Document:

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                                                                  Exhibit 10.36

                              EMPLOYMENT AGREEMENT

                  EMPLOYMENT AGREEMENT, effective as provided below (this
"Agreement"), between Net2Phone, Inc., a Delaware corporation (the "Company")
and David Greenblatt (the "Executive").

                              W I T N E S S E T H:

                  WHEREAS, the Executive is the Chief Operating Officer of the
Company;

                  WHEREAS, the Company wishes to assure itself of the continued
services of the Executive and the Executive is willing to enter into an
agreement to that end, upon the terms and conditions hereinafter set forth.

                  NOW, THEREFORE, in consideration of good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties hereby covenant and agree as follows:

                  1. EMPLOYMENT

                  The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to remain in the employ of the Company, on and subject
to the terms and conditions of this Agreement.

                  2. TERM

                  Unless earlier terminated pursuant to Section 5 hereof, the
period of this Agreement and the Executive's employment hereunder (the
"Agreement Term") shall commence as of January 1, 2000 (the "Effective Date"),
and shall expire on the third anniversary of the Effective Date; provided,
however, that the Agreement Term shall be automatically extended for an
additional year on the third anniversary of the Effective Date and on each
anniversary of the Effective Date thereafter (each an "Extension Date"), unless
written notice of non-extension is provided by either party to the other party
at least 90 days prior to such anniversary.

                  3. POSITION, AUTHORITY AND RESPONSIBILITIES

                  (a) The Executive shall serve as, and with the titles, offices
and authorities of, Chief Operating Officer of the Company, and shall report
directly to the Chief Executive Officer and Vice Chairman of the Board of the
Company.

                  (b) The Executive shall have all of the other powers,
authority, duties and responsibilities usually incident to the positions and
offices of Chief Operating Officer and such duties consistent with such
positions as may be assigned from time to
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time by the Board of Directors of the Company (the "Board") or the Chief
Executive Officer and Vice Chairman of the Board of the Company.

                  (c) The Executive agrees to devote substantially all of his
business time, efforts and skills to the performance of his duties and
responsibilities under this Agreement; provided, however, that nothing in this
Agreement shall preclude the Executive from devoting reasonable periods required
for (i) serving on corporate, civic or charitable boards or committees, (ii)
delivering lectures, fulfilling speaking engagements or teaching at educational
institutions and or (iii) managing his personal investments, provided that in
any such case that such activities do not materially interfere with the
Executive's performance of his duties and responsibilities hereunder and do not
violate the provisions of Section 12 hereof.

                  (d) The Executive shall perform his duties at the principal
offices of the Company located in Hackensack, New Jersey, but from time to time
the Executive may be required to travel to other locations in the proper conduct
of his responsibilities under this Agreement.

                  4. COMPENSATION AND BENEFITS

                  In consideration of the services rendered by the Executive
during the Agreement Term, the Company shall pay or provide the Executive the
amounts and benefits set forth below.

                  (a) Salary. The Company shall pay the Executive an initial
annual base salary (the "Base Salary") of at least $300,000. The Executive's
Base Salary shall be paid in arrears in substantially equal installments at
monthly or more frequent intervals, in accordance with the normal payroll
practices of the Company. The Executive's Base Salary shall be reviewed at least
annually by the Board for consideration of appropriate merit increases and, once
established, the Base Salary shall not be decreased during the Agreement Term.

                  (b) Annual Bonus. The Company shall provide the Executive with
an opportunity to earn an annual bonus (the "Annual Bonus") equal to at least
25% of the Base Salary for each calendar year during the Agreement Term
beginning with the 2000 calendar year pursuant to a bonus plan to be established
by the Company.

                  (c) Equity Incentives. Except as provided in this Agreement,
the treatment of options to purchase shares of the Common Stock of the Company
("Common Stock") granted to the Executive prior to the Effective Date under the
Company's stock incentive plans shall be governed by the applicable stock option
agreements. The Executive shall be eligible, from time to time, to receive
awards of stock options or other equity incentives, as determined by the Board.

                  (d) Employee Benefits. The Executive shall be entitled to
participate in all employee benefit plans, programs, practices or other
arrangements of the Company in which other senior executives of the Company are
generally eligible to participate from time to time, including, without
limitation, any qualified or non-qualified pension,

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profit sharing and savings plans, any death benefit and disability benefit
plans, and any medical, dental, health and welfare plans, except to the extent
that a separate arrangement is implemented for the Executive on terms no less
favorable than as provided to the other senior executives agreed to by the
Executive that is intended to replace any such general arrangement. Without
limiting the generality of the foregoing, (i) the Company shall provide the
Executive with life insurance coverage with a death benefit that is not less
than the amount as is in effect as of the Effective Date for the Chief Executive
Officer and Vice Chairman of the Board of the Company and (ii) the Company shall
provide the executive with disability insurance coverage consistent with the
disability insurance coverage provided to senior executives of other companies
in the same industry as the Company.

                  (e) Fringe Benefits and Perquisites. The Executive shall be
entitled to all fringe benefits and perquisites that are generally made
available to senior executives of the Company from time to time on the same
basis as is made available to such other executives. Without limiting the
generality of the foregoing, the Company shall provide the Executive with the
following:

                        (i) executive offices and support staff appropriate to
         the Executive's position;

                        (ii) prompt reimbursement of all reasonable travel and
         other business expenses and disbursements incurred by the Executive in
         the performance of his duties under this Agreement in accordance with
         the Company's normal practices and procedures, including professional
         association dues upon proper accounting therefor;

                        (iii) six weeks paid vacation during each calendar year,
         to be taken in accordance with the Company's vacation policy for senior
         executives;

                        (iv) an automobile allowance no less favorable than the
         automobile allowance in effect as of the Effective Date; and

                        (v) such other fringe benefits as the Executive and the
         Board may mutually agree from time to time.

                  5. TERMINATION OF EMPLOYMENT

                  The Agreement Term and the Executive's employment hereunder
shall be terminated upon the happening of any of the following events:

                  (a) Termination for Cause. The Company may terminate the
Agreement Term and the Executive's employment hereunder for Cause. For purposes
of this Agreement, "Cause" shall mean:

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                       (i) conviction of the Executive, by a court of competent
         jurisdiction, of, or Executive's plea of guilty or nolo contendere to,
         a felony under the laws of the United States or any state thereof;

                       (ii) misappropriation by the Executive of the Company's
         funds; or

                       (iii) the commission by the Executive of an act of proven
         fraud with respect to the Company.

                  Notwithstanding the foregoing, in no event shall the Company
be considered to have terminated the Executive's employment for "Cause" unless
and until (i) the Executive receives written notice from the Board identifying
in reasonable detail the acts or omissions constituting such "Cause" and the
provision of this Agreement relied upon by the Company for such termination and
(ii) such acts or omissions are not cured by the Executive within 30 days of the
Executive's receipt of such notice.

                  (b) Termination other than for Cause. The Board shall have the
right to terminate the Agreement Term and the Executive's employment hereunder
for any reason at any time, including for any reason that does not constitute
Cause, subject to the consequences of such termination as set forth in this
Agreement.

                  (c) Resignation for Good Reason. The Executive may voluntarily
terminate the Agreement Term and his employment hereunder for Good Reason. For
purposes of this Agreement, "Good Reason" shall mean:

                      (i) any action by the Company that results in a diminution
of the Executive's authority or responsibilities;

                      (ii) any adverse modification of the Executive's
         positions, titles or reporting relationships;

                      (iii) any failure by the Company to comply with the
         compensation and benefits provisions of Section 4 hereof or any other
         material breach of this Agreement by the Company;

                      (iv) any notice of non-extension of the Agreement Term
         given by the Company to the Executive as set forth in Section 2 hereof;

                      (v) the relocation, without the Executive's written
         consent, of the Company's principal executive offices from Newark, New
         Jersey;

                      (vi) any failure by the Company to obtain an assumption of
         this Agreement by a successor corporation as required under Section
         13(a) hereof; or

                      (vii) the occurrence of a Change in Control; provided,
         however, that in the case of this Section 5(c)(vii), the Executive must
         give notice of his voluntary resignation for Good Reason within one
         year of the Change in Control.

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                  For the purposes of this Agreement, "Change in Control" means
a change in ownership or control of the Company effected through any of the
following:

                        (i) any "person," as such term is used in Sections 13(d)
            and 14(d) of the Securities Exchange Act of 1934 (the "Exchange
            Act") (other than (A) the Company, (B) any trustee or other
            fiduciary holding securities under an employee benefit plan of the
            Company, (C) any corporation or other entity owned, directly or
            indirectly, by the stockholders of the Company in substantially the
            same proportions as their ownership of Common Stock, or (D) any
            person who, immediately prior to the initial public offering of the
            Company, owned more than 25% of the combined voting power of the
            Company's then outstanding voting securities), is or becomes the
            "beneficial owner" (as defined in Rule 13d-3 under the Exchange
            Act), directly or indirectly, of securities of the Company
            representing 25% or more of the combined voting power of the
            Company's then outstanding voting securities;

                        (ii) during any period of not more than two consecutive
            years, not including any period prior to the Effective Date,
            individuals who at the beginning of such period constitute the
            Board, and any new director (other than a director whose initial
            assumption of office is in connection with an actual or threatened
            election contest, including, but not limited to a consent
            solicitation, relating to the election of directors of the Company)
            whose election by the Board or nomination for election by the
            Company's stockholders was approved by a vote of at least two-thirds
            (2/3) of the directors then still in office who either were
            directors at the beginning of the period or whose election or
            nomination for election was previously so approved, cease for any
            reason to constitute at least a majority thereof;

                        (iii) a merger or consolidation of the Company with any
            other corporation or other entity, other than (A) a merger or
            consolidation which would result in the voting securities of the
            Company outstanding immediately prior thereto continuing to
            represent (either by remaining outstanding or by being converted
            into voting securities of the surviving or parent entity) 80% or
            more of the combined voting power of the voting securities of the
            Company or such surviving or parent entity outstanding immediately
            after such merger or consolidation or (B) a merger or consolidation
            effected to implement a recapitalization of the Company (or similar
            transaction) in which no "person" (as defined in the Exchange Act)
            acquired 25% or more of the combined voting power of the Company's
            then outstanding securities; or

                        (iv) a plan of complete liquidation of the Company or an
            agreement for the sale or disposition by the Company of all or
            substantially all of its assets (or any transaction having a similar
            effect).

                  In no event shall the Executive be considered to have
terminated his employment for "Good Reason" unless and until (i) the Company
receives written notice from the Executive identifying in reasonable detail the
acts or omissions constituting such

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"Good Reason" and the provision of this Agreement relied upon by the Executive
for such termination, and (ii) such acts or omissions are not cured by the
Company within 30 days of the Company's receipt of such notice.

                  (d) Resignation other than for Good Reason. The Executive may
voluntarily terminate the Agreement Term and his employment hereunder at any
time for any reason, including for any reason that does not constitute Good
Reason by giving the Company 30-days advance written notice of such termination.

                  (e) Disability. The Company may terminate the Agreement Term
and the Executive's employment hereunder upon the Executive's Disability. For
purposes of this Agreement, "Disability" shall mean the inability of the
Executive to perform his duties to the Company on account of physical or mental
illness for a period of six consecutive full months, or for a period of nine
full months during any 18-month period. The Executive's employment shall
terminate in such case on the last day of the applicable period following
written notice by the Company of the election to terminate the Executive's
employment due to the Executive's Disability. Notwithstanding the foregoing, in
no event shall the Executive be terminated by reason of Disability unless the
Executive is eligible to begin receiving long-term disability benefits from a
Company-sponsored long-term disability plan.

                  (f) Death. The Agreement Term and the Executive's employment
hereunder shall terminate upon his death.

                  6. COMPENSATION UPON TERMINATION OF EMPLOYMENT

                  Notwithstanding any provision of this Agreement to the
contrary, in the event the Agreement Term and the Executive's employment by the
Company is terminated, the Executive shall be entitled to the compensation and
severance benefits set forth below:

                  (a) Resignation for Good Reason; Termination without Cause. In
the event the Agreement Term and the Executive's employment hereunder is
terminated by the Executive for Good Reason or by the Company for any reason
other than for Cause, Disability or death, the Company shall pay to the
Executive and provide him with the following:

                        (i) Severance Payment. The Company shall pay the
            Executive, within 10 business days of the date of termination, a
            lump-sum cash amount equal to two times the sum of (A) the
            Executive's then-current Base Salary under Section 4(a) hereof and
            (B) the Executive's then-current Annual Bonus percentage under
            Section 4(b) hereof, multiplied by his then-current Base Salary.

                        (ii) Accrued Rights. The Company shall pay the Executive
            a lump-sum cash amount, within 10 days of the date of termination,
            equal to the sum of (A) his earned but unpaid Base Salary through
            the date of termination, (B) any earned but unpaid Annual Bonus for
            any completed calendar year, and (C)

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            any unreimbursed business expenses or other amounts due to the
            Executive from the Company as of the date of termination. In
            addition, the Company shall provide to the Executive all payments,
            rights and benefits due as of the date of termination under the
            terms of the Company's compensation or benefit plans, programs or
            awards (together with the lump-sum payment, the "Accrued Rights").

                        (iii) Bonus Rights. The Company shall pay the Executive,
            within 10 days of the date of termination, a lump-sum cash amount
            equal to a pro rata portion of the Annual Bonus for any partial
            calendar year of service through the date of termination (the "Bonus
            Rights").

                        (iv) Continued Benefits. Subject to Section 9 hereof,
            for a two-year period following the date of termination, the Company
            shall continue to provide the Executive and his eligible dependents,
            at its sole cost, with the medical, dental, disability and life
            insurance coverages ("Welfare Benefits") that were provided to the
            Executive immediately prior to termination of employment.

                        (v) Stock Options. Notwithstanding the provisions of any
            stock incentive plan or award agreement between the Company and the
            Executive to the contrary, (i) 50% of the options to purchase Common
            Stock which are not fully vested and exercisable as of the date of
            termination shall become fully vested and exercisable and (ii) the
            period during which options shall remain exercisable shall be
            extended until the second anniversary of the date of termination.
            All such award agreements shall be amended by the Company and the
            Executive to reflect the foregoing provision.

                        (vi) Life and Disability Insurance. The Company shall
            [fully fund] the life insurance and disability policies described in
            Section 4(d) hereof.

                        (vii) Company Loan. Notwithstanding the provisions of
            Section 6 of the Loan Agreement, dated as of May 17,1999, between
            the Executive and the Company (the "Loan Agreement"), the Executive
            shall not be required to prepay the entire Principal Amount (as
            defined in the Loan Agreement), together with all unpaid accrued
            interest and other charges properly incurred by the Company thereon
            (determined in accordance with the Loan Agreement) as of the date of
            termination, and instead shall be required to prepay such Principal
            Amount and all unpaid accrued interest other charges properly
            incurred by the Company thereon (determined in accordance with the
            Loan Agreement) on the first anniversary of the date of termination.
            The Loan Agreement shall be amended by the Company and the Executive
            to reflect the foregoing provision.

                        (viii) Car Allowance. Until the second anniversary of
            the date of termination, the Company shall continue to provide the
            Executive with the automobile allowance described in Section
            4(e)(iv) hereof.

                  (b) Resignation without Good Reason; Termination for Cause. In
the event the Executive voluntarily terminates the Agreement Term and his
employment

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hereunder other than for Good Reason, or in the event the Agreement Term and the
Executive's employment hereunder is terminated by the Company for Cause, the
Company shall pay and provide to the Executive all Accrued Rights and Bonus
Rights and the Executive shall retain any rights that he has pursuant to any
stock option agreement with the Company in accordance with the terms thereof.

                  (c) Disability; Death. In the event the Agreement Term and the
Executive's employment hereunder is terminated by reason of the Executive's
Disability or death, the Company shall pay the Executive (or his legal
representative) and provide him with the following:

                        (i) Severance Payment. The Company shall pay the
            Executive, within 10 business days of the date of termination, a
            lump-sum cash amount equal to one times the sum of (A) the
            Executive's then-current Base Salary under Section 4(a) hereof and
            (B) the Executive's then-current Annual Bonus percentage under
            Section 4(b) hereof, multiplied by his then-current Base Salary.

                        (ii) Accrued Rights. The Company shall pay the Executive
            a lump-sum cash amount, within 10 days of the date of termination,
            equal to the Accrued Rights.

                        (iii) Bonus Rights. The Company shall pay the Executive,
            within 10 days of the date of termination, a lump-sum cash amount
            equal to the Bonus Rights.

                        (iv) Continued Benefits. Subject to Section 9 hereof,
            for a one-year period following the date of termination, the Company
            shall continue to provide the Executive and his eligible dependents,
            at its sole cost, with the Welfare Benefits that were provided to
            the Executive immediately prior to termination of employment.

                        (v) Stock Options. Notwithstanding the provisions of any
            stock incentive plan or award agreement between the Company and the
            Executive to the contrary, (i) all options to purchase Common Stock
            which are not fully vested and exercisable as of the date of
            termination shall become fully vested and exercisable and (ii) the
            period during which such options shall be exercisable shall be
            extended until the first anniversary of the date of termination. All
            such award agreements shall be amended by the Company and the
            Executive to reflect the foregoing provision.

                  7. PARACHUTE TAX INDEMNITY

                  (a) If it shall be determined that any amount, right or
benefit paid, distributed or treated as paid or distributed by the Company to or
for the Executive's benefit (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
7) (a "Payment") would be subject to the excise tax imposed

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by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"),
or any interest or penalties are incurred by the Executive with respect to such
excise tax (such excise tax, together with any such interest and penalties,
collectively, the "Excise Tax"), then the Executive shall be entitled to receive
an additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all federal, state and local taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments.

                  (b) All determinations required to be made under this Section
7, including whether and when a Gross-Up Payment is required, the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by a nationally recognized accounting firm as shall
be designated jointly by the Executive and the Company (the "Accounting Firm")
which shall be permitted to designate an independent counsel to advise it for
this purpose. The Accounting Firm shall provide detailed supporting calculations
both to the Company and the Executive within 15 business days of the receipt of
notice from the Executive or the Company that there has been a Payment, or such
earlier time as is requested by the Company. All fees and expenses of the
Accounting Firm and its legal counsel shall be paid by the Company. Any Gross-Up
Payment, as determined pursuant to this Section 7, shall be paid by the Company
to the Executive (or to the Internal Revenue Service on Executive's behalf)
within five days of the receipt of the Accounting Firm's determination. All
determinations made by the Accounting Firm shall be binding upon the Company and
the Executive; provided that following any payment of a Gross-Up Payment to
Executive (or to the Internal Revenue Service on Executive's behalf), the
Company may require Executive to sue for a refund of all or any portion of the
Excise Taxes paid on Executive's behalf, in which event the provisions of
paragraph (c) below shall apply. As a result of the uncertainty regarding the
application of Section 4999 of the Code hereunder, it is possible that the
Internal Revenue Service may assert that Excise Taxes are due that were not
included in the Accounting Firm's calculation of the Gross-Up Payments (an
"Underpayment"). In the event that the Company exhausts its remedies pursuant to
this Section 7 and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any additional Gross-Up Payments that are due as a result
thereof shall be promptly paid by the Company to the Executive (or to the
Internal Revenue Service on Executive's behalf).

                  (c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable but no later then ten business days after the Executive
receives written notification of such claim and shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid.
The Executive shall not pay such claim prior to the expiration of the 30-day
period following the date on which it gives such notice to the Company (or such
shorter period ending on the date that any payment

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of taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall: (i) give the Company all information
reasonably requested by the Company relating to such claim; (ii) take such
action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably
selected by the Company and ceasing all efforts to contest such claim; (iii)
cooperate with the Company in good faith in order to effectively contest such
claim; and (iv) permit the Company to participate in any proceeding relating to
such claim; provided, however, that the Company shall bear and pay directly all
reasonable costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expense. Without limiting the
foregoing provisions of this Section 7, the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine and direct; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, the Company shall
advance the amount of such payment to the Executive, on an interest-free basis,
and shall indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided that any extension of
the statute of limitations relating to payment of taxes for the Executive's
taxable year with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's control of
the contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

                  (d) If, after the Executive's receipt of an amount advanced by
the Company pursuant to this Section 7, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the Executive's
receipt of an amount advanced by the Company pursuant to this Section 7, a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after the Company's receipt of notice of such determination, then
such advance shall be forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.

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                  (e) The provisions of this Section 7 shall survive the
expiration of the Agreement Term with respect to any payments, benefits or other
compensatory rights of the Executive arising during the Agreement Term.

                  8. INDEMNIFICATION

                  The Company agrees to provide to the Executive all rights of
indemnification and all director's and officer's insurance coverage to the
fullest extent permitted by law and by its Certificate of Incorporation and
By-laws.

                  9. NO MITIGATION OR OFFSET

                  The Executive shall not be required to seek other employment
or to reduce any severance benefit payable to him under Section 6 hereof, and no
such severance benefit shall be reduced on account of any compensation received
by the Executive from other employment; provided, however, to the extent that
the Executive becomes eligible to receive welfare benefits pursuant to employee
benefit plans of a new employer that are comparable to the Welfare Benefits that
the Company is obligated to provide to the Executive pursuant to Section
6(a)(iv), the Company's obligation to provide such Welfare Benefits shall cease.
The Company's obligations to the Executive under this Agreement, including,
without limitation, any obligation to provide severance benefits, shall not be
subject to set-off or counterclaim in respect of any debts or liabilities of the
Executive to the Company.

                  10. TAX WITHHOLDING; METHOD OF PAYMENT

                  All compensation payable pursuant to this Agreement shall be
subject to reduction by all applicable withholding, social security and other
federal, state and local taxes and deductions for income, employment, excise and
other taxes. Any lump-sum payments provided for in Section 6 hereof shall be
made in a cash payment, net of any required tax withholding, no later than 10
business days following the Executive's date of termination. Any payment
required to be made to the Executive under this Agreement that is not made in a
timely manner shall bear interest at an interest rate equal to 120% of the
monthly compounded applicable federal rate as in effect under Section 1274(d) of
the Code.

                  11. REGISTRATION RIGHTS

                  As of the Effective Date, the Executive shall be granted the
registration rights set forth in Exhibit A to this Agreement.

                  12. RESTRICTIVE COVENANTS

                  (a) Confidential Information. During the Agreement Term and at
all times thereafter, the Executive agrees that he will not divulge to anyone
(other than the Company or any persons employed or designated by the Company)
any knowledge or information of a confidential or proprietary nature relating to
the business of the Company or any of its subsidiaries or affiliates, including,
without limitation, all trade

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secrets (unless readily ascertainable from public or published information or
trade sources) and confidential commercial information, and the Executive
further agrees not to disclose, publish or make use of any such knowledge or
information without the consent of the Company.

                  (b) Noncompetition. The Executive acknowledges that (i) the
Company is currently engaged in the business of providing high quality, low-cost
telephone calls over the Internet ("Internet Telephony"), (ii) his work for the
company will give him access to trade secrets of and confidential information
concerning the Company, and (iii) the agreements and covenants contained in this
Agreement are essential to protect the business and goodwill of the Company.
Accordingly, the Executive covenants and agrees that during the Restricted
Period (defined below), the Executive shall not, without the prior written
consent of the Company, (1) engage or participate in the business of developing,
managing or operating any Internet Telephony business (a "Competitive Business")
on his own behalf or on behalf of any person or entity, and the Executive shall
not acquire a financial interest in any Competitive Business (except for
publicly traded equity interests that do not exceed five percent (5%) of such
class of equity) or (2) directly or indirectly solicit or encourage any employee
of the Company or any of its affiliates to leave the employment of the Company
or any of its affiliates. For purposes hereof, the "Restricted Period" shall be
the Agreement Term (as may be terminated pursuant to Section 6 hereof) and,
except in the event of a termination described in Section 6(a) hereof, the
12-month period following any termination of the Executive's employment
hereunder.

                  (c) Enforcement. The Executive acknowledges and agrees that
the Company will have no adequate remedy at law, and could be irreparably
harmed, if the Executive breaches or threatens to breach any of the provisions
of Section 12 of this Agreement. The Executive agrees that the Company shall be
entitled to equitable and/or injunctive relief to prevent any breach or
threatened breach of this Section 12, and to specific performance of each of the
terms of this Section in addition to any other legal or equitable remedies that
the Company may have. The Executive further agrees that he shall not, in any
equity proceeding relating to the enforcement of the terms of this Section 12,
raise the defense that the Company has an adequate remedy at law.

                  13. SUCCESSORS AND ASSIGNS

                  (a) This Agreement shall be binding upon and shall inure to
the benefit of the Company, its successors and any person or other entity that
succeeds to all or substantially all of the business, assets or property of the
Company. To the extent not otherwise provided by application of law, the Company
will require any successor (whether direct or indirect, by purchase, merger,
consolidation, transfer or otherwise) to all or substantially all of the
business, assets or property of the Company, to expressly assume and agree to
perform the obligations of the Company under this Agreement in the same manner
and to the same extent that the Company is required to perform hereunder. As
used in this Agreement, the "Company" shall mean the Company as hereinbefore
defined and any successor to its business, assets or property as aforesaid which
executes and delivers an agreement provided for in this Section 13(a) or which

                                       12
<PAGE>   13
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law. Except as provided by the foregoing provisions of this Section
13(a), this Agreement shall not be assignable by the Company without the prior
written consent of the Executive. In the event that this Agreement is assigned
to any person or entity as may be permitted hereunder, the Company shall be
secondarily liable in the event that any such person or entity shall fail to
satisfy its obligations under Section 6, 7 or 8 hereof.

                  (b) This Agreement and all rights of the Executive hereunder
shall inure to the benefit of and be enforceable by the Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amounts are due and payable to the Executive hereunder, all such amounts, unless
otherwise provided herein, shall be paid to the Executive's designated
beneficiary or, if there is no such designated beneficiary, to the legal
representatives of the Executive's estate. This Agreement is personal in nature
and the obligations of the Executive hereunder are not be assignable to any
person.

                  14. ENTIRE AGREEMENT/AMENDMENT

                  This Agreement contains the entire understanding of the
parties with respect to the subject matter hereof and, except as specifically
provided herein, cancels and supersedes any and all other agreements between the
parties with respect to the subject matter hereof. Any amendment or modification
of this Agreement shall not be binding unless in writing and signed by the
parties hereto.

                  15. SEVERABILITY/NO WAIVER

                  (a) In the event that any provision of this Agreement is
determined to be invalid or unenforceable, the remaining terms and conditions of
this Agreement shall be unaffected and shall remain in full force and effect,
and any such determination of invalidity or unenforceability shall not affect
the validity or enforceability of any other provision of this Agreement.

                  (b) The failure of a party to insist upon strict adherence to
any term of this Agreement or any occasion shall not be considered a waiver of
such party's rights or deprive such party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.

                  16. NOTICES

                  All notices which may be necessary or proper for either the
Company or the Executive to give to the other shall be in writing and shall be
delivered by hand or sent by registered or certified mail, return receipt
requested, or by air courier, to the Executive at:

                                       13
<PAGE>   14
                                    David Greenblatt
                                    25 Lawrence Avenue
                                    Lawrence, New York 11559
with a copy to:

                                    Joel I. Krasnow, Esq.
                                    Dewey Ballantine LLP
                                    1301 Avenue of the Americas
                                    New York, New York 10019

; and shall be sent in the manner described above to the Secretary of the
Company at the Company's principal executives offices at:

                                    171 Main Street
                                    Hackensack, New Jersey  07601

with a copy to:                     Glenn J. Williams, Esq.
                                    General Counsel

and shall be deemed given when dispatched, provided that any notice required
under Section 5 hereof or notice given pursuant to Section 2 hereof shall be
deemed given only when received. Any party may by like notice to the other party
change the address at which he or they are to receive notices hereunder.

                  17. GOVERNING LAW

                  This Agreement shall be governed by and enforceable in
accordance with the laws of the State of New York, without giving effect to the
principles of conflict of laws thereof.

                  18. ARBITRATION

                  Except for any action brought under Section 12 which may be
brought by the Company directly in any court of competent jurisdiction, any
controversy or claim arising out of, or related to, this Agreement, or the
breach thereof, shall be settled by binding arbitration in the City of New York,
New York in accordance with the rules then obtaining of the American Arbitration
Association, and the arbitrator's decision shall be binding and final, and
judgment upon the award rendered may be entered in any court having jurisdiction
thereof.

                  19. LEGAL FEES AND EXPENSES

                  The Company shall pay the legal fees and expenses incurred by
the Executive in connection with the negotiation of this Agreement. To provide
the Executive with reasonable assurance that the purposes of this Agreement will
not be frustrated by the cost of its enforcement, the Company shall pay and be
solely responsible for any attorneys' fees and expenses and any court or
arbitration costs incurred by the

                                       14
<PAGE>   15
Executive as a result of a claim that the Company has breached or otherwise
failed to perform this Agreement or any provision hereof regardless of which
party, if any, prevails in the contest.

                  20. COUNTERPARTS

                  This Agreement may be signed in counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.

                  IN WITNESS WHEREOF, the Company and the Executive have
executed this Agreement on January ___, 2000.

                                            EXECUTIVE

                                              /s/ David Greenblatt
                                            -----------------------------------
                                            David Greenblatt

                                            NET2PHONE, INC.

                                            By: /s/ Clifford M. Sobel
                                                --------------------------------

                                                 Name:  Clifford M. Sobel
                                                        ------------------------

                                                 Title: Chairman of the Board
                                                        ------------------------

                                       15
<PAGE>   16
                                    EXHIBIT A

                               REGISTRATION RIGHTS

                  SECTION 1.1 Piggyback Registrations.

                  (a) Right to Piggyback Registration. Whenever the Company
proposes to register any of its Common Stock (or securities convertible into or
exchangeable or exercisable for Common Stock) under the Securities Act of 1933,
as amended (the "Securities Act") for its own account or the account of any
stockholder of the Company (other than offerings pursuant to employee benefit
plans, or noncash offerings in connection with a proposed acquisition, exchange
offer, recapitalization or similar transaction) (a "Piggyback Registration"),
the Company will give written notice as promptly as practicable to the Executive
and to all other holders of Common Stock having similar registration rights, of
its intention to effect such a registration and shall include in such
registration all Registrable Shares with respect to which the Company has
received written request for inclusion therein within 15 days after receipt of
the Company's notice. Capitalized terms used but not defined in this Exhibit A
shall have the meanings ascribed to such terms in Section 1.11.

                  SECTION 1.2 Registration Procedures. If and whenever the
Company is required to effect or cause the registration of any Registrable
Shares under the Securities Act as provided in this Agreement, the Company
shall:

                  (a) notify the Executive of any stop order issued or
threatened by the Securities and Exchange Commission ("SEC") and take all
reasonable actions required to prevent the entry of such stop order or to remove
it if entered;

                  (b) furnish, without charge, to the Executive and each
underwriter, if any, such number of copies of the applicable Registration
Statement, each amendment and supplement thereto (including one signed copy to
the Executive and one signed copy to each managing underwriter and in each case
including all exhibits thereto), and the Prospectus included in such
Registration Statement (including each preliminary prospectus), in conformity
with the requirements of the Securities Act, and such other documents as the
Executive may reasonably request in order to facilitate the disposition of the
Registrable Shares registered thereunder;

                  (c) use commercially reasonable efforts to register or qualify
such Registrable Shares covered by such Registration Statement under such other
securities or blue sky laws of such jurisdictions within the United States of
America as the selling holders, and the managing underwriter, if any, reasonably
request and do any and all other acts and things which may be reasonably
necessary or advisable to enable the selling holders and each underwriter, if
any, to consummate the disposition in such jurisdictions of the Registrable
Shares registered thereunder; provided, however, that the Company shall not be
required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this paragraph (c), (ii)
subject

                                       16
<PAGE>   17
itself to taxation in any such jurisdiction or (iii) consent to general service
of process in any such jurisdiction;

                  (d) as promptly as practicable notify the managing
underwriter, if any, the Executive and the other selling holders, if any, at any
time when a Prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event if, as a result of such event, the
Prospectus included in such Registration Statement contains an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Company shall as promptly as practicable prepare and furnish to the selling
holders a supplement or amendment to such Prospectus so that, as thereafter
delivered, such Prospectus shall not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading;

                  (e) use commercially reasonable efforts to cause all such
securities being registered to be listed on each securities exchange, market
system or interdealer quotation system on which similar securities issued by the
Company are then listed, and enter into such customary agreements including a
listing application and indemnification agreement in customary form, and to
provide a transfer agent and registrar for such Registrable Shares covered by
such Registration Statement no later than the effective date of such
Registration Statement;

                  (f) make available for inspection by the Executive or any
holder of securities covered by such Registration Statement, any underwriter
participating in any distribution pursuant to such Registration Statement, and
any attorney, accountant or other agent retained by such persons (collectively,
the "Inspectors"), all financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries (collectively,
"Records"), as shall be reasonably necessary to enable them to exercise their
due diligence responsibilities, and cause the Company's and its subsidiaries'
officers, directors and employees to supply all information and respond to all
inquiries reasonably requested by any such Inspector in connection with such
Registration Statement;

                  (g) if requested, use commercially reasonable efforts to
obtain a "cold comfort" letter from the Company's auditors in customary form and
covering such matters of the type customarily covered by "cold comfort" letters;

                  (h) make available senior management personnel to participate
in, and cause them to cooperate with the underwriters in connection with, "road
show" and other customary marketing activities, including "one-on-one" meetings
with prospective purchasers of the Registrable Shares; and

                  (i) otherwise use commercially reasonable efforts to comply
with all applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering a period of at least 12 months, beginning with the first month after
the effective date of the Registration State-

                                       17
<PAGE>   18
ment (as the term "effective date" is defined in Rule 158(c) under the
Securities Act), which earnings statement shall satisfy the provisions of
Section 1(a) of the Securities Act and Rule 158 thereunder.

                  SECTION 1.3 Registration Expenses. The Company shall pay for
all costs and expenses with respect to its compliance with its obligations in
connection with a registration hereunder, including, but not limited to: (i) all
registration and filing fees; (ii) fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications of the Registrable Shares);
(iii) printing expenses; (iv) internal expenses (including without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties); (v) the fees and expenses incurred in connection with the
listing of the Registrable Shares on any national securities exchange, market
system or interdealer quotation system; (vi) the fees and disbursements of
counsel for the Company, and the Company's auditors (including the expenses of
any comfort letters or costs associated with the delivery by the Company's
auditors of a comfort letter or comfort letters); (vii) the fees and
disbursements of legal counsel for the Executive; (viii) the fees and expenses
of any registrar and transfer agent or any depository; (ix) the underwriting
fees, discounts and commissions applicable to any Common Stock sold for the
account of the Company; and (x) the cost of preparing all documentation in
connection therewith.

                  SECTION 1.4 Conversion of Other Securities. If the Executive
holds any options, rights, warrants or other securities that are offered with,
convertible into or exercisable or exchangeable for any Registrable Shares, the
Registrable Shares underlying such options, rights, warrants or other securities
shall be eligible for registration pursuant to Section 1.1.

                  SECTION 1.5 Rule 144. If and for so long as the Company is
subject to the reporting requirements of the Securities Exchange Act of 1934, as
amended, (the "Exchange Act"), the Company shall take such measures and file
such information, documents and reports as shall be required by the SEC as a
condition to the availability of Rule 144 (or any successor provision) under the
Securities Act.

                  SECTION 1.6 Registration Statement Indemnification. (a) The
Company agrees to indemnify and hold harmless the Executive, each Transferee and
each person, if any, who controls any of the foregoing within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act
(collectively, the "Registration Indemnitee") from and against any and all
Losses arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus, or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such Losses arise out
of or are based upon any untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with information relating to a Registration
Indemnitee furnished in writing to the Company by or on behalf of such
Registration Indemnitee expressly for use in the Registration Statement or
Prospectus.

                                       18
<PAGE>   19
                  (b) Each Registration Indemnitee agrees, severally and not
jointly, to indemnify and hold harmless the Company, its directors, its officers
who sign any Registration Statement, and any person who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, to the same extent as the indemnity from the Company to each
Registration Indemnitee provided in Section 1.6(a), but only with respect to
information relating to such Registration Indemnitee furnishing in writing to
the Company by or on behalf of such Registration Indemnitee expressly for use in
the Registration Statement or Prospectus. If any Action shall be brought against
the Company, any of its directors, any such officer, or any such controlling
person based on any Registration Statement or Prospectus and in respect of which
indemnity may be sought against a Registration Indemnitee pursuant to this
Section 1.6(b), such Registration Indemnitee shall have the rights and duties
given to the Company by Sections 1.6 through 1.9 (except that if the Company
shall have assumed the defense thereof such Registration Indemnitee shall not be
required to do so, but may employ separate counsel therein and participate in
the defense thereof, but the fees and expenses of such counsel shall be at such
Registration Indemnitee's expense), and the Company, its directors, any such
officer, and any such controlling person shall have the rights and duties given
to the Registration Indemnitee by Sections 1.6 through 1.9.

                  SECTION 1.7 Contribution. (a) If the indemnification provided
for in this Exhibit A is unavailable to an indemnified party hereunder with
respect to any Losses referred to herein, then an indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such Losses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the applicable Registration Indemnitee, on the
other hand, from the offering of the securities covered by such Registration
Statement and Prospectus, or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company, on the one hand, and the applicable
Registration Indemnitee, on the other hand, in connection with the statements or
omissions that result in such Losses, as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the one hand,
and the applicable Registration Indemnitee, on the other hand, shall be deemed
to be in the same proportion as the total net proceeds from the applicable
securities offering (before deducting expenses) received by the Company bear to
the total net proceeds from such offering (before deducting expenses) received
by such Registration Indemnitee. The relative fault of the Company, on the one
hand, and the applicable Registration Indemnitee, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, on the one hand,
or by such Registration Indemnitee, on the other hand, and the parties relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

                  (b) The Company and each Registration Indemnitee agree that it
would not be just and equitable if contribution pursuant to this Section 1.7
were determined by pro rata allocation or by any other method of allocation that
does not take

                                       19
<PAGE>   20
account of the equitable considerations referred to in Section 1.7(a). The
amount paid or payable by an indemnified party as a result of the Losses
referred to in Section 1.7(a) shall be deemed to include, subject to the
limitations set forth herein, any legal or other expenses reasonably incurred by
such party in connection with investigating any claim or defending any such
Action. Notwithstanding the provisions of this Section 1.7(b), a Registration
Indemnitee shall not be required to contribute any amount in excess of the
amount by which the proceeds to such Registration Indemnitee exceed the amount
of any damages that such Registration Indemnitee has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation, within the meaning
of Section 1(f) of the Securities Act, shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.

                  SECTION 1.8 Procedure. If any Action shall be brought against
a Registration Indemnitee or any other person entitled to indemnification
(collectively with the Registration Indemnitee, the "Indemnitee") in respect of
which indemnity may be sought against the Company, such Indemnitee shall
promptly notify the Company, and the Company shall assume the defense thereof,
including the employment of counsel and payment of all fees and expenses. Such
Indemnitee shall have the right to employ separate counsel in any such action,
suit or proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such person unless (i) the
Company has agreed in writing to pay such fees and expenses, (ii) the Company
has failed to assume the defense and employ counsel, or (iii) the named parties
to an Action (including the impleaded parties) include both an Indemnitee and
the Company and such Indemnitee shall have been advised by its counsel that
representation of such indemnified party and the Company by the same counsel
would be inappropriate under applicable standards of professional conduct
(whether or not such representation by the same counsel has been proposed) due
to actual or potential differing interests between them (in which case the
Company shall not have the right to assume the defense of such Action on behalf
of such Indemnitee). The Company shall not be liable for any settlement of any
such Action affected without its written consent, which shall not be
unreasonably withheld or delayed, but if settled with such written consent, or
if there be a final judgment for the plaintiff in any such Action, the Company
agrees to indemnify and hold harmless each Indemnitee, to the extent provided
herein from and against any Losses by reason of such settlement or judgment.

                  SECTION 1.9 Other Matters. (a) No indemnifying party shall
without the prior written consent of the indemnified party effect any settlement
of any pending or threatened Action in respect of which any indemnified party is
or could have been a party and indemnity could have been sought hereunder by
such indemnified party unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such Action, and does not include an admission of fault or culpability
on the part of any Registration Indemnitee.

                  (b) Any Losses for which an indemnified party is entitled to
indemnification or contribution hereunder shall be paid by the indemnifying
party to the indemnified party as such Losses are incurred. The indemnity and
contribution

                                       20
<PAGE>   21
agreements contained in this Exhibit A shall remain operative and in full force
and effect regardless of (i) any investigation made by or on behalf of any
Indemnitee, the Company, its directors or officers, or any person controlling
such Indemnitee and (ii) any termination of this Agreement.

                  SECTION 1.10 Transfer of Registration Rights. The Executive
may transfer all or any portion of his rights under this Exhibit A to any
transferee (each, a "Transferee") of Registrable Shares. Any transfer of
registration rights pursuant to this Section 1.10 shall be effective upon
receipt by the Company of written notice from the Executive stating the name and
address of the Transferee and identifying the amount of Registrable Shares with
respect to which the rights under this Section 1 are being transferred and the
nature of the rights so transferred. In connection with any such transfer, the
term "the Executive" as used in this Agreement shall, where appropriate to
assign each right and obligation to such Transferee, be deemed to refer to the
transferee holder of such Registrable Shares.

                  SECTION 1.11. Definitions. As used in this Exhibit A:

                  "Action" means any claim, action, cause of action, suit,
proceeding or investigation, whether civil, criminal, administrative,
investigative or other.

                  "Common Stock" means the common stock, par value $0.01 per
share, of the Company.

                  "Losses" means costs and expenses (including without
limitation attorneys' fees, interest, penalties and costs of investigation or
preparation for defense), judgments, fines, losses, claims, damages,
liabilities, demands, assessments and amounts paid in settlement.

                  "Prospectus" means the prospectus or prospectuses included in
any Registration Statement, as amended or supplemented by any prospectus
supplement and by all other amendments and supplements to such prospectus,
including post-effective amendments and all material incorporated by reference
in such prospectus or prospectuses.

                  "Registrable Shares" means any shares of Common Stock held by
the Executive or by any Transferee thereof.

                  "Registration Statement" means any registration statement of
the Company filed with the SEC under the Securities Act, including in each such
case the Prospectus relating thereto, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all materials incorporated by reference in such Registration Statement and
Prospectus.

                                       21<PAGE>   1
                                                                   EXHIBIT 10.37

                              EMPLOYMENT AGREEMENT

                  EMPLOYMENT AGREEMENT, effective as provided below (this
"Agreement"), between Net2Phone, Inc., a Delaware corporation (the "Company")
and Ilan Slasky (the "Executive").

                              W I T N E S S E T H:

                  WHEREAS, the Executive is the Chief Financial Officer of the
Company;

                  WHEREAS, the Company wishes to assure itself of the continued
services of the Executive and the Executive is willing to enter into an
agreement to that end, upon the terms and conditions hereinafter set forth.

                  NOW, THEREFORE, in consideration of good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties hereby covenant and agree as follows:

                  1.       EMPLOYMENT

                  The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to remain in the employ of the Company, on and subject
to the terms and conditions of this Agreement.

                  2.       TERM

                  Unless earlier terminated pursuant to Section 5 hereof, the
period of this Agreement and the Executive's employment hereunder (the
"Agreement Term") shall commence as of January 1, 2000 (the "Effective Date"),
and shall expire on the third anniversary of the Effective Date; provided,
however, that the Agreement Term shall be automatically extended for an
additional year on the third anniversary of the Effective Date and on each
anniversary of the Effective Date thereafter (each an "Extension Date"), unless
written notice of non-extension is provided by either party to the other party
at least 90 days prior to such anniversary.

                  3.       POSITION, AUTHORITY AND RESPONSIBILITIES

                  (a) The Executive shall serve as, and with the titles, offices
and authorities of, Chief Financial Officer of the Company, and shall report
directly to the Chief Executive Officer and Vice Chairman of the Board of the
Company.

                  (b) The Executive shall have all of the other powers,
authority, duties and responsibilities usually incident to the positions and
offices of Chief Financial Officer and such duties consistent with such
positions as may be assigned from time to time by the Board of Directors of the
Company (the "Board") or the Chief Executive Officer and Vice Chairman of the
Board of the Company.
<PAGE>   2
                  (c) The Executive agrees to devote substantially all of his
business time, efforts and skills to the performance of his duties and
responsibilities under this Agreement; provided, however, that nothing in this
Agreement shall preclude the Executive from devoting reasonable periods required
for (i) serving on corporate, civic or charitable boards or committees, (ii)
delivering lectures, fulfilling speaking engagements or teaching at educational
institutions and or (iii) managing his personal investments, provided that in
any such case that such activities do not materially interfere with the
Executive's performance of his duties and responsibilities hereunder and do not
violate the provisions of Section 12 hereof.

                  (d) The Executive shall perform his duties at the principal
offices of the Company located in Hackensack, New Jersey, but from time to time
the Executive may be required to travel to other locations in the proper conduct
of his responsibilities under this Agreement.

                  4.       COMPENSATION AND BENEFITS

                  In consideration of the services rendered by the Executive
during the Agreement Term, the Company shall pay or provide the Executive the
amounts and benefits set forth below.

                  (a) Salary. The Company shall pay the Executive an initial
annual base salary (the "Base Salary") of at least $225,000. The Executive's
Base Salary shall be paid in arrears in substantially equal installments at
monthly or more frequent intervals, in accordance with the normal payroll
practices of the Company. The Executive's Base Salary shall be reviewed at least
annually by the Board for consideration of appropriate merit increases and, once
established, the Base Salary shall not be decreased during the Agreement Term.

                  (b) Annual Bonus. The Company shall provide the Executive with
an opportunity to earn an annual bonus (the "Annual Bonus") equal to at least
25% of the Base Salary for each calendar year during the Agreement Term
beginning with the 2000 calendar year pursuant to a bonus plan to be established
by the Company.

                  (c) Equity Incentives. Except as provided in this Agreement,
the treatment of options to purchase shares of the Common Stock of the Company
("Common Stock") granted to the Executive prior to the Effective Date under the
Company's stock incentive plans shall be governed by the applicable stock option
agreements. The Executive shall be eligible, from time to time, to receive
awards of stock options or other equity incentives, as determined by the Board.

                  (d) Employee Benefits. The Executive shall be entitled to
participate in all employee benefit plans, programs, practices or other
arrangements of the Company in which other senior executives of the Company are
generally eligible to participate from time to time, including, without
limitation, any qualified or non-qualified pension, profit sharing and savings
plans, any death benefit and disability benefit plans, and any medical, dental,
health and welfare plans, except to the extent that a separate arrangement is
implemented for the Executive on terms no less favorable than as provided to the
other senior executives agreed to by the Executive that is intended to replace
any such general arrangement. Without limiting the generality of the foregoing,
(i) the Company shall provide the Executive with life insurance coverage with a
death

                                      -2-
<PAGE>   3
benefit that is not less than the amount as is in effect as of the Effective
Date for the Chief Executive Officer and Vice Chairman of the Board of the
Company and (ii) the Company shall provide the executive with disability
insurance coverage consistent with the disability insurance coverage provided to
senior executives of other companies in the same industry as the Company.

                  (e) Fringe Benefits and Perquisites. The Executive shall be
entitled to all fringe benefits and perquisites that are generally made
available to senior executives of the Company from time to time on the same
basis as is made available to such other executives. Without limiting the
generality of the foregoing, the Company shall provide the Executive with the
following:

                           (i) executive offices and support staff appropriate
         to the Executive's position;

                           (ii) prompt reimbursement of all reasonable travel
         and other business expenses and disbursements incurred by the Executive
         in the performance of his duties under this Agreement in accordance
         with the Company's normal practices and procedures, including
         professional association dues upon proper accounting therefor;

                           (iii) six weeks paid vacation during each calendar
         year, to be taken in accordance with the Company's vacation policy for
         senior executives;

                           (iv) an automobile allowance no less favorable than
         the automobile allowance in effect as of the Effective Date; and

                           (v) such other fringe benefits as the Executive and
         the Board may mutually agree from time to time.

                  5.       TERMINATION OF EMPLOYMENT

                  The Agreement Term and the Executive's employment hereunder
shall be terminated upon the happening of any of the following events:

                  (a) Termination for Cause. The Company may terminate the
Agreement Term and the Executive's employment hereunder for Cause. For purposes
of this Agreement, "Cause" shall mean:

                           (i) conviction of the Executive, by a court of
         competent jurisdiction, of, or Executive's plea of guilty or nolo
         contendere to, a felony under the laws of the United States or any
         state thereof;

                           (ii) misappropriation by the Executive of the
         Company's funds; or

                           (iii) the commission by the Executive of an act of
         proven fraud with respect to the Company.

                  Notwithstanding the foregoing, in no event shall the Company
be considered to have terminated the Executive's employment for "Cause" unless
and until (i) the Executive

                                      -3-
<PAGE>   4
receives written notice from the Board identifying in reasonable detail the acts
or omissions constituting such "Cause" and the provision of this Agreement
relied upon by the Company for such termination and (ii) such acts or omissions
are not cured by the Executive within 30 days of the Executive's receipt of such
notice.

                  (b) Termination other than for Cause. The Board shall have the
right to terminate the Agreement Term and the Executive's employment hereunder
for any reason at any time, including for any reason that does not constitute
Cause, subject to the consequences of such termination as set forth in this
Agreement.

                  (c) Resignation for Good Reason. The Executive may voluntarily
terminate the Agreement Term and his employment hereunder for Good Reason. For
purposes of this Agreement, "Good Reason" shall mean:

                           (i) any action by the Company that results in a
         diminution of the Executive's authority or responsibilities;

                           (ii) any adverse modification of the Executive's
         positions, titles or reporting relationships;

                           (iii) any failure by the Company to comply with the
         compensation and benefits provisions of Section 4 hereof or any other
         material breach of this Agreement by the Company;

                           (iv) any notice of non-extension of the Agreement
         Term given by the Company to the Executive as set forth in Section 2
         hereof;

                           (v) the relocation, without the Executive's written
         consent, of the Company's principal executive offices from Newark, New
         Jersey;

                           (vi) any failure by the Company to obtain an
         assumption of this Agreement by a successor corporation as required
         under Section 13(a) hereof; or

                           (vii) the occurrence of a Change in Control;
         provided, however, that in the case of this Section 5(c)(vii), the
         Executive must give notice of his voluntary resignation for Good Reason
         within one year of the Change in Control.

                  For the purposes of this Agreement, "Change in Control" means
a change in ownership or control of the Company effected through any of the
following:

                           (i) any "person," as such term is used in Sections
         13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Exchange
         Act") (other than (A) the Company, (B) any trustee or other fiduciary
         holding securities under an employee benefit plan of the Company, (C)
         any corporation or other entity owned, directly or indirectly, by the
         stockholders of the Company in substantially the same proportions as
         their ownership of Common Stock, or (D) any person who, immediately
         prior to the initial public offering of the Company, owned more than
         25% of the combined voting power of the Company's then outstanding
         voting securities), is or becomes the "beneficial owner" (as defined in

                                      -4-
<PAGE>   5
         Rule 13d-3 under the Exchange Act), directly or indirectly, of
         securities of the Company representing 25% or more of the combined
         voting power of the Company's then outstanding voting securities;

                           (ii) during any period of not more than two
         consecutive years, not including any period prior to the Effective
         Date, individuals who at the beginning of such period constitute the
         Board, and any new director (other than a director whose initial
         assumption of office is in connection with an actual or threatened
         election contest, including, but not limited to a consent solicitation,
         relating to the election of directors of the Company) whose election by
         the Board or nomination for election by the Company's stockholders was
         approved by a vote of at least two-thirds (2/3) of the directors then
         still in office who either were directors at the beginning of the
         period or whose election or nomination for election was previously so
         approved, cease for any reason to constitute at least a majority
         thereof;

                           (iii) a merger or consolidation of the Company with
         any other corporation or other entity, other than (A) a merger or
         consolidation which would result in the voting securities of the
         Company outstanding immediately prior thereto continuing to represent
         (either by remaining outstanding or by being converted into voting
         securities of the surviving or parent entity) 80% or more of the
         combined voting power of the voting securities of the Company or such
         surviving or parent entity outstanding immediately after such merger or
         consolidation or (B) a merger or consolidation effected to implement a
         recapitalization of the Company (or similar transaction) in which no
         "person" (as defined in the Exchange Act) acquired 25% or more of the
         combined voting power of the Company's then outstanding securities; or

                           (iv) a plan of complete liquidation of the Company or
         an agreement for the sale or disposition by the Company of all or
         substantially all of its assets (or any transaction having a similar
         effect).

                  In no event shall the Executive be considered to have
terminated his employment for "Good Reason" unless and until (i) the Company
receives written notice from the Executive identifying in reasonable detail the
acts or omissions constituting such "Good Reason" and the provision of this
Agreement relied upon by the Executive for such termination, and (ii) such acts
or omissions are not cured by the Company within 30 days of the Company's
receipt of such notice.

                  (d) Resignation other than for Good Reason. The Executive may
voluntarily terminate the Agreement Term and his employment hereunder at any
time for any reason, including for any reason that does not constitute Good
Reason by giving the Company 30-days advance written notice of such termination.

                  (e) Disability. The Company may terminate the Agreement Term
and the Executive's employment hereunder upon the Executive's Disability. For
purposes of this Agreement, "Disability" shall mean the inability of the
Executive to perform his duties to the Company on account of physical or mental
illness for a period of six consecutive full months, or for a period of nine
full months during any 18-month period. The Executive's employment shall

                                      -5-
<PAGE>   6
terminate in such case on the last day of the applicable period following
written notice by the Company of the election to terminate the Executive's
employment due to the Executive's Disability. Notwithstanding the foregoing, in
no event shall the Executive be terminated by reason of Disability unless the
Executive is eligible to begin receiving long-term disability benefits from a
Company-sponsored long-term disability plan.

                  (f) Death. The Agreement Term and the Executive's employment
hereunder shall terminate upon his death.

                  6.       COMPENSATION UPON TERMINATION OF EMPLOYMENT

                  Notwithstanding any provision of this Agreement to the
contrary, in the event the Agreement Term and the Executive's employment by the
Company is terminated, the Executive shall be entitled to the compensation and
severance benefits set forth below:

                  (a) Resignation for Good Reason; Termination without Cause. In
the event the Agreement Term and the Executive's employment hereunder is
terminated by the Executive for Good Reason or by the Company for any reason
other than for Cause, Disability or death, the Company shall pay to the
Executive and provide him with the following:

                           (i) Severance Payment. The Company shall pay the
         Executive, within 10 business days of the date of termination, a
         lump-sum cash amount equal to two times the sum of (A) the Executive's
         then-current Base Salary under Section 4(a) hereof and (B) the
         Executive's then-current Annual Bonus percentage under Section 4(b)
         hereof, multiplied by his then-current Base Salary.

                           (ii) Accrued Rights. The Company shall pay the
         Executive a lump-sum cash amount, within 10 days of the date of
         termination, equal to the sum of (A) his earned but unpaid Base Salary
         through the date of termination, (B) any earned but unpaid Annual Bonus
         for any completed calendar year, and (C) any unreimbursed business
         expenses or other amounts due to the Executive from the Company as of
         the date of termination. In addition, the Company shall provide to the
         Executive all payments, rights and benefits due as of the date of
         termination under the terms of the Company's compensation or benefit
         plans, programs or awards (together with the lump-sum payment, the
         "Accrued Rights").

                           (iii) Bonus Rights. The Company shall pay the
         Executive, within 10 days of the date of termination, a lump-sum cash
         amount equal to a pro rata portion of the Annual Bonus for any partial
         calendar year of service through the date of termination (the "Bonus
         Rights").

                           (iv) Continued Benefits. Subject to Section 9 hereof,
         for a two-year period following the date of termination, the Company
         shall continue to provide the Executive and his eligible dependents, at
         its sole cost, with the medical, dental, disability and life insurance
         coverages ("Welfare Benefits") that were provided to the Executive
         immediately prior to termination of employment.

                                      -6-
<PAGE>   7
                           (v) Stock Options. Notwithstanding the provisions of
         any stock incentive plan or award agreement between the Company and the
         Executive to the contrary, (i) 50% of the options to purchase Common
         Stock which are not fully vested and exercisable as of the date of
         termination shall become fully vested and exercisable and (ii) the
         period during which options shall remain exercisable shall be extended
         until the second anniversary of the date of termination. All such award
         agreements shall be amended by the Company and the Executive to reflect
         the foregoing provision.

                           (vi) Life and Disability Insurance. The Company shall
         [fully fund] the life insurance and disability policies described in
         Section 4(d) hereof.

                           (vii) Company Loan. Notwithstanding the provisions of
         Section 6 of the Loan Agreement, dated as of May 17,1999, between the
         Executive and the Company (the "Loan Agreement"), the Executive shall
         not be required to prepay the entire Principal Amount (as defined in
         the Loan Agreement), together with all unpaid accrued interest and
         other charges properly incurred by the Company thereon (determined in
         accordance with the Loan Agreement) as of the date of termination, and
         instead shall be required to prepay such Principal Amount and all
         unpaid accrued interest other charges properly incurred by the Company
         thereon (determined in accordance with the Loan Agreement) on the first
         anniversary of the date of termination. The Loan Agreement shall be
         amended by the Company and the Executive to reflect the foregoing
         provision.

                           (viii) Car Allowance. Until the second anniversary of
         the date of termination, the Company shall continue to provide the
         Executive with the automobile allowance described in Section 4(e)(iv)
         hereof.

                  (b) Resignation without Good Reason; Termination for Cause. In
the event the Executive voluntarily terminates the Agreement Term and his
employment hereunder other than for Good Reason, or in the event the Agreement
Term and the Executive's employment hereunder is terminated by the Company for
Cause, the Company shall pay and provide to the Executive all Accrued Rights and
Bonus Rights and the Executive shall retain any rights that he has pursuant to
any stock option agreement with the Company in accordance with the terms
thereof.

                  (c) Disability; Death. In the event the Agreement Term and the
Executive's employment hereunder is terminated by reason of the Executive's
Disability or death, the Company shall pay the Executive (or his legal
representative) and provide him with the following:

                           (i) Severance Payment. The Company shall pay the
         Executive, within 10 business days of the date of termination, a
         lump-sum cash amount equal to one times the sum of (A) the Executive's
         then-current Base Salary under Section 4(a) hereof and (B) the
         Executive's then-current Annual Bonus percentage under Section 4(b)
         hereof, multiplied by his then-current Base Salary.

                           (ii) Accrued Rights. The Company shall pay the
         Executive a lump-sum cash amount, within 10 days of the date of
         termination, equal to the Accrued Rights.

                                      -7-
<PAGE>   8
                           (iii) Bonus Rights. The Company shall pay the
         Executive, within 10 days of the date of termination, a lump-sum cash
         amount equal to the Bonus Rights.

                           (iv) Continued Benefits. Subject to Section 9 hereof,
         for a one-year period following the date of termination, the Company
         shall continue to provide the Executive and his eligible dependents, at
         its sole cost, with the Welfare Benefits that were provided to the
         Executive immediately prior to termination of employment.

                           (v) Stock Options. Notwithstanding the provisions of
         any stock incentive plan or award agreement between the Company and the
         Executive to the contrary, (i) all options to purchase Common Stock
         which are not fully vested and exercisable as of the date of
         termination shall become fully vested and exercisable and (ii) the
         period during which such options shall be exercisable shall be extended
         until the first anniversary of the date of termination. All such award
         agreements shall be amended by the Company and the Executive to reflect
         the foregoing provision.

                  7.       PARACHUTE TAX INDEMNITY

                  (a) If it shall be determined that any amount, right or
benefit paid, distributed or treated as paid or distributed by the Company to or
for the Executive's benefit (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
7) (a "Payment") would be subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code"), or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, collectively, the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all federal, state and local taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.

                  (b) All determinations required to be made under this Section
7, including whether and when a Gross-Up Payment is required, the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by a nationally recognized accounting firm as shall
be designated jointly by the Executive and the Company (the "Accounting Firm")
which shall be permitted to designate an independent counsel to advise it for
this purpose. The Accounting Firm shall provide detailed supporting calculations
both to the Company and the Executive within 15 business days of the receipt of
notice from the Executive or the Company that there has been a Payment, or such
earlier time as is requested by the Company. All fees and expenses of the
Accounting Firm and its legal counsel shall be paid by the Company. Any Gross-Up
Payment, as determined pursuant to this Section 7, shall be paid by the Company
to the Executive (or to the Internal Revenue Service

                                      -8-
<PAGE>   9
on Executive's behalf) within five days of the receipt of the Accounting Firm's
determination. All determinations made by the Accounting Firm shall be binding
upon the Company and the Executive; provided that following any payment of a
Gross-Up Payment to Executive (or to the Internal Revenue Service on Executive's
behalf), the Company may require Executive to sue for a refund of all or any
portion of the Excise Taxes paid on Executive's behalf, in which event the
provisions of paragraph (c) below shall apply. As a result of the uncertainty
regarding the application of Section 4999 of the Code hereunder, it is possible
that the Internal Revenue Service may assert that Excise Taxes are due that were
not included in the Accounting Firm's calculation of the Gross-Up Payments (an
"Underpayment"). In the event that the Company exhausts its remedies pursuant to
this Section 7 and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any additional Gross-Up Payments that are due as a result
thereof shall be promptly paid by the Company to the Executive (or to the
Internal Revenue Service on Executive's behalf).

                  (c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable but no later then ten business days after the Executive
receives written notification of such claim and shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid.
The Executive shall not pay such claim prior to the expiration of the 30-day
period following the date on which it gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall: (i) give the Company all information reasonably requested by the Company
relating to such claim; (ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company and ceasing all
efforts to contest such claim; (iii) cooperate with the Company in good faith in
order to effectively contest such claim; and (iv) permit the Company to
participate in any proceeding relating to such claim; provided, however, that
the Company shall bear and pay directly all reasonable costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest and penalties with
respect thereto) imposed as a result of such representation and payment of costs
and expense. Without limiting the foregoing provisions of this Section 7, the
Company shall control all proceedings taken in connection with such contest and,
at its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct the Executive to pay the
tax claimed and sue for a refund or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine and direct; provided, however,
that if the Company directs the Executive to pay such claim and sue for a
refund, the Company shall advance the amount of such payment to the Executive,
on an interest-free basis, and shall indemnify and hold the Executive harmless,
on an after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the Executive's taxable year with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore, the

                                      -9-
<PAGE>   10
Company's control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.

                  (d) If, after the Executive's receipt of an amount advanced by
the Company pursuant to this Section 7, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the Executive's
receipt of an amount advanced by the Company pursuant to this Section 7, a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after the Company's receipt of notice of such determination, then
such advance shall be forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.

                  (e) The provisions of this Section 7 shall survive the
expiration of the Agreement Term with respect to any payments, benefits or other
compensatory rights of the Executive arising during the Agreement Term.

                  8.       INDEMNIFICATION

                  The Company agrees to provide to the Executive all rights of
indemnification and all director's and officer's insurance coverage to the
fullest extent permitted by law and by its Certificate of Incorporation and
By-laws.

                  9.       NO MITIGATION OR OFFSET

                  The Executive shall not be required to seek other employment
or to reduce any severance benefit payable to him under Section 6 hereof, and no
such severance benefit shall be reduced on account of any compensation received
by the Executive from other employment; provided, however, to the extent that
the Executive becomes eligible to receive welfare benefits pursuant to employee
benefit plans of a new employer that are comparable to the Welfare Benefits that
the Company is obligated to provide to the Executive pursuant to Section
6(a)(iv), the Company's obligation to provide such Welfare Benefits shall cease.
The Company's obligations to the Executive under this Agreement, including,
without limitation, any obligation to provide severance benefits, shall not be
subject to set-off or counterclaim in respect of any debts or liabilities of the
Executive to the Company.

                  10.      TAX WITHHOLDING; METHOD OF PAYMENT

                  All compensation payable pursuant to this Agreement shall be
subject to reduction by all applicable withholding, social security and other
federal, state and local taxes and deductions for income, employment, excise and
other taxes. Any lump-sum payments provided for in Section 6 hereof shall be
made in a cash payment, net of any required tax withholding, no later than 10
business days following the Executive's date of termination. Any payment
required to be made to the Executive under this Agreement that is not made in a
timely

                                      -10-
<PAGE>   11
manner shall bear interest at an interest rate equal to 120% of the monthly
compounded applicable federal rate as in effect under Section 1274(d) of the
Code.

                  11.      REGISTRATION RIGHTS

                  As of the Effective Date, the Executive shall be granted the
registration rights set forth in Exhibit A to this Agreement.

                  12.      RESTRICTIVE COVENANTS

                  (a) Confidential Information. During the Agreement Term and at
all times thereafter, the Executive agrees that he will not divulge to anyone
(other than the Company or any persons employed or designated by the Company)
any knowledge or information of a confidential or proprietary nature relating to
the business of the Company or any of its subsidiaries or affiliates, including,
without limitation, all trade secrets (unless readily ascertainable from public
or published information or trade sources) and confidential commercial
information, and the Executive further agrees not to disclose, publish or make
use of any such knowledge or information without the consent of the Company.

                  (b) Noncompetition. The Executive acknowledges that (i) the
Company is currently engaged in the business of providing high quality, low-cost
telephone calls over the Internet ("Internet Telephony"), (ii) his work for the
company will give him access to trade secrets of and confidential information
concerning the Company, and (iii) the agreements and covenants contained in this
Agreement are essential to protect the business and goodwill of the Company.
Accordingly, the Executive covenants and agrees that during the Restricted
Period (defined below), the Executive shall not, without the prior written
consent of the Company, (1) engage or participate in the business of developing,
managing or operating any Internet Telephony business (a "Competitive Business")
on his own behalf or on behalf of any person or entity, and the Executive shall
not acquire a financial interest in any Competitive Business (except for
publicly traded equity interests that do not exceed five percent (5%) of such
class of equity) or (2) directly or indirectly solicit or encourage any employee
of the Company or any of its affiliates to leave the employment of the Company
or any of its affiliates. For purposes hereof, the "Restricted Period" shall be
the Agreement Term (as may be terminated pursuant to Section 6 hereof) and,
except in the event of a termination described in Section 6(a) hereof, the
12-month period following any termination of the Executive's employment
hereunder.

                  (c) Enforcement. The Executive acknowledges and agrees that
the Company will have no adequate remedy at law, and could be irreparably
harmed, if the Executive breaches or threatens to breach any of the provisions
of Section 12 of this Agreement. The Executive agrees that the Company shall be
entitled to equitable and/or injunctive relief to prevent any breach or
threatened breach of this Section 12, and to specific performance of each of the
terms of this Section in addition to any other legal or equitable remedies that
the Company may have. The Executive further agrees that he shall not, in any
equity proceeding relating to the enforcement of the terms of this Section 12,
raise the defense that the Company has an adequate remedy at law.

                                      -11-
<PAGE>   12
                  13.      SUCCESSORS AND ASSIGNS

                  (a) This Agreement shall be binding upon and shall inure to
the benefit of the Company, its successors and any person or other entity that
succeeds to all or substantially all of the business, assets or property of the
Company. To the extent not otherwise provided by application of law, the Company
will require any successor (whether direct or indirect, by purchase, merger,
consolidation, transfer or otherwise) to all or substantially all of the
business, assets or property of the Company, to expressly assume and agree to
perform the obligations of the Company under this Agreement in the same manner
and to the same extent that the Company is required to perform hereunder. As
used in this Agreement, the "Company" shall mean the Company as hereinbefore
defined and any successor to its business, assets or property as aforesaid which
executes and delivers an agreement provided for in this Section 13(a) or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law. Except as provided by the foregoing provisions of this Section
13(a), this Agreement shall not be assignable by the Company without the prior
written consent of the Executive. In the event that this Agreement is assigned
to any person or entity as may be permitted hereunder, the Company shall be
secondarily liable in the event that any such person or entity shall fail to
satisfy its obligations under Section 6, 7 or 8 hereof.

                  (b) This Agreement and all rights of the Executive hereunder
shall inure to the benefit of and be enforceable by the Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amounts are due and payable to the Executive hereunder, all such amounts, unless
otherwise provided herein, shall be paid to the Executive's designated
beneficiary or, if there is no such designated beneficiary, to the legal
representatives of the Executive's estate. This Agreement is personal in nature
and the obligations of the Executive hereunder are not be assignable to any
person.

                  14.      ENTIRE AGREEMENT/AMENDMENT

                  This Agreement contains the entire understanding of the
parties with respect to the subject matter hereof and, except as specifically
provided herein, cancels and supersedes any and all other agreements between the
parties with respect to the subject matter hereof. Any amendment or modification
of this Agreement shall not be binding unless in writing and signed by the
parties hereto.

                  15.      SEVERABILITY/NO WAIVER

                  (a) In the event that any provision of this Agreement is
determined to be invalid or unenforceable, the remaining terms and conditions of
this Agreement shall be unaffected and shall remain in full force and effect,
and any such determination of invalidity or unenforceability shall not affect
the validity or enforceability of any other provision of this Agreement.

                  (b) The failure of a party to insist upon strict adherence to
any term of this Agreement or any occasion shall not be considered a waiver of
such party's rights or deprive

                                      -12-
<PAGE>   13
such party of the right thereafter to insist upon strict adherence to that term
or any other term of this Agreement.

                  16.      NOTICES

                  All notices which may be necessary or proper for either the
Company or the Executive to give to the other shall be in writing and shall be
delivered by hand or sent by registered or certified mail, return receipt
requested, or by air courier, to the Executive at:

                                    Ilan Slasky
                                    20 Oxford Avenue
                                    New Rochelle, NY 10804
with a copy to:

                                    Joel I. Krasnow, Esq.
                                    Dewey Ballantine LLP
                                    1301 Avenue of the Americas
                                    New York, New York 10019

; and shall be sent in the manner described above to the Secretary of the
Company at the Company's principal executives offices at:

                                    171 Main Street
                                    Hackensack, New Jersey 07601

with a copy to:
                                    Glenn J. Williams, Esq.
                                    General Counsel

and shall be deemed given when dispatched, provided that any notice required
under Section 5 hereof or notice given pursuant to Section 2 hereof shall be
deemed given only when received. Any party may by like notice to the other party
change the address at which he or they are to receive notices hereunder.

                  17.      GOVERNING LAW

                  This Agreement shall be governed by and enforceable in
accordance with the laws of the State of New York, without giving effect to the
principles of conflict of laws thereof.

                  18.      ARBITRATION

                  Except for any action brought under Section 12 which may be
brought by the Company directly in any court of competent jurisdiction, any
controversy or claim arising out of, or related to, this Agreement, or the
breach thereof, shall be settled by binding arbitration in the City of New York,
New York in accordance with the rules then obtaining of the American Arbitration
Association, and the arbitrator's decision shall be binding and final, and
judgment upon the award rendered may be entered in any court having jurisdiction
thereof.

                                      -13-
<PAGE>   14
                  19.      LEGAL FEES AND EXPENSES

                  The Company shall pay the legal fees and expenses incurred by
the Executive in connection with the negotiation of this Agreement. To provide
the Executive with reasonable assurance that the purposes of this Agreement will
not be frustrated by the cost of its enforcement, the Company shall pay and be
solely responsible for any attorneys' fees and expenses and any court or
arbitration costs incurred by the Executive as a result of a claim that the
Company has breached or otherwise failed to perform this Agreement or any
provision hereof regardless of which party, if any, prevails in the contest.

                  20.      COUNTERPARTS

                  This Agreement may be signed in counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.

                                      -14-
<PAGE>   15
                  IN WITNESS WHEREOF, the Company and the Executive have
executed this Agreement on January 1, 2000.

                                           EXECUTIVE

                                           /s/ Ilan Slasky
                                           -------------------------------------
                                           Ilan Slasky

                                           NET2PHONE, INC.

                                           By: /s/ Howard Balter
                                               ---------------------------------
                                               Name: Howard Balter
                                               Title: Chief Executive Officer
<PAGE>   16
                                    EXHIBIT A

                               REGISTRATION RIGHTS

                  SECTION 1.1 Piggyback Registrations.

                  (a) Right to Piggyback Registration. Whenever the Company
proposes to register any of its Common Stock (or securities convertible into or
exchangeable or exercisable for Common Stock) under the Securities Act of 1933,
as amended (the "Securities Act") for its own account or the account of any
stockholder of the Company (other than offerings pursuant to employee benefit
plans, or noncash offerings in connection with a proposed acquisition, exchange
offer, recapitalization or similar transaction) (a "Piggyback Registration"),
the Company will give written notice as promptly as practicable to the Executive
and to all other holders of Common Stock having similar registration rights, of
its intention to effect such a registration and shall include in such
registration all Registrable Shares with respect to which the Company has
received written request for inclusion therein within 15 days after receipt of
the Company's notice. Capitalized terms used but not defined in this Exhibit A
shall have the meanings ascribed to such terms in Section 1.11.

                  SECTION 1.2 Registration Procedures. If and whenever the
Company is required to effect or cause the registration of any Registrable
Shares under the Securities Act as provided in this Agreement, the Company
shall:

                  (a) notify the Executive of any stop order issued or
threatened by the Securities and Exchange Commission ("SEC") and take all
reasonable actions required to prevent the entry of such stop order or to remove
it if entered;

                  (b) furnish, without charge, to the Executive and each
underwriter, if any, such number of copies of the applicable Registration
Statement, each amendment and supplement thereto (including one signed copy to
the Executive and one signed copy to each managing underwriter and in each case
including all exhibits thereto), and the Prospectus included in such
Registration Statement (including each preliminary prospectus), in conformity
with the requirements of the Securities Act, and such other documents as the
Executive may reasonably request in order to facilitate the disposition of the
Registrable Shares registered thereunder;

                  (c) use commercially reasonable efforts to register or qualify
such Registrable Shares covered by such Registration Statement under such other
securities or blue sky laws of such jurisdictions within the United States of
America as the selling holders, and the managing underwriter, if any, reasonably
request and do any and all other acts and things which may be reasonably
necessary or advisable to enable the selling holders and each underwriter, if
any, to consummate the disposition in such jurisdictions of the Registrable
Shares registered thereunder; provided, however, that the Company shall not be
required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this paragraph (c), (ii)
subject itself to taxation in any such jurisdiction or (iii) consent to general
service of process in any such jurisdiction;

                                      -A1-
<PAGE>   17
                  (d) as promptly as practicable notify the managing
underwriter, if any, the Executive and the other selling holders, if any, at any
time when a Prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event if, as a result of such event, the
Prospectus included in such Registration Statement contains an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Company shall as promptly as practicable prepare and furnish to the selling
holders a supplement or amendment to such Prospectus so that, as thereafter
delivered, such Prospectus shall not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading;

                  (e) use commercially reasonable efforts to cause all such
securities being registered to be listed on each securities exchange, market
system or interdealer quotation system on which similar securities issued by the
Company are then listed, and enter into such customary agreements including a
listing application and indemnification agreement in customary form, and to
provide a transfer agent and registrar for such Registrable Shares covered by
such Registration Statement no later than the effective date of such
Registration Statement;

                  (f) make available for inspection by the Executive or any
holder of securities covered by such Registration Statement, any underwriter
participating in any distribution pursuant to such Registration Statement, and
any attorney, accountant or other agent retained by such persons (collectively,
the "Inspectors"), all financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries (collectively,
"Records"), as shall be reasonably necessary to enable them to exercise their
due diligence responsibilities, and cause the Company's and its subsidiaries'
officers, directors and employees to supply all information and respond to all
inquiries reasonably requested by any such Inspector in connection with such
Registration Statement;

                  (g) if requested, use commercially reasonable efforts to
obtain a "cold comfort" letter from the Company's auditors in customary form and
covering such matters of the type customarily covered by "cold comfort" letters;

                  (h) make available senior management personnel to participate
in, and cause them to cooperate with the underwriters in connection with, "road
show" and other customary marketing activities, including "one-on-one" meetings
with prospective purchasers of the Registrable Shares; and

                  (i) otherwise use commercially reasonable efforts to comply
with all applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering a period of at least 12 months, beginning with the first month after
the effective date of the Registration Statement (as the term "effective date"
is defined in Rule 158(c) under the Securities Act), which earnings statement
shall satisfy the provisions of Section 1(a) of the Securities Act and Rule 158
thereunder.

                  SECTION 1.3 Registration Expenses. The Company shall pay for
all costs and expenses with respect to its compliance with its obligations in
connection with a registration hereunder, including, but not limited to: (i) all
registration and filing fees; (ii) fees

                                      -A2-
<PAGE>   18
and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Shares); (iii) printing expenses; (iv)
internal expenses (including without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties); (v) the fees
and expenses incurred in connection with the listing of the Registrable Shares
on any national securities exchange, market system or interdealer quotation
system; (vi) the fees and disbursements of counsel for the Company, and the
Company's auditors (including the expenses of any comfort letters or costs
associated with the delivery by the Company's auditors of a comfort letter or
comfort letters); (vii) the fees and disbursements of legal counsel for the
Executive; (viii) the fees and expenses of any registrar and transfer agent or
any depository; (ix) the underwriting fees, discounts and commissions applicable
to any Common Stock sold for the account of the Company; and (x) the cost of
preparing all documentation in connection therewith.

                  SECTION 1.4 Conversion of Other Securities. If the Executive
holds any options, rights, warrants or other securities that are offered with,
convertible into or exercisable or exchangeable for any Registrable Shares, the
Registrable Shares underlying such options, rights, warrants or other securities
shall be eligible for registration pursuant to Section 1.1.

                  SECTION 1.5 Rule 144. If and for so long as the Company is
subject to the reporting requirements of the Securities Exchange Act of 1934, as
amended, (the "Exchange Act"), the Company shall take such measures and file
such information, documents and reports as shall be required by the SEC as a
condition to the availability of Rule 144 (or any successor provision) under the
Securities Act.

                  SECTION 1.6 Registration Statement Indemnification. (a) The
Company agrees to indemnify and hold harmless the Executive, each Transferee and
each person, if any, who controls any of the foregoing within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act
(collectively, the "Registration Indemnitee") from and against any and all
Losses arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus, or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such Losses arise out
of or are based upon any untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with information relating to a Registration
Indemnitee furnished in writing to the Company by or on behalf of such
Registration Indemnitee expressly for use in the Registration Statement or
Prospectus.

                  (b) Each Registration Indemnitee agrees, severally and not
jointly, to indemnify and hold harmless the Company, its directors, its officers
who sign any Registration Statement, and any person who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, to the same extent as the indemnity from the Company to each
Registration Indemnitee provided in Section 1.6(a), but only with respect to
information relating to such Registration Indemnitee furnishing in writing to
the Company by or on behalf of such Registration Indemnitee expressly for use in
the Registration Statement or Prospectus. If any Action shall be brought against
the Company, any of its directors, any such

                                      -A3-
<PAGE>   19
officer, or any such controlling person based on any Registration Statement or
Prospectus and in respect of which indemnity may be sought against a
Registration Indemnitee pursuant to this Section 1.6(b), such Registration
Indemnitee shall have the rights and duties given to the Company by Sections 1.6
through 1.9 (except that if the Company shall have assumed the defense thereof
such Registration Indemnitee shall not be required to do so, but may employ
separate counsel therein and participate in the defense thereof, but the fees
and expenses of such counsel shall be at such Registration Indemnitee's
expense), and the Company, its directors, any such officer, and any such
controlling person shall have the rights and duties given to the Registration
Indemnitee by Sections 1.6 through 1.9.

                  SECTION 1.7 Contribution. (a) If the indemnification provided
for in this Exhibit A is unavailable to an indemnified party hereunder with
respect to any Losses referred to herein, then an indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such Losses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the applicable Registration Indemnitee, on the
other hand, from the offering of the securities covered by such Registration
Statement and Prospectus, or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company, on the one hand, and the applicable
Registration Indemnitee, on the other hand, in connection with the statements or
omissions that result in such Losses, as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the one hand,
and the applicable Registration Indemnitee, on the other hand, shall be deemed
to be in the same proportion as the total net proceeds from the applicable
securities offering (before deducting expenses) received by the Company bear to
the total net proceeds from such offering (before deducting expenses) received
by such Registration Indemnitee. The relative fault of the Company, on the one
hand, and the applicable Registration Indemnitee, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, on the one hand,
or by such Registration Indemnitee, on the other hand, and the parties relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

                  (b) The Company and each Registration Indemnitee agree that it
would not be just and equitable if contribution pursuant to this Section 1.7
were determined by pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in Section
1.7(a). The amount paid or payable by an indemnified party as a result of the
Losses referred to in Section 1.7(a) shall be deemed to include, subject to the
limitations set forth herein, any legal or other expenses reasonably incurred by
such party in connection with investigating any claim or defending any such
Action. Notwithstanding the provisions of this Section 1.7(b), a Registration
Indemnitee shall not be required to contribute any amount in excess of the
amount by which the proceeds to such Registration Indemnitee exceed the amount
of any damages that such Registration Indemnitee has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation, within the meaning
of Section 1(f) of the Securities Act, shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.

                                      -A4-
<PAGE>   20
                  SECTION 1.8 Procedure. If any Action shall be brought against
a Registration Indemnitee or any other person entitled to indemnification
(collectively with the Registration Indemnitee, the "Indemnitee") in respect of
which indemnity may be sought against the Company, such Indemnitee shall
promptly notify the Company, and the Company shall assume the defense thereof,
including the employment of counsel and payment of all fees and expenses. Such
Indemnitee shall have the right to employ separate counsel in any such action,
suit or proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such person unless (i) the
Company has agreed in writing to pay such fees and expenses, (ii) the Company
has failed to assume the defense and employ counsel, or (iii) the named parties
to an Action (including the impleaded parties) include both an Indemnitee and
the Company and such Indemnitee shall have been advised by its counsel that
representation of such indemnified party and the Company by the same counsel
would be inappropriate under applicable standards of professional conduct
(whether or not such representation by the same counsel has been proposed) due
to actual or potential differing interests between them (in which case the
Company shall not have the right to assume the defense of such Action on behalf
of such Indemnitee). The Company shall not be liable for any settlement of any
such Action affected without its written consent, which shall not be
unreasonably withheld or delayed, but if settled with such written consent, or
if there be a final judgment for the plaintiff in any such Action, the Company
agrees to indemnify and hold harmless each Indemnitee, to the extent provided
herein from and against any Losses by reason of such settlement or judgment.

                  SECTION 1.9 Other Matters. (a) No indemnifying party shall
without the prior written consent of the indemnified party effect any settlement
of any pending or threatened Action in respect of which any indemnified party is
or could have been a party and indemnity could have been sought hereunder by
such indemnified party unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such Action, and does not include an admission of fault or culpability
on the part of any Registration Indemnitee.

                  (b) Any Losses for which an indemnified party is entitled to
indemnification or contribution hereunder shall be paid by the indemnifying
party to the indemnified party as such Losses are incurred. The indemnity and
contribution agreements contained in this Exhibit A shall remain operative and
in full force and effect regardless of (i) any investigation made by or on
behalf of any Indemnitee, the Company, its directors or officers, or any person
controlling such Indemnitee and (ii) any termination of this Agreement.

                  SECTION 1.10 Transfer of Registration Rights. The Executive
may transfer all or any portion of his rights under this Exhibit A to any
transferee (each, a "Transferee") of Registrable Shares. Any transfer of
registration rights pursuant to this Section 1.10 shall be effective upon
receipt by the Company of written notice from the Executive stating the name and
address of the Transferee and identifying the amount of Registrable Shares with
respect to which the rights under this Section 1 are being transferred and the
nature of the rights so transferred. In connection with any such transfer, the
term "the Executive" as used in this Agreement shall, where appropriate to
assign each right and obligation to such Transferee, be deemed to refer to the
transferee holder of such Registrable Shares.

                                      -A5-
<PAGE>   21
                  SECTION 1.11. Definitions. As used in this Exhibit A:

                  "Action" means any claim, action, cause of action, suit,
proceeding or investigation, whether civil, criminal, administrative,
investigative or other.

                  "Common Stock" means the common stock, par value $0.01 per
share, of the Company.

                  "Losses" means costs and expenses (including without
limitation attorneys' fees, interest, penalties and costs of investigation or
preparation for defense), judgments, fines, losses, claims, damages,
liabilities, demands, assessments and amounts paid in settlement.

                  "Prospectus" means the prospectus or prospectuses included in
any Registration Statement, as amended or supplemented by any prospectus
supplement and by all other amendments and supplements to such prospectus,
including post-effective amendments and all material incorporated by reference
in such prospectus or prospectuses.

                  "Registrable Shares" means any shares of Common Stock held by
the Executive or by any Transferee thereof.

                  "Registration Statement" means any registration statement of
the Company filed with the SEC under the Securities Act, including in each such
case the Prospectus relating thereto, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all materials incorporated by reference in such Registration Statement and
Prospectus.

                                      -A6-

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