Document:

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Exhibit 10.4

                             Arbinet Holdings, Inc.
                         33 Whitehall Street, 19th Floor
                               New York, New York

                                                               December 27, 1999

Mr. Robert S. Vaters
7 Barnsdale Road
Short Hills, New Jersey  07078

Dear Bob:

On behalf of Arbinet Holdings, Inc. (the "Company"), I am pleased to extend to
you an offer of employment in accordance with the following terms:

1. Title and Position. Effective immediately following your acceptance of this
offer you will serve as an executive of the Company, initially as Executive Vice
President and Chief Financial Officer of the Company. You will report to the
Chief Executive Officer of the Company.

2. Duties and Obligations. During your employment, you will devote your full
business time, interest and effort to the performance of your duties with the
Company; provided that the foregoing shall not prevent you from serving on the
Board of Directors of no more than two (2) companies as long as these activities
do not interfere with the performance of your duties hereunder or create a
conflict of interest with the Company.

3. Employment Relationship. Should you decide to accept the Company's offer,
your employment will be for a term of one (1) year and your employment may be
terminated by either you or the Company at any time for any reason (or no
reason), by providing sixty (60) days prior written notice to the other party.
Further, your participation in any Company benefit or equity program does not
constitute an agreement by the Company to employ or continue to employ you for
any period of time.

4. Salary. While you are employed on a full-time basis by the Company, the
Company will pay you a base salary which annualizes to (i) $250,000 or (ii) upon
and after an initial public offering of the Company's equity securities (an
"IPO"), $250,000, payable in accordance with the usual payroll practices of the
Company including the
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withholding of all income and employment taxes. Your base salary will be
reviewed by the CEO on an annual basis and may be subject to adjustment upward
based on various factors including, without limitation, your performance and the
Company's achievement of its business plan (as determined by the Board), but in
no case will the annual increase be less than the annual rate of increase in the
Consumer Price Index. You will be entitled to a $50,000 "sign-on" bonus.

5. Equity.

      (a) The Board (or a duly authorized committee thereof) will grant to you,
in the form of stock options ("Options"), the right to purchase 350,000 shares
of Common Stock of the Company, at the lowest available employee plan price as
of the acceptance of this offer (the current price as approved by the board of
directors on December 9, 1999 being $0.25), subject to the following vesting
schedule: such Options will become exercisable as to 1/48th of the Options on
the last day of each full month you are employed by the Company (the "Vesting
Dates"), provided you are employed by the Company on the applicable Vesting
Dates; provided, further, that (i) if an IPO occurs during the first year of
your employment, vesting will accelerate to effect 12 months of vesting as of
the end of the month in which the IPO closing occurs, and unvested Options would
vest 1/36th per month over the 36 months after the month in which the IPO
closing occurs and (ii) all Options will vest immediately prior a "change in
control" event (which will not include an IPO or a private equity financing
transaction). To the maximum extent permissible, these will be incentive stock
options as defined by the Internal Revenue Code of 1986, as amended (the
"Code"), and the Arbinet Holdings, Inc. 1997 Stock Incentive Plan (the "Stock
Plan").

      (b) Except as otherwise provided in the Stock Plan and Section 7 below,
you shall forfeit to the Company (without compensation) all unvested Options on
the date your employment with the Company terminates.

6. Benefits. You will participate, to the extent eligible and subject to
confirming coverage with the applicable underwriter (if any), in all of the
Company's employee benefit programs generally provided to the other executive
officers, in accordance with the terms thereof as in effect from time to time;
provided that your annual vacation shall not exceed 4 weeks.

7. Termination of Employment. (a) In the event your employment hereunder is
terminated by the Company without cause, the Company will pay you, subject to
your compliance with Section 8 and 9 below, (i) any unpaid base salary through
the date of termination and any accrued vacation; (ii) severance pay equal to
twelve (12) months' base salary at the rate in effect on the date of
termination, (iii) an amount reimbursing you for the applicable premium payment
for any COBRA coverage payable under a Company health or welfare plan for you
and your dependents during the twelve (12) month period following the date of
termination (the "Twelve Month Period"); and (iv) an amount equal to any
employer contribution that would have been made by the Company
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to any retirement plan of the Company on your behalf had you remained employed
by the Company during the Twelve Month Period assuming you contributed the
maximum amount to such plan. Notwithstanding the foregoing, the amounts paid to
you pursuant to subsection (iii) and (iv) of this Section 7(a) shall not exceed
$25,000.

      (b) In the event your employment hereunder is terminated for any other
reason, the Company will pay you any unpaid base salary and compensation for
accrued vacation through the date of the termination.

      (c) In addition, in all termination events, except as specifically
provided in Section 5 hereof, the Company will pay you any other amounts or
benefits owing to you under the then applicable employee benefit plans and
programs of the Company in accordance with such plans and programs

      For purposes of this letter "cause" shall mean any of the following: (w)
your willful misconduct in the performance of your duties to the Company, or
your willful failure to implement any legal policy of the company, (x)
conviction of or plea of guilty or any other plea other than "not guilty" to a
felony; (y) the violation by you of any material provisions of this letter which
either is not cured within ten days after a written notice is given to you by
the Company or constitutes a habitual breach; or (z) your dishonesty,
misappropriation or fraud with regard to the property of the Company or its
affiliates.

8. Confidential Information. While providing your services, you will have access
to and will obtain confidential information as to the Company, its affiliates,
its employees and its customers and you may during the course of your employment
develop certain information, inventions or other intellectual property. As a
condition of your employment with the Company, you will be required to enter
into the Company's employee Inventions and Confidentiality Agreement (the
"Confidentiality Agreement"). The Confidentiality Agreement exists to assure the
Company and its investors that the Company's valuable intellectual property and
its rights thereto are protected.

9. Non-Competition/Non-Solicitation. (a) You agree that during the employment
term hereunder and for a period of one (1) year following the date your
employment terminates (the "Restricted Period"), you will not enter into
Competition with the Company. "Competition" shall mean participating, directly
or indirectly, as an individual proprietor, partner, stockholder, officer,
employee, director, joint venturer, investor, lender, consultant or in any
capacity whatsoever in a business in competition with any business conducted by
the Company or its affiliates (a "Competitor")in any jurisdiction where the
Company and/or its affiliates conduct as of the date your employment terminates
such business, which shall be deemed to include, without limitation, any
business activity or jurisdiction which is covered by or included in a written
proposal or business plan existing on the date of the termination of the
employment term hereunder; provided, however, that such participation shall not
include (i) the mere ownership of not more than one percent (1%) of the total
outstanding stock of a publicly held company;
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(ii) the performance of services for any enterprise to the extent such services
are not performed, directly or indirectly, for a business unit of the enterprise
in the aforesaid Competition; or (iii) any activity engaged in with the prior
written approval of the Board.

      (b) You agree that, during the Restricted Period, you will not, directly
or indirectly (i) solicit, recruit or hire any non-administrative or
non-clerical employee of the Company for the purpose of being employed by you or
by any Competitor of the Company on whose behalf you are acting as an agent,
representative or employee and that you will not convey any confidential
information or trade secrets about other employees of the Company to any other
person or (ii) influence or attempt to influence customers or suppliers of the
Company or its affiliates to direct their business to any Competitor of the
Company.

      (c) You acknowledge that Section 8 and 9 above are reasonable and
necessary for the protection of the business of the Company and its affiliates
and that part of the compensation paid under this letter is in consideration for
the provisions contained in Sections 8 and 9. If any restriction set forth with
regard to competition or solicitation of employees or customers is found by any
court of competent jurisdiction, to be unenforceable because it extends for too
long a period of time or over too great a range of activities or over too broad
a geographic area, it shall be interpreted to extend over a maximum period of
time, range of activities or geographic area as to which it may be enforceable.
You further acknowledge and consent that the Company would by reason of such
competition or solicitation of employees or customers be entitled to injunctive
relief in a court of appropriate jurisdiction prohibiting you from competing
with the Company or its affiliates or engaging in solicitation in violation of
this letter.

10. Governing Law/Miscellaneous. This letter is subject to the laws of the State
of New York. This letter, along with the Confidentiality Agreement, sets forth
the terms of your employment with the Company and supercedes all prior
agreements, arrangements and communications, whether oral or written, between
the Company and you. This letter may not be altered, modified or amended except
by written instrument signed by an individual authorized to sign on behalf of
the Company (other than you) and by you. This letter may not be assigned in
whole or in part, except that the Company may assign it to an acquiror of all or
substantially all of the assets of the Company. This letter shall be binding on
the successors and permitted assignees of the parties hereto.
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            This offer is made to you based on your representation to the
Company that your acceptance of employment with the Company and performance of
the contemplated services does not and will not conflict with or result in any
breach or default under any agreement, contract or arrangement to which you are
a party or violate any other legal restriction. If you find this offer of
employment acceptable, please sign the enclosed copy of this letter and return
it to us.

                                    Very truly yours,
                                    Arbinet Holdings, Inc.

                                    By: /s/ Anthony Craig
                                        ----------------------------------
                                        Name: Anthony Craig
                                        Title: Chairman & CEO

Agreed and accepted:

/s/ Robert S. Vaters
--------------------------------
Robert S. Vaters

Dated: 12/27/99
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Exhibit 10.7

                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT

      This Amended and Restated EMPLOYMENT AGREEMENT (this "Agreement") is made
as of the 2nd day of December, 1999 (the "Effective Date"), by and between
Arbinet Holdings, Inc., a Delaware corporation (the "Company") and Alex
Mashinsky, the founder of the Company (the "Founder").

                              W I T N E S S E T H:

      WHEREAS, the Company and Founder entered into that certain Employment
Agreement dated February 1, 1998, as amended on April 9, 1999 (the "Original
Agreement").

      WHEREAS, the Company and Founder desire to amend and to restate the
Original Agreement on the terms set forth herein.

      NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the parties hereto hereby agree as follows:

      1. Employment: Term. The Company hereby employs Founder, and Founder
hereby accepts employment with the Company, in accordance with and subject to
the terms and conditions set forth herein. The term of this Agreement shall
commence on the date hereof and, unless earlier terminated in accordance with
Section 5 hereof shall terminate on December 2, 2001 (the "Term"). This
Agreement and the Term may be extended for one or more additional annual periods
by written agreement signed by Founder and the Company prior to the end of the
Term.

      2. Employment.

            (a) Founder shall serve as the Vice-Chairman of the board of
directors (the "Board") of the Company; have the titles of Vice-Chairman and
"Founder" and shall report to the Chief Executive Officer of the Company. The
Company will use its commercially reasonable efforts to cause the Founder to be
elected to the Board. If so elected, and if Founder is not otherwise receiving
compensation from the Company, Founder shall receive the same compensation and
benefits as the Company may provide to other members of the Board who are not
executive officers of the Company. In addition, at the request of the Company,
the Founder shall serve on any advisory board or similar advisory body as may be
established by the Company from time to time.

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            (b) Founder shall have only such authority and responsibility as may
reasonably be assigned by the Chief Executive Officer of the Company (consistent
with this Agreement), which may include but not be limited to, at the direction
of the Chief Executive Officer of the Company, the Founder's participation in
any management or "road show" presentation of the Company in connection with any
public offering of the Company's securities or the sale of the Company. For the
avoidance of doubt, unless otherwise required by the Chief Executive Officer of
the Company, Founder shall not be required to, nor shall Founder, have
day-to-day operational or management responsibilities or the authority to bind
the Company; rather, Founder shall serve as the Company's chief architect and
advise the Chief Executive Officer regarding the Company's strategic business
plan.

            (c) From the Effective Date, until the earlier of the date which is
(i) nine (9) months from the Effective Date and (ii) two (2) months immediately
following the closing of any initial public offering ("IPO") of the Company's
equity securities (such earlier date being the "Milestone Date"), Founder shall
devote his full business and professional time to the business and affairs of
the Company.

            (d) From and after the Milestone Date, Founder shall devote an
amount of his business and professional time to the business and affairs of the
Company as is necessary for Founder to fulfill his obligations under this
Agreement; provided that Founder shall devote at least 60% (or such greater
amount as may be reasonably requested by the Chief Executive Officer of the
Company) of his business and professional time to the business and affairs of
the Company.

            (e) Founder shall be employed at the Company's principal place of
business, located in New York, New York and the Company shall provide the
Founder with an office and administrative support, including a full-time
assistant at the Company's place of business. Performance of Founder's duties
hereunder may require travel from time-to-time. Apart from such travel, Founder
will not be required to work outside of New York City.

      3. Compensation.

            (a) From the Effective Date, until the date which is the first
anniversary of the Effective Date (the "First Anniversary"), Company shall pay
Founder salary compensation ("Salary") at a rate of $200,000 per annum (the
"Annual Rate"), payable semi-monthly and subject to all legally required
withholdings.

            (b) From and after the First Anniversary, the Company shall pay
Founder Salary at the Annual Rate pro rated, to reflect the amount of business
and professional time devoted by Founder to the business and affairs of the
Company during such period, as may be required by the Chief Executive Officer of
the Company provided that in no event will the Founder's Salary be below
$120,000 per year.

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            (c) Founder shall be entitled to participate in any other
compensation or bonus, including stock option and equity incentive, plans the
Company makes generally available to its senior executives in accordance with
the terms of such plans and subject to the (i) the sole discretion of the Board
of Directors of the Company; and (ii) the Company's right to at any time amend
or terminate any such plan or program.

      4. Benefits.

            (a) The Company agrees to reimburse Founder for all reasonable and
necessary travel, business entertainment and other business expenses reasonably
incurred by Founder in connection with the performance of his duties under this
Agreement. Such reimbursements shall be made by the Company on a timely basis
upon submission by Founder of vouchers in accordance with the Company's standard
procedures.

            (b) Founder shall be entitled to participate in any and all medical
insurance, group health, disability insurance, life insurance, and other benefit
plans which are made generally available by the Company to its most senior
executives, which the Company, in its sole discretion, may at any time amend or
terminate. Employee shall be entitled to receive an annual paid vacation of four
calendar weeks each year during the Term and paid holidays made available
pursuant to the Company's policy to all employees of the Company.

            (c) Founder shall be indemnified by the Company in accordance with
the Company's policies applicable to the Company's officers and/or directors.

            (d) Founder is the holder of 2,059,214.35 shares of the Company's
common stock (the "Shares") which are subject to a right (the "Repurchase
Right") of repurchase by the Company for a price of one cent ($.01) per Share in
the event Founder's employment with the Company is terminated by the Company for
Cause (as defined below) or by the Founder. The price per share under the
Repurchase Right shall be adjusted to take into account any intervening stock
split, recapitalization, extraordinary distribution, or other transaction
affecting the capital structure of the Company from and after the Effective
Date. The Repurchase Right will lapse (i) as to 1/28th of the Shares on each
one-month anniversary of the date hereof and (ii) as to 100% of the Shares in
the event that Founder's employment with the Company is terminated for Good
Reason (as defined below). Founder shall not be entitled to vote any Shares
which are subject to the Repurchase Right and, if requested by the Company,
Founder shall exercise a written proxy in favor of the Company with respect to
such Shares. Notwithstanding the foregoing, in the event that the Founder
breaches any of the provisions contained in Section 7 hereof during the Covered
Time, the Company shall have the right, at its option, exercisable by ten (10)
days written notice by the Company to Founder, to exercise the Repurchase Right
with respect to all of the Shares. During the Term and the Covered Time (as
defined below in Section 7(a)(i)), the Founder shall not sell, assign, pledge,
encumber or otherwise transfer any of the Shares without the prior written
consent of the Board. Notwithstanding the foregoing, the Repurchase Right shall

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terminate upon the occurrence of a "change of control." For purposes hereof, a
"change of control" shall have occurred if the Company consummates (a) a merger
or consolidation of the Company with any other company (other than a
wholly-owned subsidiary of the Company), other than (i) 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 entity) 50% or more of the combined voting power of voting securities
of the Company or such surviving entity outstanding immediately after such
merger or consolidation (ii) a merger or consolidation affected to implement a
recapitalization of the Company (or similar transaction), (b) the sale of all or
substantially all of the voting securities of the Company in a single
transaction or a series of related transactions; or (c) 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 the Company's assets.

      5. Termination. Founder's employment hereunder may be terminated prior to
the end of the Term under the following circumstances:

            (a) Death. Founder's employment hereunder shall terminate upon
Founder's death.

            (b) Total Disability. The Company may terminate Founder's employment
hereunder at any time after Founder becomes "Totally Disabled". For purposes of
this Agreement, Founder shall be "Totally Disabled" as of the date Founder
becomes unable to perform the duties and responsibilities contemplated under
this Agreement for a period of more than 180 consecutive days due to physical or
mental incapacity or impairment as determined by a physician chosen by the
Company. Such termination shall become effective five days after the Company
gives notice of such termination to Founder, or to his spouse or legal
representative, in accordance with Section 10 below.

            (c) Termination by the Company for Cause. The Company may terminate
Founder's employment hereunder for Cause at any time after providing written
notice to Founder. For purposes of this Agreement, the term "Cause" shall mean
any of the following: (i) the willful and continued failure or refusal of
Founder to perform Founder's duties hereunder (other than as a result of total
or partial incapacity due to physical or mental illness); (ii) perpetration of
an intentional and knowing fraud against or affecting the Company or any
customer, client, agent, or employee thereof; (iii) any willful or intentional
act that could reasonably be expected to injure the reputation, business, or
business relationships of the Company or Founder's reputation or business
relationships; (iv) conviction (including conviction on a nolo contendere plea)
of a felony or any crime involving, fraud, dishonesty or moral turpitude; or (v)
the breach of any covenant set forth in Section 7, provided, however, that, if
the termination for Cause occurs under clauses (i), (iii) or (v) of the
definition of "Cause", such termination shall not be effective unless Founder is
given not less than ten days' advance written notice of

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such termination, specifying in reasonable detail the grounds for termination,
and fails to cure such grounds for termination within such 30-day period.

            (d) Termination by Founder for Good Reason. Founder may terminate
his employment hereunder if (i) the Company materially breaches this Agreement
or (ii) the Company effects a material diminution of Founder's title or duties,
as specified in Section 2 of this Agreement, and the Company fails to cure such
breach or material diminution within thirty (30) days after Founder gives the
Company written notice setting forth in reasonable detail the nature of such
breach or diminution.

            (e) Termination by Founder. Founder may terminate his employment
hereunder for any reason or no reason by providing sixty (60) days prior written
notice to the Company, provided that the Company may, in its sole discretion,
reduce or eliminate such notice period.

      6. Compensation Following Termination Prior to End of the Term. In the
event that Founder's employment hereunder is terminated prior to the end of the
Term, Founder shall be entitled only to the following compensation and benefits
upon such termination:

            (a) Termination by Reason of Death or Total Disability. In the event
that Founder's employment is terminated prior to the expiration of the Term by
reason of Founder's death or Total Disability pursuant to Section 5(a) or 5(b),
the Company shall pay the following amounts to Founder (or Founder's spouse or
estate, as the case may be):

                  (i) any accrued but unpaid Salary (as determined pursuant to
            Section 3) and any bonus which the Board has declared to be paid to
            Founder for periods ending before the date of termination but which
            remains unpaid at the time of termination;

                  (ii) any accrued but unpaid expenses required to be reimbursed
            pursuant to Section 4(a); and

                  (iii) any vacation accrued to the date of termination.

            (b) Termination by the Company for Cause: Termination by Founder
Without Cause. In the event that Founder's employment is terminated by the
Company for Cause or by the Founder without Cause pursuant to Section 5(e), the
Company shall pay the following amounts to Founder:

                  (i) any accrued but unpaid Salary (as determined pursuant to
            Section 3) and any bonus which the Board has declared to be paid to
            Founder for periods ending before the date of termination but which
            remains unpaid at the time of termination;

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                  (ii) any accrued but unpaid expenses required to be reimbursed
            pursuant to Section 4(a); and

                  (iii) any vacation accrued to the date of termination.

            (c) Termination by Founder for Good Reason. In the event that
Founder's employment is terminated by the Company without Cause or by Founder
for good reason pursuant to Section 5(d), the Company shall pay the following
amounts to Founder:

                  (i) any accrued but unpaid Salary (as determined pursuant to
            Section 3);

                  (ii) any accrued but unpaid expenses required to be reimbursed
            pursuant to Section 4(a);

                  (iii) any vacation accrued to the date of termination; and

                  (iv) continued payment of the Salary (as determined under
            Section 3), at the rate in effect on the day of such termination,
            for twelve (12) months or until the expiration of the Term,
            whichever is earlier. Such payments shall be made in accordance with
            the Company's standard payroll practices then in effect. Founder
            shall not be entitled to any payment under this paragraph (iv) if he
            is or has at any time been in breach of any covenant contained in
            Section 7 hereof. The benefits to which Founder may be entitled upon
            termination pursuant to the plans, policies and arrangements
            referred to in Section 4(b) hereof shall be determined and paid in
            accordance with the terms of such plans, policies and arrangements,
            except that the Company shall, with respect to any major medical and
            all other health, accident, or disability plans for which Founder,
            or his spouse or legal representative, elects continuation in
            accordance with COBRA, be responsible for payment of premiums
            related to the maintenance of such plans for a period of ninety (90)
            days following termination.

            (d) No Other Benefits or Compensation. Except as may be provided
under this Agreement or under the terms of any incentive compensation, employee
benefit, or fringe benefit plan applicable to Founder at the time of the
termination of Founder's employment prior to the end of the Term, Founder shall
have no right to receive any other compensation, or to participate in any other
plan, arrangement or benefit, with respect to any future period after such
termination or resignation.

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      7. Noncompetition: Nonsolicitation; Outside Business Activities;
Nondisclosure of Proprietary Information; Surrender of Records; Inventions and
Patents.

            (a) Noncompetition: Nonsolicitation.

                  (i) Founder acknowledges and recognizes the highly competitive
            nature of the Company's business and that access to the Company's
            confidential records and proprietary information renders him special
            and unique within the Company's industry. In consideration of the
            payment by the Company to Founder of amounts that may hereafter be
            paid to Founder pursuant to this Agreement (including, without
            limitation, pursuant to Sections 3 and 6 hereof), Founder agrees
            that during the period commencing on the Effective Date and ending
            on the later of (A) the date which is twelve (12) months after the
            expiration of the Term (and any extensions or renewals thereof) and
            (B) the second anniversary of the Effective Date (such later period
            being the "Covered Time"), without the prior written consent of the
            Company, Founder will not compete with any business the Company is
            then conducting or which is covered in a written proposal or
            business plan existing on the Date of Termination and will not
            engage, directly or indirectly, in any business that relies upon,
            utilizes, attempts to re-create, or otherwise relates to the
            products, applications, programs, or proprietary process utilized by
            the Company, any patent, trademark, copyright or other intellectual
            property obtained by or sought to be obtained by the Company, or any
            proprietary software utilized by the Company (each such activity, a
            "Competing Activity").

                  (ii) In further consideration of the payment by the Company to
            Founder of amounts that may hereafter be paid to Founder pursuant to
            this Agreement (including, without limitation, pursuant to Sections
            3 and 6 hereof). Founder agrees that during the Term (including any
            extensions thereof) and during the Covered Time he shall not (i)
            directly or indirectly solicit or attempt to solicit any of the
            employees, agents, consultants or representatives of the Company to
            terminate his, her or its relationship with the Company; (ii)
            directly or indirectly solicit or attempt to solicit any of the
            employees, agents, consultants or representatives of the Company to
            become employees, agents, representatives or consultants of any
            other person or entity (including the Founder or any person or
            entity owned or controlled by Founder); or (iii) directly or
            indirectly solicit or attempt to solicit any customer, vendor or
            distributor of the Company with respect to any product or service
            being furnished, made, sold or leased by the Company or proposed to
            be furnished, made, sold or leased by the

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            Company and which is covered in a written proposal or business plan
            by the Company.

                  (iii) During the Covered Time, Founder agrees that upon the
            earlier of Founder's (a) negotiating with any Competitor (as defined
            below) concerning the possible employment of Founder by the
            Competitor, (b) receiving an offer of employment from a Competitor
            or (c) becoming employed by a Competitor, Founder will (x)
            immediately provide notice to the Company of such circumstances and
            (y) provide copies of Section 7 of this Agreement to the Competitor.
            Founder further agrees that the Company may provide notice to a
            Competitor of Founder's obligations under this Agreement, including
            without limitation Founder's obligations pursuant to Section 7
            hereof. For purposes of this Agreement, "Competitor" shall mean any
            entity (other than the Company) that engages, directly or
            indirectly, in software development for any telephony related or
            carrier related business.

                  (iv) Founder understands that the provisions of this Section
            7(a) and Section 7(b) may limit his ability to earn a livelihood in
            a business similar to the business of the Company but nevertheless
            agrees and hereby acknowledges that the consideration provided under
            this Agreement, including any amounts or benefits provided under
            Sections 3 and 6 hereof, is sufficient to justify the restrictions
            contained in such provisions. In consideration thereof and in light
            of Founder's education, skills and abilities, Founder agrees that he
            will not assert in any forum that such provisions prevent him from
            earning a living or otherwise are void or unenforceable or should be
            held void or unenforceable.

            (b) Outside Business Activities. Notwithstanding any provision
contained herein to the contrary, during the Term, Founder will not pursue or be
engaged in, directly or indirectly, any business activity (whether or not such
activity is a Competing Activity) other than the performance of his duties
hereunder, without the prior written consent of the Board which will not be
unreasonably withheld; provided, however that in the event the Company fails to
reply to any request of Founder under this Section 7(b) within thirty (30) days
of the date thereof, the Company shall be deemed to have granted its consent to
such request by Founder.

            (c) Proprietary Information. Founder acknowledges that during the
course of his employment with the Company he will necessarily have access to and
make use of proprietary information and confidential records of the Company.
Founder covenants that he shall not during the Term or at any time thereafter,
directly or indirectly, use for his own purpose or for the benefit of any person
or entity other than the Company, nor otherwise disclose any proprietary
information to any individual or entity, unless such disclosure has been
authorized in writing by the Company or is otherwise

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required by law. Founder acknowledges and understands that the term "proprietary
information" includes, but is not limited to: (i) the software products,
programs, applications, and processes utilized by the Company (other than
pre-packaged "off the shelf" products); (ii) the name and/or address of any
customer or affiliate of the Company or any information concerning the
transactions or relations of any customer, vendor or affiliates of the Company
with the Company or any of its partners, principals, stockholders, directors,
officers or agents; (iii) any information concerning any product, technology, or
procedure employed by the Company but not generally known to its customers,
vendors or competitors, or under development by or being tested by the Company
but not at the time offered by the Company generally to customers or vendors;
(iv) any information relating to the Company's computer software, computer
systems, pricing or marketing methods, sales margins, cost of goods, cost of
material, capital structure, operating results, borrowing arrangements or
business plans; (v) any information which is generally regarded as confidential
or proprietary in any line of business engaged in by the Company; (vi) any
business plans, budgets, advertising or marketing plans; (vii) any information
contained in any of the Company's written or oral policies and procedures or
manuals; (viii) any information belonging to customers, vendors or affiliates of
the Company or any other person or entity which the Company has agreed to hold
in confidence; (ix) any inventions, innovations or improvements covered by this
Agreement; and (x) all written, graphic and other material relating to any of
the foregoing. Founder acknowledges and understands that information that is not
novel or copyrighted or patented may nonetheless be proprietary information. The
term "proprietary information" shall not include information generally available
to the public or information that is or become available to Founder on a
non-confidential basis from a source other than the Company or the Company's
directors, officers, employees, partners, principals or agents (other than as a
result of a breach of any obligation of confidentiality).

            (d) Confidentiality and Surrender of Records. Founder shall not
during the Term or at any time thereafter (irrespective of the circumstances
under which Founder's employment by the Company terminates), except as required
by law, directly or indirectly publish, make known or in any fashion disclose
any confidential records to, or permit any inspection or copying of confidential
records by, any individual or entity other than in the course of such
individual's or entity's employment or retention by the Company, nor shall
Founder retain, and will deliver promptly to the Company, any of the same
following termination of his employment hereunder for any reason or upon request
by the Company. For the purposes hereof, "confidential records" means all
correspondence, memorandum, files, manuals, books, lists, financial, operating
or marketing records, magnetic tape, or electronic or other media or equipment
of any kind which may be in Founder's possession or under his control or
accessible to him which contain any proprietary information. All confidential
records shall be and remain the sole property of the Company during the Term and
thereafter.

                                       9
<PAGE>

            (e) Inventions and Patents. All inventions, innovations or
improvements (including policies, procedures, products, improvements, software,
ideas and discoveries, whether patent, copyright, trademark, service mark, or
otherwise) conceived or made by Founder, either alone or jointly with others, in
the course of and since the beginning of his employment by the Company, relating
to the business of the Company, including without limitation, the provision of
local, long distance or international access telephony or data services belong
to the Company. Founder will promptly disclose in writing such inventions,
innovations or improvements to the Company and perform all actions reasonably
requested by the Company to establish and confirm such ownership by the Company,
including, but not limited to, cooperating with and assisting the Company in
obtaining patents, copyrights, trademarks, or service marks for the Company in
the United States and in foreign countries. The Company acknowledges that the
Founder may currently have and may hereafter develop inventions or innovations
not relating to the business of the Company which do not belong to the Company;
provided, that Founder shall have the burden of proof to establish that any such
inventions or innovations do not relate to the business of the Company.

            (f) No Other Obligations. Founder represents that he is not
precluded or limited in his ability to undertake or perform the duties described
herein by any contract, agreement or restrictive covenant. Founder covenants
that he shall not employ the trade secrets or proprietary information of any
other person in connection with his employment by the Company.

            (g) Confidentiality. Founder agrees to keep confidential the terms
of this Agreement. This provision does not prohibit Founder from providing this
information to his attorneys or accountants for purposes of obtaining legal or
tax advice or as otherwise required by law. The Company shall not disclose the
terms of this Agreement except as necessary in the ordinary course of its
business or as required by law.

            (h) Enforcement. Founder acknowledges and agrees that, by virtue of
his position, his services and access to and use of confidential records and
proprietary information, any violation by him of any of the undertakings
contained in this Section 7 would cause the Company immediate, substantial and
irreparable injury for which it has no adequate remedy at law. Accordingly,
Founder agrees and consents to the entry of an injunction or other equitable
relief by a court of competent jurisdiction restraining any violation or
threatened violation of any undertaking contained in this Section 7. The Company
agrees and consents to the entry of an injunction or other equitable relief by a
court of competent jurisdiction restraining the Company from making any
defamatory statements, whether orally or in writing, relating to alleged
violations or threatened violations by Founder of any undertaking contained in
this Section 7. Founder and the Company each waive posting of any bond otherwise
necessary to secure such injunction or other equitable relief. Rights and
remedies provided for in this Section 7 are

                                       10
<PAGE>

cumulative and shall be in addition to rights and remedies otherwise available
to the parties hereunder or under any other agreement or applicable law.

            (i) Notwithstanding anything in this Section 7 to the contrary, each
reference herein to the Company shall also include each subsidiary of the
Company unless the context expressly requires otherwise.

      8. Key Man Insurance. Founder recognizes and acknowledges that the Company
or its affiliates may seek and purchase one or more policies providing key man
life insurance with respect to Founder, the proceeds of which would be payable
to the Company or such affiliate. Founder hereby consents to the Company or its
affiliates seeking and purchasing such insurance and will provide such
information, undergo such medical examinations (at the Company's expense),
execute such documents and otherwise take any and all actions reasonably
necessary or desirable in order from the Company or its affiliates to seek,
purchase and maintain in full force and effect such policy or policies.

      9. Notices. Any notice, consent, request or other communication made or
given in accordance with this Agreement shall be in writing and shall be deemed
to have been duly given when actually received, or, if mailed, three days after
mailing by registered or certified mail, return receipt requested and postage
prepaid, to those listed below at their following respective addresses or at
such other address as each may specify by notice to the others:

            To the Company:

                  Arbinet Holdings, Inc.
                  266 East 54th Street
                  New York, New York 10022
                  Attention: Chief Executive Officer

            With a copy to:

                  Neil A. Torpey, Esq.
                  Paul, Hastings, Janofsky & Walker LLP
                  399 Park Avenue
                  New York, New York  10022

            To Founder:

                  Alex Mashinsky
                  495 West End Avenue
                  New York, New York 10024

                                       11
<PAGE>

            With a copy to:

                  Roberts & Holland LLP
                  Attention: David E. Kahen, Esq.
                  825 Eighth Avenue, 37th Floor
                  New York, New York 10019-7416

      10. Assignability: Binding Effect. This Agreement is a personal services
contract calling for the provision of unique services by Founder, and Founder's
rights and obligations hereunder may not be sold, transferred, assigned, pledged
or hypothecated. In the event of any attempted assignment or transfer of rights
hereunder by Founder contrary to the provisions hereof (other than as may be
required by law), the Company will have no further liability for payments
hereunder. The rights and obligations of the Company hereunder will be binding
upon and run in favor of the successors and assigns of the Company.

      11. Complete Understanding: Amendment: Waiver. This Agreement constitutes
the complete understanding between the parties with respect to the employment of
Founder and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof,
and no statement, representation, warranty or covenant has been made by either
party with respect thereto except as expressly set forth herein. This Agreement
shall not be altered, modified, amended or terminated except by a written
instrument signed by each of the parties hereto. Any waiver of any term or
provisions hereof, or of the application of any such term or provision to any
circumstances, shall be in writing signed by the party charged with giving such
waiver. Wavier by either party hereto of any breach hereunder by the other party
shall not operate as a waiver of any other breach, whether similar to or
different from the breach waived. No delay on the part of the Company or Founder
in the exercise of any of their respective rights or remedies shall operate as a
waiver thereof, and no single or partial exercise by the Company or Founder of
any such right or remedy shall preclude other or further exercise thereof.

      12. Severability. If any provision of this Agreement or the application of
any such provision to any party or circumstances shall be determined by any
court of competent jurisdiction to be invalid or unenforceable to any extent,
the remainder of this Agreement, or the application of such provision to such
person or circumstances other than those to which it is so determined to be
invalid or unenforceable, shall not be affected thereby, and each provision
hereof shall be enforced to the fullest extent permitted by law. If any
provision of this Agreement, or any part thereof, is held to be invalid or
unenforceable because of the scope or duration of or the area covered by such
provision, the parties hereto agree that the court making such determination
shall reduce the scope, duration and/or area of such provision (and shall
substitute appropriate provisions for any such invalid or unenforceable
provisions) in order to make such provision enforceable to the fullest extent
permitted by law and or shall delete specific

                                       12
<PAGE>

words and phrases, and such modified provisions shall then be enforceable and
shall be enforced. The parties hereto recognize that if, in any judicial
proceedings, a court shall refuse to enforce any of the separate covenants
contained in this Agreement, then that invalid or unenforceable covenant
contained in this Agreement shall be deemed eliminated from these provisions to
the extent necessary to permit the remaining separate covenants to be enforced.
In the event that any court determines that the time period or the area, or
both, are unreasonable and that any of the covenants is to that extent invalid
or unenforceable, the parties hereto agree that such covenants will remain in
full force and effect, first, for the greatest time period, and second, in the
greatest geographical area that would not render them unenforceable. To the
extent that a court of competent jurisdiction determines that Founder breached
any undertaking in Section 7, the company's obligation to make payments
hereunder shall immediately cease, provided that the Company shall be liable for
such payments in the event that the determination of such court is overturned or
reversed by any higher court.

      13. Survivability. The provisions of this Agreement which by their terms
call for performance subsequent to termination of Founder's employment
hereunder, or of this Agreement, shall so survive such termination.

      14. Governing Law: Consent to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to agreements made and to be wholly performed within that State. Any
action to enforce this Agreement must be brought in a court situated in New York
and the parties hereby consent to the jurisdiction of courts situated in New
York. Whichever party prevails in any action relating to this Agreement, the
employment of Founder by the Company, or any other matter arising out of or
relating to the relationship between Founder and the Company shall be entitled
to recover reasonable attorneys' fees and costs incurred in bringing or
defending the proceeding.

      15. Expenses. The Company shall pay all costs and expenses incurred in
connection with the execution and delivery of this Agreement, including fees for
counsel to the Founder, in an aggregate amount not to exceed $10,000.

      16. Titles and Captions. All paragraph titles or captions in this
Agreement are for convenience only and in no way define, limit, extend or
describe the scope or intent of any provision hereof

                                       13
<PAGE>

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

                              ARBINET HOLDINGS, INC.

                              By:  /s/ Neil A. Torpey
                                 -------------------------
                                 Name: Neil A. Torpey
                                 Title: Secretary

                                 /s/ Alex Mashinsky
                                 -------------------------
                                 Alex Mashinsky

                                       14

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