Document:

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Exhibit 10.15

                                                                          NORTEL
                                                                        NETWORKS

Northern Telecom
2350 Lakeside Blvd.
Mail Stop (07J/03/A10)
Richardson, TX 75082-4399
Tel 972-685-1752
Fax 972-685-3284
www.nortelnetworks.com

Sharon J. Howard
Staff Manager
Contract Management

October 28, 1999

Ms. Rachelle Rees-McCarthy
Arbinet Holdings Corp.
226 East 54th Suite 200
New York, NY 10022

Dear Rachelle:

         Enclosed please find a fully executed copy of the GPA between Nortel
and Arbinet.

         If you have any questions, please give me a call at the above number.
Thank you for your assistance and for your business.

Sincerely,

Sharon J. Howard
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                            GLOBAL PURCHASE AGREEMENT

                                     BETWEEN

                          ARBINET HOLDINGS CORPORATION

                                       AND

                              NORTEL NETWORKS INC.
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                                                                         ARBINET
                                                                            GPSA

                            GLOBAL PURCHASE AGREEMENT

This Global Purchase Agreement ("Agreement"), effective as of the, 20th day of
October, 1999 ("Effective Date"), is entered into by and between Arbinet
Holdings Corporation (hereinafter "Company"), a Delaware corporation with its
principal place of business located at 226 East 54th Street, Suite 200, New
York, New York 10022 and Nortel Networks Inc. (hereinafter "Nortel Networks"), a
Delaware corporation with offices located at 2350 Lakeside Boulevard,
Richardson, Texas 75082-4399.

WHEREAS, Company is engaged in providing communication services and products,
and providing and maintaining public and private communication networks; and

WHEREAS, Nortel Networks, in conjunction with Nortel Networks Affiliates, is
engaged in the design, development, manufacture and sale of various products and
offers services associated with such products, which can be used in connection
with the communication services, products and networks of Company; and

WHEREAS, Company and Company Affiliates wish to be able to purchase and/or
license various products and services from Nortel Networks and Nortel Networks
Affiliates, which Company and Company Affiliates will use for their own internal
use and not for resale or as stock in trade, and Nortel Networks is willing to
sell and/or license such products to Company, subject to the terms and
conditions of this Agreement;

NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements herein set forth, the parties agree as follows:

1        DEFINITIONS

         The following words shall have the meanings set forth below. Words in
the singular shall be held to include the plural and vice versa, and words of
gender shall be held to include the other gender as the context requires.

         1.1 "Acceptance" shall mean that either (i) Company has indicated that
an ordered Product is operating substantially in accordance with the applicable
Specification; or (ii) an ordered Product has been deemed to be accepted
pursuant to criteria set forth in Article 6.

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                                                                         Arbinet
                                                                            GPSA

         1.2 "Affiliate" shall mean any entity listed in Exhibit C in which
either Nortel Networks or Company directly or indirectly owns and controls, and
continues to own or control, more than fifty percent (50%) of the shares
entitled to elect the board of directors of such entity. Each party agrees that
the other party may add to Exhibit C any such entity, and any other entity shall
only be added upon mutual written consent of the parties. The Affiliates of
Nortel Networks are referred to herein as "Nortel Networks Affiliates", and the
Affiliates of Company are referred to herein as "Company Affiliates". Nortel
Networks Dasa GmbH of Germany and Matra Nortel Networks Communications S.A.S.,
for purposes of this Agreement, shall be treated as Affiliates of Nortel
Networks.

         1.3 "Applications" shall mean any program, product, service,
development or invention developed by a party using the Building Blocks,
including any modified or created Building Blocks, created by Company.

         1.4 "Background IPR" shall mean any Intellectual Property Rights that
are conceived, created, or developed by a party or its Affiliates prior to, or
independently of, any Services performed pursuant to this Agreement.

         1.5 "Building Block(s)" shall mean those Software files provided by
Nortel Networks with Modifiable Software that are manipulatable or which may be
created by Company with such Modifiable Software and which can be used, created
or manipulated by Company to create Applications.

         1.6 "Commencement Date" shall mean the date, as agreed to by the
parties, on which Nortel Networks is to commence performance of Services ordered
by Company pursuant to a Services Annex to this Agreement.

         1.7 "Confidential Information" shall mean all information, including,
without limitation, specifications, drawings, documentation, designs, test
results, programs, know-how and pricing and market information, of every kind or
description which may be disclosed by one party to the other party in connection
with this Agreement; provided that, the disclosing party shall clearly mark all
such information disclosed in writing as the confidential or proprietary
property of the disclosing party and, in the case of oral disclosure, the
disclosing party shall identify the confidential or proprietary nature of any
such information at the time of such oral disclosure and shall provide a written
summary (labeled as confidential or proprietary) of the orally disclosed
information to the recipient within fifteen (15) business days following such
disclosure.

         1.8 "Contract" shall mean an agreement for the supply of Products
and/or Services between (i) Company or an Affiliate and (ii) Nortel Networks or
a Nortel Networks Affiliate,

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                                                                         Arbinet
                                                                            GPSA

which comes into effect by the acceptance of an Order pursuant to the provisions
of this Agreement, and which Contract shall be governed solely by the terms and
conditions of this Agreement; and each reference to "Company" in this Agreement
shall for such Contract mean the ordering Company Affiliate.

         1.9 "Customer" shall mean entities to whom Company provides
communications services as a result of Company's internal use of the Products.

         1.10 "Company Information" or "Cl"shall mean the information provided
by Company to Nortel Networks in order for Nortel Networks to engineer and/or
provide the components of Systems.

         1.11 "Customized Service(s)" shall mean, individually and collectively,
any Services other than Standard Services, including, without limitation, those
Services described in a Services Annex, if any.

         1.12 "Documentation" shall mean the documents which Nortel Networks
generally makes available to its customers containing descriptive, operating,
installation, engineering and maintenance information for Products, including
Specifications, as such documents may be amended from time to time.

         1.13 "Extension" shall mean Hardware and/or Software which is
engineered by Nortel Networks and added to an Initial System after the Turnover
Date of the Initial System.

         1.14 "Ex Works" shall have the meaning ascribed to it in Incoterms
1990.

         1.15 "Financing Commitment" shall mean a firm written commitment to
fund monies sufficient to pay for purchases made by Company pursuant to this
Agreement, whether that Financing Commitment is in the form of third party
financing from a financial institution, corporation or individual, or a lease
agreement between Company and a third party lessee covering the hardware and
Software purchased by Company from Nortel Networks.

         1.16 "Foreground IPR" shall mean any Intellectual Property Rights that
are conceived, created, or developed by a party or its Affiliates in the course
of performing Services pursuant to a Services Annex to this Agreement.

         1.17 "Hardware" shall mean, individually and collectively, the Nortel
Networks equipment listed in the Product Annexes of Exhibit A or otherwise
purchased by Company from Nortel Networks from time to time, and shall be deemed
to include any equipment which Nortel

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                                                                         Arbinet
                                                                            GPSA

Networks adds to its generally available Hardware price lists or so identifies
to Company in a Quotation.

         1.18 "Hazardous Material" shall mean any pollutants or dangerous, toxic
or hazardous substances (including without limitation, asbestos) as defined in,
or pursuant to the OSHA Hazard Communication Standard (29 C.F.R. Part 1910,
Subpart Z), the Resource Conservation and Recovery Act (15 U.S.C. Section 6901,
et seq.), the Toxic Substances Control Act (15 U.S.C. Section 2601, et seq.),
the Comprehensive Environmental Response Compensation and Liability Act (42
U.S.C. Section 9601, et seq.), and any other federal, state or local
environmental law, ordinance, rule or regulation or equivalent law or regulation
in the location to which the Product is shipped by Nortel Networks.

         1.19 "Initial System" shall mean Hardware and Software, inclusive of a
central processor unit, included in a configuration which Nortel Networks
identifies as a System and which is initially engineered by Nortel Networks and
installed at a specific Installation Site.

         1.20 "Installation Site" shall mean the location or facility identified
in an Order at which the applicable Products will be installed.

         1.21 "Intellectual Property Rights" shall mean any and all rights in
any invention, discovery, improvement, utility model, copyright, trademark,
service mark, patent, industrial design or mask work right, and any and all
rights of whatever nature in computer software and data, Confidential
Information, trade secrets or know-how, and any and all intangible rights and
privileges of a nature similar to any of the foregoing, in every case in any
part of the world and whether or not registered, and shall include all rights in
any applications and granted applications for any of the foregoing.

         1.22 "Licensed Software" shall mean the Software which Company has
licensed pursuant to this Agreement.

         1.23 "Merchandise" shall mean any Hardware or other parts or components
which are not ordered as part of a System and with respect to which no
engineering, installation or other Services are provided by Nortel Networks

         1.24 "Modifiable Software" shall mean Software, or a portion of
Software that is identified as such by Nortel Networks in its applicable
Documentation, which Company may have certain rights to modify and potentially
create Applications or Building Blocks in accordance with the applicable
Documentation.

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                                                                         Arbinet
                                                                            GPSA

         1.25 "Non-Licensed Software" shall mean Software for which Company has
not yet obtained a license nor paid applicable right to use fees, but which
Software may be included with Software loads delivered to Company hereunder.

         1.26 "Object Code" shall mean Software either written directly, or
translated from Source Code, which when presented on a suitable medium may be
directly executed by and through computer hardware and/or firmware and which
Software may be stored on any storage medium whatsoever.

         1.27 "Order" shall mean a numerically controlled purchase authorization
document issued by Company or a Company Affiliate to Nortel Networks or a Nortel
Networks Affiliate, specifying the types and quantities of Products and Services
to be furnished by Nortel Networks pursuant to this Agreement.

         1.28 "Product(s)" shall mean, individually and collectively, the
Hardware, Software, and Documentation.

         1.29 "Product Annex" shall mean, with respect to a specific Product,
additional or modified terms and conditions as set forth in Exhibit A, inclusive
of but not limited to those that may apply to any Third Party Hardware or Third
Party Software, unique to such Product.

         1.30 "Quotation" shall mean a written budgetary or firm price quotation
issued by Nortel Networks to Company or a Company Affiliate for the supply of
any Products or Services pursuant to this Agreement.

         1.31 "Service(s)" shall mean, individually and collectively, any of the
Standard and/or Customized Services set forth in this Agreement and Annexes that
Company may acquire from Nortel Networks, such as but not limited to
maintenance, engineering, installation, training, data management, program
management, project management, commissioning, testing, technical assistance
with respect to Products, installation, and consulting.

         1.32 "Services Annex" shall mean, with respect to a specific type of
Service, the attachment hereto documenting the terms and conditions that relate
to such type of Service.

         1.33 "Services Site" shall mean the location or facility identified
within an Order or Services Annex where the Services are to be performed.

         1.34 "Services Software" shall mean that Software and related
documentation made available by Nortel Networks which may be used by Company for
estimation, planning or information purposes.

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                                                                         Arbinet
                                                                            GPSA

         1.35 "Ship Date" shall mean the date on which a Product ordered by
Company is shipped from Nortel Networks facility, or in the case of Software
which is downloaded, the date upon which such Software is to be downloaded to
the System; however, Ship Date shall not mean the date on which Non-Licensed
Software is activated.

         1.36 "Software" shall mean (i) computer programs in Object Code form or
firmware which (a) are owned by, or licensed to, Nortel Networks or Nortel
Networks Affiliates, (b) reside in Product memories, tapes, disks or other
media, and (c) provide basic logic operating instructions and user-related
application instructions; and (ii) documentation associated with such computer
programs, which may be furnished by Nortel Networks to Company from time to
time, including both Licensed Software and Non-Licensed Software, but in no
event shall Software include Source Code.

         1.37 "Software Release" shall mean Software or revisions to Software
containing problem fixes, new features and/or enhancements.

         1.38 "Source Code" shall mean Software in assembly language or any
higher-level source language and all available appropriate documentation.

         1.39 "Specifications" shall mean with respect to any Product the
specifications and/or practices set forth in Nortel Networks Practices ("NNPs")
or similar documents published by Nortel Networks which Nortel Networks
identifies as the standard performance specifications and practices for such
Product.

         1.40 "Standard Service(s)" shall mean, individually and collectively,
any of the Services described in a Services Annex and shall be deemed to include
any similar services which Nortel Networks adds to its generally available
Services offerings or so identifies to Company in writing.

         1.41 "Statement of Work" shall mean a document that describes the
scope, activities, schedule, prices, deliverables (including, but not limited
to, any drawings, specifications, reports, designs, and test results to be
prepared or produced by Nortel Networks) related to, and/or any additional terms
and conditions pertaining to, such Customized Service(s) as may, from time to
time, be mutually agreed to in writing by Company and Nortel Networks pursuant
to this Agreement.

         1.42 "System" shall mean a configuration of Hardware and Software
providing a specified functionality and includes an Initial System and its
Extensions, if any.

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                                                                         Arbinet
                                                                            GPSA

         1.43 "Third Party Hardware" shall mean any hardware not of Nortel
Networks' manufacture, including any such hardware which Nortel Networks adds to
its generally available Third Party Hardware price lists or so identifies to
Company in a Quotation.

         1.44 "Third Party Software" shall mean any Software where the
intellectual property rights thereto are not owned by Nortel Networks which is
included within Licensed Software or Non-Licensed Software.

         1.45 "Territory" shall mean the countries in which Nortel Networks is
authorized and engaged in the design, development, manufacture and sale of its
Products and Services as set forth in Exhibit D.

         1.46 "Turnover" shall mean, with respect to any System installed by
Nortel Networks, that Nortel Networks has completed its standard manufacturing
test procedures, as applicable, and that the System is ready for acceptance
testing by Company.

         1.47 "Turnover Date" shall mean, with respect to any Product installed
by Nortel Networks hereunder, the date on which Nortel Networks provides a
notice of Turnover to Company.

2        SCOPE OF AGREEMENT

         2.1 This Agreement sets forth the terms and conditions under which
Company or Company Affiliates may order Products and/or Services from Nortel
Networks and Nortel Networks Affiliates. Any Order placed by a Company
Affiliate, under this Agreement, shall be subject to the terms and conditions of
this Agreement, as if such Company Affiliate is the party that executed this
Agreement; provided, however, that Nortel Networks has the right to reject any
Order as specified in Section 3.2. Company may use the Product(s) itself,
including use to provide services to others, subject to the terms and conditions
of this Agreement. Company expressly represents that it is not buying Product
for resale.

         2.2 To the extent any terms and conditions set forth in this Agreement
are inapplicable to a Product or type of Service, the applicable terms and
conditions and any additional terms and conditions for such Product or type of
Service shall be set forth in the respective Product or Services Annex. The
specific terms and conditions set forth in the Products or Services Annex shall
take precedence over any conflicting terms and conditions set forth in this
Agreement.

         2.3 If specified in a Product or Services Annex as a requirement,
Company shall, fifteen (15) days prior to each calendar quarter, submit to
Nortel Networks a consolidated

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                                                                         Arbinet
                                                                            GPSA

nonbinding forecast of Products and Services by geographic region, that Company
anticipates purchasing or licensing over the next four (4) calendar quarters. In
addition to the type, quantity and cumulative dollar amount of Products or
Services, the parties may agree upon additional information to be included in
such forecast.

         2.4 All references to prices, charges, fees or other amounts herein
shall be in U.S. dollars and all documentation, correspondence and communication
shall be in the English language. Unless otherwise set forth herein, any
reference in this Agreement to Company shall be deemed to include Company
Affiliates and any reference to Nortel Networks shall be deemed to include
Nortel Networks Affiliates.

         2.5 Nortel Networks' obligations under this Agreement are contingent
upon Company providing Nortel Networks with satisfactory written documentation
that a Financing Commitment is in place. Nortel Networks' continuing obligations
under this Agreement are similarly contingent upon there being no material
changes in the Financing Commitment. If there is a breach of the Financing
Commitment by either party to the Financing Commitment, Nortel Networks shall
have the right to deem itself insecure and, at Nortel Networks' option, suspend
further performance under this Agreement. Company shall provide notice of any
Financing Commitment breach, by any party to the Financing Commitment, to Nortel
Networks within ten (10) days of a breach.

3        PLACEMENT OF ORDERS

         3.1 To order Products and/or Services, Company shall submit to such
person as Nortel Networks shall designate, an Order which shall at a minimum
specify the following, if applicable:

                  (i)      the name of the Company Affiliate placing the Order,
                           which shall be a Company Affiliate set forth in
                           Exhibit C for the country in which the Product is to
                           be placed;

                  (ii)     the incorporation by reference of this Agreement;

                  (iii)    the types and quantities of Products and Services to
                           be furnished by Nortel Networks;

                  (iv)     the name and address, as set forth in Exhibit C, of
                           the Nortel Network Affiliate that will be providing
                           the Products and/or Services being ordered

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                                                                         Arbinet
                                                                            GPSA

                           in the country in which the Products and/or Services
                           are to be placed and/or performed, as appropriate;

                  (v)      the applicable prices, charges and fees with respect
                           to such Products and/or Services;

                  (vi)     the location or facility to which the Products are to
                           be delivered or where the Systems are located;

                  (vii)    the Installation or Services Site, if known;

                  (viii)   the requested Ship Date and Turnover Date of the
                           System or the requested Commencement Date of the
                           Services; and

                  (ix)     any other information required under this Agreement
                           to be included in an Order.

         3.2 All purchases pursuant to this Agreement shall be made by means of
Orders issued from time to time by Company or Company's Affiliate addressed to
Nortel Networks or Nortel Networks' Affiliate and accepted by Nortel Networks or
Nortel Networks' Affiliate in writing within fifteen (15) days after receipt of
the Order. An Order submitted by a Company Affiliate pursuant to the terms and
conditions of this Agreement, and which Nortel Networks has accepted,
constitutes a Contract between the Company Affiliate ordering and Nortel
Networks or the applicable Nortel Networks Affiliate. In the event that Nortel
Networks fails to provide its acceptance of an Order in writing within such
fifteen (15) day period, such Order shall be deemed to be accepted, subject to
Section 3.3. Nortel Networks shall have the right to reject any Order, or the
applicable portion of such Order, placed hereunder where Company or the Company
Affiliate placing the Order has a separate agreement with Nortel Networks for
the provision of the Products or Services requested in such Order or the Order
is otherwise not in accordance with this Agreement.

                           3.2.1 Nortel Networks reserves the right to amend
                  Exhibit C from time to time and shall provide ten (10) days
                  prior written notice of such amendment to Company. Exhibit C
                  may be subject to change in relation to Company's or a Company
                  Affiliate's purchases of different Products from Nortel
                  Networks or a Nortel Networks Affiliate. Subject to the terms
                  and conditions of this Agreement, Company or a Company
                  Affiliate may place an Order for a Product with the
                  appropriate Nortel Networks Affiliate in the territory where
                  the Product will be delivered as set forth in Exhibit C.

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                                                                         Arbinet
                                                                            GPSA

         3.3 Pre-printed or additional or conflicting terms and conditions set
forth in Orders issued by Company, or in any prior Quotations, acknowledgments
or other related documentation issued by any party, shall be considered null and
void and shall have no force or effect unless the conflicting or special terms
have been expressly accepted by Nortel Networks in writing, in which case
acceptance is for such Order only, and supersedes the specific terms and
conditions contained in this Agreement, including all Exhibits attached hereto,
which are in conflict, but only to the extent of such conflict.

         3.4 Company may at any time request additions, alterations, deductions
or deviations to an Order, subject to the condition that such changes and any
adjustments resulting from such changes, including, but not limited to,
schedules and prices, shall be mutually agreed upon and, if so agreed,
subsequently detailed in a written revision to the applicable Order ("Change
Order"). Company acknowledges that a premium charge may be applied by Nortel
Networks should Nortel Networks agree to process a Change Order outside of its
standard Order processing cycle for a Product or in the event that a Change
Order requires an additional amount of work (such as engineering) to be
undertaken to comply with such changes.

         3.5 If Company desires to receive a budgetary or firm Quotation from
Nortel Networks for a Product or Service, Company shall submit such request in
writing to Nortel Networks' Director, Commercial Marketing, or such other person
as designated by Nortel Networks. The request for Quotation shall include the
information listed in Section 3.1, as applicable.

         3.6 Nortel Networks shall respond in writing to requests for budgetary
Quotations and requests for firm Quotations. Unless otherwise specified in the
firm Quotation, such firm Quotation shall be valid for ninety (90) days from the
date of such Quotation. Budgetary Quotations shall be provided for information
and planning purposes only and shall not be considered to be a final or firm
statement binding on either party. All prices will be quoted in U.S. dollars,
unless otherwise agreed. The Quotations shall include the following information:

         (i)      Budgetary Quotations
                  (a)      preliminary Hardware and Software lists;
                  (b)      the estimated charges for the Products;
                  (c)      the estimated charges for Services requested; and
                  (d)      any other information requested by Company.

         (ii)     Firm Quotations
                  (a)      the price to be paid by Company for the Products,
                           after applying the
                           applicable discounts, if any;
                  (b)      fixed charges for Services requested;

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                                                                         Arbinet
                                                                            GPSA

                  (c)      complete Hardware and Software lists and project
                           schedules; and
                  (d)      any other information requested by Company.

         3.7 If Company desires to receive a Statement of Work from Nortel
Networks for Consulting or Customized Services, Company shall submit such
request in writing to such person as Nortel Networks may designate. The request
for a Statement of Work shall include the information listed in Section 3. 1, as
applicable. Nortel Networks shall prepare a Statement of Work in response to
Company's request. Any changes to the proposed Statement of Work shall be
negotiated and agreed to in writing by the parties. Any Statement of Work and
any changes to an existing Statement of Work shall not be binding unless and
until the terms are reduced to a writing signed by the authorized
representatives of both parties. Company's Order(s) for the Consulting or
Customized Services described within a Statement of Work shall be based upon the
contents of the Statement of Work as mutually agreed to by the parties and
attached to such Order(s).

         3.8 The Ship Date for Products shall be based on Nortel Networks'
standard intervals for the applicable Product; however, the parties shall always
mutually agree on the Ship Date and take into consideration any unique aspect of
the applicable project.

         3.9 The Commencement Date for ordered Services shall be based on Nortel
Networks' standard intervals for the applicable Service; however, the parties
shall always mutually agree, in writing, on the Commencement Date taking into
consideration any unique aspect of the applicable project.

         3.10 Orders may be issued either electronically, such as through
electronic data interchange, or via traditional manual methods.

         3.11 Company and Nortel Networks absolutely, irrevocably and
unconditionally guarantees the performance of each of its respective Affiliates
with regard to Orders and/or otherwise acting under this Agreement and any
Contract created thereby. Both parties to this Agreement expressly waive any
other diligence, protest or notice as well as any requirement that the
non-breaching party exhaust any remedy or right against such breaching
Affiliate.

4        PRICE AND PAYMENT

         4.1 Nortel Networks shall charge Company for each Product and/or
Service ordered by Company in accordance with the prices set forth in each
accepted Order, which prices shall be based upon prices identified in one of (i)
a Product or Services Annex; (ii) a Firm Quotation; (iii) a Statement of Work;
(iv) Nortel Networks' then current prices; or (v) as specified elsewhere in this
Agreement or as otherwise mutually agreed in writing.

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                                                                            GPSA

                           4.1.1 All Products for delivery within the European
                  Union shall be priced and delivered in accordance with
                  Delivery Duty Paid ("D.D.P."), European Union site terms and
                  for other European countries in accordance with Carriage
                  Insurance Paid ("CIP") specified port/airport of entry. The
                  terms D.D.P. and CIP shall be interpreted in accordance with
                  Incoterms 1990. In all cases, prices are exclusive of Sales
                  Tax or Value Added Taxes ("VAT") which will be payable by the
                  Company in addition to the purchase price at the rate
                  applicable as of the date of invoice.

                           4.1.2 All Products for delivery within Australia
                  shall be priced and delivered in accordance with D.D.P.,
                  Australian site terms, as applicable. Prices are subject to
                  changes in statutory charges such as duties and taxes.

                           4.1.3 All Products for delivery within New Zealand
                  shall be priced and delivered in accordance with Delivered
                  Duty Unpaid ("D.D.U."), New Zealand site terms, as applicable.
                  Prices are subject to duties and General Sales Tax.

                           4.1.4 All Products for delivery within Japan shall be
                  priced and delivered in accordance with D.D.P., Japanese site
                  terms. In all cases, prices are exclusive of Sales Tax which
                  will be payable by the Company in addition to the purchase
                  price at the rate applicable as of the date of invoice.

                           4.1.5 All Products for delivery within countries not
                  otherwise specified above shall be priced and delivered in
                  accordance with Ex Works, Nortel Networks' applicable
                  facility.

         4.2 Nortel Networks' prices, if set forth in attached Exhibits, may be
revised by Nortel Networks no more than once each calendar year, by providing
sixty (60) days prior written notice to Company. Such notice shall specify the
effective date of the price change and shall apply to all Orders received by
Nortel Networks on or after the effective date of the price change. However, in
the event that there is a recognized industry-wide shortage of a component that
is incorporated in a Product, Nortel Networks may increase the price of such
Product, following the provision of written notice to Company fifteen (15) days
prior to the effective date of such increase or such shorter date as is mutually
agreed in view of the shortage. The price increase of such Product due to a
component shortage shall be limited to a reasonable amount under the
then-current circumstances having regard for industry conditions for the period
of time during which such recognized shortage exists. Following the
implementation of a price increase due to a component shortage, the parties
shall jointly review every three (3) months or at such other time as is mutually
agreed, in good faith, whether such component shortage still exists. If the
component shortage has abated, the parties shall jointly determine whether there
still is a

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                                                                            GPSA

need for such price increase. In addition, in the event that worldwide
hyperinflation occurs, the parties shall work together in good faith to
determine any applicable increase in prices of affected Products to cover Nortel
Networks' additional costs.

         4.3 Unless otherwise set forth in a Product or Services Annex or
Statement of Work, Nortel Networks shall invoice Company for Products and
Services as follows, unless otherwise agreed to in writing:

                  (i)      for Products and Systems, whether or not installation
                           has been ordered from Nortel Networks:

                           (a)      Ten percent (10%) of the price of the
                                    Products or System shall be due with the
                                    Purchase Order; and,
                           (b)      Seventy percent (70%) of the price of the
                                    Products or System shall be invoiced on the
                                    Ship Date; and,
                           (c)      Twenty percent (20%) of the price of the
                                    Products or System shall be invoiced on the
                                    Acceptance Date.

                  (ii)     for Merchandise or Documentation provided on a
                           furnish-only basis, one hundred percent (100%) of the
                           price on the Ship Date; and

                  (iii)    for Orders covering Services only, one hundred
                           percent (100%) of the price for such Services
                           following completion of performance, except for
                           recurring support Services which shall be billed
                           quarterly in advance unless otherwise agreed. Some
                           Services may be subject to monthly invoicing as set
                           out in a Product or Services Annex. To the extent
                           such Services are to be invoiced differently than set
                           out in this paragraph (iii), such differences shall
                           be set forth in the applicable Product or Services
                           Annex and such provisions shall take precedence.

         4.4 Each invoice shall be paid in full within thirty (30) days after
the date of such invoice. In the event that Company does not pay an invoice in
full within such thirty (30) day period, then Nortel Networks may charge Company
interest on the outstanding portion of such invoice from day thirty one (31)
forward, at the rate of one and one half percent (1.5%) simple interest per
month, or such lesser amount as may be the maximum permissible rate under
applicable law, until such time as the outstanding invoice is paid. In addition,
Company agrees to pay all collection costs and reasonable legal fees incurred by
Nortel Networks as a result of late payment or non-payment by Company.

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5        SHIPMENT, TITLE, RISK OF LOSS, AND SECURITY INTEREST FOR
         PRODUCTS PROVIDED HEREUNDER

         5.1 Prior to the Ship Date, Company shall have the right to reschedule
any pending, Orders; provided that (i) a minimum period of notice prior to such
Ship Date is given to Nortel Networks by Company in accordance with the
applicable Product Annex; and (ii) the new Ship Date is within ninety (90) days
of the original Ship Date. However, each Order may only be rescheduled once.
Company shall reimburse Nortel Networks for any storage fees, insurance and
demurrage costs incurred with respect to such rescheduled Orders.

                  5.1.1 All Products for delivery within the European Union
         shall be delivered in accordance with D.D.P., European Union site terms
         and for other European countries in accordance with CIP specified
         port/airport of entry. All Products for delivery within Australia or
         Japan shall be priced and delivered in accordance with D.D.P.,
         Australian or Japanese site terms, as applicable. All Products for
         delivery within New Zealand shall be priced and delivered in accordance
         with D.D.U., New Zealand site terms, as, applicable. Products to be
         delivered in all other countries not specifically mentioned in this
         Section 5.2 shall be delivered in accordance with Ex Works, Nortel
         Networks' applicable facility, and risk of loss and damage to Products
         shall be as provided therein. Company shall keep such Products fully
         insured for the total amount then due Nortel Networks for such
         Products.

                  5.1.2 Risk of loss and damage to Products for delivery in the
         United States and Canada shall pass to Company upon delivery to the
         loading dock at the Installation Site or other delivery location
         specified by Company in an Order. Company shall keep such Products
         fully insured for the total amount then due Nortel Networks for such
         Products. Company shall pay transportation charges, including
         insurance, associated with the shipment of Products; provided however,
         that if the parties agree, Nortel Networks shall prepay transportation
         charges, and insurance for delivery of Products to the Installation
         Site or other delivery location or other designated receiving point as
         specified in an Order. The charges therefor shall be invoiced by Nortel
         Networks and paid by Company to Nortel Networks in accordance with
         Article 4 above.

         5.2 Good title to Hardware furnished hereunder, free and clear of all
liens and encumbrances, shall vest in Company upon full payment to Nortel
Networks of the total amount payable by Company for such Hardware and any
related Licensed Software or Services ("Total Fee") furnished by Nortel Networks
in connection with such Hardware. Prior to payment of the Total Fee for the
Products and Services in an Order, Company shall not sell or lease the Hardware,
or allow any liens or encumbrances to attach to the Hardware or Software, or
remove

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the Hardware or Software from the Installation Site without the prior written
consent of Nortel Networks, such consent not to be unreasonably withheld.

         5.3 If Company notifies Nortel Networks prior to a Ship Date that
Company does not wish to receive such Products on the Ship Date, or the
Installation Site or other delivery location is not prepared in sufficient time
for Nortel Networks to make delivery in accordance with such date, or Company
fails to take delivery of any portion of the Products in an Order when shipped,
Nortel Networks may place the applicable Products in storage. In that event,
Company shall be liable for all additional costs thereby incurred by Nortel
Networks. Delivery by Nortel Networks of any Products to a storage location as
provided above shall be deemed to constitute delivery of the Products to Company
for purposes of this Agreement, including, without limitation, provisions for
payment, invoicing, passage of risk of loss, and commencement of the warranty
period.

         5.4 Until the Total Fee is paid, Company grants to Nortel Networks
and/or its agents a purchase money security interest in the Products in an Order
and their proceeds or such other similar protection as may be available in the
applicable jurisdiction. Company shall cooperate with Nortel Networks in
preserving and perfecting Nortel Networks' security interest in the Products and
Company shall promptly execute and deliver to Nortel Networks (i) such financing
statements and (ii) such other agreements, documents and instruments as Nortel
Networks may require to perfect and maintain the validity, effectiveness and
priority of the security interest created or intended to be created by this
Agreement.

         5.5 Company authorizes Nortel Networks to file one or more financing or
continuation statements and amendments thereto, relating to all or any part of
the Products in an Order without signature of the Company where permitted by
law. A carbon, photographic or other or of any financing statement covering the
Products or any part thereof shall be sufficient as a financing statement and
may be filed as a financing statement.

6        COMPANY'S ADDITIONAL RESPONSIBILITIES

         6.1 Company shall provide Nortel Networks or its subcontractors with
access to its Installation Sites or other Company facilities during the times
specified by Nortel Networks and as are reasonably necessary for Nortel Networks
to perform its obligations hereunder. Nortel Networks shall comply with
Company's reasonable site and security regulations of which Nortel Networks is
informed by Company.

         6.2 All sites at which the Products shall be delivered or installed
shall be prepared by Company in accordance with Nortel Networks' standards,
including, without limitation, environmental requirements. Prior to and during
installation, Company shall ensure the timely

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and adequate delivery, installation and functioning of the electrical and
communications connections and other environmental requirements, including but
not limited to, HVAC systems, specified in Nortel Networks' instructions,
Specifications, Documentation, or a Product Annex.

         6.3 Company shall provide reasonable working space and facilities,
including heat, light, ventilation, telephones, electrical current, waste
removal and other necessary utilities, for use by Nortel Networks' personnel
performing installation or other Services, and adequate secure storage space, if
required by Nortel Networks, for Products and materials. Company shall also
provide adequate security against theft, damage or other loss for the Products
while on Company's Installation Site or other delivery location specified by
Company.

         6.4 Company shall obtain all necessary governmental permits applicable
to Company in connection with the installation, operation, and maintenance of
Products furnished hereunder, excluding any applicable permits required in the
normal course of Nortel Networks' doing business. Any information which Nortel
Networks reasonably requests from Company and which is necessary for Nortel
Networks to properly install or maintain the Products shall be provided by
Company to Nortel Networks in a timely fashion and in a form reasonably
specified by Nortel Networks.

         6.5 If Company (a) notifies Nortel Networks, prior to the Commencement
Date for ordered Services, that Company wishes to postpone the commencement of
such Services, or (b) at the Services Site (or other location), necessary
information or key Company representatives are not available or prepared in
sufficient time for Nortel Networks to commence such Services in accordance with
such date, then Company shall be liable for all additional costs related to the
postponed Services, including, without limitation, (i) standard rates (including
any overtime premium) for Nortel Networks' personnel and/or contractors who
travel to the Services Site or other location, and the actual travel and living
expenses (plus a fifteen percent (15%) administrative fee) and/or relocation
expenses incurred by such personnel and/or contractors, and (ii) any costs,
charges or expenses incurred by Nortel Networks under its arrangements with
third party vendors, licensors, lessors, and/or contractors. In addition, if
Company provides less than thirty (30) days' notice of the postponement, Company
shall pay to Nortel Networks a postponement charge equal to ten percent (10%) of
the Order amount for the postponed Services.

7        TESTING, TURNOVER AND ACCEPTANCE OF PRODUCT AND SERVICES

         7.1 If installation Services are ordered by Company, Nortel Networks
shall, upon completion of such installation, test the Products in accordance
with Nortel Networks' Turnover procedures to verify that such Products function
substantially in accordance with the applicable Specifications. Upon completion
of such verification, Nortel Networks shall provide to Company a written notice
of Turnover. Company shall be permitted an opportunity to have an

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appropriately qualified individual in attendance to observe the performance of
such tests, however, the absence of such Company individual for any reason shall
not invalidate the tests nor be a reason for Company to withhold Acceptance.

         7.2 Within ten (10) business days after the Turnover Date, Company
shall either accept the Product in writing by execution of a notice of
Acceptance, or notify Nortel Networks in writing, specifying in reasonable
detail those particulars in which, in Company's opinion, the Product does not
materially conform with the Specifications. If Acceptance does not occur within
ten (10) days after the Turnover Date and Company has not indicated to Nortel
Networks in writing its basis for not accepting such Product, then Acceptance
shall be deemed to have occurred.

         7.3 If Nortel Networks does not install Products furnished hereunder,
Nortel Networks shall, prior to delivery of the Products, perform such factory
tests as Nortel Networks determines to be appropriate in order to confirm that
such Products perform substantially in accordance with the applicable
Specifications. If Company does not provide written notice of defects in such
Products to Nortel Networks within five (5) days of delivery, Company shall be
deemed to have accepted the Products based upon such tests and Acceptance shall
be deemed to have occurred upon the Ship Date. In the event that Company or any
other entity intends to perform installation of Products, (except for
installation of Products which are not permitted to be installed other than by
Nortel Networks, as specified in the applicable Product Annex or Documentation)
Company or such entity may be required to complete prerequisite training or
certification prior to Company being allowed to install such Products.

         7.4 In the event that Company is utilizing any Product in a
revenue-generating capacity, Acceptance shall be deemed to have occurred without
limitation or restriction, upon the date of placement of such Product into
revenue-generating service.

         7.5 Products, such as Merchandise, which are purchased separately from
a System, shall be deemed accepted upon the Ship Date unless Company provides
written notice of defects to Nortel Networks within five (5) days of delivery of
such Products. Services that are purchased separately from a Product shall be
deemed to be accepted upon completion of such Services or upon specific
milestones as may be identified in a Product Annex.

         7.6 Company shall not unreasonably withhold Acceptance. Nortel Networks
shall correct any deficiencies identified by Company in the manner described in
this Article whereby such Products do not materially conform to the
Specifications. When Nortel Networks has corrected such deficiencies, Company
shall accept the Products as described in Section 7.2, above.

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         7.7 Following Acceptance of Products, Company shall execute Nortel
Networks' Acceptance notice, confirming Acceptance without any conditions,
restrictions, or limitations of any nature whatsoever.

         7.8 Acceptance shall not be withheld or postponed due to:

                  (i)      Deficiencies of such Products resulting from causes
                           attributable to the Company or its agents, such as,
                           but not limited to (a) material change or inaccuracy
                           in Customer Information, (b) inadequacy or
                           deficiencies of any materials, information,
                           facilities or services provided directly or
                           indirectly by Company and tested in conjunction with
                           the applicable Products, or spurious outputs from
                           adjacent material, or (c) other conditions external
                           to the Products which are beyond the limits specified
                           by Nortel Networks in the Specifications for the
                           Products; or

                  (ii)     Minor deficiencies or shortages with respect to such
                           Products which are, attributable to Nortel Networks,
                           but of a nature that do not prevent operation of the
                           Products in revenue-generating service.

         7.9 With respect to any deficiencies of the type described in Section
7.8(i), Nortel Networks shall at Company's request and expense assist Company in
the elimination or minimization of any such deficiencies. With respect to any
deficiencies or shortages as described in Section 7.8(ii), Nortel Networks
shall, at Nortel Networks' expense, correct any such deficiencies or shortages
within thirty (30) days of the date of Acceptance or as otherwise agreed by the
parties.

         7.10 In the event that Company notifies Nortel Networks of
non-acceptance of a Product and Nortel Networks personnel travel to the
Installation Site to remedy such non-acceptance and determine that
non-acceptance is due to a deficiency of the type described in Section 7.8(i),
Nortel Networks will invoice Company for Nortel Networks' investigation of the
matter, consisting of the standard labor rate for Nortel Networks' personnel who
travel to the Installation Site and the reasonable travel and living expenses
incurred by such personnel.

         7.11 Services shall be deemed to be accepted upon: (i) completion of
such Services; or (ii) completion of specific milestones as may be identified in
a Services Annex or Statement of Work; or for ongoing Services purchased on an
annual basis, upon agreement of the parties in writing to purchase and provide
such Services.

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8        ORDER CANCELLATION

         8.1 If, prior to the Ship Date, Company cancels all or any part of an
Order, Company shall pay to Nortel Networks a cancellation charge for the
Products or each item of Third Party Hardware or Third Party Software that has
been canceled in accordance with the schedule set forth in the applicable
Product Annex.

         8.2 Orders for Products that have been shipped may not be canceled.
Furthermore, Orders for Products which Nortel Networks customizes in accordance
with a specific Company request may not be canceled.

         8.3 In the event that Company cancels all or part of an Order for
Products or Systems, Company shall pay to Nortel a cancellation charge for each
Product or each item of Third Party Hardware or Third Party Software that has
been canceled in accordance with the following schedule:

         - 60 days or more prior to Ship Date       100% of Engineering Charges
         - 30-59 days prior to Ship Date             25% of Order amount
         - 15-29 days prior to Ship Date             35% of Order amount
         - 0-14 days prior to Ship Date              50% of Order amount

         8.4 Unless otherwise set forth in a Services Annex or Statement of
Work, in the event that Company cancels all or any part of an Order for
Services, Company shall pay to Nortel Networks a cancellation charge for the
Services that have been cancelled in accordance with the following schedule:

         - 60 or more days prior to Commencement
           Date                                      No cancellation charge
         - 45-59 days prior to Commencement Date     5% of Order amount
         - 30-44 days prior to Commencement Date     10% of Order amount
         - 0-29 days prior to Commencement Date      20% of Order amount

         8.5 In addition, Company shall be liable for all additional costs
related to the cancelled Products or Services, including, without limitation,
(i) standard rates (including any overtime premium) for Nortel Networks'
personnel and/or contractors who travel to the Installation or Services Site or
other location, and the actual travel and living expenses (plus a fifteen
percent (15%) administrative fee) and/or relocation expenses incurred by such
personnel and/or contractors, and (ii) any costs, charges or expenses incurred
by Nortel Networks under its arrangements with third party vendors, licensors,
lessors and/or contractors.

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9        WARRANTY

         9.1 Nortel Networks warrants that for a period of twelve (12) months
from Acceptance of a System, the Hardware contained in such System under normal
use and service will be free from defective material and faulty workmanship and
shall comply with the applicable Specifications. The warranty period for
Merchandise shall be ninety (90) days from the Ship Date of such Merchandise.
The foregoing warranties shall not apply to items normally consumed during
operation of a System such as, but not limited to, lamps and fuses.

         9.2 Nortel Networks warrants that any installation Services performed
by Nortel Networks with respect to a System will be free from defects in
workmanship for a period of twelve (12) months from the completion date of such
Services.

         9.3 Nortel Networks warrants that any Licensed Software shall function
during the warranty period of the Hardware with respect to which such Licensed
Software is furnished without any material, service-affecting, nonconformance to
the applicable Specifications. Licensed Software that is delivered separately
from Hardware is warranted for a period of twelve (12) months from the
applicable Ship Date. If the Licensed Software fails to so function, Company's
exclusive remedy and Nortel Networks' sole obligation under this warranty is for
Nortel Networks to correct such failure through, at Nortel Networks' option, the
replacement or modification of the Licensed Software or such other actions as
Nortel Networks reasonably determines to be appropriate, all within a reasonable
time having regard to all of the circumstances and failing which the parties
agree to negotiate a commercially reasonable solution. Any modification to the
Software not performed by Nortel Networks, other than with respect to Modifiable
Software, shall void this warranty.

         9.4 If Hardware is not free from defects in material or workmanship and
fails to comply with the applicable Specifications during the warranty period,
Nortel Networks will at its sole option repair, replace or modify the defective
Hardware so that it substantially complies with the applicable Specifications.
The warranty service shall be performed at the Installation Site or Nortel
Networks' facility as determined by Nortel Networks. If Nortel Networks is
unable to repair or modify the defective Hardware within a reasonable period of
time so that such Hardware conforms to the applicable Specification, Nortel
Networks shall replace the defective Hardware with Hardware that conforms to
such Specifications. Replacement Hardware may be new or reconditioned at Nortel
Networks' option. Nortel Networks' sole obligation and Company's exclusive
remedy under the warranty provisions of this Article with respect to Hardware
and installation Services shall be limited to repair, modification or
replacement of the defective Hardware or correction of the defective
Installation Services.

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         9.5 Notwithstanding the foregoing, the warranty period of Hardware
which has been subject to repair or replacement by Nortel Networks shall
commence upon the Ship Date of the repaired or replacement Hardware to Company
and shall expire on the later of ninety (90) days or the last day of the
original warranty period with respect to the Hardware which was repaired or
replaced. The warranty period of Licensed Software which has been corrected, due
to a material, service-affecting non-conformance found in such Licensed
Software, shall expire on the later of ninety (90) days from the Ship Date of
the corrected Licensed Software to Company or the last day of the original
warranty period with respect to such Licensed Software.

         9.6 Nortel Networks warrants that its Products and deliverables shall
comply in all material aspects with all applicable laws and regulations known to
Nortel Networks, which are in force on the date of acceptance of the applicable
Order therefor, which laws or regulations directly impose obligations upon any
manufacturer, seller or, if applicable, installer of such Products. Upon request
therefor, Nortel Networks may implement such changes as are necessary to comply
with any applicable law and/or regulation which becomes effective after the date
of acceptance of the applicable Order; provided that the parties have reached
mutual agreement concerning the cost of such changes and which party will bear
them.

         9.7 The performance by Nortel Networks of any of its obligations
described in this Article 9 shall not extend the applicable warranty period.

         9.8 The warranties set forth in this Article shall not apply to any
Products where the defect or non-conformance is due to (i) accident, fire,
explosion, power failure, power surge or other power irregularity, lightning,
alteration, abuse, misuse or repair not performed by Nortel Networks; (ii)
improper storage; (iii) failure to comply with all applicable environmental
requirements for the Products as specified by Nortel Networks or any other
applicable supplier, such as but not limited to temperature or humidity ranges;
(iv) improper performance of installation, maintenance, operation or other
service in connection with the Products, provided that such service was not
performed by Nortel Networks or on Nortel Networks' behalf; (v) use in
conjunction with an incompatible product or a product not purchased under this
Agreement; (vi) any error, act or omission by anyone other than Nortel Networks;
or (vii) where written notice of the defect has not been given to Nortel
Networks within the applicable warranty period. The warranties set forth in this
Article shall not apply to (i) Non-Licensed Software for which the applicable
right-to-use fees have not been paid; or (ii) Third Party Software or Third
Party Hardware, provided however that Nortel Networks shall assign to Company
(to the extent of Nortel Networks' right to do so) the warranty rights granted
to Nortel Networks by the appropriate vendor of such Third Party Software or
Third Party Hardware.

         9.9 Unless Nortel Networks elects to repair or replace defective
Hardware at Company's facility, all Hardware to be repaired or replaced, whether
in or out of warranty, shall

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be de-installed and packed by Company in accordance with Nortel Networks'
instructions. Nortel Networks shall use reasonable efforts to ship repaired or
replacement Hardware within thirty (30) days of receipt of the defective
Hardware. To facilitate the processing of the defective Hardware returned
hereunder, Nortel Networks may ship replacement Hardware prior to Nortel
Networks receiving the defective Hardware. In the event that Company fails to
return defective Hardware and Nortel Networks has shipped such replacement
Hardware, Nortel Networks shall invoice Company at Nortel Networks' applicable
then-current prices for such replacement Hardware, thirty (30) days after the
Ship Date of such replacement Hardware. If mutually agreed, Nortel Networks will
make repairs on-site at Nortel Networks' then-current charge for such repairs.

         9.10 If the Hardware returned to Nortel Networks pursuant to Section
9.9 is determined by Nortel Networks to be beyond repair and is outside the
warranty period, Nortel Networks shall notify Company and if requested Nortel
Networks shall sell Company replacement Hardware at Nortel Networks'
then-current prices for such replacement Hardware.

         9.11 Company shall bear risk of loss or damage and shall pay for all
transportation charges for Hardware returned to Nortel Networks and Nortel
Networks shall bear risk of loss or damage and pay for transportation charges
for repaired or replacement Hardware shipped to Company. Title to returned
Hardware shall pass to Nortel Networks upon receipt. Title to replacement
Hardware shall pass to Company upon receipt.

         9.12 Nortel Networks and Nortel Networks' vendors of Third Party
Hardware and Third Party Software, as appropriate, shall not have any
responsibility to Customers for warranties offered by Company to such Customers
and Company hereby indemnifies and holds harmless Nortel Networks and Nortel
Networks' vendors, as appropriate, from any claims, damages or liabilities
arising out of, or relating to, any warranties offered by Company to such
Customers.

         9.13 If Company discloses to Nortel Networks that Company has purchased
Equipment from a party other than Nortel Networks for installation upon a
Product or if Nortel Networks determines in its sole discretion that any
Equipment installed upon a Product was not purchased by Company from Nortel
Networks, Nortel Networks shall have the right to immediately discontinue all of
its obligations, services and responsibilities with respect to such Product
pursuant to this Agreement until such time as such Product has successfully
completed Nortel Networks' certification process (the "Certification"), and
provide Company with written notice thereof. Company shall, upon receipt of
Nortel Networks' written notice, (i) issue an Order for Nortel Networks'
Certification of such Product at the purchase price to be determined pursuant to
Section 4.1; (ii) ensure that such Product successfully completes Nortel
Networks' Certification process, including, but not limited to, purchasing
additional Equipment from Nortel

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Networks as required in order to successfully complete the Certification
process; and (iii) pay the prices, charges and fees for such Certification
within thirty (30) days after the date of invoice. Upon the successful
completion of the Certification process for such Product, Nortel Networks shall
resume its obligations, services and responsibilities with respect to such
Product pursuant to this Agreement.

         9.14 THE WARRANTIES, CONDITIONS AND REMEDIES SET FORTH HEREIN
CONSTITUTE THE ONLY WARRANTIES, OBLIGATIONS OR CONDITIONS OF NORTEL NETWORKS
WITH RESPECT TO THE PRODUCTS AND SERVICES AND ARE COMPANY'S SOLE AND EXCLUSIVE
REMEDIES IN THE EVENT THAT SUCH WARRANTIES OR CONDITIONS ARE BREACHED. THEY ARE
IN LIEU OF ALL OTHER WARRANTIES OR CONDITIONS, WRITTEN OR ORAL, STATUTORY,
EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. NORTEL NETWORKS SHALL NOT
BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE OR CONSEQUENTIAL
DAMAGES, INCLUDING WITHOUT LIMITATION, LOST REVENUES OR PROFITS OR OTHER
ECONOMIC LOSS, OF ANY NATURE WHATSOEVER ARISING OUT OF NORTEL NETWORKS' BREACH
OF WARRANTY OR CONDITION.

10       NORTEL NETWORKS' ADDITIONAL OBLIGATIONS

         10.1 Nortel Networks shall make training available to representatives
of Company with respect to the operation, configuration, installation, service,
maintenance and support of the Products at Nortel Networks' then current prices
and at Nortel Networks' facilities, subject to course and class availability.
The training provided under this Section 10.1 may be provided at a Nortel
Networks facility or other location, at Nortel Networks' discretion. Nortel
Networks shall provide Company with a certain number of training credits
("Training Credits"), as set forth in the applicable Product Annex, to be used
by Company in any of Nortel Networks' training courses related to the Products
that Company has purchased. The Training Credits for each Product may only be
used in connection with such Product and must be used within one (1) year from
the date such Training Credits were earned, after which such Training Credits
will be forfeited by Company.

         10.2 Upon request, Nortel Networks shall provide Company with copies of
its then current training catalogue. Company shall provide Nortel Networks with
a reasonable number of names and addresses of people to whom this catalogue
should be sent. Upon the request of Company, Nortel Networks shall provide to
Company such additional training as Company requests, at a time and place
mutually agreed upon and at the prices to be quoted for such training. The
cancellation fees set forth in the training catalogues shall apply.

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         10.3 Nortel Networks shall include its standard Documentation package,
if any, with each shipment of Products. Nortel Networks shall make the
Documentation available on its choice of media, which may include CD-ROM or
other electronic media. Nortel Networks shall provide Company with any other
Documentation that is ordered at its then-current prices therefor. Documentation
provided via Nortel Networks' CD-ROM media may be printed and copied and
Documentation provided in paper format may be copied, to the extent such
Documentation so provides, and only to the extent such printing or copying is
necessary for the operation and maintenance of the Products to which the
Documentation pertains. However, Company may not press or burn any copies of
CD-ROM discs.

         10.4 During the term of this Agreement, Company may receive various
support Services from Nortel Networks in connection with the Products Company
acquires from Nortel Networks under this Agreement. These Services may include,
but are not limited to the following: technical assistance Services,
installation Services, Hardware maintenance Services, Software maintenance
Services and parts repair and replacement Services. The various support Services
that Company may obtain and the manner in which they will be provided are set
forth in a Services Annex, which is attached hereto and incorporated herein. The
fees for these Services, if available upon execution of this Agreement are set
forth in Exhibit B. Fees for any support Services not specified in Exhibit B
shall be provided on an as-quoted basis or in a Statement of Work pursuant to
Nortel Networks' applicable terms and conditions.

11       SOFTWARE LICENSE

         11.1 Company acknowledges that the Software may contain programs which
have been supplied by, and are proprietary to, Third Party Software vendors. In
addition to the terms and conditions herein, Company shall abide by any
additional terms and conditions specified in a Product Annex with respect to any
Software provided by any Third Party Software vendor.

         11.2 Upon Company's payment to Nortel Networks of the applicable fees
with respect to any Software furnished to Company pursuant to this Agreement,
Nortel Networks hereby grants to Company, subject to the applicable terms and
conditions of this Article 11, a personal, non-exclusive, right and license to
use the Object Code version of the Licensed Software furnished to Company, but
only in conjunction with Company's use of the Hardware or the Documentation with
respect to which such Licensed Software was furnished. The duration of such
right to use shall last (i) with respect to Licensed Software furnished in
connection with Hardware, for the life of that Hardware as it may be repaired or
modified, and (ii) with respect to Licensed Software furnished in connection
with Documentation, for the duration of Company's right to use the
Documentation. Company shall be granted no title or ownership rights to the
Software, which rights shall remain in Nortel Networks or its suppliers.

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         11.3 As a condition precedent to this license and to the supply of
Software by Nortel Networks pursuant to this Agreement, Nortel Networks requires
Company to give proper assurances to Nortel Networks for the protection of the
Software. Accordingly, all Software supplied by Nortel Networks under or in
implementation of this Agreement shall be treated by Company as the exclusive
property, and as proprietary and a trade secret, of Nortel Networks and/or its
suppliers, as appropriate, and Company shall: (i) hold the Software, including,
without limitation, any methods or concepts utilized therein in confidence for
the benefit of Nortel Networks and/or its suppliers, as appropriate; (ii) not
provide or make the Software available to any person except to its employees on
a 'need to know' basis and then only under confidentiality obligations; (iii)
not reproduce, copy, or modify the Software in whole or in part except as
authorized by Nortel Networks; (iv) except as provided for under the Council of
the European Communities Directive on the legal protection of Computer Programs
dated the 14th of May, 1991 (91/250/EEC), not attempt to decompile, reverse
engineer, disassemble, reverse translate, or in any other manner decode the
Software; (v) issue adequate instructions to all persons, and take all actions
reasonably necessary to satisfy Company's obligations under this license; and
(vi) forthwith return to Nortel Networks, or with Nortel Networks' consent
destroy (a) upon termination of the license for any reason, or (b) upon receipt
of replacement, modified, or updated Software, any magnetic tape, disc,
semiconductor device or other memory device or system memory and/or
Documentation or other material regarding such Software, including, but not
limited to all printed material furnished by Nortel Networks to Company. An
appropriate officer or other authorized representative of Company shall certify
in writing to Nortel Networks that all copies of material in the possession or
control of Company have been destroyed as required in this Paragraph.

         11.4 The obligations of Company hereunder shall not extend to any
information or data relating to the Software which is now available to the
general public or becomes available by reason of acts or failures to act not
attributable to Company. If Company is required or requested in a legal,
judicial, or administrative proceeding, or otherwise by law, to disclose such
information or data, Company shall use reasonable efforts to provide prior
notice to Nortel Networks and allow Nortel Networks to seek protective or other
court or administrative orders, and Company shall to the extent of its ability
protest such required disclosure and request that all information or data so
disclosed be protect to the full extent possible as confidential and disclosed
only under restrictive circumstances and orders to ensure such continued
protection.

         11.5 Nortel Networks may issue updates to the Software from time to
time, and, upon Company's payment of applicable right to use fees, if any, shall
license such updates to Company. The right to use fees for such updates do not
include the price of any associated Hardware that may be required to use such
updates.

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         11.6 Unless agreed to in writing in advance by both Nortel Networks and
Company, which consent shall not be unreasonably withheld, neither Company nor
any successor to Company's title in the applicable Hardware shall have the right
to (i) assign this license as to the applicable Licensed Software to any other
person who acquires legal title to such Hardware; or (ii) sublicense the rights
herein granted as to such Licensed Software to any other person who subsequently
acquires the right to use such Hardware.

         11.7 Company shall indemnify and hold Nortel Networks and its
suppliers, as appropriate, harmless from any loss or damage resulting from a
breach of this Article 11. The obligations of Company under this Article 11
shall survive the termination of the Agreement and shall continue if the
Software is removed from service.

NON-LICENSED SOFTWARE

         11.8 Certain Software delivered by Nortel Networks may include
Non-Licensed Software. Non-Licensed Software includes (i) any Software for which
the applicable right to use fees have not been paid; and (ii) Software for which
a periodic right to use fee has expired and the applicable additional periodic
right to use fees have not been paid. Company shall submit to Nortel Networks an
Order for any Non-Licensed Software that Company desires to license or renew.

         11.9 When Non-Licensed Software is placed into service, even without
the submission of an Order, the applicable right to use fees shall be payable.
Company shall also have the option to pay the applicable right to use fees for
any Non-Licensed Software upon installation of a Software load containing such
Non-Licensed Software.

         11.10 To ensure Company's proper activation and/or usage of only the
appropriate Software, Company shall complete the appropriate form designated by
Nortel Networks prior to the activation and/or usage by Company of any
Non-Licensed Software. Company shall identify all Software desired to be
activated and/or used (including the number of lines or other units activated,
if applicable) in each System and shall transmit such fon-n to Nortel Networks.

         11.11 Nortel Networks shall promptly review any form submitted pursuant
to Section 11.10 and respond in writing, identifying whether (i) any applicable
prerequisite Hardware or Software is required by Company prior to activation
and/or usage of the applicable Software; or (ii) whether the use of such
Software requires Nortel Networks to determine whether the current System
configuration will require additional elements, such as Hardware, other hardware
and/or System memory, prior to activation and/or usage; or (iii) whether Company
can use such Software without the addition of any additional Hardware or
Software.

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         11.12 Nortel Networks reserves the right to access by remote polling
any site in which Software has been installed to determine which Software has
been activated. Such polling shall be done so as not to unreasonably interfere
with Company's use of the Products.

         11.13 Nortel Networks shall issue invoices to Company, in addition to
those amounts previously invoiced, for amounts found to be payable as a result
of Company's activation and/or usage of any Software which Nortel Networks
determines as a result of the remote polling of a site and for which Company has
not previously paid the appropriate right to use fees.

         11.14 The warranty period for Software activated later than the
original Ship Date of the Software load shall commence on the date the Software
feature's right to use fees have been paid by Company; or, Nortel Networks has
been notified by Company of activation of such feature; or, remote polling
indicates that such feature has been activated, whichever occurs first.

         11.15 Nortel Networks shall provide the Software support Services
specified in Article 10 or in a Services Annex or Statement of Work, provided
that Company operates the Software at Nortel Networks' current Software release
level or within at least two previous Software release levels, or as otherwise
specified in the Services agreement.

MODIFIABLE SOFTWARE

         11.16 Notwithstanding anything to the contrary above, upon payment to
Nortel Networks of the applicable fees, Nortel Networks hereby grants to
Company, subject to the applicable terms and conditions of this Article 11, a
personal, non-transferable, non-assignable and non-exclusive right and license
to modify and prepare derivative works based on Licensed Software which Nortel
Networks identifies as Modifiable Software. Upon the modification or creation of
any Applications, or the modification or creation of any Building Blocks, Nortel
Networks shall have no obligations with regard to warranty under Article 9 or
indemnity under Article 14 for such Applications or Building Blocks.

         11.17 Nothing contained in Sections 11.16 through 11.20 shall transfer,
or be deemed to transfer, or contemplate the transfer of, any rights in or to
the Software other than those rights specifically granted herein, and in
particular but without restricting the generality of the foregoing, Nortel
Networks does not in any way transfer any right, title or interest in or to the
Software or any element constituting a portion thereof to Company, other than
the right of Company to modify, create, or prepare derivative works based on
Building Blocks and Applications.

         11.18 For any Building Blocks and Applications created solely by
Company, and for all Company-modified portions of the Nortel Networks-provided
Building Blocks with respect to

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such modified portion only, Company shall own all forms of intellectual property
rights (including but not limited to patent, trade secret, copyright and mask
rights) pertaining to such Applications, Building Blocks or portions thereof and
shall have the right to file for or otherwise secure and protect such rights.
For all such Company created Applications or Building Blocks, or modified
portions of Building Blocks, the parties shall, on a case by case basis,
negotiate in good faith to determine whether Company may desire to license any
such Applications or Building Blocks to Nortel Networks, such license to be at
no charge to Nortel Networks as long as Company is licensed hereunder.

         11.19 For any Applications created solely by Nortel Networks and for
the Nortel Networks- provided Building Blocks, Nortel Networks shall own all
forms of intellectual property rights (including but not limited to patent,
trade secret, copyright and mask rights) pertaining to such Applications or
Building Blocks and shall have the right to file for or otherwise secure and
protect such rights. For all such Nortel Networks Applications or Building
Blocks, Company may license any such additional Nortel Networks Products upon
Nortel Networks making such software generally available to its customers.

         11.20 In the event that Company and Nortel Networks intend to jointly
create Applications or Building Blocks, the parties shall mutually agree in
writing as to applicable terms and conditions.

SERVICES SOFTWARE

         11.21 With respect to Services Software, Company shall: (i) utilize
such Services Software and the results thereof solely for the purposes described
in Section 1.34; and (ii) comply with additional terms, if any, applicable to
such Services Software as specified in a Product Annex. Nortel Networks may, at
any time and without liability or obligation to Company, modify the Services
Software, any computer equipment of Nortel Networks or suppliers used in
connection with such Services Software, and identification codes, manuals or
other information or Documentation used in connection with the Services
Software.

         11.22 SERVICES SOFTWARE IS PROVIDED AS IS AND WITHOUT WARRANTY OR
CONDITION OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO,
THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
NORTEL NETWORKS DOES NOT AND CANNOT WARRANT THE PERFORMANCE OR RESULTS THAT MAY
BE OBTAINED BY USING SERVICES SOFTWARE. COMPANY ASSUMES SOLE RESPONSIBILITY FOR
THE SELECTION OF THE SERVICES SOFTWARE TO ACHIEVE COMPANY'S INTENDED RESULTS,
AND FOR THE INSTALLATION, USE, AND RESULTS OBTAINED FROM THE SERVICES

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SOFTWARE. IN NO EVENT SHALL NORTEL NETWORKS BE LIABLE FOR ANY INDIRECT,
INCIDENTAL, SPECIAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES, INCLUDING WITHOUT
LIMITATION, LOST REVENUES OR PROFITS OR OTHER ECONOMIC LOSS, OF ANY NATURE
WHATSOEVER ARISING OUT OF COMPANY'S USE OF SERVICES SOFTWARE.

12       HOMOLOGATION AND CERTIFICATION

         12.1 Nortel Networks hereby warrants that it will comply with the
homologation requirements for a Product, unless otherwise specified in a Product
Annex, in each of the countries set forth on Exhibit D.

         12.2 In the event that Nortel Networks or a Nortel Networks Affiliate
has complied or complies in the future with the homologation requirements for a
Product in any country not set forth on Exhibit D, Nortel Networks shall, to the
extent of its legal right to do so, grant Company the right to use the results
of such homologation. Any costs arising from such grant shall be subject to
agreement by the parties prior to such grant being made.

13       INTELLECTUAL PROPERTY RIGHTS

         13.1 The Services performed by Nortel Networks and its Affiliates
pursuant to this Agreement (and any deliverables provided to Company in
connection therewith) are not "works for hire".

         13.2 All Background IPR of a party or its Affiliate shall remain the
exclusive property of such party or its Affiliate, and the information contained
therein shall be deemed to be Confidential Information of such party or its
Affiliate.

         13.3 With respect to any Background IPR of Company disclosed to Nortel
Networks, its Affiliates, and/or its contractors in connection with this
Agreement, Company hereby grants to Nortel Networks, Nortel Networks'
Affiliates, and Nortel Networks' contractors a nonexclusive, royalty-free,
worldwide right to make, use, and reproduce such Background IPR, but only to the
extent that such right is necessary for the performance of Nortel Networks'
obligations under this Agreement and the Services contemplated hereunder.

         13.4 With respect to any Foreground IPR of Nortel Networks and its
Affiliates which is incorporated or contained within, or which is required for
the implementation of, any recommendation(s) or conclusion(s) advanced by Nortel
Networks in the course of performing Services under this Agreement, Nortel
Networks hereby grants to Company a non-exclusive, royalty-free, worldwide right
to use and disclose such Foreground IPR, but only to the extent

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necessary for Company to implement such recommendation(s) or conclusion(s) in
the implementation, operation and maintenance of Company's communications
network or in Company's provision of communications services.

         13.5 With respect to any Background IPR of Nortel Networks and its
Affiliates which is incorporated or contained within, or which is required for
the implementation of, any recommendation(s) or conclusion(s) advanced by Nortel
Networks in the course of performing Services under this Agreement, Nortel
Networks will grant to Company, upon reasonable commercial terms, a
non-exclusive, worldwide right to use and disclose such Background IPR, but only
to the extent necessary for Company to implement such recommendation(s) or
conclusion(s) in the implementation, operation and maintenance of Company's
communications network or in Company's provision of communications services.
Notwithstanding the foregoing, the grant to Company of rights in the Background
IPR of Nortel Networks and its affiliates shall not include product design
information of Nortel Networks and its Affiliates, but shall be limited to that
Background IPR within the scope of the technical information to be included
within the deliverables.

         13.6 Prior to disclosing to any third party any Foreground IPR or
Background IPR of Nortel Networks and its Affiliates pursuant to Sections 13.2
or 13.5, Company shall (i) advise such third party in writing of the
confidential and proprietary nature and the limitations on use of the
information to be disclosed, as set forth in Sections 13.4 and 13.5, and shall
(ii) obtain from such third party a written undertaking to respect such
obligations.

         13.7 Nothing contained in this Agreement shall transfer, or be deemed
to transfer or contemplate the transfer of, any Intellectual Property Right
other than those rights specifically granted herein, and in particular but
without restricting the generality of the foregoing, Nortel Networks does not in
any way grant any license in, to, or under any of its Intellectual Property
Rights.

         13.8 Nothing contained in this Agreement shall prevent, or be deemed to
prevent, Nortel Networks or its Affiliates from providing to any third party the
same or similar Services (including the same or similar recommendations or
conclusions) as may be provided to Company pursuant to this Agreement.

14       LIABILITY FOR BODILY INJURY, PROPERTY DAMAGE AND PATENT
         INFRINGEMENT

         14.1 A party hereto shall defend the other party against any suit,
claim, or proceeding brought against the other party for direct damages due to
bodily injuries (including death) or damage to tangible property which allegedly
result from the defending party's negligence or

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willful misconduct in the performance of this Agreement. The defending party
shall pay all litigation costs, reasonable attorney's fees, settlement payments
and such direct damages awarded or resulting from any such suit, claim or
proceeding. Nortel Networks' responsibility in respect of each Contract, except
in respect of death or personal injury, whether in contract or tort or resulting
from Nortel Networks' proven negligent acts or omissions, shall not exceed One
Million Dollars ($1,000,000.00) for any one or more separate claims having the
same cause or attributable to the same event or occurrence. Nortel Networks
shall at all times during the continuance of this Contract maintain insurance
against such liabilities.

         14.2 Nortel Networks shall defend Company against any suit, claim or
proceeding brought against Company alleging that the sale to, or use by Company
of, any Products excluding Third Party Hardware or Third Party Software,
furnished hereunder infringes any patent, trademark, trade secret or copyright
("Infringement Claim"). Nortel Networks shall pay, subject to Section 14.3
below, all litigation costs, reasonable attorney's fees, settlement payments and
damages awarded or resulting from any such suit, claim or proceeding. With
respect to Third Party Hardware or Third Party Software, Nortel Networks shall
assign any rights with respect to infringement of patents granted to Nortel
Networks by the supplier of such items to the extent of Nortel Networks' right
to do so.

         14.3 Except as provided for in Section 14.1, Nortel Networks'
cumulative liability, pursuant to this Article 14 and including its costs and
expenses incurred in satisfying its obligations set forth below, shall not
exceed one hundred fifty percent (150%) of the purchase price of the Products or
Services giving rise to the Infringement Claim.

         14.4 Nortel Networks shall have no liability, in respect of any
Infringement Claim based on the use of a Product where such claim arises from a
Product that: (i) is manufactured, designed or supplied by Nortel Networks in
accordance with any design or any special instruction furnished by Company; (ii)
is used by Company in a manner or for a purpose not contemplated or authorized
by this Agreement; (iii) is used by Company in combination with other products
not provided by Nortel Networks, including, without limitation, any software
developed solely by Company through the permitted use of Products furnished
hereunder, provided that the Infringement Claim arises from such combination or
the use thereof, (iv) is modified by Company where such modification is not
authorized by Nortel Networks; or (v) is used or located by Company in a
location other than the location in which and for which it was supplied by
Nortel Networks. In the excepted cases stated above, Company shall indemnify and
hold Nortel Networks harmless against any loss, cost, expense, damage,
settlement or other liability, including, but not limited to, attorneys' fees,
which may be incurred by Nortel Networks with respect to any suit, claim, or
proceeding described in this Section 14.5.

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         14.5 Nortel Networks shall not be liable for, and Company shall
indemnify Nortel Networks in respect of, any damages awarded based on Company's
willful, knowing or deliberate infringement of a patent, copyright, trade
secret, trademark or other proprietary right where such infringement results in
a pecuniary damage award.

         14.6 Nortel Networks may provide Company with notice of an actual or
potential Infringement Claim. Nortel Networks shall consult with Company
regarding the Infringement Claim and the course of action to be pursued as a
result thereof. In the event that the parties fail to agree on a satisfactory
course of action for dealing with the matter, Company may either: (i) return to
Nortel Networks the affected portion of the Product(s) or deliverables in return
for a refund of the depreciated value (as carried on the books of Company) of
the Product(s) or deliverables so returned; or (ii) continue to use the
Product(s), Services or deliverables at Company's own risk. Nortel Networks
shall not be liable for, and Company shall indemnify Nortel Networks in respect
of any Infringement Claim(s) where Nortel Networks has provided notice to
Company of the Infringement Claim(s) and Company elects to continue its use of
the Product(s) or deliverable related to or covered by the Infringement Claim.

         14.7 If as a result of an Infringement Claim, other than those
contemplated in Section 14.6(i) and 14.6(ii) above, an injunction is obtained
against Company's use of any Product(s) Service(s) or deliverable(s) Nortel
Networks shall, at Nortel Networks' option: (i) procure for Company the right to
continue using the alleged infringing Product(s), Service(s) or deliverable(s);
(ii) replace or modify the same with equivalent or better Product(s), Service(s)
or deliverable(s) so that Company's use is non-infringing; or (iii) accept
return of the affected portion of the Product(s) or deliverable(s) and refund to
Company the purchase price of such Product(s) or deliverable(s) upon the
Products return.

         14.8 The defense of any claim which is predominantly covered by the
provisions of this Agreement shall be controlled by the party upon whom the
majority of the ultimate liability is likely to be imposed. Such controlling
party shall give the other party a reasonable opportunity to participate in
negotiation or defense of the claim so that such other Party may reasonably
protect its own interests. Neither Party shall be liable for any settlement
obligation incurred without its written consent.

         14.9 Company shall waive any and all claims that Company may have
against Nortel Networks that Company may have due to any use by Company of
Modifiable Software and any modification Company may have made to a Product
where such modification may have given rise to such claim. Further, Company
shall be responsible for any additional hardware, software or services required
as a result of such use.

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         14.10 THE REMEDIES SET FORTH IN THIS ARTICLE 14 ESTABLISH THE ENTIRE
OBLIGATION OF THE PARTIES IN REGARD TO CLAIMS RELATING TO INTELLECTUAL PROPERTY
RIGHTS INCLUDING CLAIMS DIRECTED TO THE INFRINGEMENT OF PATENTS, COPYRIGHT,
TRADE SECRETS AND OTHER PROPRIETARY RIGHTS. IN NO EVENT SHALL EITHER PARTY BE
LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES,
INCLUDING WITHOUT LIMITATION, LOST REVENUES OR PROFITS OR OTHER ECONOMIC LOSS OF
ANY NATURE WHATSOEVER, ARISING FROM SUCH INFRINGEMENT CLAIMS AND/OR RELATED
MATTERS, OTHER THAN AS SPECIFICALLY SET FORTH HEREIN.

15       REMEDIES AND LIMITATION OF LIABILITY

         15.1 Nortel Networks shall have the right to suspend its performance,
upon written notice to Company, and forthwith remove and take possession of all
Products or deliverables that have been delivered to Company, if, prior to
payment to Nortel Networks of any amounts due pursuant to this Agreement with
respect to such Products or Services, Company shall (i) become insolvent or
bankrupt or cease, be unable, or admit in writing its inability, to pay all
debts as they mature, or make a general assignment for the benefit of, or enter
into any arrangement with, creditors; (ii) authorize, apply for, or consent to
the appointment of, a receiver, trustee, or liquidator of all or a substantial
part of its assets or have proceedings seeking such appointment commenced
against it which are not terminated within sixty (60) days of such commencement;
or (iii) file a voluntary petition under any bankruptcy or insolvency law or
under the reorganization or arrangement provisions of the United States
Bankruptcy Code or any similar law of any jurisdiction or have proceedings under
any such law instituted against it which are not terminated within sixty (60)
days of such commencement.

         15.2 In the event of any material breach of this Agreement which shall
continue for thirty (30) or more days after written notice of such breach
(including a reasonably detailed statement of the nature of such breach) shall
have been given to the breaching party by the aggrieved party, the aggrieved
party shall be entitled at its option to avail itself of any and all remedies
available at law or equity, except as otherwise limited in this Agreement;
provided however, that nothing contained in Section 15.2 or elsewhere in this
Agreement shall make Nortel Networks liable for any indirect, incidental,
punitive, special or consequential damages of any nature whatsoever for any
breach of this Agreement whether the claims for such damages arise in contract,
or otherwise.

         15.3 Nortel Networks shall not be liable for any additional costs,
expenses, losses or damages resulting from errors, acts or omissions of Company,
including, but not limited to, inaccuracy, incompleteness or untimeliness in the
provision of information by Company to

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Nortel Networks or fulfillment by Company of any of its obligations under this
Agreement. Company shall pay Nortel Networks the amount of any such costs,
expenses, losses or damage incurred by Nortel Networks.

         15.4 Any action for breach of this Agreement or to enforce any right
hereunder shall be commenced within two (2) years after the cause of action
accrues or it shall be deemed waived and barred, except any action for
nonpayment by Company of any prices, charges, fees or other amounts payable
hereunder may be brought by Nortel Networks at any time permitted by applicable
law, and Nortel Networks may suspend performance of any of its obligations
hereunder until all such payments are made.

16       TERM AND TERMINATION

         16.1 This Agreement will be in effect from the Effective Date for a
period of three (3) years (the "Original Term"). Thereafter, this Agreement
shall automatically renew for one (1) year terms (each, a "Renewal Period" and
collectively and together with the Original Term, the "Term"), unless either
party provides the other party with written notice of its intent not to renew at
least sixty (60) days prior to the end of the Original Term or any Renewal
Period.

         16.2 Either party may delay performance under this Agreement or
terminate this Agreement, in whole or in part, in the event of a default by the
other, provided that the non-defaulting party so advises the defaulting party in
writing of the event of alleged default and the defaulting party does not remedy
the alleged default within thirty (30) days after written notice thereof. If the
alleged default is not capable of being remedied within thirty (30) days, the
defaulting party must commence to remedy the alleged default within such thirty
(30) day period and provide to the non-defaulting party a plan for timely
remedying the alleged default in order to avoid termination. A default shall
include:

                  (i)      a party's insolvency or initiation of bankruptcy or
                           receivership proceedings by or against a party or the
                           execution of an assignment for the benefit of
                           creditors; or

                  (ii)     either party's material breach of any of the terms or
                           conditions hereof including the failure to make any
                           payment when due.

         16.3 The expiration or termination of this Agreement for any cause
shall not release either party from:

                  (i)      any obligations and duties remaining under any Order
                           accepted by Nortel Networks prior to such expiration
                           or termination, except that Nortel

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                           Networks shall not be required to fulfil the Order if
                           the termination is due to a breach or default by
                           Company;

                  (ii)     any liability which at the time of expiration or
                           termination has already accrued to the other party,
                           or, which thereafter may accrue in respect to any
                           event prior to expiration or termination; or

                  (iii)    any liability from any obligation specified in
                           Section 18.18 below to survive expiration or
                           termination.

         16.4 Notwithstanding the foregoing, Nortel shall not be obligated to
provide any Services pursuant to this Agreement after termination of this
Agreement. Company shall pay the full price for Services performed prior to the
Effective Date of termination plus the costs to Nortel of, and necessarily
incidental to, termination, including such other costs, charges or expenses for
which Nortel has the right to reimbursement hereunder. Termination of this
Agreement shall not entitle Company to withhold payment of any amount due or
accruing to Nortel hereunder prior to the effective date of termination, or to
reimbursement of any amount previously paid to Nortel.

17       MISCELLANEOUS

         17.1 Each party which receives the other party's Confidential
Information shall use reasonable care to hold such Confidential Information in
confidence and not disclose such Confidential Information to anyone other than
to its employees and employees of a Company Affiliate or a Nortel Networks
Affiliate, as applicable, with a need to know. A party that receives the other
party's Confidential Information shall not reproduce such Confidential
Information, except to the extent reasonably required for the performance of its
obligations pursuant to this Agreement and in connection with any permitted use
of such Confidential Information.

         17.2 Company shall take reasonable care to use Nortel Networks'
Confidential Information only for study, operating, or maintenance purposes in
connection with Company's use of Products and/or Services furnished by Nortel
Networks pursuant to this Agreement.

         17.3 Notwithstanding the foregoing, either party shall be free to use
that portion of the Confidential Information which may be retained in intangible
form by those employees who have had access to the Confidential Information, for
any purpose, including use in the development, manufacture, marketing and
maintenance of its products and services. The marketing of any product or
service, including the dissemination of supporting documentation, which
inherently discloses the disclosing party's Confidential Information shall not
be deemed a

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breach by the recipient of such obligations; provided however, that ownership of
the Confidential Information and all intellectual property rights to such
Confidential Information remain with the disclosing party.

         17.4 The obligations of either party pursuant to this Article 17 shall
not extend to any Confidential Information which a recipient can demonstrate
through written documentation was already known to the recipient prior to its
disclosure to the recipient and without confidential obligations was known or
generally available to the public at the time of disclosure to the recipient,
becomes known or generally available to the public (other than by act of the
recipient) subsequent to its disclosure to the recipient, is disclosed or made
available in writing to the recipient by a third party having a bona fide right
to do so and without similar confidentiality obligations, is independently
developed by recipient, or is required to be disclosed by subpoena or other
process of law, provided that the recipient shall notify the disclosing party
promptly of any such subpoena or other process of law requiring disclosure and
shall take steps to ensure the continued confidentiality of the Confidential
Information or shall allow the disclosing party to do so.

18       MISCELLANEOUS

         18.1 PUBLICITY - A party shall not release any advertising or other
publicity relating to this Agreement or the contents hereof wherein such other
party may reasonably be identified without the prior written approval of the
other party. In addition, each party shall take reasonable precautions to keep
the existence and the contents of this Agreement confidential so long as this
Agreement remains in effect and for a period of five (5) years thereafter,
except as may be otherwise expressly provided in this Agreement or as may be
reasonably required to enforce this Agreement by law.

         18.2 APPLICABLE LAW - The validity, construction and performance of
this Agreement shall be governed by and interpreted in accordance with the laws
of the State of New York, without giving effect to the principles of conflict of
laws thereof except to the extent that any mandatory provisions of local law in
any country take precedence over the provisions of this Agreement and New York
law. The United Nations convention on Contracts for the International Sale of
Goods shall not apply to this Agreement. The parties agree that when a Contract
is executed and performed by their respective Affiliates in the same country
outside the United States, the law for that country shall apply to such
Contract.

         18.3 EFFECTS OF HEADINGS - All headings used herein are for index and
reference purposes only, and shall not be given any substantive effect. This
Agreement has been created jointly by the parties and no rule of construction
requiring interpretation against the drafter of this Agreement shall apply in
its interpretation.

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         18.4 ASSIGNMENT. - Notwithstanding anything in this Agreement to the
contrary, either party may assign or transfer this Agreement or any of its
rights hereunder with the prior written consent of the other party, such consent
not to be unreasonably withheld. A change in control of Company, including but
not limited to if ownership or control of more than fifty percent (50%) of the
shares of the Company entitled to elect the board of directors changes during
the Term of this Agreement, shall be deemed an assignment hereunder. Nortel
Networks consent shall not be required for any assignment or transfer by Company
to any of its Affiliates listed on Exhibit C to this Agreement. Company's
consent shall not be required for any assignment or transfer by Nortel Networks
(i) to any Nortel Networks Affiliate of all or any part of this Agreement or of
Nortel Networks' rights hereunder; or (ii) to any third party of Nortel
Networks' right to receive any monies ("Receivables") which may become due to
Nortel Networks pursuant to this Agreement. Company hereby consents to the sale
of Receivables by Nortel Networks without the necessity for any further notice
and without any qualification on such consent. Company grants permission for
Nortel Networks to disclose the provisions of this Agreement to purchasers and
prospective purchasers of Receivables, or their affiliates and others with a
present or prospective financial interest in such Receivables, and their
respective agents, attorneys, auditors, rating agencies and other advisors.

         18.5 SUBCONTRACTING - Nortel Networks may subcontract any of its
obligations under this Agreement, but no such subcontract shall relieve Nortel
Networks of primary responsibility for performance of its obligations.

         18.6 NON-WAIVER - The failure by either party hereto at any time to
require performance by the other party or to claim a breach of any provision of
this Agreement shall not be construed as affecting any subsequent breach or the
right to require the performance with respect thereto or to claim a breach with
respect thereto.

         18.7 RELATIONSHIP OF THE PARTIES - The provisions of this Agreement
shall not be construed to establish any form of partnership, agency or joint
venture of any kind between Nortel Networks and Company, nor to constitute
either party as the agent, employee or legal representative of the other. To the
extent Nortel Networks provides Services under this Agreement, those Services
are provided as an independent contractor. All persons fumished by either party
to accomplish the intent of this Agreement shall be considered solely as the
furnishing party's employees or agents and the furnishing party shall be solely
responsible for compliance with respect to its employees with all laws, rules
and regulations involving, but not limited to, employment of labor, hours of
labor, working conditions, workers' compensation, payment of wages, and
withholding and payment of applicable taxes, including, but not limited to
income taxes, unemployment taxes, and social security taxes.

                                      -39-
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                                                                         Arbinet
                                                                            GPSA

         18.8 FORCE MAJEURE - If the performance by a party of any of its
obligations under this Agreement shall be interfered with by reason of any
circumstances beyond the reasonable control of that party, including without
limitation, fire, explosion, acts of God, war, revolution, civil commotion,
unavailability of supplies or sources of energy, power failure, breakdown of
machinery, delays regarding zoning, easements or deed restrictions, any legal
proceedings between parties unrelated to the parties hereto or labor
difficulties, including without limitation, strikes, slowdowns, picketing or
boycotts, then that party shall be excused from such performance for a period
equal to the delay resulting from the applicable circumstances and such
additional period as may be reasonably necessary to allow that party to resume
its performance. With respect to labor difficulties as described above, a party
shall not be obligated to accede to any demands being made by employees or other
personnel.

         18.9 TAXES - Company shall at Nortel Networks' direction promptly
reimburse Nortel Networks or pay directly to the applicable government or taxing
authority all taxes and charges arising hereunder, including, without
limitation, penalties and interest, except for taxes computed upon the net
income of Nortel Networks. If Company provides Nortel Networks with a
certificate of exemption for the applicable taxes, in a timely manner, then
Nortel Networks shall not invoice Company for such taxes.

         18.10 HAZARDOUS MATERIALS - Prior to issuing any Order for Services to
be performed at Company's facilities, Company shall identify and notify Nortel
Networks in writing of the existence of all Hazardous Materials which Nortel
Networks may encounter during the performance of such Services, including
without limitation, any Hazardous Materials contained within any equipment to be
removed by Nortel Networks.

If Company breaches its obligations pursuant to this Section 18.10, (i) Nortel
Networks may discontinue the performance of the applicable Services until all
the Hazardous Materials have been removed or abated to Nortel Networks'
satisfaction by Company at Company's sole expense; and (ii) Company shall
defend, indemnify and hold Nortel Networks harmless from any and all damages,
claims, losses, liabilities and expenses, including without limitation,
attorney's fees, which arise out of Company's breach of such obligations.

         18.11 NOTICE-All notices required or permitted to be given here under
shall be in writing and shall be deemed given when delivered (i) by hand; or
(ii) by facsimile, transmission

                                      -40-
<PAGE>

                                                                         Arbinet
                                                                            GPSA

(confirming the same by mail); or (iii) by certified, return receipt, or
next-day mail, or courier service, addressed as follows:

If to Company:
         Arbinet Holdings Corporation
         226 East 54th Street, Suite 200
         New York, New York 10022
         Attention:
         Facsimile:

If to Nortel Networks:
         Nortel Networks Inc.
         2350 Lakeside Boulevard
         Richardson, Texas 75082-4399
         USA
         Attention: Senior Manager, Contracts Mgmt & Negotiations
         Facsimile: (972) 685-3284

Either party hereto may change its address by a notice given to the other party
hereto in the manner set forth above.

         18.12 INFORMATION AND DOCUMENTATION - Company shall provide any
information and/or documentation that Nortel Networks reasonably requests from
Company and that is necessary for Nortel Networks to properly perform any of its
obligations hereunder. Such information shall be provided in a form reasonably
specified by Nortel Networks by the dates specified by Nortel Networks.

         18.13 EXPORT - Company shall not export any Products or technical data
received from Nortel Networks pursuant to this Agreement, or release any such
Products or technical data with the knowledge or intent that such Products or
technical data will be exported or transmitted to any country or to foreign
nationals of any country, except in accordance with applicable laws and
regulations of the U.S. or Canada concerning the exporting of such items and
with Nortel Networks' prior written consent for these countries or other such
jurisdiction affecting the Products. Company shall obtain all appropriate
government authorizations in accordance with applicable law prior to exporting
or transmitting any such Products or technical data. Nortel Networks will
provide such assistance as Company reasonably requests to obtain such
authorizations.

                  18.13.1 Nortel Networks acknowledges that the transfer of
         Systems or components thereof, and associated documentation, outside of
         the United States may be

                                      -41-
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                                                                         Arbinet
                                                                            GPSA

         subject to the specific approval of the applicable Software suppliers
         and other suppliers. All such approvals, if applicable, shall be
         conditions precedent to any of the obligations of Nortel Networks
         hereunder respecting such Systems or component thereof and associated
         documentation. To the extent any such conditions exist, they shall be
         listed in the applicable Product Annex.

                  18.13.2 Nortel Networks hereby agrees that its shareholders,
         directors, officers, employees, agents or contractors of Nortel
         Networks will not make, authorize or offer, or cause to be made or
         offered, any payment, loan or gift of money or anything of value
         directly or indirectly to: (i) any official or employee of any
         government, or agency or instrumentality thereof; (ii) any political
         Party or official thereof or any candidate for political office; or
         (iii) any person; under circumstances in which the shareholders,
         directors, officers, employees, agents or contractors of Nortel
         Networks know, or have reason to know, that all or any portion of such
         money or thing of value will be offered or given, directly or
         indirectly, to any person named in clauses (i) and (ii) above to
         influence a decision or to gain any advantage to Nortel Networks or its
         shareholders, directors, officers, employees, agents or subcontractors,
         or to retain business for or with, or directing business to, Nortel
         Networks, or in connection with any transaction relating to this
         Agreement which could result in a violation of the Foreign Corrupt
         Practices Act, as amended and any other law, regulation, order, decree
         or directive having the force of law and relating to bribery,
         kick-backs, or similar business practices. For purposes of this
         Agreement, the term "official" shall mean and include any employee or
         officer in public service or in the private sector, any employee or
         official of any governmental or quasi governmental department, agency
         or instrumentality thereof, or any person or entity acting in an
         official capacity for on behalf of any such government or department,
         agency or instrumentality.

                  18.13.3 Each Party shall take all required or advisable steps
         to ensure that, for the duration of this Agreement, it remains a
         company in good standing, duly organized, registered and existing under
         the laws of each country in which it is undertaking its obligations
         hereunder, as well as any other applicable regional and local
         jurisdiction.

         18.14 SEVERABILITY - If any provision of this Agreement is declared or
judicially determined to be invalid or unenforceable under applicable law, the
remaining provisions shall continue in full force and effect and the parties
shall substitute for the invalid provision a valid provision which most closely
approximates the economic effect and intent of the invalid provision.

         18.15 ENTIRE AGREEMENT - This Agreement, including the Exhibits and
Annexes which are attached hereto and incorporated herein, comprises all the
terms, conditions and agreements

                                      -42-
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                                                                         Arbinet
                                                                            GPSA

of the parties hereto with respect to the subject matter hereof and supersedes
all previous negotiations, proposals, commitments, writings, publications and
understandings of any nature whatsoever. The parties hereto hereby acknowledges
and agrees that it has not relied on any representations or warranties other
than those expressly set forth in this Agreement.

         18.16 MODIFICATION OF AGREEMENT - No addition to or modification of
this Agreement, including Exhibits, Schedules, or Annexes, shall be effective or
binding on either of the parties hereto unless reduced to writing and executed
by the respective duly authorized representatives of each of the parties hereto.

         18.17 REGULATORY COMPLIANCE - In the event of any change in the
Specifications or Nortel Networks' manufacturing or delivery processes for any
Products as a result of the imposition of requirements by any government, Nortel
Networks may upon notice to Company, increase its prices, charges and fees to
cover the added costs and expenses directly and indirectly incurred by Nortel
Networks as a result of such change.

         18.18 SURVIVORSHIP - Any terms of this Agreement which by their nature
are intended to survive including but not limited to those Articles titled
"Price and Payment", "Warranty," "Intellectual Property Rights," "Liability for
Bodily Injury, Property Damage and Patent Infringement," "Remedies and
Limitation of Liability," "Confidentiality," and "Miscellaneous," as well as
Sections 11.2, 11.3, 11.16, 13.3, 13.5 and 16.3, shall survive the termination
or expiration of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement.

NORTEL NETWORKS INC.                      ARBINET HOLDINGS CORPORATION

By:    /s/ Jeff Kirchner                  By:    /s/ Rachelle E. Rees McCarthy
       --------------------------------          -------------------------------
Name:  Jeff Kirchner                      Name:  Rachelle E. Rees McCarthy
       --------------------------------          -------------------------------
Title: Vice President                     Title: COO
       --------------------------------          -------------------------------
Date:  28 Oct 99                          Date:  10/19/99
       --------------------------------          -------------------------------

                                      -43-
<PAGE>

                                                                         ARBINET
                                                               PRODUCT ANNEX A.1
                                                                    ATTACHMENT 1

                                    EXHIBIT A

                                PRODUCT ANNEX A.1

                            CARRIER NETWORKS PRODUCTS

The supplemental terms and conditions provided below take precedence over any
conflicting terms and conditions specified, in the Sections noted below or
elsewhere, in the Agreement as such terms and conditions apply to the DMS-250,
DMS-300, DMS300/250, DMS-500 or DMS-GSP Products ("Carrier Networks Products").

ARTICLE 2, SECTION 2.1

With regard to the scope of the Agreement, the following shall apply:

         2.1.1. Within the first year of the Original Term, Company commits to
         purchase and/or license, as applicable, and take delivery of the
         Products described in Attachment 1, Part I (DMS-GSP Initial Systems)
         and Part III (DMS-GSP Initial System Standard/Additional Software
         Features), in a minimum dollar amount of Seven Million Six Hundred
         Twenty Seven Thousand Five Hundred Seventy Two Dollars ($7,627,572.00)
         (the "Initial Commitment Amount"), which amount shall include without
         limitation no less than three (3) DMS-GSP Initial Systems as described
         in Attachment 1, Part I. The prices, charges and fees for the Products
         shall be paid in accordance with Article 4 of the Agreement.

         2.1.2 Company may issue Orders for additional ports to be added to an
         Initial System ("Extension Orders") after the Ship Date for such
         System. If Company issues an Extension Order before the Turnover Date
         for such System, the first Extension Order shall be priced at Add-On
         prices described in Part III, Section III.1.2 If Company issues an
         Order for additional ports to be added to an Initial System after the
         Turnover Date for such System, the Order shall be priced at Extension
         pricing.

         2.1.3 Company may purchase Optional Software described in this
         Agreement, or other Software not described in this Agreement based upon
         a Firm Quotation for such Software. If the Optional Software is
         purchased for installation in an Initial System prior to the Turnover
         Date for such System, the Company will be entitled to a software
         discount of seventy percent (70%) off the list price for such Software.
         If Company issues an Order for Optional Software after the Turnover
         Date for the Initial System in which the Software is to be installed,
         the Company shall be entitled to a discount of thirty

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                                                                    ATTACHMENT 1

         percent (30%) off the list price for such Software. The Firm Quotation
         shall reflect the list price less the applicable discount.

ARTICLE  2, SECTION 2.3

With regard to the subject of forecasts, the following shall apply:

         Company shall submit a non-binding forecast to Nortel, in accordance
         with Section 2.3 of the Agreement as set forth in Attachment 2 to this
         Annex A.1.

ARTICLE 2, SECTION 2.6

With regard to the subject of joint advertising, the following shall apply:

         2.6 During the Original Term of this Agreement, each party commits to
         pay Fifty Thousand Dollars ($50,000.00) for the purpose of jointly
         undertaking a cooperative marketing and joint advertising campaign. The
         parties shall mutually agree on the content and placement of such
         cooperative marketing and advertising. Each party agrees to make an
         expenditure of Fifty Thousand Dollars ($50,000.00) during the calendar
         year 2000 for such cooperative marketing and joint advertising. Fifty
         percent (50%) of the total amount to be expended by Nortel during the
         calendar year of 2000 shall be available six (6) months after Nortel's
         receipt of Company's Order for the first DMS-GSP Initial System
         purchased hereunder.

ARTICLE 7, SECTION 7.3

With regard to the subject of Company performing installation of any of the
Carrier Networks Products, the following shall apply:

         Company shall not have the right to perform installation Services.

ARTICLE 10, SECTION 10.1

With regard to the subject of Training Credits, the following shall apply:

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                                                               PRODUCT ANNEX A.1
                                                                    ATTACHMENT 1

         With the DMS-GSP Initial System purchased for New York hereunder,
         Nortel shall provide to Company a total of one hundred (100) student
         training days. With each DMS-GSP Initial System purchased hereafter,
         Nortel shall provide to Company a total of fifty (50) student training
         days, in accordance with Nortel's procedures related thereto.

ARTICLE 10, SECTION 10.5

With regard to the subject of Nortel Networks additional obligations, the
following shall apply:

"Nortel Networks shall cooperate with Company and Company's Third Party
Vendor(s) (approved by Nortel Networks) with respect to Company's network
management systems and customization of Company's CDR requirements. Upon
reasonable written notice to Nortel and the execution of a Non-Disclosure
Agreement between Nortel Networks, Company, and Company's Third Party Vendor,
Nortel Networks shall allow access to Nortel's test lab to Company's
representatives. If Company or its Third Party Vendor requests Nortel Networks'
personnel to perform substantial work or if such lab access is requested for an
extended period of time, Nortel Networks may, at its option, invoice Company for
reasonable costs and expenses associated with such lab access. If Company or its
representatives request Nortel Networks to undertake research or development of
Hardware or Software for Company's use, then Nortel shall provide a Firm Quote
to Company for such work."

ARTICLE 11, SECTION 11.5

With regard to the subject of Software updates, the following shall apply:

         Nortel shall classify such updates as either (i) incremental Software
         upgrades ("ISUs"), designed to correct any nonconformance to the
         applicable Software specifications; or (ii) enhancements which will
         provide additional features or functionality ("Enhancements"). Updates
         classified as ISUs by Nortel will be provided at no cost to Company
         during the warranty period for such Licensed Software. Updates
         classified as Enhancements by Nortel will be made available to Company
         at Nortel's applicable right to use fees. In the event that Nortel
         determines that an update includes both ISUs and Enhancements, such
         update shall be made available to Company. If Company elects to receive
         the update, Nortel shall invoice Company only for the right to use fees
         applicable to the Enhancements contained in such update.
         Notwithstanding the foregoing, Company shall be provided Software
         defect corrections ("Bug Fixes") at no additional charge.

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                                                               PRODUCT ANNEX A.1
                                                                    ATTACHMENT 1

ARTICLE 11, SECTION 11.5.

With regard to the subject of Software upgrades, the following shall apply:

         "11.5.1 Notwithstanding Part II, Section II.1.1 of Attachment 1 to this
         Product Annex A.1, DMS-GSP Initial Systems ordered hereunder shall be
         delivered with the then-current generally available base Software load.
         Additionally, Nortel shall provide to Company, at no additional charge,
         a base load Software upgrade(s) for each DMS-GSP ordered hereunder to
         the GSP-09 Software release ("GSP-09 Upgrade") when it becomes
         generally available. The GSP-09 Upgrade does not include additional
         costs to Company associated with any Enhancements as set forth in
         Section 11.5 above, or, the cost of ONP as described in Part IV,
         Section IV.2.2. of Attachment 1 to this Product Annex A.1.

         11.5.2 With regard to the foregoing Sections 10.5 and 11.5.1, the
         parties understand that Nortel Networks will expand routing tables in
         Software Release GSP-09 in accordance with the parameters set forth in
         Part I, Section I.1.2(i.), Section I.2.2 (i), and Section I.3.2(f.) of
         Attachment 1 to this Product Annex A.1. The parties also understand
         that Company's Third Party Vendors shall develop an interface or other
         products for their network management system that includes the ability
         to update routing tables in frequent intervals. Nortel Networks,
         Company and Company's Third Party Vendor shall cooperate to develop an
         interface that accomplishes the updating of routing tables within
         mutually agreed parameters.

ARTICLE 15, SECTION 15.9

With regard to the subject of taxes, the following shall apply:

         The prices do not include any applicable taxes.

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                                                                      ATTACHMENT

                  ATTACHMENT 1 TO EXHIBIT A, PRODUCT ANNEX A.1
                         PART I. DMS-GSP INITIAL SYSTEMS
                          (FOR U.S.A. AND EUROPE ONLY)

NORTEL SHALL ENGINEER THE DMS-GSP INITIAL SYSTEM PROVIDED HEREUNDER IN
ACCORDANCE WITH NORTEL'S STANDARD ENGINEERING PRACTICES AND PROCEDURES. AFTER
NORTEL HAS ENGINEERED EACH DMS-GSP INITIAL SYSTEM ORDERED BY COMPANY HEREUNDER,
NORTEL SHALL PROVIDE COMPANY WITH A DETAILED LIST OF THE DMS-GSP INITIAL SYSTEM
COMPONENTS.

I.1.0 DMS-GSP SUPERNODE INITIAL SYSTEM (17,856 T1/E1 PORTS) FOR NEW YORK

         I.1.1 DMS-GSP SUPERNODE INITIAL SYSTEM INCLUDES:

                  A DMS-GSP SuperNode Initial System (17,856 T1/E1 Ports) shall
                  consist of the following configuration of major Equipment and
                  Software:

                      a) SuperNode front end, 128K Enhanced Network, Link
                      Peripheral Processor and other common Equipment as
                      follows:

                                 One (1) SuperNode equipped with BRISC-70EM
                                 processor with 512 Meg on board memory per
                                 plane and two (2) SLM III.

                                 128K Enhanced Network to support an Initial
                                 System wired and equipped for 17,856 speech
                                 ports.

                                 One (1) Link Peripheral Processor (LPP)
                                 individually wired and equipped with Eighteen
                                 (18) Link Interface Units (LIU7s), Four (4)
                                 Network Interface units (NIUs) and Two (2)
                                 Ethernet Interface Units (EIUs).

                                 Two (2) ISME frames equipped with service and
                                 test circuits as wen as two (2) Enhanced
                                 Digital Recorded Announcement Machine circuit
                                 packs each providing a maximum of four (4)
                                 minutes of recordable announcement time.

                                 The following input/output device/interfaces
                                 will be provided:
                                            Two (2) DAT drive
                                            Four (4) SCSI Disk Drive Units

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                                                                      ATTACHMENT

                  ATTACHMENT 1 TO EXHIBIT A, PRODUCT ANNEX A.1
                         PART I. DMS-GSP INITIAL SYSTEMS
                          (FOR U.S.A. AND EUROPE ONLY)

                                            Four (4) IOM Controllers providing
                                            sixteen (16) RS-232 interface ports
                                            each
                                            Four (4) X.25 circuit packs

                                 Two (2) MIS frames equipped with required
                                 inverts and terminal block assemblies.

                                 One (1) Meridian Cabinet Spare Storage (MCSS)
                                 cabinet to house switch spares.

                                 Two (2) Power Distribution Center (PDC) frames
                                 equipped with "A" and "B" feed fuse panels &
                                 fuses as required.

                                 Miscellaneous Switch Room Equipment as follows:
                                            One (1) Maintenance Administration
                                            Position and MAP furniture
                                            Two (2) UDS 2440 Modems
                                            Two (2) RTIF Terminals
                                            One (1) MAP Printers
                                            One (1) Helmsman CD-ROM
                                            documentation disk

                  b) SuperNode Trunk configurable equipment as follows:

                                 Three (3) SPM frames wired with 12,096 DS-0
                                 ports on OC-3s equipped as follows:
                                            Five (5) Spectrum Peripheral Modules
                                            (SPM) modules equipped with Ten
                                            thousand eight (10,008) DS-0 OC-3
                                            ports

                                 Two (2) DTEO frames wired with 1,920 DS-0 ports
                                 on E1s equipped as follows:
                                            Two (2) Digital Trunk Controller
                                            Offshore (DTCO) modules equipped
                                            with Nine Hundred Sixty (960) DS-0
                                            E1 ports
                                 Two (2) DTEI frames wired with 1,920 DS-0 ports
                                 on T1s equipped as follows:

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                                                                      ATTACHMENT

                  ATTACHMENT 1 TO EXHIBIT A, PRODUCT ANNEX A.1
                         PART I. DMS-GSP INITIAL SYSTEMS
                          (FOR U.S.A. AND EUROPE ONLY)

                                            Two (2) Digital Trunk Controller
                                            (DTC) modules equipped with Nine
                                            Hundred Sixty (960) DS-0 T1 ports
                                 Two (2) DTEI frames wired with 1,920 DS-0 ports
                                 on PRI equipped as follows:
                                            Two (2) Digital Trunk Controller
                                            ISDN (DTCI) modules equipped with
                                            Nine Hundred Sixty (960) DS-0 PRI
                                            ports

                  c)  DMS-GSP Standard/Additional Software Features as set forth
                      in Part II of this Attachment.

                  d)  Nortel's standard compliment of switch spares.

                  e)  Power plant with 1,200 amps of rectifiers and a 4 hour
                      battery back-up.

                  f)  Digital Servuce Units (DSU) bay for V.35 Link Interface
                      Units (LIUs)

                  g)  Tellabs echo cancelers - 32ms to support 960 DS-0 E1s

                  h)  Helios Distribution Bay with Ten 10amp fuses and Fifteen
                      20amp fuses.

                  i)  Nortel Networks commits to expand the Routing Tables of
                      the DMS-GSP to a total of 105,472 Route Lists and 843,776
                      Route Choices. This expansion is committed for the
                      Generally Available date of the GSP09 software release.

I.1.2    DMS-GSP SUPERNODE INITIAL SYSTEM (17,856 T1/E1 PORTS) PRICING FOR NEW
         YORK

         The price for each DMS-GSP SuperNode (17,856 T1/E1 Ports) is Two
         Million Eight Hundred Sixty Two Thousand Five Hundred Eighty Six
         ($2,862,586.00) dollars.

I.2.0    DMS-GSP SUPERNODE INITIAL SYSTEM (17,856 T1/E1 PORTS) FOR LOS ANGELES

         I.2.1    DMS-GSP SUPERNODE INITIAL SYSTEM INCLUDES:

                  A DMS-GSP SuperNode Initial System (17,856 T1/E1 Ports) shall
                  consist of the following configuration of major Equipment and
                  Software:

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                                                                         ARBINET
                                                                   GPA-EXHIBIT A
                                                                      ATTACHMENT

                  ATTACHMENT 1 TO EXHIBIT A, PRODUCT ANNEX A.1
                         PART I. DMS-GSP INITIAL SYSTEMS
                          (FOR U.S.A. AND EUROPE ONLY)

                      a)         SuperNode front end, 128K Enhanced Network,
                                 Link Peripheral Processor and other common
                                 Equipment as follows:

                                 One (1) SuperNode equipped with BRISC-70EM
                                 processor with 512 Meg on board memory per
                                 plane and two (2) SLM III.

                                 128K Enhanced Network to support an Initial
                                 System wired and equipped for 17,856 speech
                                 ports.

                                 One (1) Link Peripheral Processor (LPP)
                                 individually wired and equipped with Eighteen
                                 (18) Link Interface Units (LIU7s), Four (4)
                                 Network Interface units (NIUs) and Two (2)
                                 Ethernet Interface Units (E1Us).

                                 Two (2) ISME frames equipped with service and
                                 test circuits as well as two (2) Enhanced
                                 Digital Recorded Announcement Machine circuit
                                 packs each providing a maximum of four (4)
                                 minutes of recordable announcement time.

                                 The following input/output device/interfaces
                                 will be provided:
                                            Two (2) DAT drive
                                            Four (4) SCSI Disk Drive Units
                                            Four (4) IOM Controllers providing
                                            sixteen (16) RS-232 interface ports
                                            each
                                            Four (4) X.25 circuit packs

                                 Two (2) MIS frames equipped with required
                                 inverts and terminal block assemblies.

                                 One (1) Meridian Cabinet Spare Storage (MCSS)
                                 cabinet to house switch spares.

                                 Two (2) Power Distribution Center (PDC) frames
                                 equipped with "A" and "B" feed fuse panels &
                                 fuses as required.

                                 Miscellaneous Switch Room Equipment as follows:

                                     4 of 26
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                                                                      ATTACHMENT

                  ATTACHMENT 1 TO EXHIBIT A, PRODUCT ANNEX A.1
                         PART I. DMS-GSP INITIAL SYSTEMS
                          (FOR U.S.A. AND EUROPE ONLY)

                                            One (1) Maintenance Administration
                                            Position and MAP furniture
                                            Two (2) UDS 2440 Modems
                                            Two (2) RTIF Terminals
                                            One (1) MAP Printers
                                            One (1) Helmsman CD-ROM
                                            documentation disk

                      b)         SuperNode Trunk configurable equipment as
                                 follows:

                                 Three (3) SPM frames wired with 12,096 DS-0
                                 ports on OC-3s equipped as follows:

                                            Five (5) Spectrum Peripheral Modules
                                            (SPM) modules equipped with Ten
                                            thousand eight (10,008) DS-0 OC-3
                                            ports

                                 Two (2) DTEO frames wired with 1,920 DS-0 ports
                                 on E1s equipped as follows:
                                            Two (2) Digital Trunk Controller
                                            Offshore (DTCO) modules equipped
                                            with Nine Hundred Sixty (960) DS-0
                                            E1 ports

                                 Two (2) DTEI frames wired with 1,920 DS-0 ports
                                 on T1s equipped as follows:
                                            Two (2) Digital Trunk Controller
                                            (DTC) modules equipped with Nine
                                            Hundred Sixty (960) DS-0 T1 ports

                                 Two (2) DTEI frames wired with 1,920 DS-0 ports
                                 on PRI equipped as follows:
                                            Two (2) Digital Trunk Controller
                                            ISDN (DTCI) modules equipped with
                                            Nine Hundred Sixty (960) DS-0 PRI
                                            ports

                      c)         DMS-GSP Standard/Additional Software Features
                                 as set forth in Part II of this Attachment.

                      d)         Nortel's standard compliment of switch spares.

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                                                                      ATTACHMENT

                  ATTACHMENT 1 TO EXHIBIT A, PRODUCT ANNEX A.1
                         PART I. DMS-GSP INITIAL SYSTEMS
                          (FOR U.S.A. AND EUROPE ONLY)

                      e)         Power plant with 1,200 amps of rectifiers and a
                                 4 hour battery back-up.

                      f)         Digital Servuce Units (DSU) bay for V.35 Link
                                 Interface Units (LIUs)

                      g)         Tellabs echo cancelers - 32ms to support 960
                                 DS-0 E1s

                      h)         Helios Distribution Bay with Ten 10amp fuses
                                 and Fifteen 20amp fuses.

                      i)         Nortel Networks commits to expand the Routing
                                 Tables of the DMS-GSP to a total of 105,472
                                 Route Lists and 843,776 Route Choices. This
                                 expansion is committed for the Generally
                                 Available date of the GSP09 software release.

         I.2.2    DMS-GSP SUPERNODE INITIAL SYSTEM (17,856 T1/E1 PORTS) PRICING
                  FOR LOS ANGELES

         The price for each DMS-GSP SuperNode (17,856 T1/E1 Ports) is Two
         Million Seven Hundred Sixty Three Thousand Seven Hundred Eighty Six
         ($2,763,786) dollars.

I.3.0    DMS-GSP SUPERNODE INITIAL SYSTEM (9,600 T1/E1 PORTS) FOR LONDON

         1.3.1    DMS-GSP SUPERNODE INITIAL SYSTEM INCLUDES:

         A DMS-GSP SuperNode Initial System (9,600 T1/E1 Ports) shall consist of
         the following configuration of major Equipment and Software:

                  a)  SuperNode front end, 128K Enhanced Network, Link
                      Peripheral Processor and other common Equipment as
                      follows:

                      One (1) SuperNode equipped with BRISC-70EM processor with
                      512 Meg on board memory per plane and two (2) SLM III.

                                     6 of 26
<PAGE>

                                                                         ARBINET
                                                                   GPA-EXHIBIT A
                                                                      ATTACHMENT

                  ATTACHMENT 1 TO EXHIBIT A, PRODUCT ANNEX A.1
                         PART I. DMS-GSP INITIAL SYSTEMS
                          (FOR U.S.A. AND EUROPE ONLY)

                      128K Enhanced Network to support an Initial System wired
                      and equipped for 9,600 speech ports.

                      One (1) Link Peripheral Processor (LPP) individually wired
                      and equipped with Sixteen (16) Link Interface Units
                      (LIU7s), Four (4) Network Interface units (NIUs) and Two
                      (2) Ethernet Interface Units (EIUs).

                      Two (2) ISME frames equipped with service and test
                      circuits as well as two (2) Enhanced Digital Recorded
                      Announcement Machine circuit packs each providing a
                      maximum of four (4) minutes of recordable announcement
                      time.

                      The following input/output device/interfaces will be
                      provided:
                                 Two (2) DAT drive
                                 Four (4) SCSI Disk Drive Units
                                 Four (4) IOM Controllers providing sixteen (16)
                                 RS-232 interface ports each
                                 Four (4) X.25 circuit packs

                      Two (2) MIS frames equipped with required inverts and
                      terminal block assemblies.

                      One (1) Meridian Cabinet Spare Storage (MCSS) cabinet to
                      house switch spares.

                      Two (2) Power Distribution Center (PDC) frames equipped
                      with "A" and "B" feed fuse panels & fuses as required.

                      Miscellaneous Switch Room Equipment as follows:
                                 One (1) Maintenance Administration Position and
                                 MAP furniture
                                 Two (2) UDS 2440 Modems
                                 Two (2) RTIF Terminals
                                 One (1) MAP Printers
                                 One (1) Helmsman CD-ROM documentation disk

                  b)  SuperNode Trunk configurable equipment as follows:

                                     7 of 26
<PAGE>

                                                                         ARBINET
                                                                   GPA-EXHIBIT A
                                                                      ATTACHMENT

                  ATTACHMENT 1 TO EXHIBIT A, PRODUCT ANNEX A.1
                         PART I. DMS-GSP INITIAL SYSTEMS
                          (FOR U.S.A. AND EUROPE ONLY)

                                 Eight (8) DTEO frames wired with 7,680 DS-0
                                 ports on E1s equipped as follows:
                                            Sixteen (16) Digital Trunk
                                            Controller Offshore (DTCO) modules
                                            equipped with Sixty thousand seven
                                            hundred twenty (6,720) DS-0 E1 ports

                                 Two (2) DTEI frames wired with 1,920 DS-0 ports
                                 on PRI equipped as follows:

                                 Two (2) Digital Trunk Controller Offshore ISDN
                                 (DTCOI) modules equipped with Nine Hundred
                                 Sixty (960) DS-0 PRI ports

                  c)  DMS-GSP Standard/Additional Software Features as set forth
                      in Part II of this Attachment.

                  d)  Nortel's standard compliment of switch spares.

                  e)  Power plant with 800 amps of rectifiers and a 4 hour
                      battery back-up.

                  f)  Nortel Networks commits to expand the Routing Tables of
                      the DMS-GSP to a total of 105,472 Route Lists and 843,776
                      Route Choices. This expansion is committed for the
                      Generally Available date of the GSP09 software release.

1.3.2    DMS-GSP SUPERNODE INITIAL SYSTEM (9,600 T1/E1 PORTS) PRICING FOR LONDON

         The price for each DMS-GSP SuperNode (9,600 T1/El Ports) is Two Million
         One Hundred Thousand ($2,100,000) dollars.

                                     8 of 26
<PAGE>

                                                                         ARBINET
                                                                   GPA-EXHIBIT A
                                                                    ATTACHMENT 1

                  ATTACHMENT 1 TO EXHIBIT A, PRODUCT ANNEX A.1
             PART II. DMS-GSP STANDARD/ADDITIONAL SOFTWARE FEATURES
                          (FOR U.S.A. AND EUROPE ONLY)

II.1.0 DMS-GSP STANDARD SOFTWARE FEATURES

         II.1.1   DMS-GSP INITIAL SYSTEM STANDARD SOFTWARE FEATURES INCLUDED IN
                  THE DMS-GSP INITIAL SYSTEM PRICE FOR NEW YORK AND LOS ANGELES.

         The licensing fees for the following DMS-GSP GSP06 Standard Software
         Features are included in the price of the DMS-GSP SuperNode Initial
         Systems (17,856 model) set forth in Part I, Section I.1.0 above. The
         following is a list of Software only and does not include any and/or
         all required Equipment for feature functionality.

         FEATURE/PACKAGE      DESCRIPTION
         ---------------      -----------
         BASE0001             Base
         BASE0009             Supernode Series 70 EM Processor (SN Port Models)
         GCSB0001             GCSB GCS Base
         ISDN0001             ISDN Platform Supt
         ISP70001             ISP BASE ISUP CCS7 Trunk
         GTON0003             Per Country Tone Set
         GSS70006             Per Country ISUP/TUP
         TEL00001             TEL Telecom Layer
         TEL00002             TEL Channelized Access
         TEL00003             Gateway Screening
         TEL00005             Multi-Point MTP Code
         TEL00006             C7 Link Prot.  Testor
         TEL00007             C7 Link Fault Locator
         TEL00008             TEL CCS7 Base
         TEL00009             C7 Network Integrity Items
         TEL00010             Multiple CCS7 Network Address

II.1.2   DMS-GSP INITIAL SYSTEM ADDITIONAL SOFTWARE FEATURES INCLUDED IN THE
         DMS-GSP INITIAL SYSTEM PRICE FOR NEW YORK AND LOS ANGELES.

The licensing fees for the following DMS-GSP Additional Software features are
included in the price of the DMS-GSP SuperNode Initial Systems (17,856 port
model) set forth in Part I. The following is a list of Software only and does
not include any and/or all required Equipment for feature functionality.

                                     9 of 26
<PAGE>

                                                                         ARBINET
                                                                   GPA-EXHIBIT A
                                                                    ATTACHMENT 1

                  ATTACHMENT 1 TO EXHIBIT A, PRODUCT ANNEX A.1
             PART II. DMS-GSP STANDARD/ADDITIONAL SOFTWARE FEATURES
                          (FOR U.S.A. AND EUROPE ONLY)

         GSS70002             ANSI ISUP Plus
         GTON0024             GTON US Tones
         GSS70003             GSS7 ETSI ISUP V1
         GWAY0002             GWAY per Call Echo Control
         GWAY0001             Gateway Functions
         GCSB0018             EIU for OAMP

II.2.1   DMS-GSP INITIAL SYSTEM STANDARD SOFTWARE FEATURES INCLUDED IN THE
         DMS-GSP INITIAL SYSTEM PRICE FOR LONDON.

The licensing fees for the following DMS-GSP GSP06 Standard Software Features
are included in the price of the DMS-GSP SuperNode Initial Systems (9,600 model)
set forth in Part I, Section I.1.0 above. The following is a list of Software
only and does not include any and/or all required Equipment for feature
functionality.

         FEATURE/PACKAGE      DESCRIPTION
         ---------------      -----------
         BASE0001             Base
         BASE0009             Supernode Series 70 EM Processor (SN Port Models)
         GCSB0001             GCSB GCS Base
         ISDN0001             ISDN Platform Supt
         ISP70001             ISP BASE ISUP CCS7 Trunk
         GTON0003             Per Country Tone Set
         GSS70006             Per Country ISUP/TUP
         TEL00001             TEL Telecom Layer
         TEL00002             TEL Channelized Access
         TEL00003             Gateway Screening
         TEL00005             Multi-Point MTP Code
         TEL00006             C7 Link Prot.  Testor
         TEL00007             C7 Link Fault Locator
         TEL00008             TEL CCS7 Base
         TEL00009             C7 Network Integrity Items
         TEL00010             Multiple CCS7 Network Address

                                    10 of 26
<PAGE>

                                                                         ARBINET
                                                                   GPA-EXHIBIT A
                                                                    ATTACHMENT 1

                  ATTACHMENT 1 TO EXHIBIT A, PRODUCT ANNEX A.1
             PART II. DMS-GSP STANDARD/ADDITIONAL SOFTWARE FEATURES
                          (FOR U.S.A. AND EUROPE ONLY)

11.2.2   DMS-GSP INITIAL SYSTEM ADDITIONAL SOFTWARE FEATURES INCLUDED IN THE
         DMS-GSP INITIAL SYSTEM PRICE FOR LONDON.

The licensing fees for the following DMS-GSP Additional Software features are
included in the price of the DMS-GSP SuperNode Initial Systems (9,600 port
model) set forth in Part I. The following is a list of Software only and does
not include any and/or all required Equipment for feature functionality.

         GSS70005             GSS7 BTUP
         GTON0006             GTON UK Tones
         GSS70003             GSS7 ETSI ISUP Vl
         GWAY0002             GWAY per Call Echo Control
         GWAY0001             Gateway Functions
         GCSB0018             EIU for OAMP

III.1.0  FULLY WIRED AND FULLY EQUIPPED DTEI PORT EXTENSION

         III.1.1 DTEI PORT EXTENSION FULLY WIRED AND FULLY EQUIPPED

         DTEI Port Extensions are sold in minimum increments of nine hundred
         sixty (960) DS-0 ports, are configured for SS7/PTS or ISDN signaling at
         Company's request and include the following:

         a)       DTEI hardware and XPM+;

         b)       Either UTR, STR, CTD for DTCs configured for SS7 or PTS
                  capability, or UTR and ISDN pre-processor circuit packs
                  configured for ISDN PRI capability;

         c)       Any required circuit packs associated with a 128K Dual Bay
                  ENET expansion, MS, or processor memory expansions for the
                  BRISC70EM processor;

         d)       Any required Service/Test Circuits;

         e)       Any ENET software license fee;

         f)       Any required Power Distribution Center (PDC) Equipment;

                                    11 of 26
<PAGE>

                                                                         ARBINET
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                                                                    ATTACHMENT 1

                  ATTACHMENT 1 TO EXHIBIT A, PRODUCT ANNEX A.1
             PART II. DMS-GSP STANDARD/ADDITIONAL SOFTWARE FEATURES
                          (FOR U.S.A. AND EUROPE ONLY)

         g)       Spare circuit packs, if required, based on Nortel's standard
                  engineering sparing guidelines; and

         h)       Engineering, installation at Nortel's non-standard union labor
                  rates, commissioning, program management and freight.

         III.1.2  DTEO, DTEI AND SPM (WHEN AVAILABLE) PORT ADD-ON AND EXTENSION
                  PRICES

                  The price for each DS-0 Add-on or Extension port is as
                  follows:

                  III.1.2. A)       ADD-ON PORTS T1 AND E1 DS-0 PORTS

<TABLE>
<CAPTION>
       WIRED               EQUIP                TOTAL
       -----               -----                -----
<S>                       <C>                  <C>
      $85.00              $37.00               $122.00
</TABLE>

                  III.1.2. B)       ADD-ON PORTS PRI DS-0 PORTS

<TABLE>
<CAPTION>
       WIRED               EQUIP                TOTAL
       -----               -----                -----
<S>                       <C>                  <C>
      $105.00             $45.00               $150.00
</TABLE>

                  Add-on prices will apply when ordered before the Turnover Date
                  of the Initial System in which the extensions will be
                  installed.

                  III.1.2 C)        EXTENSION PORTS TL AND EL DS-0 PORTS

<TABLE>
<CAPTION>
       WIRED               EQUIP                TOTAL
       -----               -----                -----
<S>                       <C>                  <C>
      $119.00             $51.00               $170.00
</TABLE>

                  III.1.2. D)       EXTENSION PORTS PRI DS-0 PORTS

<TABLE>
<CAPTION>
       WIRED               EQUIP                TOTAL
       -----               -----                -----
<S>                       <C>                  <C>
      $131.00             $56.00               $187.00
</TABLE>

                                    12 of 26
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                                                                    ATTACHMENT 1

                  ATTACHMENT 1 TO EXHIBIT A, PRODUCT ANNEX A.1
             PART II. DMS-GSP STANDARD/ADDITIONAL SOFTWARE FEATURES
                          (FOR U.S.A. AND EUROPE ONLY)

                  Extension port prices will apply to Orders for extension ports
                  submitted by Company after the Turnover Date of the Initial
                  System in which the ports will be installed.

III.2.0           SPECIAL DTEO, DTEI AND PRI EXTENSION PORT PRICES

         Arbinet may choose to purchase fully wired and equipped DS-0 ports in
         bulk. The prices below are the prices for each DS-0 port purchased in
         the minimum increments shown and deployed among a maximum number of
         installation sites.

<TABLE>
<CAPTION>
                                    MINIMUM PORT PURCHASE
              ------------------------------------------------------------------
INCREMENTS:   4,032 DS-0             8,064 DS-0             12,096 DS-0
------------- ---------------------  ---------------------  --------------------
<S>           <C>                    <C>                    <C>
MAXIMUM #     1 SITE                 2 SITES                4 SITES
OF SITES
T1/E1/SPM     $155                   $147                   $140
PRI           $167                   $157                   $150
</TABLE>

III.3.0 LINK PERIPHERAL PROCESSOR (LPP)

         III.3.1 LINK PERIPHERAL PROCESSOR EXTENSIONS

         A Link Peripheral Processor (LPP) Extension to a DMS-GSP Initial System
         (either equipped with LPP hardware or not equipped with LPP hardware)
         is Three Hundred Thousand Dollars ($300,000.00), wired for the maximum
         capacity of first thirty-six (36) ASUs and ten (10) LIU7s equipped
         units ordered by Company.

         The LPP Extension for the above defined configuration includes the
         following:

                  a)  Link Peripheral Processor frame and equipment including
                      four (4) LIU7s and 2 NIUs;

                  b) Any required Message Switch (MS) expansions;

                                    13 of 26
<PAGE>

                                                                         ARBINET
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                                                                    ATTACHMENT 1

                  ATTACHMENT 1 TO EXHIBIT A, PRODUCT ANNEX A.1
                   PART IV. DMS-GSP OPTIONAL SOFTWARE FEATURES
                            (FOR NORTH AMERICA ONLY)

                  c)  Spare unique circuit packs, if any and as deemed
                      appropriate by Nortel, per Nortel's standard engineering
                      sparing rules; and

                  d)  V.35 or DS-0A interface equipment to support wired
                      configurations.

III.3.2 LINK INTERFACE UNIT (LIU7) CARD EXTENSIONS TO EQUIP WIRED LPPS

The price per additional LIU7 for an existing LPP is Thirteen Thousand Dollars
($11,900.00), excluding Nortel's installation of the LIU7 cards. LIUs are priced
individually.

III. 3.3 ETHERNET INTERFACE UNIT (EIU) CARD EXTENSIONS TO EQUIP WIRED LPPS

The price per additional EIU for an existing LPP is Eleven Thousand Nine Hundred
Dollars ($11,900.00), excluding Nortel's installation of the EIU cards. EIUs are
priced individually.

III.3.4 NETWORK INTERFACE UNIT (NIU) CARD EXTENSIONS TO EQUIP WIRED LPPS

The price per additional NIU for an existing LPP is Ten Thousand Dollars
($10,000.00), excluding Nortel's installation of the NIU cards. NIUs are priced
individually.

IV.1.0 DMS-GSP OPTIONAL SOFTWARE FEATURES

         IV.1.1 DMS-GSP OPTIONAL SOFTWARE

                  The licensing fees for the following GSP06 Optional Software
                  features are NOT included in the price of the DMS-GSP Initial
                  Systems (17,856 and 9,600 port model) set forth in Part I
                  above. The following Software features represents those
                  feature packages that may be ordered by Company at an
                  additional price for a DMS-GSP Initial System and does not
                  include any and/or all required Equipment to provide feature
                  functionality.

<TABLE>
<CAPTION>
         ORDER CODE        DESCRIPTION                                 PRICE                     NOTES
         ----------        -----------                                 -----                     -----
<S>                        <C>                                         <C>                       <C>
         GCAS0003          GCAS per country CAS                        $50,000
         GCAS0009          GCAS AC15                                   $75,000
         GCAS0018          GCAS C5 for the DMS-GSP                     $300,000
         GCAS0011          GCAS CR11 HK CAS                            $85,000

                                    14 of 26
<PAGE>

                                                                         ARBINET
                                                                   GPA-EXHIBIT A
                                                                    ATTACHMENT 1

                  ATTACHMENT 1 TO EXHIBIT A, PRODUCT ANNEX A.1
                   PART IV. DMS-GSP OPTIONAL SOFTWARE FEATURES
                            (FOR NORTH AMERICA ONLY)

         GCAS0012          GCAS CRI2 HK CAS                            $75,000
         GCAS0010          GCAS DC5                                    $75,000
         GCAS0013          Brazil R2                                   $200,000
         GCAS0014          GCAS International R2                       $75,000
         GCAS0015          GCAS US CAS                                 $93,000
         GCAS0016          Japan T1 CAS                                $75,000                   Need
                                                                                                 GCAS0003
                                                                                                 per country
                                                                                                 code
         GCAS0017          GCAS Taiwan R1                              $75,000
         GCIN0001          GCIN GCS Base CS1 SSP                       $200,000
         GCIN0013          GCIN CS-2 Leg Manipulati                    $300,000
         GCIN0003          GCIN EDP 4                                  $30,000
         GCIN0004          GCIN EDP 5                                  $30,000
         GCIN0005          GCIN EDP 6                                  $30,000
         GCIN0006          GCIN EDP 7                                  $30,000
         GCIN0010          GCIN EDP 8                                  $100,000
         GCIN0011          GCIN EDP 9                                  $30,000
         GCIN0012          GCIN External IP                            $100,000
         GCIN0007          GCIN FCI Billing                            $30,000
         GCIN0008          GCIN Internal IP                            $50,000
         GCIN0009          GCIN TDP 2                                  $50,000
         GCIN0002          GCIN TDP 3                                  $50,000
         GCSB0003          GCSB AUTH Screening                         $100,000
         GCSB0016          GCSB Acct Code Expansion                    $50,000
         GCSB0023          GCSB Auto Collect Call for Brazil           $50,000
         GCSB0019          GCSB CLI Screen Freephon                    $50,000
         GCSB0002          GCSB CLI Screening                          $100,000
         GCSB0022          Dest. OM's                                  $130,000
         GCSB0021          Equal Access Enhancements                   $125,000
         GCSB0020          GCSB CLIP/CLIR                              $100,000

                                    15 of 26
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                                                                   GPA-EXHIBIT A
                                                                    ATTACHMENT 1

                  ATTACHMENT 1 TO EXHIBIT A, PRODUCT ANNEX A.1
                   PART IV. DMS-GSP OPTIONAL SOFTWARE FEATURES
                            (FOR NORTH AMERICA ONLY)

         GCSB0015          GCSB Calling Card                           See Note                  The fee is
                                                                                                 $100,000. If
                                                                                                 GCSB0003 is
                                                                                                 licensed then
                                                                                                 the fee is
                                                                                                 $50,000.
         GCSB0018          GCSB EIU for OAMP                           $100,000
         GCSB0007          GCSB GCSB Freephone                         $100,000
         GCSB0014          GCSB GSM Roaming                            $100,000
         GCSB0017          GCSB German Call Monitor                    $200,000
         GCSB0024          GCSB Long Call Dur Audit                    $25,000
         GCSB0005          GCSB Switch based VPN                       $200,000
         GPRI0004          GPRI per country PRI                        $50,000
         GPRI0002          GPRI ANSI PRI                               $25,000
         GPRI0011          GPRI AOC German EuroISDN                    $25,000
         GPRI0015          GPRI AOC for Swissnet3                      $25,000
         GPRI0018          AOC for ETSI PRI                            $25,000
         GPRI0019          Japan PRI                                   $50,000                   Need
                                                                                                 GPRI0004
                                                                                                 per country
                                                                                                 PRI

         GPRI0020          AOC Italian PRI                             $25,000                   Need
                                                                                                 GPRI0004 per
                                                                                                 country PRI &
                                                                                                 GPRI0009
         GPRI0008          GPRIDASS2                                   $25,000
         GPRI0007          GPRI DPNSS                                  $100,000
         GPRI0005          GPRI Dutch PRI                              $50,000
         GPRI0003          GPRI ETSI PRI                               $25,000
         GPRI0010          GPRI German Eur0ISDN                        $50,000
         GPRI0006          GPRI HK PRI CR13                            $200,000
         GPRI0009          GPRI Italian PRI                            $50,000
         GPRI0013          GPRI QSig Basic Call                        $50,000
         GPRI0017          GPRI Swedish PRI                            $47,500

                                    16 of 26
<PAGE>

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                                                                   GPA-EXHIBIT A
                                                                    ATTACHMENT 1

                  ATTACHMENT 1 TO EXHIBIT A, PRODUCT ANNEX A.1
                   PART IV. DMS-GSP OPTIONAL SOFTWARE FEATURES
                            (FOR NORTH AMERICA ONLY)

         GPRI0014          GPRI Swissnet3                              $50,000
         GPRI0016          Australian PRI                              $54,000
         GPRI0021          GPRI Taiwan PRI                             $50,000
         GPRI0012          GPRI VN-4 Numeris                           $50,000
         GSS70002          GSS7 ANSI ISUP PLUS                         $25,000
         GSS70005          GSS7 BTUP                                   $100,000
         GSS70024          GSS7 Brazil ISUP                            $50,000
         GSS70023          GSS7 Brazil TUP                             $50,000
         GSS70008          GSS7 Colombian ISUP                         $50,000
         GSS70011          GSS7 Danish ISUP                            $50,000
         GSS70003          GSS7 ETSI ISUP Vl                           $25,000
         GSS70010          GSS7 ETSI ISUP v2                           $150,000
         GSS70012          GSS7 French TUP                             $50,000
         GSS70014          GSS7 German ISUP                            $50,000
         GSS70007          GSS7 HK ISUP CR14                           $50,000
         GSS70013          GSS7 HK ISUP CR15                           $50,000
         GSS70015          GSS7 Australian I-ISUP                      $50,000
         GSS70016          GSS7 New Zealand ISUP                       $50,000
         GSS7G009          GSS7 Red Book TUP                           $50,000
         GSS70018          GSS7 Spanish ISUP                           $50,000
         GSS70017          GSS7 Swedish ISUP                           $50,000
         GSS70025          GSS7 Taiwan ISUP                            $50,000
         GSS70019          Japan NCCI ISUP v.2                         $100,000                  Need
                                                                                                 GSS70006 per
                                                                                                 country ISUP

         GSS70021          Italian ISUP                                $50,000                   Need SS70006
                                                                                                 per country
                                                                                                 ISUP

         GSS70022          ISUP FG-D                                   $125,000                  Need
                                                                                                 GSS70006 per
                                                                                                 country ISUP

         GTON0021          GTON Australian Tones                       $20,000
         GTON0015          GTON Austrian Tones                         $20,000

                                    17 of 26
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                                                                    ATTACHMENT 1

                  ATTACHMENT 1 TO EXHIBIT A, PRODUCT ANNEX A.1
                   PART IV. DMS-GSP OPTIONAL SOFTWARE FEATURES
                            (FOR NORTH AMERICA ONLY)

         GTON0013          GTON Belgian Tones                          $20,000
         GTON0011          GTON Brazilian tones                        $20,000
         GTON0016          GTON Colombian Tones                        $20,000
         GTON0019          GTON Danish Tones                           $20,000
         GTON0020          GTON French Tones                           $20,000
         GTON0024          GTON U.S.Tones                              $20,000
         GTON0014          GTON German Tones                           $20,000
         GTON0027          GTON Haiti Tones                            $20,000
         GTON0005          GTON Hong Kong Tones                        $20,000
         GTON0009          GTON Irish Tones                            $20,000
         GTON0008          GTON Italian Tones                          $20,000
         GTON0017          GTON Japanese Tones                         $20,000
         GTON0018          GTON Korean Tones                           $20,000
         GTON0004          GTON Netherlands Tones                      $20,000
         GTON0022          GTON New Zealand Tones                      $20,000
         GTON0028          GTON Norway Tones for GSP                   $20,000
         GTON0026          GTON Singapore Tones                        $20,000
         GTON0010          GTON Spanish tones                          $20,000
         GTON0023          GTON Swedish Tones                          $20,000
         GTON0012          GTON Swiss tones                            $20,000
         GTON0025          GTON Taiwan Tones                           $20,000
         GTON0006          GTON UK Tones                               $20,000

         GWAY0001          GWAY Gateway Functions                      $50,000
         GWAY0005          GWAY Closed User Group                      $30,000
         GWAY0003          GWAY DCME Control                           $50,000
         GWAY0004          GWAY TS 16 Echo Control                     $50,000
         GWAY0002          GWAY per call Echo Control                  $50,000

         DCR00001     DCR DCR                                          See Note                  One-time network
                                                                                                 software license fee of
                                                                                                 $200,000 plus a per
                                                                                                 switch license fee of
                                                                                                 $50,000

                                    18 of 26
<PAGE>

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                                                                   GPA-EXHIBIT A
                                                                    ATTACHMENT 1

                  ATTACHMENT 1 TO EXHIBIT A, PRODUCT ANNEX A.1
                   PART IV. DMS-GSP OPTIONAL SOFTWARE FEATURES
                            (FOR NORTH AMERICA ONLY)

         DCR00003     DCR Dual X25 link                                See Note                  One-time network
                                                                                                 software license fee of
                                                                                                 $20,000 plus a per
                                                                                                 switch license fee of
                                                                                                 $3,000
         DCR00002     DCR Mult. Net. Access                            $75,000
         DCR00004     DCR Univrsal Translation                         $16,000
         ISP70003     ISP7 Aut Cngst Cntrls                            $25,000
         ISP70004     ISP7 TFP/TFC Rtng Opts                           $15,000
         STPB0001     STPB BASE                                        See Note.                 The fee is no charge
                                                                                                 for Standalone STP.
                                                                                                 The fee is $350,000
                                                                                                 for DMS-250 Inode.

         STPE0001     STPE ENHANCED                                    No Charge.
         STPE0002     STPE DCIS6                                       $75,000
         STPE0004     STPE Routeset Expansion                          See Note                  The fee is no charge
                                                                                                 for the first 256 Route
                                                                                                 Sets. The fee is
                                                                                                 $200,000 for the
                                                                                                 second group of 256
                                                                                                 Route Sets plus
                                                                                                 $25,000 for each
                                                                                                 additional group of
                                                                                                 256 Route Sets.
         STPE0003     STPE XLIST Management                            $200,000
         STPE0200     STPE NRC Items                                   $317,500
         STPE0300     STPE STP Integration                             $50,000
         TEL00004     TEL C7 Routset Increment                         See Note.                 The fee is no charge
                                                                                                 for the first 256 Route
                                                                                                 Sets. The fee is
                                                                                                 $200,000 for the
                                                                                                 second group of 256
                                                                                                 Route Sets plus
                                                                                                 $25,000 for each
                                                                                                 additional group of
                                                                                                 256 Route Sets.

                                    19 of 26
<PAGE>

                                                                         ARBINET
                                                                   GPA-EXHIBIT A
                                                                    ATTACHMENT 1

                  ATTACHMENT 1 TO EXHIBIT A, PRODUCT ANNEX A.1
                   PART IV. DMS-GSP OPTIONAL SOFTWARE FEATURES
                            (FOR NORTH AMERICA ONLY)

         TEL00011     TEL CSidel4-Extended Msg                         $25,000
</TABLE>

IV.2.0   LABOR CHARGES

         IV.2.1 SOFTWARE ACTIVATION CHARGES

                  The labor charges for activating the optional Software
                  features set forth in Part IV, other than a Generic Software
                  upgrade is Five Hundred Forty Dollars ($540.00) for the first
                  feature and Two Hundred Seventy Dollars ($270.00) for each
                  additional feature requested in the same Order. There is no
                  labor charge for activating the above optional Software
                  features when activated in conjunction with a Generic Software
                  upgrade.

         IV.2.2 SOFTWARE UPGRADE ONP

                  The labor charges associated with the installation and
                  activation of Software upgrades by overnight process are as
                  follows:

                  Weekday ONP    $12,000.00    Weekend ONP    $20,000.00

                                    20 of 26
<PAGE>

                                                                         Arbinet
                                                                  GPSA-Exhibit A
                                                                    Attachment 2

                                    EXHIBIT A
                        ATTACHMENT 2 TO PRODUCT ANNEX A.1
                          FORECAST OF PRODUCT PURCHASES

         Pursuant to Section 2.3 of Product Annex A.1, Company submits the
following forecast for the purchase of Nortel Networks Products:

         Company comniits to purchasing three (3) DMS-GSP Initial Systems on the
following schedule and for the minimum purchase prices set forth below:

<TABLE>
<CAPTION>
         SWITCH SITE:       DELIVERY:     PURCHASE PRICE:
         ------------       ---------     ---------------
<S>                         <C>           <C>
         New York Oct.      1999          $2,763,786.00
         Los Angeles        May, 2000     $2,763,786.00
         London,U.K.        May, 2000     $2,100,000.00
</TABLE>

         The pricing set forth above is inclusive of Initial System prices only
and does not include extension ports or any other Nortel Networks Products
offered under the Agreement.

Signed this ______ day of ______ 1999.

                                            ARBINET HOLDINGS CORPORATION

                                            By________________________________

                                    21 of 26
<PAGE>

                                                                         Arbinet
                                                                       Exhibit B

                                    EXHIBIT B

                                       TO

                                 GLOBAL PURCHASE

                                       AND

                               SERVICES AGREEMENT

                                    22 of 26
<PAGE>

                                                                         ARBINET
                                                                  GPSA-EXHIBIT B

                  ATTACHMENT 1 TO EXHIBIT B, PRODUCT ANNEX A.1
                        POST CUTOVER INTEGRATION SERVICES

ARTICLE 10, SECTION 10.4

         10.4.1 Subsequent to the Turnover Date for an Initial System, Nortel
will assign one (1) technician to provide Post Cutover Integration Services
("PCI Services") at the Service Site during Normal Business Hours. PCI Services
will include testing of each Initial System to confirm that each Initial System
operates as designed ("Switch Grooming") and that the features engineered for
each Initial System operate correctly in accordance with Nortel's standards and
procedures ("Feature and Call Through Testing"). The tests to be performed by
Nortel will include, but will not be limited to, the following:

         10.4.2 HARDWARE AND SOFTWARE TESTING

         A.       Install and Test Alarms
                  1)  install cross connects, datafill scan and SD points
                  2)  verify operation and detection of alarms

         B.       Patch Verification
                  1)  verify patching of peripherals

         C.       REX Testing
                  1)  set up switch to test its integral parts

         D.       Switch Grooming
                  1)  set up switch to run Operation and Measurement ("OM") logs
                  2)  set up switch to run maintenance reports
                  3)  set up switch security measures

10.4.3   TRUNK TESTING

         A.       Install and Perform Transmission Tests
                  1)  test Call Through Features
                  2)  verify CDR trunks
                  3)  verify SS7 Translations and confirm that datafill properly
                      performed

         B.       Wire and Cross Connect DSX
                  1)  establish links between transmission facilities with all
                      testing being performed within the switch room

                                    23 of 26
<PAGE>

                                                                         ARBINET
                                                                  GPSA-EXHIBIT B

                  ATTACHMENT 1 TO EXHIBIT B, PRODUCT ANNEX A.1
                        POST CUTOVER INTEGRATION SERVICES

         C.       Verification of DSX Cross Connect

         D.       Interconnection Testing

                  1)  test Transmission and/or ROTL
                  2)  test Call Through dial plan on one trunk member per card

         10.4.4   REQUIRED LINE TESTING

         A.       Line to Line Matching
                  1) verify NPA's, NNX's and AMA's with the demarcation point
                  for testing set inside the main distribution frame within the
                  switch room

         10.4.5    COMPANY'S RESPONSIBILITIES

                  In order for Nortel to commence the PCI Services, Company must
complete the following activities with respect to each Initial System at a
Service Site:

                  A.  Ensure that all transmission links are terminated and
                      labeled on the DSX or distribution frame blocks;
                  B.  Ensure that trunk facilities are connected to the
                      respective Local Exchange Carriers ("LEC") at the above
                      sites;
                  C.  Order the appropriate translations from the LEC's access
                      tandem in order to translate Company's originated calls;
                  D.  Establish a phone board for telephone set and feature
                      evaluations;
                  E.  Provide a test unit or equivalent for DS-I/DS-3 testing,
                      as well as a PRI monitor; and
                  F.  Provide a template which identifies specific cross-connect
                      allocations for trunk and any line facilities.

         10.4.6   TERM

         Nortel will provide to Company at no charge, initial PCI Services
("Initial PCI Services") for the Initial System in the total amount of two
hundred forty (240) hours. The Company may purchase Extended PCI Services in
increments of forty (40) hours. Company may purchase Extended PCI Services based
on a Firm Quote for such Services.

         Nortel's overtime rate for PCI Services is Two Hundred Dollars
($200.00) per hour for each hour of PCI Services provided by Nortel after Normal
Business Hours.

                                    24 of 26
<PAGE>

                                                                         ARBINET
                                                                  GPSA-EXHIBIT B

                  ATTACHMENT 1 TO EXHIBIT B, PRODUCT ANNEX A.1
                        POST CUTOVER INTEGRATION SERVICES

         "Normal Business Hours" are from 8:00 a.m. until 5:00 p.m. (with a one
(1) hour lunch break), from Monday through Friday, excluding Nortel's standard
holidays.

                                    25 of 26
<PAGE>

                                                                         ARBINET
                                                                  GPSA-EXHIBIT B

                  ATTACHMENT 2 TO EXHIBIT B, PRODUCT ANNEX A.1

Section 10.5      REMOTE HYBRID MAINTENANCE SERVICES

Nortel Networks' CSC Remote Hybrid Maintenance Services ("RHM Services") include
the CSC Remote Surveillance Services and the remote resolution of Switch alarms
for each Switch in Company's network pursuant to Company's instructions. In the
event of an emergency situation that requires on-site assistance, RM Services
will notify the appropriate Nortel Networks technician pursuant to Company's
instructions. Typical RM Services responsibilities include, but are not limited
to, the following:

         Remedial and preventative maintenance, including initiation,
         monitoring, documenting, controlling and escalating, in coordination
         with the customer, until the problem is resolved;
         Corrective action in response to alarm conditions, including
         restoration of equipment, system diagnosis, software or hardware
         problem location and alarm release procedures.
         Emergency recovery procedures as required.
         Environmental alarms, external to the switch, are restored to the
         non-alarm state after investigation, if appropriate
         Analysis of alarms, including root cause analysis, system
         initialization, maintenance interruptions, critical and major alarms,
         and hardware and software failures.

In order for Nortel Networks to perform RHM Services, either Nortel Networks or
Company must have a technician at the Service Site during Normal Business Hours.
Two options are available for Hybrid Maintenance services.

         a) HYBRID MAINTENANCE 1: provides system monitoring as described in
         Section 220 above during the following hours: 24 X 7, 365 days per
         year; remote maintenance services as described in the section above
         during the following hours: 5 p.m. to 8 a.m. Monday through Friday
         (Customer Local Time), weekends and holidays.

         b) HVBRID MAINTENANCE 2: provides remote monitoring and maintenance
         during the hours of 5 p.m. to 6 a.m. Monday through Friday (Customer
         Local Time), weekends and holidays only. No monitoring or maintenance
         is available during customer local business hours of 8:00 a.m. to 5:00
         p.m. Monday through Friday.

                                    26 of 26
<PAGE>

                                                                         ARBINET
                                                                  GPSA-EXHIBIT B

                  ATTACHMENT 2 TO EXHIBIT B, PRODUCT ANNEX A.1

TERM

Nortel Networks shall provide six (6) months of RHM Services for the first three
(3) Initial Systems purchased by Company at no additional charge. RHM Services
shall commence on the Turnover Date for each Initial System. Company may
purchase additional RHM Services at Nortel Networks then current prices as set
forth in a Firm Quote issued by Nortel to Company.
<PAGE>

                                                                         ARBINET
                                                                  GPSA-EXHIBIT B

                  ATTACHMENT 3 TO EXHIBIT B, PRODUCT ANNEX A. 1
                           ON-SITE MAINTENANCE SUPPORT

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

SECTION 10.6      MAINTENANCE SUPPORT SERVICES

Nortel Networks will assign one (1) technician per each DMS-family switching
system ("Switch") to perform On-Site Maintenance Support Services ("Maintenance
Support Services") at the Service Site during Normal Business Hours. The
Maintenance Support Services technician(s) will perform preventative
maintenance, address Switch problems, perform emergency procedures, and perform
administrative functions, subject to the instructions provided by Company within
the Customer Specified Procedure ("CSP"), as directed by Nortel Networks'
Customer Support Center ("CSC") and/or Company's Network Operations Center
("NOC"). Maintenance Support Services will include, but will not be limited to,
the following services:

         Provide preventative maintenance, as required by the customer
         Work with Nortel Networks' Customer Support Center on technical and
         procedural issues as required
         Support switch software applications (new software loads and patches)
         Work with the customer control/help desk to track and resolve user
         trouble reports
         Clear switch, trunk and transport troubles as received from the
         Customer Support Center or the customer's help desk, etc.
         Assist with data modification for routing and translation changes in
         the trunk network and for customer groups
         Perform routine tasks and procedures as scheduled and assigned by the
         Customer Support Center or the customer help desk
         Prepare back-up office image (to tape) as required
         Process billing tapes, as required
         Provide trunk problem resolution/coordination assistance with other
         switches
         Replace circuit packs as required under the direction of the Customer
         Support Center or the customer help desk
         Maintain a marked, proven set of maintenance spare cards
         Maintain the following office Logs:
                  - AMA/CDR Tape Log
                  - Circuit Pack Replacement/Repair Log
                  - Site Trouble Ticket Log
         Record MDF assignments and connections
         Participate in all technical and service analysis meetings
         Replenish printer paper on printer

                                     1 of 9
<PAGE>

                                                                         ARBINET
                                                                  GPSA-EXHIBIT B

                  ATTACHMENT 3 TO EXHIBIT B, PRODUCT ANNEX A. 1
                           ON-SITE MAINTENANCE SUPPORT

Each Nortel Networks maintenance technician will have a standard issued tool
kit. Additional test and measurement equipment, computer terminals and on-line
documentation must be supplied by the customer.

TERM

Nortel Networks shall provide six (6) months of On-Site Support Services for the
DMS-GSP Initial System to be installed in New York. On-Site Support Services
shall commence on the Turnover Date for the New York System. Company may
purchase additional On-Site Support Services at Nortel Networks then current
prices as set forth in a Firm Quote issued by Nortel to Company.

                                     2 of 9
<PAGE>

                                                           ARBINET HOLDINGS CORP
                                                                            GPSA

                                    EXHIBIT C

                                   AFFILIATES

1.0      COMPANY AFRILIATES

         1.1      For purposes of this Agreement, the Company Affiliates shall
                  include:

Present Company Name                                 Place of Incorporation
--------------------                                 ----------------------

[TO BE PROVIDED BY COMPANY]

2.0      NORTEL AFFILIATES

         2.1      For purposes of this Agreement, the Nortel Affiliates shall
                  include:

NAME OF CORPORATION                                 ADDRESS
-------------------                                 -------

NORTHERN TELECOM DE ARGENTINA S.A.                  Leandro N. Alem 712
                                                    Piso 9, Buenos Aires 1001
                                                    ARGENTINA

NORTEL AUSTRALIA PTY. LIMITED                       Level 5, 495 Victoria Avenue
                                                    Chatswood, N.S.W.  2067
                                                    AUSTRALIA

NORTHERN TELECOM N.V.                               Belgicastraat 4
(For Nortel Products in Luxembourg also)            1930 Zaventem
                                                    Brussels, BELGIUM

NORTHERN TELECOM DO BRASIL                          Av. Das Nacoes Unidas, 17891
INDUSTRIA E COMERCIO LTDA.                          4-Andar
                                                    San Amaro, Sao Paolo
                                                    State of Sao Paolo
                                                    CEP: 04795-100
                                                    BRAZIL

                                     3 of 9
<PAGE>

                                                           ARBINET HOLDINGS CORP
                                                                            GPSA

                                    EXHIBIT C

                                   AFFILIATES

NORTHERN TELECOM BULGARIA EOOD                       Datelina Residence
                                                     42 Damian Gruev Street
                                                     VII Floor, Apartment B
                                                     Sofia 1606
                                                     BULGARIA

NORTHERN TELECOM LIMITED                             8200 Dixie Road, Suite 100
                                                     Brampton, Ontario
                                                     L6T 5P6
                                                     CANADA

NORTHERN TELECOM DE COLUMBIA                         Carrera 14, No. 94-81
SOCIEDAD ANONIMA                                     Santa Fe de Bogota
                                                     COLUMBIA

MATRA NORTEL COMMUNICATIONS S.A.S                    33 quai Paul Doumer
                                                     Paris la Defense
                                                     92415 Courbevoie Cedex
                                                     FRANCE

NORTEL DASA NETWORK SYSTEMS
GmbH & CO.                                           Lyonerstrasse 15
                                                     D-60528 Frankfurt/Main.
                                                     GERMANY

NORTHERN TELECOM (ASIA) LIMITED                      34th Floor, Central Plaza
                                                     18 Harbour Road
                                                     Wanchai
                                                     Hong Kong
                                                     HONG KONG
                                                     KOREA
                                                     TAIWAN

NORTHERN TELECOM (IRELAND) LIMITED                   25 St. Stephens Green
                                                     Dublin
                                                     IRELAND

                                     4 of 9
<PAGE>

                                                           ARBINET HOLDINGS CORP
                                                                            GPSA

                                    EXHIBIT C

                                   AFFILIATES

NORTEL COMMUNICATIONS (ISRAEL)                      Kibbutz Galil Yam
LIMITED                                             Herzliya
                                                    46905
                                                    ISRAEL

NORTEL ITALIA S.p.A.                                Ivrea (Torino)
                                                    Via Monte Navale2.
                                                    ITALY

NORTHERN TELECOM JAPAN INC.                         Oak Minami Azabu Building
                                                    19-23 Minami Azuba 3-chome
                                                    Minato-ku, Tokyo 106
                                                    JAPAN

NORTHERN TELECOM MAROC SA                           6 rue Majob Mahfoud
                                                    Casablanca
                                                    MOROCCO

NORTEL NEW ZEALAND LIMITED                          Level 4, 36 Kitchener Street
                                                    Auckland
                                                    NEW ZEALAND

NORTHERN TELECOM SCANDINAVIA AS                     Nedre Slodttsgt, 15
                                                    P.O. Box 236 -Sentrum
                                                    N-0157 Oslo
                                                    NORWAY

NORTHERN TELECOM SINGAPORE                          15 1, Lorong Chuan
PTE LIMITED                                         #02-01 New Tech Park
                                                    1955
                                                    SINGAPORE

NORTHERN TELECOM B.V                                Siriusdreef 17-27
                                                    2132 WT Hoofddorp
                                                    THE NETHERLANDS

NORTEL SLOVENSKO SRO                                Hotel Danube

                                     5 of 9
<PAGE>

                                                           ARBINET HOLDINGS CORP
                                                                            GPSA

                                    EXHIBIT C

                                   AFFILIATES

                                                     Rybne Namestie 1
                                                     Bratislava
                                                     SLOVAK REPUBLIC

NORTEL HISPANIA S.A.                                 Avenidas de los Dos
                                                     Castillas 33
                                                     Edificio Atica - 2
                                                     Pozuelo de Alarcon
                                                     28224 Madrid
                                                     SPAIN

NORTHERN TELECOM AG                                  Drahzugstrasse 18
                                                     8008 Zurich
                                                     SWITZERLAND

NETAS - NORTHERN ELECTRIC                            Alemdag Caddesi
TELKOMUNIKASYON A.S.                                 Umraniye 81 244
                                                     Istanbul
                                                     TURKEY

NORTEL plc.                                          Maidenhead Office Park
                                                     Westacott Way
                                                     Maidenhead
                                                     Berkshire SL6 3QH
                                                     UNITED KINGDOM

NORTHERN TELECOM DE VENEZUELA                        Ave. Gonzales Rincones
COMPANIA ANONIMA                                     La Trinidada
                                                     Edificio Centre-Van
                                                     Caracas
                                                     VENEZUELA

NOTES:

It is not possible to give a blanket undertaking for Austria as part of this
Agreement. Requirements for deployments in Austria will be considered on a case
by case by basis.

                                     6 of 9
<PAGE>

                                                           ARBINET HOLDINGS CORP
                                                                            GPSA

                                    EXHIBIT C

                                   AFFILIATES

For any other countries in Europe, the Nortel Affiliate is Nortel plc., United
Kingdom. For any other countries in the Middle East, Africa or elsewhere, the
Nortel Affiliate is Nortel Europe S.A. For other countries in Asia-Pacific or
the Caribbean and Latin America, Nortel shall advise Company in advance of
issuing an Order of the name and address of an applicable Nortel Affiliate.

                                     7 of 9
<PAGE>

                                                           ARBINET HOLDINGS CORP
                                                                            GPSA

                                    EXHIBIT D

                                  HOMOLOGATION

                                     8 of 9
<PAGE>

                                                           ARBINET HOLDINGS CORP
                                                                            GPSA

                               EXHIBIT D, PART II
                         DMS FAMILY HOMOLOGATION STATUS

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
            COUNTRY           HOMOLOGATION                          EMC                   PSTN & NOTES            APPROVAL
                                 SAFETY                                                                           AUTHORITY
------------------------------------------------------------------------------------------------------------------------------------
<S>                        <C>                              <C>                         <C>                 <C>
US                         Compliance Achieved              Compliance Achieved         Approval Achieved   UL1459, FCC BELLCORE
                                                                                                                TR-NWT-00063
------------------------------------------------------------------------------------------------------------------------------------
UK                         Compliance Achieved              Compliance Achieved        PSTN via 100 & GSP.          BABT
------------------------------------------------------------------------------------------------------------------------------------
GERMANY                    Compliance Achieved              Compliance Achieved        PSTN via 100 & GSP.           BZT
------------------------------------------------------------------------------------------------------------------------------------
FRANCE                     Compliance Achieved              Compliance Achieved       PSTN via 100, planned          DRG
                                                                                             on GSP.
------------------------------------------------------------------------------------------------------------------------------------
CANADA                     Compliance Achieved              Compliance Achieved         Approval Achieved       CSA 22.2.225
------------------------------------------------------------------------------------------------------------------------------------
SWITZERLAND                Compliance Achieved              Compliance Achieved          Planned on GSP.            Bakom
------------------------------------------------------------------------------------------------------------------------------------
NETHERLANDS                Compliance Achieved              Compliance Achieved        PSTN via 100 & GSP.          HDTD
------------------------------------------------------------------------------------------------------------------------------------
ITALY                      Compliance Achieved              Compliance Achieved       PSTN via 100, planned          IGT
                                                                                             on GSP.
------------------------------------------------------------------------------------------------------------------------------------
HONG KONG                  Compliance Achieved              Compliance Achieved        PSTN via 100 & GSP.
------------------------------------------------------------------------------------------------------------------------------------
JAPAN                      Compliance Achieved              Compliance Achieved       PSTN via 100, planned
                                                                                             on GSP.
------------------------------------------------------------------------------------------------------------------------------------
BELGIUM                    Compliance Achieved              Compliance Achieved        PSTN via 100 & GSP.          BIPT
------------------------------------------------------------------------------------------------------------------------------------
SWEDEN                     Compliance Achieved              Compliance Achieved       Planned on 100 & GSP.          NTA
------------------------------------------------------------------------------------------------------------------------------------
SPAIN                      Compliance Achieved              Compliance Achieved       PSTN via 100, planned          DGT
                                                                                             on GSP.
------------------------------------------------------------------------------------------------------------------------------------
AUSTRIA                    Compliance Achieved              Compliance Achieved       PSTN via 100, planned         ATRA
                                                                                             on GSP.
------------------------------------------------------------------------------------------------------------------------------------
NORWAY                     Compliance Achieved              Compliance Achieved       Planned on 100 & GSP
------------------------------------------------------------------------------------------------------------------------------------
MEXICO                     Compliance Achieved              Compliance Achieved         Approval Achieved
------------------------------------------------------------------------------------------------------------------------------------

                                     9 of 9
<PAGE>

                                                           ARBINET HOLDINGS CORP
                                                                            GPSA
                                   EXHIBIT D, PART II
                             DMS FAMILY HOMOLOGATION STATUS

------------------------------------------------------------------------------------------------------------------------------------
AUSTRALIA                  Compliance Achieved              Compliance Achieved       PSTN via 100, planned        AUSTEL
                                                                                             on GSP.
------------------------------------------------------------------------------------------------------------------------------------
DENMARK                    Compliance Achieved              Compliance Achieved           PSTN via GSP               NTA
------------------------------------------------------------------------------------------------------------------------------------
LUXEMBORG                  Compliance Achieved              Compliance Achieved                TBD
------------------------------------------------------------------------------------------------------------------------------------
IRELAND                    Compliance Achieved              Compliance Achieved                TBD
------------------------------------------------------------------------------------------------------------------------------------
FINLAND                    Compliance Achieved              Compliance Achieved       Planned on 100 & GSP
------------------------------------------------------------------------------------------------------------------------------------
CHINA                      Compliance Achieved              Compliance Achieved           PSTN via 100.
------------------------------------------------------------------------------------------------------------------------------------
KOREA                            Pending                          Pending                      TBD
------------------------------------------------------------------------------------------------------------------------------------
JAMAICA                    Compliance Achieved              Compliance Achieved         Approval Achieved
------------------------------------------------------------------------------------------------------------------------------------
DOMINICAN                  Compliance Achieved              Compliance Achieved         Approval Achieved
------------------------------------------------------------------------------------------------------------------------------------
REPUBLIC
------------------------------------------------------------------------------------------------------------------------------------
PUERTO RICO                Compliance Achieved              Compliance Achieved         Approval Achieved
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                     10 of 9
<PAGE>

                         -------------------------------
                         EXHIBIT D, PART I, HOMOLOGATION
                         -------------------------------

<TABLE>
<CAPTION>
ASIA/SOUTH PACIFIC     NORTH AMERICA                      CARIBBEAN
------------------     -------------                      ---------
<S>                    <C>                <C>             <C>
                       Canada
Australia              USA
Belau
China                                                     Antigua
Guam                   LATIN AMERICA                      Bahamas
Hong Kong              -------------                      Barbados
Japan                  Argentina          El Salvador     Belize
Malaysia               Bolivia            Guyana          Bermuda
Marshall Islands       Brazil             Honduras        British Virgin Islands
Micronesia             Chile              Mexico          Dominica
New Zealand            Colombia           Paraguay        Dominican Republic
Philippines            Costa Rica         Peru            Grenada
South Korea                                               Haiti
Vietnam                EUROPE                             Jamaica
                       ------                             Montserrat
AFRICA/MIDDLE EAST     Austria            Ireland         Puerto Rico
                       Bulgaria           Netherlands     St. Martin
Bahrain                C.I.S.             Poland          St. Kitts
Burkina Faso           UK                 Spain           Trinidad
Morocco                Germany            Italy           Turks Caicos
Saudi Arabia           Hungary            France          US Virgin Islands
Tunisia
Turkey
</TABLE>

Exhibit D, Part I, discloses the countries where the DMS Family of Products
maintaians an established installation. Notwithstanding any provision to the
contrary, the parties hereto, understand that Homologation and/or PSTN
certification, if any, are required on a periodic basis as effectuated by but
not limited to revisions, upgrades or new equipment and/or software releases.
This Exhibit D, Part I and II constitute no warranty as to Homologation and/or
PSTN certification continuance.

Homologation is defined as meeting the requirements for safety and EMC in a
specific country, and may include formal certification on a case by case basis.
PSTN is defined as meeting the requirements for interface in a specific country
for the Public Switch Telephone Network, and may include formal certification on
a case by case basis.<PAGE>

Exhibit 10.17

                             ARBINET HOLDINGS, INC.

                         SERIES B AND C SENIOR PREFERRED

                            STOCK PURCHASE AGREEMENT

        (Sale by the Company of 11,980,561 shares of Series B Cumulative

           Redeemable Senior Preferred Stock and 11,980,562 shares of

             Series C Cumulative Convertible Senior Preferred Stock

                      Aggregate Sale Price $30,449,795.59)

                                November 24, 1999

                        Series B and C Senior Preferred Stock Purchase Agreement
<PAGE>

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

1.       Basic Terms of Purchase and Sale.                                     1
         1.1      Purchase and Sale of Senior Preferred Stock                  1
         1.2      The Closing                                                  2
         1.3      Additional Shares                                            2

2.       Representations and Warranties of the Company                         3
         2.1      Organization Good Standing and Qualification                 3
         2.2      Capitalization; Stock Option Plan                            3
         2.3      Subsidiaries                                                 5
         2.4      Authorization                                                5
         2.5      Consents                                                     6
         2.6      Permits                                                      6
         2.7      Litigation                                                   7
         2.8      Proprietary Information and Inventions Agreement             7
         2.9      Intellectual Property                                        7
         2.10     Manufacturing and Marketing Rights                          10
         2.11     Compliance with Other Instruments                           10
         2.12     Agreements, Action                                          10
         2.13     Brokers or Finders                                          12
         2.14     Disclosure                                                  12
         2.15     No Conflict of Interest                                     12
         2.16     Rights of Registration                                      13
         2.17     Private Placement                                           13
         2.18     Corporate Documents; Board of Directors                     13
         2.19     Title to Property and Assets                                13
         2.20     Financial Statements                                        13
         2.21     Changes                                                     14
         2.22     Employment Benefit Plans                                    15
         2.23     Tax Returns and Payments                                    17
         2.24     Insurance                                                   17
         2.25     Labor Agreements and Actions                                17
         2.26     Environmental and Safety Laws                               18
         2.27     Year 2000 Compliance                                        18
         2.28     Minute Books                                                19
         2.29     Small Business Concern                                      19
         2.30     Section 897 of the Internal Revenue                         20
         2.31     Use of Proceeds                                             20
         2.32     Absence of Certain Commercial Practices                     20

                                       i
<PAGE>

                                                                            Page
                                                                            ----

3.       Representations and Warranties of the Investor                       21
         3.1      Authorization                                               21
         3.2      Purchase Entirely for Own Account                           21
         3.3      Investment Experience                                       21
         3.4      Restricted Securities                                       21
         3.5      No Public Market                                            22
         3.6      Legends                                                     22
         3.7      Accredited Investor                                         22
         3.8      Brokers or Finders                                          22

4.       Conditions to Investors' Obligations at Closing                      23
         4.1      Accuracy of Representations and Warranties                  23
         4.2      Performance                                                 23
         4.3      Compliance Certificate                                      23
         4.4      Qualifications and Consents                                 23
         4.5      Proceedings and Documents                                   23
         4.6      Opinion of Company Counsel                                  24
         4.7      Board of Directors                                          24
         4.8      Rights Agreement                                            24
         4.9      Co-Sale Agreement                                           24
         4.10     Voting Agreement                                            24
         4.11     Series A-2 Restructuring                                    24
         4.12     Officer's Certificate                                       24
         4.13     Blue Sky Approvals                                          24
         4.14     SBA Documentation                                           24
         4.15     No Material Adverse Change                                  25
         4.16     No Litigation                                               25
         4.17     Satisfactory Completion of Due Diligence; Etc.              25
         4.18     Payment of Expenses                                         25
         4.19     Foundation Limited Partner Certificate                      25
         4.20     Management Rights Agreement                                 25
         4.21     Regulatory Compliance Side Letter                           25
         4.22     Stock Certificates, etc.                                    25

5.       Conditions of the Company's Obligations at Closing                   25
         5.1      Representations and Warranties True at Closing              25
         5.2      Qualifications                                              26
         5.3      Covenants                                                   26
         5.4      Rights Agreement                                            26
         5.5      Co-Sale Agreement                                           26
         5.6      Voting Agreement                                            26
         5.7      Restated Amendment                                          26
         5.8      Series A-2 Restructuring Agreement                          26

                                       ii
<PAGE>

                                                                            Page
                                                                            ----

6.       Affirmative Covenants of the Company                                 26
         6.1      Observer Rights                                             26
         6.2      Information                                                 27
         6.3      Exemption from Investment Company Act; FIRPTA               28
         6.4      Accounting and Reserves                                     28
         6.5      Payment of Taxes and Claims                                 29
         6.6      Availability of Common Stock for Conversion                 29
         6.7      Governing Instruments                                       29
         6.8      SBIC Covenants                                              29
         6.9      Assistance in Sales                                         30
         6.10     Employee Agreements                                         30
         6.11     Stock Option Plan                                           31

7.       Miscellaneous Provisions                                             31
         7.1      Survival; Termination                                       31
         7.2      Transfer of Successors and Assigns                          31
         7.3      Governing Law                                               31
         7.4      Counterparts                                                31
         7.5      Titles and Subtitles                                        31
         7.6      Notices                                                     31
         7.7      Expenses                                                    32
         7.8      Indemnification.                                            32
         7.9      Attorneys' Fees                                             32
         7.10     Amendments and Waivers                                      32
         7.11     Severability                                                33
         7.12     Delays or Omissions                                         33
         7.13     Entire Agreement                                            33
         7.14     California Corporate Securities Law                         33
         7.15     Further Assurances                                          33
         7.16     Specific Performance                                        33
         7.17     Understanding Among Investors                               34
         7.18     Publicity                                                   34

                                      iii
<PAGE>

                                                                            Page
                                                                            ----
                              SCHEDULE OF EXHIBITS

Designation    Description

Schedule I     Investors

Exhibit A      Company's Amended and Restated Certificate of Incorporation

Exhibit B      Schedule of Exceptions

Exhibit C      Company's Stockholders

Exhibit D      Amended and Restated Investor Rights Agreement

Exhibit E      Amended and Restated Co-Sale and Right of First Refusal Agreement

Exhibit F      Amended and Restated Voting Agreement

Exhibit G      Series A-2 Restructuring Agreement

Exhibit H      Opinion of Paul, Hastings, Janofsky & Walker LLP

Exhibit I      By-Laws

Exhibit J      Employee Proprietary Information and Inventions Agreement

Exhibit K      Foundation Limited Partner Certificate

Exhibit L      Management Rights Agreement

Exhibit M      Regulatory Compliance Side Letter
<PAGE>

                             ARBINET HOLDINGS, INC.

            SERIES B AND C SENIOR PREFERRED STOCK PURCHASE AGREEMENT

      THIS SERIES B AND C SENIOR PREFERRED STOCK PURCHASE AGREEMENT (the
"Agreement") is made and entered into as of the 24th day of November, 1999, by
and among Arbinet Holdings, Inc., a Delaware corporation (the "Company"), J. P.
Morgan Investment Corporation, a Delaware corporation ("JPMIC"), Sixty Wall
Street SBIC Fund, L.P., a Delaware limited partnership ("Sixty Wall" and
together with JPMIC, the "JPM Investors"), CB Capital Investors, L.P., a
Delaware limited partnership ("Chase"), BancBoston Ventures Inc., a
Massachusetts corporation ("BBV" and, together with the JPM Investors and Chase,
the "SBIC Investors"), and each of the other parties listed on the signature
pages hereto under the caption "Other Investors" (collectively, the "Other
Investors" and together with the SBIC Investors, the "Investors").

      WHEREAS, the Company desires to sell (i) Eleven Million Nine Hundred
Eighty Thousand Five Hundred Sixty One (11,980,561) of its authorized but
unissued shares of Series B Cumulative Redeemable Senior Preferred Stock, par
value $.001 per share (the "Series B Preferred Stock"), and (ii) Eleven Million
Nine Hundred Eighty Thousand Five Hundred Sixty Two (11,980,562) of its
authorized but unissued shares of Series C Cumulative Convertible Senior
Preferred Stock, par value $.001 per share (the "Series C Preferred Stock" and
collectively with the Series B Preferred Stock, the "Senior Preferred Stock" or
the "Shares") to the Investors at the Closing (as defined in Section 1.2 below)
for an aggregate cash consideration equal to Thirty Million Four Hundred Forty
Nine Thousand Seven Hundred Ninety Five Dollars Fifty Nine Cents
($30,449,795.59) in accordance with the terms hereof; and

      WHEREAS, subject to the terms and conditions of this Agreement, the
Investors desire to purchase the Shares from the Company at the aggregate
purchase price set forth herein.

      IT IS HEREBY AGREED AS FOLLOWS:

                                       1
<PAGE>

Basic Terms of Purchase and Sale.
<PAGE>

Purchase and Sale of Senior Preferred Stock .

The Company shall adopt and file with the Secretary of State of Delaware on
or before the date of the Closing an Amended and Restated Certificate of
Incorporation in the form attached hereto as Exhibit A (the "Restated
Certificate"). The rights, preferences and privileges of the Shares will be
as provided in the Restated Certificate.

(a)      Subject to the terms and conditions of this Agreement each of the
Investors agrees, severally and not jointly, to purchase from the Company at
the Closing, and the Company agrees to sell and issue to each of the
Investors at the Closing, (i) that number of shares of Series B Preferred
Stock as is set forth opposite such Investor's name on Schedule I for cash
equal to $1.2708 per share, and (ii) that number of shares of Series C
Preferred Stock as is set forth opposite such Investor's name on Schedule I
for cash equal to $1.2708 per share, with the aggregate amount to be paid by
each Investor for the Shares to be acquired by such Investor being as stated
on Schedule I opposite such Investor's name. The Company's agreements with
each of the Investors are separate agreements, and the sale of the Shares to
each of the Investors are separate sales.

1.2      The Closing. The closing of the sale and purchase of the Shares
pursuant to this Agreement shall take place at the offices of Paul, Hastings,
Janofsky & Walker LLP, 399 Park Avenue, New York, New York 10022-4692 on or
about November 24, 1999, at 10:00 a.m., eastern standard time, or at such
other time and place as the Company and each of the Investors may mutually
agree (the "Closing"). At the Closing, the Company shall deliver to each
Investor a certificate representing that number of the shares of Series B
Preferred Stock and Series C Preferred Stock, respectively, set forth on
Schedule I opposite the name of such Investor against delivery to the Company
by such Investor of a wire transfer of immediately available funds in the
amount set forth opposite such Investor's name on Schedule I. If, at the
Closing, any of the conditions specified in Section 4 of this Agreement shall
not have been fulfilled, each of the Investors shall, at its election, be
relieved of all of its obligations under this Agreement.

1.3      Additional Shares.

(a)      Upon the earlier to occur of (i) May 24, 2001 or (ii) the effective
date of the Company's first registered public offering of its Common Stock,
par value $.001 per share, other than a registration relating either to the
sale of securities to employees of the Company pursuant to a stock option,
stock purchase or similar plan or any transaction described in Rule 145(a)
promulgated under the Securities Act of 1933, as amended, the Company shall
cause its Chief Executive Officer and Chief Financial Officer to execute and
deliver to the Investors a certificate certifying the Net Bellfax Liability
(as defined below) (the "Net Bellfax Liability Certificate"). If the Net
Bellfax Liability is greater than zero, the Company shall issue and deliver
to each Investor as a purchase price adjustment, without payment of any
additional consideration

<PAGE>

therefor, such Investor's pro rata share of the Additional Shares (as defined
below). The Additional Shares, when issued in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable. The Additional Shares (and
the Common Stock issuable upon conversion thereof) will be free of any liens,
charges or encumbrances other than those created by or imposed upon the holders
thereof through no action of the Company, and the Additional Shares (and the
Common Stock issuable upon conversion thereof) will be free of restrictions on
transfer, other than the restrictions on transfer under this Agreement, the
Related Documents (as defined below) and under applicable state and federal
securities laws. Unless holders of a majority of the Shares dispute the
computation of the Net Bellfax Liability in accordance with Section 1.3(b), the
Additional Shares shall be delivered to the Investors on the 30th day following
the delivery of the Net Bellfax Liability Certificate.

(b)      The Net Bellfax Liability Certificate shall present in reasonable
detail the Company's computation of the Net Bellfax Liability. Without
limitation of any other rights of the Investors under this Agreement or the
Related Documents, the Investors (and/or their representatives) shall have
the right at reasonable times and on reasonable notice to review and/or audit
the books and records of the Company and its subsidiaries for the purpose of
verifying any computation of the Net Bellfax Liability. The Company shall pay
the fees and expenses incurred by any representative or representatives
designated by the holders of a majority of the Shares (which may include an
Investor); provided, however, if it is ultimately determined that the
Company's computation of the Net Bellfax Liability was within five percent
(5%) of the actual amount thereof, then the total amount of such fees and
expenses shall be applied against, and therefore reduce, the Net Bellfax
Liability.

(c)      Capitalized terms used in this Section 1.3 shall have the meaning
ascribed thereto elsewhere in this agreement, except the following terms used
in this Section 1.3 shall have the following meanings:

(i)      "Additional Shares" shall mean a number of shares of Series C
Preferred Stock equal to the Net Bellfax Liability divided by the original
issuance price of the Series C Preferred Stock, or $1.2708, as such original
issuance price may be adjusted in accordance with the Restated Certificate.

(ii)     "Net Bellfax Liability" shall mean the total amount of payments
made by the Company, indebtedness or obligations assumed, liabilities and
obligations, fixed or contingent, incurred or accrued by the Company, or
other credit support provided, or liability of any kind whatsoever suffered
(including, without limitation, all liabilities which the Company is required
to accrue in accordance with generally accepted accounting principles), by
the Company or any of its subsidiaries (other than Bell Fax (as defined
below)) which is attributable to the business and operations of Bell Fax,
Inc., a Delaware corporation and wholly-owned subsidiary of the Company
("Bell Fax"), unrelated to the principal business of the Company as

<PAGE>

described in the Business Plan (the "Principal Business"); provided, however,
such amount shall be reduced by the total net cash proceeds realized from (i)
the sale or other disposition of any assets of Bell Fax not used or useful in
the Principal Business or (ii) the sale or other disposition of the capital
stock or assets of ArbiNet Israel Ltd.

2.       Representations and Warranties of the Company.

         The Company hereby represents and warrants to each Investor that,
except as set forth on the Schedule of Exceptions attached hereto as Exhibit
B, specifically identifying the relevant subsection hereof (which exceptions
shall be deemed to be representations and warranties as if made hereunder),
the following are true and correct:

2.1      Organization Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power and
authority to carry on its business as now conducted and as proposed to be
conducted. The Company is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure so to qualify could
reasonably be expected to have a material adverse effect on its business,
operations, operating results, properties, prospects, assets, condition
(financial or otherwise) or liabilities.

2.2      Capitalization; Stock Option Plan. The authorized capital of the
Company consists, or will consist, contemporaneously with, or immediately
following the Closing (after giving effect to the Series A-2 Restructuring
(as such term is defined in Section 4.11 below)), of:

(i)      Preferred Stock. Forty Million (40,000,000) shares of Preferred
Stock, par value $.001 per share, of which (x) Ten Million (10,000,000)
shares have been designated Series A Preferred Stock, of which Five Million
One Hundred Twenty Four Thousand Nine Hundred Eighty Five (5,124,985) have
been designated Series A-1 Preferred Stock, par value $.001 per share
("Series A-1 Junior Preferred Stock), and Five Million One Hundred Twenty
Four Thousand Nine Hundred Eighty Five (5,124,985) shares of Series A-1
Preferred Stock are issued and outstanding, (y) Twelve Million (12,000,000)
shares will have been designated Series B Preferred Stock, of which Eleven
Million Nine Hundred Eighty Thousand Five Hundred Sixty One (11,980,561)
shares of Series B Preferred Stock will be issued and outstanding and (z)
Twelve Million (12,000,000) shares have been designated Series C Preferred
Stock, of which Eleven Million Nine Hundred Eighty Thousand Five Hundred
Sixty Two (11,980,562) shares of Series C Preferred Stock will be issued and
outstanding. The rights, privileges and preferences of the Preferred Stock
are as stated in the Restated Certificate.

(ii)     Common Stock. Forty Million (40,000,000) shares of Common Stock,
par value $.001 per share, Five Million Nine Hundred Two Thousand Nine
Hundred Thirty Nine and Forty One-Hundreths (5,902,939.40) shares of which
are issued and outstanding and (w) Five Million One Hundred Twenty Four
Thousand Nine Hundred Eighty Five (5,124,985) shares of Common Stock are
reserved for issuance upon conversion of issued and outstanding shares of

<PAGE>

Series A-1 Junior Preferred Stock, (x) Eleven Million Nine Hundred Eighty
Thousand Five Hundred Sixty Two (11,980,562) shares of Common Stock will be
reserved for issuance upon conversion of issued and outstanding shares of Series
C Preferred Stock, (y) Ten Million Four Hundred Twenty Six Thousand Nine Hundred
Eighteen (10,426,918) shares of Common Stock will be reserved for issuance to
key employees, officers, directors and consultants pursuant to the Company's
1997 Stock Incentive Plan, as amended (the "Stock Option Plan"), and (z) One
Hundred Eighty Four Thousand Nine Hundred Twenty Three (184,923) shares of
Common Stock will be reserved for issuance upon conversion of issued and
outstanding warrants issued pursuant to the Series A-2 Restructuring Agreement.
The rights, privileges and preferences of the Common Stock are as stated in the
Restated Certificate.

(iii)    An accurate list of (x) the Company's stockholders and their
holdings and (y) those Persons (as defined below) holding options, warrants
or other rights to purchase any class of the Company's capital stock
(excluding conversion privileges of the Series A-1 Junior Preferred Stock and
Series C Preferred Stock) and their holdings is set forth in Exhibit C to
this Agreement. All of the issued and outstanding shares of the Company as of
the Closing (including the Shares) are duly authorized, validly issued, fully
paid and nonassessable and were issued in compliance with state and federal
securities laws. Based upon the representations of the Investors in this
Agreement and subject to the provisions of Section 2.5 below, the Shares (and
the Common Stock issuable upon conversion thereof) have been issued or will
be issued in compliance with all applicable federal and state securities laws.

(iv)     Except for (A) conversion privileges of the Series A-1 Junior
Preferred Stock and Series C Preferred Stock and (B) options to purchase an
aggregate of Five Million Three Hundred Eighty Three Thousand Eight Hundred
Sixty Eight and Thirty One One-Hundreths (5,383,868.31) shares of Common
Stock granted to present or former employees, officers, directors or
consultants of the Company pursuant to the Stock Option Plan and (C) warrants
to purchase an aggregate of One Hundred Eighty Four Thousand Nine Hundred
Twenty Three (184,923) shares of Common Stock issued pursuant to the A-2
Restructuring Agreement, there are no outstanding options, warrants, rights
(including conversion or preemptive rights) or agreements, orally or in
writing, for the purchase, redemption or acquisition from the Company of any
shares of its capital stock. Except as otherwise contemplated herein, the
Company is not a party or subject to any agreement or understanding, and, to
the best of the Company's knowledge, there is no agreement or understanding
between any individual partnership, limited liability company, joint venture,
corporation, association trust or any other entity or organization
(collectively, a "Person") that affects or relates to (i) the voting or
giving of written consents with respect to any security of the Company
(including, without limitation, any voting agreements, voting trust
agreements, shareholder agreements or similar agreements) or the voting by a
director of the Company or (ii) the sale, transfer or other disposition with
respect to any security of the Company.

(b)      The shares of Common Stock presently available for issuance under
the Stock Option Plan are sufficient to cover all grants of stock options to
eligible participants under the

<PAGE>

Stock Option Plan which the Company reasonably anticipates it will be necessary
or advisable to issue within the eighteen month period following the date of the
Closing.

2.3      Subsidiaries. Section 2.3 of Exhibit B sets forth a true and
complete list of all of the subsidiaries of the Company (collectively, the
"Subsidiaries") the place of incorporation of each such subsidiary and its
authorized capitalization, its shares of capital stock outstanding, and the
record and beneficial owner of those shares. Except as set forth in Section
2.3 of Exhibit B, none of the Subsidiaries has conducted any business or
entered into any contract, agreement or undertaking and have been inactive
from the date of its formation. Except for the Subsidiaries, the Company does
not, and prior to the Closing will not, own or control, directly or
indirectly, any partnership interests, stock or other equity interests in any
partnership, corporation, limited liability company or partnership or other
entity. There are no outstanding (and neither the Company nor any Subsidiary
has any plan to issue, grant or enter into any) options, warrants, rights
(including conversion or preemptive rights), subscriptions or agreements for
the purchase or acquisition from or by the Company or any Subsidiary of any
shares of capital stock of any Subsidiary or other entity. There are no
voting agreements, voting trust agreements, shareholder agreements or other
similar agreements relating to the capital stock of any of the Subsidiaries.

2.4      Authorization. The Company has all requisite corporate power to
execute and deliver this Agreement and to carry out and perform its
obligations under this Agreement. All corporate action on the part of the
Company, its officers, directors and stockholders (including, without
limitation, holders of Preferred Stock (other than holders of Senior
Preferred Stock)) necessary for the authorization, execution and delivery of
this Agreement, the Restated Certificate, the Amended and Restated Investors'
Rights Agreement in the form attached as Exhibit D (the "Rights Agreement"),
the Amended and Restated Co-Sale and Right of First Refusal Agreement in the
form attached as Exhibit E (the "Co-Sale Agreement"), the Amended and
Restated Voting Agreement in the form attached as Exhibit F (the "Voting
Agreement") and the Series A-2 Restructuring Agreement in the form attached
as Exhibit G (the "Series A-2 Restructuring Agreement" and, together with the
Restated Certificate, the Rights Agreement, the Co-Sale Agreement and the
Voting Agreement, the "Related Documents"), the performance of all
obligations of the Company hereunder and thereunder and the authorization,
issuance and delivery of the Shares (and the Common Stock issuable upon
conversion of the Shares) has been taken or will be taken prior to the
Closing, and this Agreement, the Restated Certificate, the Rights Agreement,
the Co-Sale Agreement, the Voting Agreement and the Series A-2 Restructuring
Agreement constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, and other laws of general application
affecting enforcement of creditors rights generally, as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies, and (ii) to the extent the indemnification
provisions contained in the Rights Agreement may be limited by applicable
federal or state securities laws. The Shares, when issued in compliance with
the provisions of this Agreement, will be validly issued and will be fully
paid and nonassessable and will have the rights, preferences and privileges
described in the Restated

<PAGE>

Certificate. The shares of Common Stock issuable upon conversion of the Series C
Preferred Stock have been duly and validly reserved and, when issued in
compliance with the provisions of this Agreement and the Restated Certificate
will be validly issued, fully paid and nonassessable. The Shares (and the Common
Stock issuable upon conversion thereof) will be free of any liens, charges or
encumbrances other than those created by or imposed upon the holders thereof
through no action of the Company, and the Shares (and the Common Stock issuable
upon conversion thereof) will be free of restrictions on transfer, other than
the restrictions on transfer under this Agreement and the Related Documents
under the applicable state and federal securities laws.

2.5      Consents. No consent, approval, license, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority or any party to a Contract (as
defined in Section 2.11(a) below) or any other third party is required by the
Company or any Subsidiary in connection with (x) the valid execution and
delivery of this Agreement and the Related Documents, (y) the offer and sale
of the Shares (and the Common Stock issuable upon conversion of the Series C
Preferred Stock) or (z) the consummation of the transactions contemplated by
this Agreement and the Related Documents, except (i) the filing of the
Restated Certificate with the Secretary of State of the State of Delaware and
(ii) such filings as may be required under applicable state and federal
securities laws, which filings will be timely filed within the applicable
periods therefor.

2.6      Permits. The Company and each Subsidiary has all franchises,
permits, licenses and any similar authority as necessary for the conduct of
its business as now being conducted by it, and believes it can obtain,
without undue burden or expense, any similar authority for the conduct of its
business as planned to be conducted, except for those franchises, permits,
licenses or similar authority the failure of which to obtain could not
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any Subsidiary is in material default under any of such franchises,
permits, licenses or other similar authority. The execution, delivery and
performance of and compliance with this Agreement and Related Documents and
the issuance of the Shares and the Common Stock issuable upon conversion of
the Series C Preferred Stock will not result in suspension, revocation,
impairment, forfeiture or nonrenewal of any such franchise, permit, license
or similar authority which could not be reasonably expected to result in a
Material Adverse Effect (as defined below in Section 2.11).

2.7      Litigation. There is no action, suit, proceeding or investigation
pending or, to the Company's knowledge, currently threatened against the
Company or any Subsidiary or any of their respective properties nor is the
Company aware that there is any basis for the foregoing, including, without
limitation, any action, suit, proceeding or investigation which questions the
validity of this Agreement or any Related Document or any action to be taken
in connection herewith or therewith. The foregoing includes, without
limitation, actions pending or, to the Company's knowledge, threatened (or
any basis therefor known to the Company) involving the prior employment of
any of the Company's or any Subsidiary's employees, their use in connection
with the Company's or any Subsidiary's business of any information or
techniques

<PAGE>

allegedly proprietary to any of their former employers, or their obligations
under any agreements with prior employers. Neither the Company nor any
Subsidiary nor any of their respective properties is a party or subject to the
provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality. There is no action, suit, proceeding or
investigation by the Company or any Subsidiary currently pending or which the
Company or any such Subsidiary currently intends to initiate.

2.8      Proprietary Information and Inventions Agreement. Each current and
prior employee, consultant and officer of the Company has executed an
agreement with the Company regarding confidentiality and proprietary
information with provisions addressing confidentiality and corporate
ownership of inventions in the form provided to counsel for the Investors.
The Company is not aware that any parties are in violation thereof.

2.9      Intellectual Property .

(a)(i)   Set forth in Section 2.9 of the Schedule of Exceptions is a true,
correct and complete list of all patents, trademarks, service marks, trade
names, brand names, registered copyrights, franchises, technology, and areas
of know-how and processes, and any applications for any of the foregoing
(collectively, the "Intellectual Property") of any kind in which the Company
or any of the Subsidiaries has an interest or which is otherwise used in the
business of the Company or any of the Subsidiaries. Section 2.12 of the
Schedule of Exceptions also contains a true, correct and complete list of all
licenses, agreements or potential conflicts that materially affect the rights
of the Company and the Subsidiaries to any of the Intellectual Property or
any trade secret material of the Company and the Subsidiaries (the
"Intellectual Property Licenses").

(ii)     The Company and the Subsidiaries are the sole and exclusive owners,
free and clear of all Liens, and have all right, title and interest in all of
the Intellectual Property. With respect to any Intellectual Property or trade
secret material to the conduct of its business, the Company and each of the
Subsidiaries owns or has the right to use such Intellectual Property or trade
secret in its business. The Company and each of the Subsidiaries has the
right to use all Intellectual Property necessary to conduct the business of
such Company or Subsidiary as now being conducted and as proposed to be
conducted by such Company or Subsidiary.

(iii)    Each of the Intellectual Property Licenses is in full force and
effect and constitutes a legal, valid, binding and enforceable obligation in
accordance with its terms against the Company and each of the Subsidiaries
party thereto, except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting the
enforceability of creditors' rights in general or by general principles of
equity and, to the best knowledge of the Company, each other Person party
thereto. The Company and each of the Subsidiaries has performed all
obligations imposed upon it under each of the Intellectual Property Licenses
to which it is a party. Neither the Company or any of the Subsidiaries nor,
to the

<PAGE>

best knowledge of the Company, any other party thereto is in default thereunder,
nor, to the best knowledge of the Company, is there any event that with notice
or lapse of time, or both, would constitute a default thereunder. Neither the
Company nor any of its subsidiaries has received any notice that any other party
to any of the Intellectual Property Licenses intends to cancel, terminate or
refuse to renew the same or to exercise or decline to exercise any option or
other right thereunder. No licenses, sublicenses, covenants or agreements have
been granted or entered into by the Company or any of the Subsidiaries in
respect of any of the Intellectual Property or any trade secret material of the
Company or any of the Subsidiaries, except the Intellectual Property Licenses.
To the best knowledge of the Company, no director, officer, stockholder,
employee or other affiliate of the Company owns, directly or indirectly, in
whole or in part, any of the Intellectual Property or any trade secret material
to the Company or any of the Subsidiaries. To the best knowledge of the Company,
none of the officers, employees, consultants, distributors, agents,
representatives or advisors of the Company or any of the Subsidiaries have
entered into any agreement relating to the Company's or such Subsidiary's
business regarding the Intellectual Property, including know-how, trade secrets,
assignment of rights in inventions, or prohibition or restriction of competition
or solicitation of customers, or any other similar restrictive agreement or
covenant, whether written or oral, with any Person other than the Company and
the Subsidiaries.

(iv)     Neither the Company nor any of the Subsidiaries has disclosed other
than in the ordinary course of business consistent with past practice any
proprietary information relating to the Intellectual Property or the
Intellectual Property Licenses to any Person other than the Investors and the
Company's and the Subsidiary's employees, consultants, accountants, lawyers
and other advisors. The Company and each of the Subsidiaries have at all
times maintained reasonable procedures to protect and have enforced all of
their respective trade secrets. The Company and each of the Subsidiaries has
disclosed trade secrets to other Persons solely as required for the conduct
of the Company's or such Subsidiary's business and solely under nondisclosure
agreements that are enforceable by the Company or such subsidiary. Neither
the Company nor any of the Subsidiaries is under any contractual or other
obligation to disclose any proprietary information relating to the
Intellectual Property, any trade secret material of the Company or any of the
Subsidiaries or the Intellectual Property Licenses, nor, to the best
knowledge of the Company, is any other party to the Intellectual Property
Licenses under any such obligation to disclose proprietary information
included in or relating to Intellectual Property, any trade secret material
to the Company or any of the Subsidiaries or the Intellectual Property
Licenses to any Person, and no event has taken place, including the execution
and delivery of this Agreement and the transactions contemplated hereby or
any related change in the business activities of the Company or any of the
Subsidiaries, that would give rise to such obligation.

(v)      The consummation of the transactions contemplated hereby will not
alter or impair the rights of the Company or any of the Subsidiaries to any
of the Intellectual Property,

<PAGE>

any trade secret material to the Company or any of the Subsidiaries, or under
any of the Intellectual Property Licenses.

(b)(i)   No claim with respect to the Intellectual Property, any trade
secret material to the Company or any of the Subsidiaries, or any
Intellectual Property License which would materially adversely affect the
ability of the Company or any of the Subsidiaries to conduct its business as
presently conducted and as proposed to be conducted or, to the best knowledge
of the Company, has been asserted, or threatened by any Person. Nor does the
Company know of any grounds for any claim against the Company or any of the
Subsidiaries, (A) to the effect that any operation or activity of the Company
or any of the Subsidiaries presently occurring or contemplated, including,
inter alia, the manufacture, use or sale of any software, product, device,
instrument, or other material made or used according to the patents or patent
applications included in the Intellectual Property or Intellectual Property
Licenses, infringes or misappropriates any United States or foreign
copyright, patent, trademark, service mark or trade secret; (B) to the effect
that any other Person infringes on the Intellectual Property or
misappropriates any trade secret or know-how or other proprietary rights
material to the Company or any of the Subsidiaries; (C) challenging the
ownership, validity or effectiveness of any of the Intellectual Property or
trade secret material to the Company or such Subsidiary; or (D) challenging
the license of the Company or any of the Subsidiaries or other legally
enforceable right under, any Intellectual Property or the Intellectual
Property Licenses.

(ii)     Neither the Company nor any of the Subsidiaries is aware of any
presently existing United States or foreign patents or any patent
applications which if issued as patents would be infringed by any activity of
the Company or any Subsidiary.

(c)(i)   The Intellectual Property listed in Section 2.9 of the Schedule
of Exceptions hereto as part of the Intellectual Property, to the best
knowledge of the Company, have been properly prepared and filed on behalf of
the Company and each of the Subsidiaries named therein and are being
diligently pursued by the Company and such Subsidiaries. The inventions and
marks described in the Intellectual Property are assigned or licensed to the
Company or a Subsidiary and no other entity or individual has any right or
claim in any of the inventions, marks, Intellectual Property or any patents
or registered trademarks to be issued therefrom. Neither the Company nor any
Subsidiary is aware of any material defects in any of the Intellectual
Property which would cause any of them to be held invalid or unenforceable.
The Company and each of the Subsidiaries named in any of the Intellectual
Property has filed or will file in the patent applications of the
Intellectual Property to which it is a party all relevant and noncumulative
prior art of which it is aware.

(ii)     The Company has no knowledge of any objection or proceeding,
pending or threatened, that would affect the validity of any patent or
trademark issued pursuant thereto.

(iii)    Except in connection with the prosecution of the patent and
trademark applications listed in Section 2.9 of the Schedule of Exceptions,
there are no pending judicial or

<PAGE>

governmental proceedings, including but not limited to interferences and
oppositions, relating to any of the Intellectual Property or any other
proprietary information to which the Company or any of the Subsidiaries is a
party or by which any property (such term "property" specifically to include
rights pursuant to licenses or options or other rights to acquire licenses) of
the Company or any of the Subsidiaries is subject, and no such proceedings are
threatened or contemplated by Governmental Authorities or other Persons.

(d)      The Company will use its best, commercially reasonable, efforts to
prosecute all pending patent and trademark applications listed in Section 2.9
of the Schedule of Exceptions to issuance.

2.10     Manufacturing and Marketing Rights. Neither the Company nor any of
its Subsidiaries has granted rights to manufacture, produce, assemble,
license, market or sell its products to any other Person and is not bound by
any agreement that affects the Company's or any Subsidiary's exclusive right
to develop, manufacture, assemble, distribute, license, market or sell its
products.

2.11     Compliance with Other Instruments. Neither the Company nor any
Subsidiary is in violation or default of any provisions of (i) its
certificate of incorporation or by-laws (or comparable governing instruments)
or (ii) any instrument, contract, undertaking, understanding, indenture or
agreement to which it is a party or by which it is bound (each a "Contract")
or, of any federal or state judgment, order, writ, decree, statute, rule or
regulation applicable to the Company or any such Subsidiary (or any of their
respective properties), except, with respect to the subject matter of this
clause (ii) only, where any such violation or default could not reasonably be
expected to result in (x) the Company's or any Subsidiary's loss of any right
granted under any Contract or (y) a material adverse effect (financial or
otherwise) on the business, operations, operating results, properties,
prospects, assets, condition (financial or otherwise) or liabilities of the
Company and the Subsidiaries taken as a whole (such an effect, a "Material
Adverse Effect"). To the best of the Company's knowledge, all parties having
contracts, agreements and commitments with the Company or any Subsidiary are
in compliance therewith in all material respects. The execution, delivery and
performance of this Agreement, the Related Documents and the consummation of
the transactions contemplated hereby and thereby will not result in any
violation or be in conflict with or constitute, with or without the passage
of time and giving of notice, either a default under any such Contract,
judgment, order, writ, decree, statute, rule or regulation or an event which
results in the creation of any lien, charge or encumbrance upon any assets of
the Company or any Subsidiary.

2.12     Agreements, Action.

(a)      Neither the Company nor any Subsidiary is a party to or bound by:

<PAGE>

(i)      any note, bond debenture or other evidence of indebtedness, or any
Contract, judgment, order, writ, decree, commitment or understanding under
which it has borrowed any money or issued any note, bond, debenture or other
evidence of indebtedness, or any mortgage, pledge, security agreement, deed
of trust, financing statement or other document granting any lien,
encumbrance or security interest (including liens, encumbrances or security
interests upon properties acquired under conditional sales, capital leases
and other title retention or security devices), or any guaranty or
endorsement (other than endorsements for collection in the ordinary course of
business) of, or other contingent obligations in respect of, indebtedness for
borrowed money or other liabilities or obligations of others, in any separate
case in excess of $50,000 in principal amount or $250,000 in the aggregate;

(ii)     any Contract, judgment, order, writ, decree, commitment, arrangement
or understanding relating to any joint venture, partnership or sharing of
profits or losses with any Person or entity or permitting any Person or
entity to utilize any technology, know-how or proprietary information of the
Company or any Subsidiary;

(iii)    any Contract, instrument, judgment, order, writ, decree, commitment
for the future purchase by the Company or any Subsidiary of any materials,
equipment, services or supplies which (w) involves the payment of more than
$50,000, (x) continues for a period of more than six months, (y) by its terms
requires the Company or any Subsidiary to purchase the entire output or
services of a supplier or (z) provides that any supplier will be the
exclusive supplier of the Company or any Subsidiary;

(iv)     any Contract, instrument, proposed transaction, judgment, order,
writ or decree for the sale or other disposition by the Company or any
Subsidiary of its assets or properties other than in the ordinary course of
business, or for the merger, or consolidation of the Company or any
Subsidiary with any other Person or entity;

(v)      any Contract, instrument, judgment, order, writ or decree containing
covenants purporting to limit the freedom of the Company or any Subsidiary to
compete in any line of business or in any geographic area;

(vi)     any Contract, instrument, judgment, order, writ or decree not
elsewhere specifically disclosed pursuant to this Agreement involving the
payment or receipt by the Company or any Subsidiary of more than $50,000 per
year or $100,000 over the term thereof;

(vii)    any Contract with a consultant which provides for payment during the
term of the Contract of more than $50,000; or

(viii)   any Contract with any employee of the Company which provides for
payment of $100,000 or more per annum.

<PAGE>

(b)      True and complete copies of all Contracts identified in Section
2.12(a) of Exhibit B (collectively, the "Scheduled Contracts") have been made
available to counsel for the Investors. Neither the Company nor any
Subsidiary has received any written notification of any breach, or default
under any of the Scheduled Contracts and, to the knowledge of the Company, no
other party to any of the Scheduled Contracts has materially breached or
defaulted thereunder, and, to the knowledge of the Company, no event has
occurred and no condition or state of facts exists which, with the passage of
time or the giving of notice or both, would constitute such a default or
breach by any such other party. Neither the Company nor any Subsidiary is
currently paying liquidated damages in lieu of performance under any
Scheduled Contract.

(c)      Neither the Company nor any Subsidiary has (i) declared or paid any
dividends, or authorized or made any distribution upon or with respect to any
class or series of its capital stock, (ii) other than as expressly set forth
in the Financial Statements (as defined below in Section 2.20), incurred any
indebtedness for money borrowed or incurred any other liabilities
individually in excess of $50,000 or in excess of $50,000 in the aggregate,
(iii) made any loans or advances to any Person or entity other than ordinary
advances for travel expenses for employees in the ordinary course of
business, or (iv) sold, exchanged or otherwise disposed of any of its assets
or rights, other than the sale of its inventory in the ordinary course of
business.

(d)      Neither the Company nor any Subsidiary has engaged in the past six
(6) months in any material discussion (i) with any representative of any
corporation or corporations regarding the merger of the Company and/or such
Subsidiary with or into any such corporation or corporations, (ii) with any
corporation, partnership, association or other business entity or any
individual regarding the sale, conveyance or disposition of all or
substantially all of the assets of the Company and/or such Subsidiary or a
transaction or series of related transactions in which more than fifty
percent (50%) of the voting power of the Company and/or such Subsidiary is
disposed of, or (iii) regarding any other form of liquidation, dissolution or
winding up of the Company and/or such Subsidiary.

2.13     Brokers or Finders. Neither the Company nor any Subsidiary has
incurred, and will not incur, directly or indirectly, as a result of any
action taken by the Company and/or any such Subsidiary, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement and the Related Documents.

2.14     Disclosure. To its knowledge, the Company has fully provided the
Investors or their representatives with all the information which the
Investors have requested for deciding whether to purchase the Shares and all
information which the Company believes is reasonably necessary to enable the
Investors to make such a decision, including certain of the Company's
projections describing its proposed business (collectively, the "Business
Plan"). No representation or warranty of the Company contained in the
exhibits to this Agreement or the Business Plan contains any untrue statement
of a material fact or omits to state a material fact necessary in order to
make the statements contained herein or therein not misleading in light of
the circumstances under which they were made. The Business Plan and the
financial projections

<PAGE>

contained in the Business Plan were prepared in good faith and based upon
assumptions which the Company believes are reasonable; provided, however,
that the Company does not represent or warrant that it will achieve such
financial projections.

2.15     No Conflict of Interest. Except as described in the Financial
Statements, neither the Company nor any Subsidiary is indebted, directly or
indirectly, to any of its officers, directors or stockholders (including
holders of Preferred Stock), or to their respective spouses, parents,
children or siblings or any of their respective affiliates, in any amount
whatsoever other than in connection with expenses or advances of expenses
incurred in the ordinary course of business. None of the Company's or any of
its Subsidiaries' officers, directors or stockholders (including holders of
Preferred Stock), or any members of their immediate families, are indebted to
the Company and/or any Subsidiary or, to the best of the Company's knowledge,
have any direct or indirect ownership interest in any firm or corporation
with which the Company or any Subsidiary is affiliated or with which the
Company or any Subsidiary has a business relationship, or any firm or
corporation which competes with the Company or any Subsidiary, except that
officers, directors and/or stockholders of the Company may own up to 1% of
the outstanding stock in publicly traded companies which may compete with the
Company or any Subsidiary. To the best of the Company's knowledge, no
officer, director or stockholders (including holders of Preferred Stock) or
any member of their immediate families is, directly or indirectly, interested
in any Contract. Neither the Company nor any Subsidiary is a guarantor or
indemnitor of any indebtedness of any other Person, firm or corporation.

2.16     Rights of Registration. Except as contemplated in the Rights
Agreement, the Company has not granted or agreed to grant any registration
rights, including piggyback rights, to any Person or entity.

2.17     Private Placement. Subject to the truth and accuracy of each
Investor's representations set forth in this Agreement, the offer, sale and
issuance of the Shares as contemplated by this Agreement is and the issuance
of shares of Common Stock upon conversion of the Series C Preferred Stock
will be exempt from the registration requirements of the Securities Act of
1933, as amended (the "Securities Act"), and neither the Company nor any
authorized agent acting on its behalf will take any action hereafter that
would cause the loss of such exemption.

2.18     Corporate Documents; Board of Directors. A true and complete copy
of the Bylaws of the Company are in the form of Exhibit I. As of the Closing,
the Bylaws of the Company shall provide that the number of members of the
Board of Directors of the Company is eight (8). As of the Closing, the Board
of Directors of the Company shall be comprised of Roland Van der Meer, Doug
Alexander, Alex Mashinsky, Robert Stavis, the chief executive officer of the
Company, Paul Theunissen and Philip Summe and there shall be one (1) vacancy,
which shall be filled by a designee selected in accordance with the Restated
Certificate and the Voting Agreement. The current officers of the Company and
each Subsidiary are as set forth in Section 2.18 of Exhibit B.

<PAGE>

2.19     Title to Property and Assets. The Company and each Subsidiary owns its
property and assets free and clear of all mortgages, liens, loans and
encumbrances, except such mortgages, encumbrances, loans and liens which arise
in the ordinary course of business and do not materially impair the Company's or
any such Subsidiary's ownership or use of such property or any assets. With
respect to the property and assets it leases, the Company and each Subsidiary is
in compliance in all material respects with such leases and, to the best of the
Company's knowledge, holds a valid leasehold interest free of any material
liens, claims, loans or encumbrances.

2.20     Financial Statements. The Company has delivered to the Investors its
audited consolidated financial statements (including balance sheet and profit
and loss statement and statement of cash flows) for the fiscal year ended
December 31, 1998, as well as its unaudited, consolidated and consolidating
financial statements (including balance sheet and profit and loss statement)
for the ten months ended October 31, 1999 (collectively referred to as the
"Financial Statements"). The Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated. The Financial Statements
fairly present the financial condition and operating results of the Company
as of the dates, and for the periods, indicated therein, subject to normal
year-end audit adjustments which are not expected in the aggregate to be
material. Except as set forth in the Financial Statements, neither the
Company nor any Subsidiary has any liabilities, contingent or otherwise,
other than (i) liabilities incurred in the ordinary course of business
subsequent to October 31, 1999 and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required
under generally accepted accounting principles to be reflected in the
Financial Statements, which, in both cases, individually or in the aggregate
are not material to the financial condition or operating results of the
Company and its Subsidiaries taken as a whole. The Company and each
Subsidiary maintains a system of internal accounting controls that will
enable it to prepare financial statements in accordance with generally
accepted accounting principles.

2.21     Changes. Since October 31, 1999, there has not been:

(a)      any change in the business, assets, properties, liabilities,
condition (financial or otherwise) or operating results of the Company or any
of its Subsidiaries from that reflected in the Financial Statements, except
changes in the ordinary course of business that have not been, individually
or in the aggregate, materially adverse;

(b)      any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the business (as such business
is presently conducted and as it is proposed to be conducted), assets,
properties, liabilities, prospects, or condition (financial or otherwise) or
operating results of the Company or any of the Subsidiaries;

(c)      any waiver (or partial waiver) or compromise by the Company of a
valuable right or of a material debt owed to it;

<PAGE>

(d)      any satisfaction or discharge of any lien, claim or encumbrance or
payment of any obligation by the Company or any of the Subsidiaries, except
in the ordinary course of business and that is not material to the business
(as such business is presently conducted and as it is proposed to be
conducted), properties, prospects, or condition (financial or otherwise) of
the Company and the Subsidiaries taken as a whole;

(e)      any material change to a Contract;

(f)      any change in any compensation arrangement or agreement with any
employee, officer, director, stockholder, consultant or finder;

(g)      any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets of the Company or any of
the Subsidiaries;

(h)      any sale, assignment or transfer of any tangible assets of the
Company or any of the Subsidiaries, except for the sale of inventory in the
ordinary course of business;

(i)      any resignation or termination of employment of any officer or key
employee of the Company or any of the Subsidiaries, and the Company, to the
best of its knowledge, does not know of any impending resignation or
termination of employment of any such officers or employees;

(j)      receipt of notice that there has been a loss of, or order
cancellation by, any major customer of the Company or any of the Subsidiaries
or cancellation or discontinuance by any major supplier or service provider
of the Company or any of the Subsidiaries;

(k)      any mortgage, pledge, transfer of a security interest in, or lien,
created by the Company or any of the Subsidiaries with respect to any of its
properties or assets, except liens for taxes not yet due or payable;

(l)      any payment, loan, advance or guaranty made by the Company or any of
the Subsidiaries to, or any sale, transfer or lease of any properties or
assets by the Company or any of the Subsidiaries or any other agreement or
arrangement entered into by the Company or any of the Subsidiaries with or
for the benefit of, its employees, officers, directors or stockholders
(including holders of Preferred Stock), or any members of their immediate
families, other than travel advances to employees or directors made in the
ordinary course of its business consistent with past practice;

(m)      any declaration, setting aside or payment or other distribution in
respect to any of the capital stock of the Company or any of the
Subsidiaries, or any direct or indirect redemption, purchase or other
acquisition of any of such stock by the Company or any of the Subsidiaries;

<PAGE>

(n)      any labor trouble at the Company or any of the Subsidiaries which
could reasonably be expected to have a Material Adverse Effect;

(o)      any change in the line of business of the Company or any of the
Subsidiaries;

(p)      any dissolution, winding-up, liquidation or discontinuance of a line
of business involving the Company or any of the Subsidiaries;

(q)      any other event or condition of any character which has had or could
reasonably be expected to have a Material Adverse Effect; or

(r)      any arrangement or commitment by the Company or any of the
Subsidiaries to do any of the above items described in this Section 2.21.

2.22     Employment Benefit Plans .

(a)      Except as listed in Section 2.22 of Exhibit B, neither the Company
nor any entity that would be deemed a "single employer" with the Company
under Section 414(b), (c), (m), or (o) of the Internal Revenue Code of 1986,
as amended (the "Code") or Section 4001 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") (an "ERISA Affiliate") maintains,
sponsors, contributes to, or has or has had an obligation to, or otherwise
participated in or participates in or in any way, directly or indirectly, has
or has had any liability with respect to any "employee benefit plan," as
defined in Section 3(3) of ERISA, or any other bonus, profit sharing,
pension, deferred compensation, incentive, stock option, fringe benefit,
health, welfare, change in control, or other plan, agreement, policy, trust
fund, or arrangement, whether written or unwritten, insured or self-insured
(each a "Plan" and, collectively, the "Plans"). None of the Company, any
ERISA Affiliate, or any of their respective predecessors has ever contributed
to, contributes to, has ever been required to contribute to, or otherwise
participated in or participates in or in any way, directly or indirectly, has
any liability with respect to any plan subject to Section 412 of the Code,
Section 302 of ERISA or Title IV of ERISA, including, without limitation any,
"multiemployer plan" (within the meaning of Sections (3)(37) or 4001(a)(3) of
ERISA or Section 414(f) of the Code), or any single employer pension plan
(within the meaning of Section 4001(a)(15) of ERISA). No event, condition, or
circumstance exists that would prevent the amendment or termination of any
Plan.

(b)      With respect to each of the Plans in Section 2.22 of Exhibit B:

      (i)   each Plan complies in all material respects and has been maintained
      and administered at all times in accordance with its terms and all
      applicable laws, rules and regulations, including, without limitation,
      ERISA and the Code and any trust maintained pursuant thereto is exempt
      from federal income taxation under Section 501 of the Code and nothing has
      occurred or is expected to occur through the date of the

<PAGE>

      Closing that caused or could cause the loss of such exemption or the
      imposition of any penalty or tax liability;

      (ii)  no claim, lawsuit, arbitration or other action has been threatened,
      asserted, instituted, or anticipated against the Plans (other than
      non-material routine claims for benefits, and appeals of such claims), any
      trustee or fiduciaries thereof, the Company, any ERISA Affiliate, any
      director, officer, or employee thereof, or any of the assets of any trust
      of the Plans;

      (iii) no "prohibited transaction," within the meaning of Section 4975 of
      the Code and Section 406 of ERISA, has occurred or is expected to occur
      with respect to the Plan (and the consummation of the transactions
      contemplated by this Agreement will not constitute or directly or
      indirectly result in a "prohibited transaction");

      (iv)  with respect to each Plan that is funded mostly or partially through
      an insurance policy, neither the Company nor any ERISA Affiliate has any
      liability in the nature of retroactive rate adjustment, loss sharing
      arrangement or other actual or contingent liability arising wholly or
      partially out of events occurring on or before the Closing.

(c)      The consummation of the transactions contemplated by this Agreement
will not give rise to any liability, including, without limitation, liability
for severance pay, unemployment compensation, termination pay, or withdrawal
liability, or accelerate the time of payment or vesting or increase the
amount of compensation or benefits due to any employee, director,
shareholder, or beneficiary of the Company (whether current, former, or
retired) or their beneficiaries solely by reason of such transactions. No
amounts payable under any Plan will fail to be deductible for federal income
tax purposes by virtue of Section 280G or 162(m) of the Code. Neither the
Company nor any ERISA Affiliate maintains, contributes to, or in any way
provides for any benefits of any kind whatsoever (other than under Section
4980B of the Code, the Federal Social Security Act, or a plan qualified under
Section 401(a) of the Code) to any current or future retiree or terminee.
Neither the Company nor any ERISA Affiliate has any unfunded liabilities
pursuant to any Plan that is not intended to be qualified under Section
401(a) of the Code.

2.23     Tax Returns and Payments. The Company and the Subsidiaries have
filed or caused to be filed all required Tax Returns (as defined below) with
the appropriate governmental agencies in all jurisdictions in which such Tax
Returns are required to be filed by the Company or any of the Subsidiaries
and all Taxes (as defined below) shown on such Tax Returns payable by such
entity have been properly accrued or paid to the extent such Taxes have
become due or are being contested in good faith, and for which reserves
therefor have been established by the Company in accordance with generally
accepted accounting principles. Neither the Company, nor any Subsidiary has
executed any waiver or extensions of any statute of limitations on the
assessment or collection of any Tax or with respect to any liability arising
therefrom. None of the federal,

<PAGE>

state or local income Tax Returns for the Company or any of the Subsidiaries
have been audited by any taxing authority, including the United States Internal
Revenue Service. For purposes of this Section 2.23, "Taxes" means any federal,
state, or local taxes, assessments, interest, penalties, deficiencies, fees and
other governmental charges or impositions; and "Tax Return" means any federal,
state, or local tax return, report, statement and other similar filings required
to be filed by the Company or any of the Subsidiaries with respect to Taxes.

2.24     Insurance. The Company and the Subsidiaries have in full force and
effect fire, casualty and liability insurance policies issued by insurers of
recognized responsibility, with extended coverage, sufficient in amount to
allow any of them, as applicable, to replace any of its properties that might
be damaged or destroyed. Neither the Company nor any of the Subsidiaries have
been refused any insurance coverage sought or applied for, and the Company
has no reason to believe that the Company or any Subsidiary will be unable to
renew its existing insurance coverage.

2.25     Labor Agreements and Actions. Neither the Company nor any
Subsidiary is bound by or subject to (and none of its assets or properties is
bound by or subject to) any written or oral, express or implied, contract,
commitment or arrangement (including, without limitation, collective
bargaining agreements) with any labor union, and no labor union has requested
or, to the knowledge of the Company, has sought to represent any of the
employees, representatives or agents of the Company or any of the
Subsidiaries. There is no strike or other labor dispute involving the Company
or any of the Subsidiaries pending, or to the knowledge of the Company,
threatened, which could reasonably be expected to have a Material Adverse
Effect. The Company and the Subsidiaries have complied in all material
respects with all applicable state and federal equal employment opportunity
and other laws related to employment. Neither the Company nor any of the
Subsidiaries has engaged in any unfair labor practice which could reasonably
be expected to result in a Material Adverse Effect. Neither the Company nor
any of the Subsidiaries has any agreements or arrangements with persons
titled as independent contractors or consultants, as a result of which, by
virtue of the control exercised by the Company or the Subsidiaries, the type
of work performed by the persons or any other circumstances, said persons
could reasonably be deemed to be employees of the Company or the
Subsidiaries. Neither the Company nor any Subsidiary is aware that any
officer or key employee, or that any group of key employees, intends to
terminate their employment with the Company or any such Subsidiary, nor does
the Company or any such Subsidiary have a present intention to terminate the
employment of any of the foregoing. The employment of each officer and
employee of the Company and the Subsidiaries is terminable at the will of the
Company or the Subsidiaries to the extent permitted by law.

2.26     Environmental and Safety Laws. The business, assets and properties
of the Company and the Subsidiaries are and have been operated and maintained
in compliance with all applicable federal, state, city, county and local
environmental protection and occupational health and safety laws and
regulations (collectively, the "Environmental and Safety Laws"), except where
the failure to so comply could not reasonably be expected to have a Material
Adverse

<PAGE>

Effect. No event has occurred which, with or without the passage of time or the
giving of notice, or both, would constitute non-compliance by the Company or the
Subsidiaries with, or a violation by any of the Company or the Subsidiaries of,
the Environmental and Safety Laws, except for violations which could not
reasonably be expected to have a Material Adverse Effect. None of the Company
nor any of the Subsidiaries nor any of their respective predecessor companies
has caused or permitted to exist, as a result of an intentional or unintentional
act or omission by the Company, any such Subsidiary, any of their respective
predecessor companies or, to the best knowledge of the Company, by any
contractor or supplier of any of their raw materials, a disposal, discharge or
release of solid wastes, pollutants or hazardous substances, on or from any site
which currently is or formerly was owned, leased, occupied or used by any of the
Company, the Subsidiaries or any predecessor company, or, to the best knowledge
of the Company, any contractor or supplier of any of their raw materials, except
where such disposal, discharge or release was in compliance with the
Environmental and Safety Laws. Section 2.26 of Exhibit B hereto contains a
complete and correct list of the name and location of each site (i) which is
listed, or proposed for listing on a registry or inventory of inactive hazardous
waste sites maintained by any governmental authority and which currently is or
formerly was owned, leased, occupied or used by any of the Company, the
Subsidiaries or any predecessor company or (ii) with respect to which any of the
Company, the Subsidiaries or any predecessor company has received notice that
such company is considered to be a potentially responsible Person for cleanup or
other liability in respect of Environmental and Safety Laws.

2.27     Year 2000 Compliance. The computer software of the Company and the
Subsidiaries, including, without limitation, any software incorporated or
imbedded in any product or specification used or offered by the Company or
any Subsidiary or proposed for use or sale by the Company or any Subsidiary,
and including, to the Company's knowledge, software the Company or any
Subsidiary licenses from third parties, is "Millennium Compliant". As used in
this Agreement, "Millennium Compliant" means the ability of the software to
provide the following functions: (a) consistently handle date information
before, during and after January 1, 2000, including, but not limited to,
accepting date input, providing date output, and performing calculations on
dates or portions of dates; (b) function accurately in accordance with its
specifications and without interruption before, during and after January 1,
2000, without any change in operations associated with the advent of the new
century (defined for purposes of this paragraph as commencing at 12:00 A.M.,
January 1, 2000); (c) respond to two-digit date input in a way that resolves
any ambiguity as to century in a disclosed, defined and predetermined manner;
and (d) store and provide output of date information in ways that are
unambiguous as to century.

2.28     Minute Books. The copy of the minute books of the Company and its
Subsidiaries provided to the counsel for the Investors contains minutes of
all material meetings of directors (including committees thereof) and
stockholders and all material actions by written consent without a meeting by
the directors and stockholders since the date of incorporation and reflects
all actions by the directors (and any committee of directors) and
stockholders with respect to all transactions referred to in such minutes
accurately in all material respects.

<PAGE>

2.29     Small Business Concern .

(a)      The Company, together with its "affiliates" (as that term is defined
in Title 13 of the United States Code of Federal Regulations) is a "Small
Business" within the meaning of the Small Business Investment Act of 1958, as
amended (the "Small Business Investment Act"), and the regulations
promulgated thereunder (including Part 107 and 121 of Title 13 of the United
States Code of Federal Regulations). The information provided by the Company
on SBA Forms 480, 652 and 1031 delivered in connection herewith is true and
correct.

(b)      The proceeds from the sale of the Series B Preferred Stock and
Series C Preferred Stock to any Investor that is a small business investment
company (an "SBIC") will be used by the Company to fund working capital and
for general corporate purposes. No portion of such proceeds (i) will be used
to purchase stock in, provide capital to or repay any indebtedness incurred
for the purpose of investing in a company licensed under the Small Business
Investment Act, (ii) will be used to acquire realty or to discharge an
obligation relating to the prior acquisition of realty, (iii) will be used
outside the United States (except to acquire abroad materials and equipment
or property rights for use or sale in the United States), or (iv) will be
used for any purpose contrary to the public interest (including but not
limited to activities which are in violation of law) or inconsistent with
free competitive enterprise, in each case, within the meaning of ss. 107.720
of Title 13 of the United States Code of Federal Regulations.

(c)      The Company's primary business activity does not involve, directly
or indirectly, providing funds to others, the purchase or discounting of debt
obligations, factoring or long-term leasing of equipment with no provision
for maintenance or repair, and the Company is not classified under Major
Group 65 (Real Estate) or Industry No. 1531 (Operative Builders) of the SIC
Manual. Not more than 49% of the Company's employees or tangible assets are
located outside of the United States.

(d)      The Company confirms that it has been advised that each of the SBIC
Investors is a Federal licensee under the Small Business Investment Act.

2.30     Section 897 of the Internal Revenue. The Company is not a U.S. Real
Property Holding Company as defined in Section 897 of the Internal Revenue
Code of 1986, as amended (the "Code").

2.31     Use of Proceeds. The Company will use the proceeds from the sale of
the Shares to the SBIC Investors as set forth in Section 2.29(b). The Company
may also use such proceeds for research and development. The Company will use
the proceeds from the sale of Shares to the Other Investors for general,
corporate and working capital purposes. None of the proceeds from the sale of
the Shares will be used, directly or indirectly, by the Company for the
purpose of purchasing or carrying, or for the purpose of reducing or retiring
any indebtedness which was originally incurred to purchase or carry, any
"margin security" or "margin stock" within the meaning of Regulation U (12
CFR Part 221), of the Board of Governors of the Federal Reserve

<PAGE>

System or for any other purpose which might make the transactions contemplated
in this Agreement a "purpose credit" within the meaning of said Regulation U, or
cause this Agreement to violate any other regulation of the Board of Governors
of the Federal Reserve System or the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or any rules or regulations promulgated under any of such
statutes. Neither the Company nor any of the Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying "margin security" or "margin
stock" within the meaning of Regulation U (12 CFR Part 221) of the Board of
Governors of the Federal Reserve System.

2.32     Absence of Certain Commercial Practices. Neither the Company nor
any of the Subsidiaries nor, to the knowledge of the Company, any officer,
director, employee or agent of the Company or any of the Subsidiaries (or any
Person acting on behalf of any of the foregoing), has (i) given or agreed to
give any gift or similar benefit of more than nominal value on behalf of the
Company or any Subsidiary to any official of any governmental authority
(domestic or foreign), to induce the recipient or his employer to do
business, grant favorable treatment or compromise or forego any claim, (ii)
made any payment which is illegal under prevailing law (regardless of the
jurisdiction in which such payment was made) to promote or retain sales or to
help procure or maintain good relations with suppliers, (iii) engaged in any
activity which constitutes a violation of the Foreign Corrupt Practices Act
of 1977, as amended, and the rules and regulations promulgated thereunder,
(iv) engaged in any practice violating any United States federal law
prohibiting compliance with an unsanctioned foreign boycott or (v) failed to
perform its obligations in any respect under any contract with, or violated
in any material respect any federal law known to the Company or any of the
Subsidiaries in its dealings with, the federal government or any agency or
department thereof, including, but not limited to, any law with respect to
conspiracy to defraud, false claims, conspiracy to defraud the United States,
embezzlement or theft of public money, fraud and false statements, false
demands against the United States, mail fraud, wire fraud, RICO, and truth in
negotiations, which failure or violation would result in a Material Adverse
Effect. No such gift or benefit is required in connection with the operations
of the Company or any of the Subsidiaries or their businesses to avoid any
fine, penalty, cost, expense or change in the business, assets, properties,
prospects, operations or financial condition of the Company or any of the
Subsidiaries which could reasonably be expected to result in a Material
Adverse Effect.

3.       Representations and Warranties of the Investor.

         Each Investor, severally and not jointly, hereby represents and
warrants to the Company as follows:

<PAGE>

3.1      Authorization. This Agreement and the Related Documents, when
executed and delivered by such Investor, will each constitute a valid and
legally binding obligation of such Investor, enforceable in accordance with
its terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and any other laws of
general application affecting enforcement of creditors rights generally, and
as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (ii) to the extent the
indemnification provisions contained in the Rights Agreement may be limited
by applicable federal or state securities laws.

3.2      Purchase Entirely for Own Account. This Agreement is made with the
Investor in reliance upon the Investor's representation to the Company, which
by the Investor's execution of this Agreement the Investor hereby confirms,
that the Shares (and Common Stock issuable upon conversion thereof) to be
acquired by the Investor will be acquired for investment for the Investor's
own account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof in violation of federal securities laws. The
Investor represents that it has the requisite power and authority to enter
into, execute, deliver and perform this Agreement.

3.3      Investment Experience. The Investor understands that the Shares
(and the Common Stock issuable upon conversion of the Series C Preferred
Stock) have not been, and will not be, registered under the Securities Act by
reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature
of the investment intent and the accuracy of the Investor's representations
as expressed herein. The Investor has not been formed for the specific
purpose of acquiring the Shares (or the Common Stock issuable upon conversion
of the Series C Preferred Stock).

3.4      Restricted Securities. The Investor understands that the Shares
(and the Common Stock issuable upon conversion of the Series C Preferred
Stock) are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such Shares (and the Common Stock issuable upon
conversion of the Series C Preferred Stock) may be resold without
registration under the Securities Act only in certain limited circumstances.
The Investor acknowledges that the Shares (and the Common Stock issuable upon
conversion of the Series C Preferred Stock) must be held indefinitely unless
subsequently registered under the Securities Act or an exemption from such
registration is available. The Investor is aware of the provisions of Rule
144 promulgated under the Securities Act which permit limited resale of
shares purchased in a private placement subject to the satisfaction of
certain conditions, including, among other things, the existence of a public
market for the shares, the availability of certain current public information
about the Company, the resale occurring not less than one year after a party
has purchased and paid for the security to be sold, the sale being effected
through a "broker's transaction" or in transactions directly with a "market
maker" (as provided by Rule 144(f)) and the number of shares being sold
during any three-month period not exceeding specified limitations.

<PAGE>

3.5      No Public Market. The Investor understands that no public market
now exists for any of the securities issued by the Company, that the Company
has made no assurances that a public market will ever exist for the Shares or
the Common Stock issuable upon conversion of the Series C Preferred Stock and
that, even if such a public market exists at some future time, the Company
may not then be satisfying the current public information requirements of
Rule 144.

3.6      Legends. The Investor understands that the Shares (and the Common
Stock issuable upon conversion of the Series C Preferred Stock), and any
securities issued in respect thereof or exchange therefor, may bear one or
all of the following legends:

(a)      "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."

(b)      Any legend required by the laws of the State of New York.

(c)      Any legend required by the Blue Sky laws of any other state to the
extent such laws are applicable to the shares represented by the certificate
so legended.

         The requirement that the foregoing legend(s) be placed upon
certificates evidencing any such securities shall cease and terminate upon
the earliest of the following events: (i) when such securities are
transferred in a public offering under the Securities Act, (ii) when such
securities are transferred pursuant to Rule 144 under the Securities Act or
(iii) when such shares are transferred in any other transaction if the seller
delivers to the Company an opinion of its counsel, which counsel and opinion
shall be reasonably satisfactory to the Company (it being agreed that Paul,
Hastings, Janofsky & Walker LLP, Proskauer Rose LLP, Bingham Dana LLP or
O'Sullivan Graev & Karabell, LLP shall be satisfactory), or a "no-action"
letter from the staff of the SEC, in either case, to the effect that such
legend is no longer necessary in order to protect the Company against a
violation by it of the Securities Act upon any sale or other disposition of
such shares without registration thereunder. Upon the occurrence of any event
permitting the removal of a legend hereunder, the Company, upon the surrender
of certificates containing such legend, shall, at its own expense, deliver to
the holder of any such shares as to which the requirement for such legend
shall have terminated, one or more new certificates evidencing such shares
not bearing such legend.

3.7      Accredited Investor. The Investor is an accredited investor as
defined in Rule 501 (a) of Regulation D promulgated under the Act.

3.8      Brokers or Finders. Except as disclosed in the Schedule of
Exceptions, the Company will not incur, directly or indirectly, as a result
of any action taken by the Investor, any liability

<PAGE>

for brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement.

4.       Conditions to Investors' Obligations at Closing.

         The obligations of each of the Investors under this Agreement are
subject to the fulfillment, or the waiver by each of the Investors, of the
conditions set forth in this Section 4 on or before the Closing.

4.1      Accuracy of Representations and Warranties. Each representation and
warranty of the Company contained in this Agreement shall be true in all
material respects on and as of the date of the Closing with the same effect
as though such representation and warranty had been made on and as of that
date. Immediately prior to the Closing, the Company shall provide each of the
Investors with a new Disclosure Schedule, updated for such Closing, provided
that, the obligation set forth in the preceding sentence with respect to the
accuracy of the representations and warranties of the Company as of the
Closing shall be based solely on Exhibit B, Schedule of Exceptions, provided
to the Investors at or prior to the execution of this Agreement.

4.2      Performance. The Company shall have performed and complied with all
covenants, agreements, obligations and conditions contained in this Agreement
that are required to be performed or complied with by it on or before the
Closing.

4.3      Compliance Certificate. The President of the Company shall deliver
to the Investors at the Closing a certificate certifying that the conditions
specified in Sections 4. 1 and 4.2 have been fulfilled.

4.4      Qualifications and Consents. All authorizations, approvals or
permits, if any, of any governmental authority or regulatory body and all
consents and approvals of any third party that are required in connection
with the lawful consummation of the transactions provided for herein and in
the Related Documents (including, without limitation, the lawful issuance and
sale of the Shares pursuant to this Agreement) shall be obtained and
effective as of the Closing without the imposition of any obligations,
liabilities or conditions adverse to the Company, the Subsidiaries or any
Investor. Without limiting the generality of the foregoing, each of the
Company's existing stockholders shall have waived any preemptive right or
right of first offer (or any comparable right) any such stockholder may have
to purchase any of the Shares (or the shares of Common Stock issuable upon
conversion of the Series C Preferred Stock).

4.5      Proceedings and Documents. On or prior to the date of the Closing,
the Restated Certificate shall have been filed with the Secretary of State of
the State of Delaware. All corporate and other proceedings in connection with
the transactions contemplated by this Agreement and the Related Documents at
the Closing and all documents incident thereto shall be reasonably
satisfactory in form and substance to the Investors'

<PAGE>

counsel, and the Investors' counsel shall have received all such counterpart
original and certified or other copies of such documents as it may reasonably
request.

4.6      Opinion of Company Counsel. The Investors shall have received from
(i) Paul, Hastings, Janofsky & Walker LLP, counsel for the Company, an
opinion, dated as of the Closing, in the form of Exhibit H and (ii) Pennie &
Edmonds LLP, special counsel for the Company, an opinion, dated as of the
Closing, in the form of Exhibit I.

4.7      Board of Directors. The Company's Bylaws shall reflect that the
size of the Board of Directors of the Company shall be set at eight (8). As
of the Closing, the Board of Directors of the Company shall be comprised of
Roland Van der Meer, Doug Alexander, Alex Mashinsky, Robert Stavis, the chief
executive officer of the Company, Paul Theunissen and Philip Summe, and there
shall be one (1) vacancy, which shall be filled by a designee selected in
accordance with the Restated Certificate and the Voting Agreement.

4.8      Rights Agreement. The Company and each holder of Series A-1 Junior
Preferred Stock shall have executed and delivered the Rights Agreement.

4.9      Co-Sale Agreement. The Company, Alex Mashinsky and each holder of
Series A-1 Junior Preferred Stock shall have executed and delivered the
Co-Sale Agreement.

4.10     Voting Agreement. The Company, Alex Mashinsky and each holder of
Series A-1 Junior Preferred Stock shall have executed and delivered the
Voting Agreement.

4.11     Series A-2 Restructuring. Prior to or concurrently with the
Closing, the Company shall have consummated the following (i) all existing
shares of the Company's Series A-2 Preferred Stock, par value $.001 per share
(the "Series A-2 Preferred Stock"), shall have been repurchased by the
Company and (ii) all warrants to purchase shares of Common Stock which were
issued in connection with the original issuance of the Series A-2 Preferred
Stock, shall have been canceled and of no further force or effect, in each
case, as more particularly set forth in the Series A-2 Restructuring
Agreement (the "Series A-2 Restructuring"). The terms and conditions of the
Series A-2 Restructuring Agreement and the transactions contemplated thereby
shall be satisfactory to each Investor and counsel to the Investors.

4.12     Officer's Certificate. The Company's Chairman shall have delivered
to each Investor a certificate dated as of the Closing and signed by the
Chairman certifying, among other things, copies of the Board of Directors and
stockholder resolutions approving the transactions contemplated by this
Agreement and the Related Documents and true and correct copies of the
Restated Certificate and the Bylaws.

4.13     Blue Sky Approvals. The Company shall have received all requisite
approvals, if any, of the securities authorities of each jurisdiction in
which such approval is required, and such approvals shall be in full force
and effect on and as of the date of the Closing.

<PAGE>

4.14     SBA Documentation. The Company shall have completed, executed
(where applicable) and delivered to the SBIC Investors, SBA Form 480, SBA
Form 652 and SBA Form 1031.

4.15     No Material Adverse Change. There shall not have occurred any
material adverse change in the business, assets, properties, prospects,
liabilities or condition (financial or otherwise) of the Company or the
Subsidiaries taken as a whole.

4.16     No Litigation. There shall not be any action, suit, proceeding or
investigation of or before any governmental authority pending or threatened
(i) with respect to this Agreement, the Related Documents or any of the
transactions contemplated hereby or thereby or (ii) which could reasonably be
expected to result in a Material Adverse Effect.

4.17     Satisfactory Completion of Due Diligence; Etc. The Investors and
their respective representatives (including, without limitation, attorneys,
agents and accountants) shall have completed their legal due diligence review
and accounting review of the business and affairs, assets and liabilities and
condition (financial and otherwise) of the Company and the Subsidiaries.

4.18     Payment of Expenses. The Company shall have paid all fees and
expenses in accordance with Section 7.7 hereof.

4.19     Foundation Limited Partner Certificate. The Company shall have
executed and delivered the Foundation Limited Partner Certificate in the form
of Exhibit K.

4.20     Management Rights Agreement. The Company shall have executed and
delivered the Management Rights Letter in the form of Exhibit L.

4.21     Regulatory Compliance Side Letter. The Company shall have executed
and delivered the Regulatory Compliance Side Letter in the form of Exhibit M.

4.22     Stock Certificates, etc. At the Closing, the Company shall have
tendered to each Investor a certificate representing shares of Senior
Preferred Stock in accordance with Schedule I hereof, all in form and
substance satisfactory to such Investor and sufficient to transfer to and
vest in such Investor good and valid title to the Shares, free and clear of
any lien, charge or encumbrance.

         If at the Closing the Company fails to tender to the Investors the
documents specified herein which are required to be delivered to the
Investors at the Closing or if at the Closing any of the conditions specified
in this Section 4 shall not have been fulfilled to each Investor's
satisfaction, or waived by each Investor, such Investor shall, at its
election, be relieved of all further obligations under this Agreement.

<PAGE>

5.       Conditions of the Company's Obligations at Closing.

         The obligations of the Company under Section 1 of this Agreement are
subject to the fulfillment, or waiver by the Company, of each of the
following conditions on or before the Closing.

5.1      Representations and Warranties True at Closing. The representations
and warranties of the Investors contained in Section 3 hereof shall be true
in all material respects on and as of the date of the Closing with the same
effect as though said representations and warranties had been made on and as
of that date.

5.2      Qualifications. All authorizations, approvals or permits, if any,
of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale
of the Shares pursuant to this Agreement shall be obtained and effective as
of the date of the Closing.

5.3      Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by the Investors on or prior to the date of
the Closing shall have been performed or complied with.

5.4      Rights Agreement. Each Investor and each holder of Series A-1
Junior Preferred Stock shall have executed and delivered the Rights Agreement.

5.5      Co-Sale Agreement. Each Investor and each holder of Series A-1
Junior Preferred Stock shall have executed and delivered the Co-Sale
Agreement.

5.6      Voting Agreement. Each Investor and each holder of Series A-1
Junior Preferred Stock shall have executed and delivered the Voting Agreement.

5.7      Restated Amendment. The Restated Certificate shall have been filed
with the Secretary of State of the State of Delaware.

5.8      Series A-2 Restructuring Agreement. The transactions contemplated
by the Series A-2 Restructuring Agreement shall have been consummated in
accordance with the terms thereof.

6.       Affirmative Covenants of the Company.

         The Company hereby covenants and agrees with the Investors (except
that Section 6.8 shall be for the benefit of the SBIC Investors only) as
follows:

<PAGE>

6.1      Observer Rights. The Company shall give to BBV notice of each
meeting of the Board of Directors of the Company and its subsidiaries and of
each committee thereof at the same time and in the same manner as notice is
given to the directors of the Company or any such subsidiary. If no designee
of BBV shall then be serving on the Board of Directors of the Company, one
(1) designee of BBV shall be entitled to attend in person or by telephone, as
an observer, all meetings of the Board of Directors of the Company and each
of its subsidiaries and of each committee thereof. The Company shall provide
to BBV in connection with each meeting its respective observer designee is
entitled to attend, whether or not present at such meeting, copies of all
notices, minutes, consents, and all other materials or information that it
provides to the directors of the applicable company with respect to such
meeting, at the same time such materials and information are given to the
directors of such company (except that materials and information provided to
directors of the Company or any such subsidiary at meetings at which a
designee of BBV is not present (in person or by telephone) may be provided to
BBV promptly after the meeting). If the Board of Directors of any of the
Company or any of its subsidiaries or any committee thereof proposes to take
any action by written consent in lieu of a meeting, the Company shall give
written notice thereof to BBV prior to the effective date of such consent
describing in reasonable detail the nature and substance of such action.
Notwithstanding anything herein to contrary, if pursuant to applicable law or
regulations (or prevailing interpretation thereof), either the JPM Investors
or Chase is prohibited (or reasonably believes it is prohibited) from
designating a director to the Board of Directors of the Company and do not
designate such a director, then the JPM Investors and/or Chase, as the case
may be, shall be entitled to one (1) observer to the same extent as BBV.

6.2      Information. The Investors and their assignees shall be entitled to
receive, and the Company agrees to provide to such Investors and their
assignees, the following:

(a)      Financial and Related Data.

      (i)   As soon as available, but in any event not later than forty-five
      (45) days after the end of each month, the unaudited consolidated balance
      sheet as at the end of such month of the Company and its subsidiaries and
      the related unaudited consolidated statements of operations, stockholders'
      equity and cash flows for such month and for the elapsed period in such
      fiscal year, all in reasonable detail and stating in comparative form the
      figures as of the end of and for the comparable period of the preceding
      fiscal year and budgeted figures for the period. All such financial
      statements shall be complete and correct in all material respects, and
      shall be accompanied by a certificate of the President or chief financial
      officer of the Company to such effect.

      (ii)  As soon as available, but in any event not later than 45 days after
      the end of each fiscal quarter, the unaudited consolidated balance sheet
      of the Company and its subsidiaries as at the end of such fiscal quarter
      and the related unaudited consolidated statements of operations,
      stockholders' equity and cash flows of the Company and its subsidiaries
      for such fiscal quarter, all in reasonable detail and stating in

<PAGE>

      comparative form the figures as at the end of and for such quarter in the
      previous fiscal year and budgeted figures for the period. All such
      financial statements shall be complete and correct in all material
      respects and prepared in reasonable detail and in accordance with
      generally accepted accounting principles applied, except as stated
      therein, on a consistent basis throughout the periods reflected therein
      (except that such financial statements may omit footnotes and may be
      subject to normal year end adjustments which are not, in the aggregate,
      material), and shall be accompanied by a certificate of the President or
      chief financial officer of the Company to such effect.

      (iii) As soon as available, but in any event within 90 days after the end
      of each fiscal year of the Company, the audited consolidated and unaudited
      consolidating balance sheet of the Company and its subsidiaries as at the
      end of such fiscal year and the related audited consolidated statements
      and unaudited consolidating statements of operations, stockholders' equity
      and cash flows of the Company and its subsidiaries for such fiscal year,
      all in reasonable detail and stating in comparative form the figures as at
      the end of and for the previous fiscal year and budgeted figures for the
      fiscal year accompanied by an opinion of an accounting firm of nationally
      recognized standing selected by the Company with respect to the
      consolidated statements, which opinion shall state that such accounting
      firm's audit was conducted in accordance with generally accepted auditing
      standards and, accordingly, included such tests of accounting records and
      such other auditing procedures as were considered necessary under the
      circumstances and which opinion shall not be subject to any qualification
      resulting from a limit on the scope of the examination of the financial
      statements or the underlying data or which could be eliminated by changes
      in the financial statements or the notes thereto or by the creation of or
      increase in a reserve or a decreased carrying value of assets, as such
      standards may change from time to time. All such financial statements
      shall be complete and correct in all material respects and prepared in
      reasonable detail and in accordance with generally accepted accounting
      principles applied, except as stated therein, on a consistent basis
      throughout the periods reflected therein.

      (iv)  As soon as available, but in any event not later than 45 days prior
      to the end of each fiscal year of the Company, the financial plan of the
      Company for the next succeeding fiscal year to be submitted to the Board
      of Directors of the Company for approval, including but not limited to, at
      minimum, assumptions with respect to (a) revenues, (b) customers and
      contracts, (c) operating costs and (d) capital expenditures and cash flow
      and balance sheet projections and operating budget, calculated monthly,
      comparisons to comparable periods in the prior year and any updates or
      revisions as soon as available.

      (v)   Promptly after receipt, copies of all management letters from
      accountants and all certificates prepared by or for the Company or its
      subsidiaries as to compliance, defaults, material adverse changes,
      material litigation or similar matters.

<PAGE>

(b)      Access. The Company shall permit, and shall cause its subsidiaries
to permit, representatives designated by each of the JPM Investors, Chase and
BBV, upon reasonable prior notice to the Company, to visit and inspect each
of the Company's or its subsidiaries' properties, to examine their respective
corporate and financial records (and make copies thereof or extracts
therefrom), to discuss their respective affairs, finances and accounts with
the Company's or its subsidiaries' directors and officers, and, through the
President or chief financial officer of the Company or any of its
subsidiaries, as the case may be, such company's key employees and
accountants, all at such reasonable times as may be requested by any such
Investor during normal business hours of the Company or any such subsidiary;
provided, however, that such access shall not materially disrupt the
operation of the business of the Company or any such subsidiary.

6.3      Exemption from Investment Company Act; FIRPTA. The Company shall
conduct its business so that neither the Company nor any of its subsidiaries
shall become (i) an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or (ii) a United States real property
holding corporation (as defined in Section 897(c)(2) of the Code).

6.4      Accounting and Reserves. The Company shall, and the Company shall
cause each of its subsidiaries to, maintain a standard and uniform system of
accounting and shall keep proper books and records and accounts in which
full, true and correct entries shall be made of its transactions, all in
accordance with generally accepted accounting principles applied on a
consistent basis through all periods, and shall set aside on such books for
each fiscal year all such proper reserves for depreciation, obsolescence,
amortization, bad debts and other purposes in connection with its operations
as are required by such principles so applied.

6.5      Payment of Taxes and Claims. The Company shall, and the Company
shall cause each of its subsidiaries to, pay and discharge promptly all
lawful taxes, assessments and governmental charges or levies imposed upon it
or any such subsidiary, as the case may be, or upon their respective income
or profits or upon any of their respective properties, real, personal or
mixed, before the same shall become delinquent, as well as all lawful claims
for labor, materials and supplies which, if unpaid, would by law become a
lien or charge upon their respective properties; provided that if both of the
following conditions are met in any instance, the Company shall not be
obligated, and the Company shall not be obligated to cause any of its
subsidiaries, to pay or discharge, or to cause to be paid or discharged, such
tax, assessment, charge, levy or claim: (i) if and for so long as the Company
or such subsidiary, as the case may be, is contesting in good faith by
appropriate proceedings the amount, applicability or validity thereof, and
(ii) if the Company or such subsidiary, as the case may be, shall have set
aside on its books reserves deemed by it in accordance with generally
accepted accounting principles to be adequate with respect to such tax,
assessment, charge, levy or claim; provided further that notwithstanding the
previous provision, the Company shall pay or cause to be paid all such taxes,
assessments, charges, levies or claims forthwith upon the commencement of
proceedings to perfect or foreclose any lien which attached as security
therefor.

<PAGE>

6.6      Availability of Common Stock for Conversion. The Company shall at
all times reserve and keep available out of its authorized but unissued
shares of Common Stock, such number of its duly authorized shares of Common
Stock as shall be sufficient to effect the conversion of the Series C
Preferred Stock. If at any time the number of authorized but unissued shares
of Common Stock shall not be sufficient to effect the conversion of the
Series C Preferred Stock, or otherwise comply with the terms of this
Agreement or any Related Document, the Company shall forthwith take such
corporate action as may be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for
such purposes.

6.7      Governing Instruments. The Company shall not amend the Restated
Certificate or the By-Laws in any manner adverse to the rights of the holders
of the Shares.

6.8      SBIC Covenants .

(a)      The Company will provide to each Investor that is a Small Business
Investment Company (an "SBIC") (upon reasonable notice and during normal
business hours) and the U.S. Small Business Administration access to the
Company's books and records for the purpose of confirming the use of the
proceeds provided by such SBIC pursuant to this Agreement and for all other
purposes required by the U.S. Small Business Administration. Upon the request
of an SBIC, the Company will promptly provide to such SBIC and the U.S. Small
Business Administration a certificate of the chief financial officer (or
other executive officer) of the Company verifying the use of such proceeds
and certifying compliance by the Company with the provisions of Section 2.31
of this Purchase Agreement and paragraph (b) below.

(b)      For a period of one year following the date hereof, the Company will
not change its business activity if such change would cause the Company to be
engaged in a business activity that would render the Company ineligible as a
"Small Business" under the Small Business Investment Act of 1958, as amended,
and the regulations thereunder.

(c)      The Company will at all times comply with the non-discrimination
requirements of Parts 112, 113 and 117 of Title 13 of the United States Code
of Federal Regulations.

(d)      Upon the request of an SBIC, the Company promptly (and in any event
within twenty (20) days of such request) will provide to such SBIC an
assessment, in form and substance satisfactory to such SBIC, of the economic
impact of the financing provided by such SBIC, specifying the full-time
equivalent jobs created or retained, the impact of the financing on the
Company's business, in terms of expanded revenue and profits, and on taxes
paid by the business and its employees. Upon the request of an SBIC, the
Company promptly (and in any event within twenty (20) days of such request)
will furnish to such SBIC all information requested by such SBIC in order for
it to prepare and file SBA Form 468 or any other filing required to be filed
by such SBIC.

<PAGE>

(e)      The Company promptly will provide to each SBIC such financial
statements and other information as such SBIC may from time to time
reasonably request for the purpose of assessing the financial condition of
the Company and complying with any requirements of any governmental agency
asserting jurisdiction over such SBIC.

(f)      Without the consent of each SBIC Investor, the Company will not
issue Securities to any SBIC in the future if such issuance would cause the
SBIC Investor to be deemed to be a member of an "Investor Group" in "Control"
of the Company (as such terms are defined in 13 C.F.R. ss. 107.865).

6.9      Assistance in Sales. Anything in this Agreement or any Related
Document to the contrary notwithstanding, in the event that it becomes
unlawful for any Investor to continue to hold all or some portion of the
Shares to be held by it, or restrictions are imposed on such Investor by any
law or regulation which, in the reasonable judgement of such Investor, make
it unduly burdensome to continue to hold all or some portion of such Shares,
then such Investor may sell or otherwise dispose of all or any portion of its
Shares, and the Company shall use reasonable efforts to assist such Investor
in disposing of such interest in a prompt and orderly manner, and, at the
request of any such Investor, shall provide (and authorize such Investor to
provide) financial and other information concerning the Company and its
subsidiaries to any prospective purchaser of such interest, subject to the
execution by the Person receiving such information of a confidentiality
agreement in a form reasonably acceptable to the Company; provided, however,
that in effecting any such sale or other disposition of such Shares, such
Investor shall use its best efforts to comply with Section 3 of the Co-Sale
Agreement.

6.10     Employee Agreements. For so long as the Investors own any of the
Shares, all employees of the Company shall enter into a proprietary
information and assignment of inventions agreement, substantially in the form
attached hereto as Exhibit K.

6.11     Stock Option Plan. The Company shall not issue any stock options or
other rights to acquire Common Stock under the Stock Option Plan to satisfy
any obligations which the Company may have to those former consultants to the
Company referred to in the capitalization chart of Arbinet Holdings, Inc. (as
of November 23, 1999) delivered to the Investors by the Company prior to the
Closing.

7.       Miscellaneous Provisions.

7.1      Survival; Termination. Subject to the last sentence of this Section
7.1, the warranties, representations and covenants of the Company and the
Investors contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and shall in no way be limited,
diminished or affected by any investigation made by or on behalf of the
Investors. This Agreement, including the representations, warranties and
covenants made herein, will terminate on the closing of a Qualified IPO (as
such term is defined in the Restated Certificate).

<PAGE>

7.2      Transfer of Successors and Assigns. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties hereto. This Agreement may
not be assigned by any party hereto without the prior written consent of the
other parties to this Agreement; provided, however, that this Agreement may
be assigned to any affiliate of an Investor or any subsequent holder of any
Shares. Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective permitted
successors and assigns any rights, remedies, obligations, or liabilities
under or by reason of this Agreement, except as expressly provided in this
Agreement.

7.3      Governing Law. It is the intention of the parties that the internal
laws of the State of New York, as such laws are applied to agreements between
New York residents entered into and to be performed entirely within New York,
shall govern this Agreement in all respects, whether or not all parties
hereto are residents of New York.

7.4      Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

7.5      Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

7.6      Notices .

(a)      All notices, requests, demands and other communications under this
Agreement or (i) in connection herewith shall be given to or made upon (i)
the Investors at each such Investors address set forth on Schedule I with a
copy to Proskauer Rose LLP, 1585 Broadway, New York, New York 10036-8299,
attention: Jack P. Jackson, Esq.; and (ii) the Company at 226 East 54th
Street, 2nd Floor, New York, NY 10022, attention: Chief Executive Officer,
with a copy to Paul, Hastings, Janofsky & Walker LLP, 399 Park Avenue, New
York, New York 10022-4697, attention: Neil A. Torpey, Esq.

(b)      All notices, requests, demands and other communications given or
made in accordance with the provisions of this Agreement shall be in writing,
and shall be sent by airmail, return receipt requested, or by facsimile with
confirmation of receipt, and shall be deemed to be given or made when receipt
is so confirmed.

(c)      Any party may, by written notice to the Company, alter its address
or respondent, and such notice shall be considered to have been given three
(3) days after the airmailing or faxing thereof.

7.7      Expenses. Each of the Company and the Investors shall bear their
own expenses incurred with respect to this Agreement, the Related Documents
and the transactions contemplated hereby and thereby; provided, however, the
Company will pay at the Closing and

<PAGE>

from time to time thereafter the reasonable out-of-pocket expenses of the
Investors, including, without limitation, the reasonable fees and expenses of
counsel to the SBIC Investors, attributable to the negotiation, execution,
delivery, amendment or enforcement of this Agreement, the Related Documents or
the transactions contemplated hereby, in any case, in an amount not to exceed
$100,000.

7.8      Indemnification. Notwithstanding anything herein to the contrary,
the Company agrees to indemnify each Investor and each officer, director,
employee, agent, partner, stockholder and affiliate of each Investor
(collectively, the "Indemnified Parties") for, and hold each Indemnified
Party harmless from and against: (i) any and all damages, losses, claims and
other liabilities of any and every kind, including, without limitation,
judgments and costs of settlement, and (ii) any and all out-of-pocket costs
and expenses of any and every kind, including, without limitation, reasonable
fees and disbursements of counsel for such Indemnified Parties (all of which
expenses periodically shall be reimbursed as incurred), in each case, arising
out of or suffered or incurred in connection with any of the following: (a)
any misrepresentation or any breach of any warranty made by the Company
herein or in any of the other covenant or agreement made by the Company
herein or in any of the other Related Documents, (b) any breach or
non-fulfillment by the Company of any Related Documents, (c) any claim
relating to or arising out of a violation of applicable federal or state
securities laws by the Company in connection with the sale of the Shares by
the Company to any such Investor other than any such claim resulting from,
arising out of, or relating to, any gross negligence or willful misconduct on
the part of any such Investor and (d) any failure by the Company to use the
proceeds from the sale of the Shares as specified herein.

7.9      Attorneys' Fees. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of this Agreement
or any Related Document, the prevailing party shall be entitled to reasonable
attorneys' fees, costs and necessary disbursements in addition to any other
relief to which such party may be entitled as determined by such court,
equity or arbitration proceeding.

7.10     Amendments and Waivers. Any term of this Agreement may be amended
only with the written consent of the Company and the holders of a majority of
the Common Stock issued or issuable upon conversion of the Series C Preferred
Stock. Any amendment or waiver effected in accordance with this Section 7.10
shall be binding upon each of the Investors and each transferee of the Shares
(or the Common Stock issuable upon conversion of the Series C Preferred
Stock), each future holder of all such securities and the Company.

7.11     Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, portions of such provisions, or
such provisions in their entirety, to the extent necessary, shall be severed
from this Agreement and the balance of the Agreement shall be interpreted as
if such provision were so excluded and shall be enforceable in accordance
with its terms.

<PAGE>

7.12     Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any holder of any of the Shares, upon any breach
or default of the Company under this Agreement shall impair any such right,
power or remedy of such holder nor shall it be construed to be a waiver of
any such breach or default, or an acquiescence therein, or of or in any
similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval
of any kind or character on the part of any holder of any breach or default
under this Agreement, or any waiver on the part of any holder of any
provisions or conditions of this agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
holder shall be cumulative and not alternative.

7.13     Entire Agreement. This Agreement and the documents referred to
herein constitute the entire agreement between the parties hereto pertaining
to the subject matter hereof, and any and all other written or oral
agreements existing between the parties hereto are expressly canceled.

7.14     California Corporate Securities Law. THE SALE OF THE SECURITIES
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF
SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS AN EXEMPTION FROM
SUCH QUALIFICATION IS AVAILABLE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT
ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR SUCH
EXEMPTION BEING AVAILABLE.

7.15     Further Assurances. Upon request of any of the Investors, all
parties hereto agree to promptly execute and deliver all such other
instruments and take all such other actions as any Investor may reasonably
request from time to time in order to effectuate and carry out the purposes,
privileges, restrictions, rights and duties of the parties and the other
provisions of this Agreement and the Related Documents.

7.16     Specific Performance. The parties hereby declare that it is
impossible to measure in money the damages which will accrue to a party
hereto by reason of a failure to perform any of the obligations under this
Agreement and that a breach hereof shall cause irreparable injury and, in
addition to any other right or remedy available to the parties hereto at law
or in equity, any injured party hereunder shall be entitled to enforcement by
court injunction or specific performance of the obligations of the parties
hereunder, without the necessity for posting a bond. Notwithstanding the
foregoing sentence, nothing herein shall be construed as prohibiting any
injured party hereunder from also pursuing any other rights or remedies for
such breach or threatened breach, including receiving damages and attorneys'
fees. The election of any remedy shall not be construed as a waiver on the
part of any injured party hereunder of any right such party might otherwise
have at law or in equity, which rights and remedies shall be cumulative.

<PAGE>

7.17     Understanding Among Investors. The decision of each Investor to
purchase Shares pursuant to this Agreement has been made by such Investor
independently of any other Investor and independently of any statements or
opinions as to the condition (financial or otherwise) of the Company which
may have been made or given by any other Investor or by any agent or employee
of any other Investor. Each Investor acknowledges that no other Investor has
acted as agent for such Investor in connection with making its investment
hereunder and that no other Investor will be acting as agent of such Investor
in connection with monitoring its investment hereunder.

7.18     Publicity. Except as may be required by applicable law, the Company
shall not use the name of, or make reference to, any Investor or any of its
affiliates in any press release or in any public manner without such
Investor's prior written consent.

<PAGE>

      IN WITNESS WHEREOF, the parties hereto have executed this Series B and C
Senior Preferred Stock Purchase Agreement with the intent and agreement that the
same shall be effective as of the day and year first written above.

                                    COMPANY:

Address:                            ARBINET HOLDINGS, INC.

33 Whitehall Street, 19 Floor
New York, NY 10004
Fax: (212) 797-9083
Attention: CEO
                                    /s/ Alex Mashinsky
                                    --------------------------------------------
                                    By:    Alex Mashinsky
                                    Title: Chairman

                                    INVESTORS:

Address:                            J.P. MORGAN INVESTMENT CORPORATION

60 Wall Street
New York, NY 10260                  /s/ Paul G. Theunissen
Fax: (212) 648-5593                 --------------------------------------------
Attention: Paul G. Theunissen       By:    Paul G. Theunissen
                                    Title: Vice President

                                    SIXTY WALL STREET SBIC FUND, L.P.

                                    By: Sixty Wall Street SBIC Corporation, its
Address:                                general partner

60 Wall Street
New York, NY 10260                  /s/ Paul G. Theunissen
Fax: (212) 648-5593                 --------------------------------------------
Attention: Paul G. Theunissen       By:    Paul G. Theunissen
                                    Title: Vice President

                                    CB CAPITAL INVESTORS, L.P.
Address:

380 Madison Avenue                  By: CB Capital Investors, Inc., its General
12th Floor                               Partner
New York, NY 10017
Fax: (212) 622-3101                 By: /s/ Mitchell J. Blutt
Attention: Philip Summe                 ----------------------------------------
                                        Name:  Mitchell J. Blutt
                                        Title: Executive Partner

Signature Page to Series B and C Senior Preferred Stock Purchase Agreement.
<PAGE>

Address:                            BANCBOSTON VENTURES INC.

175 Federal Street, 10th Floor
Boston, MA 02110
Attention: Peter R. Roberts
Fax: (617) 434-1153                 /s/ Peter R. Roberts
                                    --------------------------------------------
                                    By: Peter R. Roberts
                                    Title: Vice President

                                    BAYVIEW 99 I, LP

Address:                            By: BAYVIEW 99 GP, LLC, its General Partner

Fax: (415) 676-2990
Attention:                          By: /s/ Terry R. Otton
                                       -----------------------------------------
                                       Name:  Terry R. Otton
                                       Title: Authorized Signatory

                                    BAYVIEW 99 II, LP

Address:                            By: BAYVIEW 99 GP, LLC, its General Partner

Fax: (415) 676-2990
Attention:                          By: /s/ Terry R. Otton
                                        ----------------------------------------
                                        Name:  Terry R. Otton
                                        Title: Authorized Signatory

Address:

Sousa Road
Sands Point, NY 11054
Fax: (516) 883-3532                 /s/ Jeffrey Rosenbluth
                                    --------------------------------------------
                                    Jeffery Rosenbluth

Address:

211 Hommocks Road
Larchmont, NY 10538                 /s/ Robert Stavis
Fax: (914) 834-2291                 --------------------------------------------
                                    Robert Stavis

Signature Page to Series B and C Senior Preferred Stock Purchase Agreement.
<PAGE>

Address:                            GATEHOUSE INVESTORS, LLC

22 Gatehouse Road
Stamford, CT 06902-7908             By: /s/ Curt Snyder
Attention: Curt Snyder                  ----------------------------------------
Fax: (203) 462-7350                     Name:  Curt Snyder
                                        Title: Managing Member

Address:                            MOMENTUM INVESTMENTS LLC

c/o Deutsche Bank Alex Brown
Attention: Stephen Todd Walker
1635 Market Street, 17 Floor        By: /s/ Stephen Todd Walker
Philadelphia, Pa 19103                  ----------------------------------------
Fax: (215) 854-1595                     Name: Stephen Todd Walker
                                        Title:

Address:

c/o FAC Equities/First Albany
Exchange Place
53 State Street, 29th Floor
Boston, MA 02109-2811               /s/ Ullas Naik
Fax: (617) 228-3015                 --------------------------------------------
                                    Ullas Naik

Address:

20 Patrol Court
Woodside, CA 94062-4220             /s/ Tom Kippola
Fax: (650) 529-0754                 --------------------------------------------
                                    Tom Kippola

Address:                            BELFREY PARTNERS, LP

Belfrey Partners, LP
c/o US Bancorp Piper Jaffray
222 South Ninth Street
Minneapolis, MN 55402-3804          By: /s/ Mark Copman
Fax: (612) 342-6360                     ----------------------------------------
Attention: Mark Copman, General         Name:  Mark Copman
           Partner                      Title: General Partner

Signature Page to Series B and C Senior Preferred Stock Purchase Agreement.
<PAGE>

Address:                            AUGUSTA  PARTNERS

                                    By: /s/ Neil A. Torpey
                                        ----------------------------------------
                                        Name:  Neil A. Torpey
                                        Title: General Partner

                                    OTHER INVESTORS

Address:                            COMMUNICATIONS VENTURES III, L.P.,
                                    By its General Partner Communications
                                    Ventures III, LLC
505 Hamilton Ave., Suite 305
Palo Alto, CA 94301
Attention: Roland A. Van der Meer   By: /s/ Roland A. Van der Meer
Fax: (650) 325-9608                     ----------------------------------------
                                        Name:  Roland A. Van der Meer
                                        Title: Manager

                                    COMMUNICATIONS VENTURES III CEO &
Address:                            ENTREPRENEURS' FUND, L.P.,

                                    By its General Partner Communications
                                    Ventures III, LLC
505 Hamilton Ave., Suite 305
Palo Alto, CA 94301
Attention: Roland Van der Meer      By: /s/ Roland A. Van der Meer
Fax: (650) 325-9608                     ----------------------------------------
                                        Name:  Roland A. Van der Meer
                                        Title: Manager

Address:                            INTERNET CAPITAL GROUP, INC.

800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19087                     By: /s/ Douglas A. Alexander
Attention: Douglas A. Alexander         ----------------------------------------
Fax: (610) 989-0112                     Name: Douglas A. Alexander
                                        Title:

Signature Page to Series B and C Senior Preferred Stock Purchase Agreement.
<PAGE>

                                    BEDROCK CAPITAL PARTNERS I, L.P.

Address:                            By: BEDROCK GENERAL PARTNER I, LLC

One Boston Place                    By: /s/ David J. Duval
Suite 3310                              ----------------------------------------
Boston, MA 02108                        Name:  David J. Duval
                                        Title: Managing Member

Signature Page to Series B and C Senior Preferred Stock Purchase Agreement.
<PAGE>

                                    VBW EMPLOYEE BEDROCK FUND, L.P.

Address:                            By: BEDROCK GENERAL PARTNER I, LLC

One Boston Place                    By: /s/ David J. Duval
Suite 3310                              ----------------------------------------
Boston, MA 02108                        Name:  David J. Duval
                                        Title: Managing Member

                                    CREDIT SUISSE FIRST BOSTON BEDROCK FUND,
                                    L.P.

                                    By: BEDROCK GENERAL PARTNER I, LLC, its
Address:                                Attorney in Fact

One Boston Place                    By: /s/ David J. Duval
Suite 3310                              ----------------------------------------
Boston, MA 02108                        Name:  David J. Duval
                                        Title: Managing Member

Signature Page to Series B and C Senior Preferred Stock Purchase Agreement.
<PAGE>

                                   SCHEDULE I

                                    INVESTORS

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                Name and Address        No. of Shares of Series B   No. of Shares of Series C     Aggregate
                of Each Investor          Preferred Stock Being       Preferred Stock Being        Purchase
                                                Purchased                   Purchased               Price
-------------------------------------------------------------------------------------------------------------------
<S>                                             <C>                        <C>                  <C>
J. P. Morgan Investment Corporation             2,655,789                   2,655,789           $6,749,954.19
60 Wall Street
New York, New York 10260-0060
Attention: Paul G. Theunissen
Telecopy: (212) 648-5593

With a copy to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Attention: Jack P. Jackson, Esq
Telecopy: (212) 969-2900
-------------------------------------------------------------------------------------------------------------------
Sixty Wall Street SBIC Fund, L.P.                295,088                     295,088             $749,994.91
60 Wall Street
New York, New York 10260-0060
Attention: Paul G. Theunissen
Telecopy: (212) 648-5593

With a copy to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Attention: Jack P. Jackson, Esq
Telecopy: (212) 969-2900
-------------------------------------------------------------------------------------------------------------------
CB Capital Investors, L.P.                      2,950,877                   2,950,877           $7,499,949.11
380 Madison Avenue, 12th Floor
New York, New York 10017
Attention: Philip Summe
Telecopy: (212) 622-3101

With a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Attention: Harvey M. Eisenberg, Esq.
Telecopy: (212) 728-5950
</TABLE>

<PAGE>

<TABLE>
<S>                                             <C>                        <C>                  <C>
-------------------------------------------------------------------------------------------------------------------
BancBoston Ventures Inc.                        1,967,265                   1,967,265             $5,000,000
175 Federal Street, 10th Floor
Boston, Massachusetts 02110
Attention: Peter R. Roberts
Telecopy: (617) 434-1153

With a copy to:
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
Attention: Roger D. Feldman, Esq.
Telecopy: (617) 951-8736
-------------------------------------------------------------------------------------------------------------------
Communications Ventures III L.P.                1,592,546                   1,592,546           $4,047,615.44
505 Hamilton Avenue, Suite 305
Palo Alto, CA 94304
Attention: Roland Van der Meer
Telecopy: (650) 325-9608
-------------------------------------------------------------------------------------------------------------------
Communications Ventures III                       79,612                     79,612              $202,342.52
CEO & Intrepreneur's Fund L.P.
505 Hamilton Avenue, Suite 305
Palo Alto, CA 94301
Attention: Roland Van der Meer
Telecopy: (650) 325-9608
-------------------------------------------------------------------------------------------------------------------
Bedrock Capital Partners I, L.P.                1,552,917                   1,552,917           $3,946,893.85
One Boston Place
Suite 3310
Boston, Mass. 02108
Attention: [____________________]
Telecopy: (617) [_______________]
-------------------------------------------------------------------------------------------------------------------
VBW Employee Bedrock Fund, L.P.                   54,178                     54,178              $137,698.80
One Boston Place
Suite 3310
Boston, Mass. 02108
Attention: [____________________]
Telecopy: (617) [_______________]
-------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston                        65,063                     65,064              $165,365.39
   Bedrock Fund, L.P.
One Boston Place
Suite 3310
Boston, Mass. 02108
Attention: [____________________]
Telecopy: (617) [_______________]
-------------------------------------------------------------------------------------------------------------------
Internet Capital Group, Inc.                     491,812                     491,812            $1,249,989.44
800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19087
Attention: Douglas A. Alexander
Telecopy: (610) 989-0112
</TABLE>

<PAGE>

<TABLE>
<S>                                             <C>                        <C>                  <C>
-------------------------------------------------------------------------------------------------------------------
Jeffrey Rosenbluth                                19,672                     19,672               $49,997.46
Sousa Road
Sands Point, NY 11054
Telecopy: (516) 883-3532
-------------------------------------------------------------------------------------------------------------------
Robert Stavis                                     19,672                     19,672               $49,997.46
211 Hommocks Road
Larchmont, NY 10538
Telecopy: (914) 834-2291
-------------------------------------------------------------------------------------------------------------------
Bayview 99 I, L.P.                                53,278                     53,278              $135,410.09

-------------------------------------------------------------------------------------------------------------------
Bayview 99 II, L.P.                               45,086                     45,086              $114,589.31

-------------------------------------------------------------------------------------------------------------------
Gatehouse Investors, LLC                         49,181.5                   49,181.5             $124,999.15
22 Gatehouse Road
Stamford, CT 06902-7908
Telecopy: (203) 462-7350
-------------------------------------------------------------------------------------------------------------------
Momentum Investments LLC                         49,181.5                   49,181.5             $124,999.15
c/o Deutsche Bank Alex Brown
Attention: Stephen Todd Walker
1635 Market Street, 17th Floor
Philadelphia, PA 19103
Telecopy: (215) 854-1595
-------------------------------------------------------------------------------------------------------------------
Ullas Naik                                        9,836                       9,836               $24,999.83
c/o FAC Equities/First Albany
Exchange Place
53 State Street, 29th Floor
Boston, MA 02109-2811
Telecopy: (617) 228-3015
-------------------------------------------------------------------------------------------------------------------
Tom Kippola                                       9,836                       9,836               $24,999.83
20 Patrol Court
Woodside, CA 94062-4220
Telecopy: (650) 529-0754
-------------------------------------------------------------------------------------------------------------------
Belfrey Partners, L.P.                            9,836                       9,836               $24,999.83
c/o US Bancorp Piper Jaffray
222 South Ninth Street
Minneapolis, MN 55402-3804
Telecopy: (612) 342-6360
Attention: Mark Copman
-------------------------------------------------------------------------------------------------------------------
Augusta Partners L.P.                             9,836                       9,836               $24,999.83
-------------------------------------------------------------------------------------------------------------------
TOTALS                                          11,980,561                 11,980,562           $30,449,795.59
-------------------------------------------------------------------------------------------------------------------
</TABLE>

Signature Page to Series B and C Senior Preferred Stock Purchase Agreement.

<PAGE>

                                    EXHIBIT A

                         COMPANY'S AMENDED AND RESTATED
                          CERTIFICATE OF INCORPORATION

<PAGE>

                                    EXHIBIT B

                             SCHEDULE OF EXCEPTIONS

<PAGE>

                                    EXHIBIT C

                             COMPANY'S STOCKHOLDERS

<PAGE>

                                    EXHIBIT D

                 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

<PAGE>

                                    EXHIBIT E

                     AMENDED AND RESTATED CO-SALE AGREEMENT

<PAGE>

                                    EXHIBIT F

                      AMENDED AND RESTATED VOTING AGREEMENT

<PAGE>

                                    EXHIBIT G

                       SERIES A-2 RESTRUCTURING AGREEMENT

<PAGE>

                                    EXHIBIT H

                OPINION OF PAUL, HASTINGS, JANOFSKY & WALKER LLP

<PAGE>

                                    EXHIBIT I

                                     BY-LAWS

<PAGE>

                                    EXHIBIT J

                        EMPLOYEE PROPRIETARY INFORMATION
                                       AND
                              INVENTIONS AGREEMENT

<PAGE>

                                    EXHIBIT K

                     FOUNDATION LIMITED PARTNER CERTIFICATE

<PAGE>

                                    EXHIBIT L

                           MANAGEMENT RIGHTS AGREEMENT

<PAGE>

                                    EXHIBIT M

                        REGULATORY COMPLIANCE SIDE LETTER

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