Document:

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Exhibit 10.2

                   AMENDED AND RESTATED ARBINET HOLDINGS, INC.

                            1997 STOCK INCENTIVE PLAN
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                                    ARTICLE I
                                     GENERAL

      I.1 Purpose

            The purpose of the ArbiNet Holdings, Inc. 1997 Amended and Restated
Stock Incentive Plan (the "Plan") is to provide for officers, other employees
and directors of, and consultants to, ArbiNet Holdings, Inc. (the "Company") and
its subsidiaries an incentive (a) to enter into and remain in the service of the
Company, (b) to enhance the long-term performance of the Company, and (c) to
acquire a proprietary interest in the success of the Company.

      I.2 Administration

            I.2.1 Subject to Section 1.2.6, the Plan shall be administered by
the Stock Option Committee (the "Committee") of the board of directors of the
Company (the "Board"), which shall consist of not less than two directors. The
members of the Committee shall be appointed by, and serve at the pleasure of,
the Board. To the extent required for transactions under the Plan to qualify for
the exemptions available under Rule 16b-3 ("Rule 16b-3") promulgated under the
Securities Exchange Act of 1934 (the "1934 Act"), all actions relating to awards
to persons subject to Section 16 of the 1934 Act shall be taken by the Board
unless each person who serves on the Committee is a "non-employee director"
within the meaning of Rule 16b-3 or such actions are taken by a sub-committee of
the Committee (or the Board) comprised solely of "non-employee directors." To
the extent required for compensation realized from awards under the Plan to be
deductible by the Company pursuant to section 162(m) of the Internal Revenue

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Code of 1986 (the "Code"), the members of the Committee shall be "outside
directors" within the meaning of section 162(m).

            I.2.2 The Committee shall have the authority (a) to exercise all of
the powers granted to it under the Plan, (b) to construe, interpret and
implement the Plan and any Plan Agreements executed pursuant to Section 2. 1,
(c) to prescribe, amend and rescind rules and regulations relating to the Plan,
including rules governing its own operations, (d) to make all determinations
necessary or advisable in administering the Plan, (e) to correct any defect,
supply any omission and reconcile any inconsistency in the Plan, and (f) to
amend the Plan to reflect changes in applicable law.

            I.2.3 Actions of the Committee shall be taken by the vote of a
majority of its members. Any action may be taken by a written instrument signed
by a majority of the Committee members, and action so taken shall be fully as
effective as if it had been taken by a vote at a meeting.

            I.2.4 The determination of the Committee on all matters relating to
the Plan or any Plan Agreement shall be final, binding and conclusive.

            I.2.5 No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any award
thereunder.

            I.2.6 Notwithstanding anything to the contrary contained herein: (a)
until the Board shall appoint the members of the Committee, the Plan shall be
administered by the Board; and (b) the Board may, in its sole discretion, at any
time and from time to time, grant awards or resolve to administer the Plan. In
either of the

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foregoing events, the Board shall have all of the authority and responsibility
granted to the Committee herein.

      I.3 Persons Eligible for Awards

            Awards under the Plan may be made to such directors, officers and
other employees of the Company and its subsidiaries (including prospective
employees conditioned on their becoming employees), and to such consultants to
the Company and its subsidiaries (collectively, "key persons") as the Committee
shall in its discretion select.

      I.4 Types of Awards Under Plan

            Awards may be made under the Plan in the form of (a) incentive stock
options (within the meaning of section 422 of the Code), (b) nonqualified stock
options, (c) stock appreciation rights, (d) dividend equivalent rights, (e)
restricted stock, (f) restricted stock units and (g) other stock-based awards,
all as more fully set forth in Article II. The term "award" means any of the
foregoing. No incentive stock option may be granted to a person who is not an
employee of the Company on the date of grant.

      I.5 Shares Available for Awards

            I.5.1 The total number of shares of common stock of the Company, par
value $.001 per share ("Common Stock"), which may be transferred pursuant to
awards granted under the Plan shall not exceed 10,426,918 shares. Such shares
may be authorized but unissued Common Stock or authorized and issued Common
Stock held in the Company's treasury or acquired by the Company for the purposes
of the Plan. The

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Committee may direct that any stock certificate evidencing shares issued
pursuant to the Plan shall bear a legend setting forth such restrictions on
transferability as may apply to such shares pursuant to the Plan.

            I.5.2 Subject to any required action by the shareholders of the
Company, the number of shares of Common Stock covered by each outstanding award,
the number of shares available for awards, the number of shares that may be
subject to awards to any one employee, and the price per share of Common Stock
covered by each such outstanding award shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the
Committee, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an award.
After any adjustment made pursuant to this Section 1.5.2, the

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number of shares subject to each outstanding award shall be rounded to the
nearest whole number.

            I.5.3 Except as provided in this Section 1.5 and in Section 2.3.7,
there shall be no limit on the number or the value of the shares of Common Stock
that may be subject to awards to any individual under the Plan.

      I.6 Definitions of Certain Terms

            I.6.1 The "Fair Market Value" of a share of Common Stock on any day
shall be determined as follows.

                  (a) If the principal market for the Common Stock (the Market")
is a national securities exchange or the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") National Market, the last sale
price or, if no reported sales take place on the applicable date, the average of
the high bid and low asked price of Common Stock as reported for such Market on
such date or, if no such quotation is made on such date, on the next preceding
day on which there were quotations, provided that such quotations shall have
been made within the ten (10) business days preceding the applicable date;

                  (b) If the Market is a Market other than the NASDAQ National
Market, the average of the high bid and low asked price for the Common Stock on
the applicable date, or, if no such quotations shall have been made on such
date, on the next preceding day on which there were quotations, provided that
such quotations shall have been made within the ten (10) business days preceding
the applicable date; or,

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                  (c) In the event that neither paragraph (a) nor (b) shall
apply, the Fair Market Value of a share of Common Stock on any day shall be
determined in good faith by the Committee.

            I.6.2 The term "incentive stock option" means an option that is
intended to qualify for special federal income tax treatment pursuant to
sections 421 and 422 of the Code, as now constituted or subsequently amended, or
pursuant to a successor provision of the Code, and which is so designated in the
applicable Plan Agreement. Any option that is not specifically designated as an
incentive stock option shall under no circumstances be considered an incentive
stock option. Any option that is not an incentive stock option is referred to
herein as a "nonqualified stock option."

            I.6.3 The term "employment" means, in the case of a grantee of an
award under the Plan who is not an employee of the Company, the grantee's
association with the Company or a subsidiary as a director, consultant or
otherwise.

            I.6.4 A grantee shall be deemed to have a "termination of
employment" upon ceasing to be employed by the Company and all of its
subsidiaries or by a corporation assuming awards in a transaction to which
section 424(a) of the Code applies. The Committee may in its discretion
determine (a) whether any leave of absence constitutes a termination of
employment for purposes of the Plan, (b) the impact, if any, of any such leave
of absence on awards theretofore made under the Plan, and (c) when a change in a
non-employee's association with the Company constitutes a termination of
employment for purposes of the Plan. The Committee shall have the right to
determine

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whether the termination of a grantee's employment is a dismissal for cause (as
defined herein) and the date of termination in such case, which date the
Committee may retroactively deem to be the date of the action that is cause for
dismissal. Such determinations of the Committee shall be final, binding and
conclusive.

            I.6.5 The term "cause," when used in connection with termination of
a grantee's employment, shall have the meaning set forth in any then-effective
employment agreement between the grantee and the Company or a subsidiary
thereof. In the absence of such an employment agreement, "cause" means: (i) the
gross neglect or willful failure or refusal of the Optionee to perform
Optionee's duties under any agreement between the Optionee and the Company
(other than as a result of total or partial incapacity due to physical or mental
illness); (ii) the engaging by Optionee in misconduct which is injurious to the
Company, monetarily or otherwise; (iii) perpetration of an intentional and
knowing fraud against or affecting the Company or any customer, client, agent,
or employee thereof; (iv) any willful or intentional act that could reasonably
be expected to injure the reputation, business, or business relationships of the
Company or Employee's reputation or business relationships; (v) conviction
(including conviction on a nolo contendere plea) of a felony or any crime
involving, in the good faith judgment of the Company, fraud, dishonesty or moral
turpitude; or (vi) the breach of any covenant by the Optionee to the Company
relating to noncompetition, nonsolicitation, nondisclosure of proprietary
information or surrender of records, inventions or patents.

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                                   ARTICLE II
                              AWARDS UNDER THE PLAN

      II.1 Agreements Evidencing Awards

            Each award granted under the Plan (except an award of unrestricted
stock) shall be evidenced by a written agreement ("Plan Agreement") which shall
contain such provisions as the Committee in its discretion deems necessary or
desirable. Such provisions may include, without limitation, a requirement that
the grantee become a party to a shareholders' agreement with respect to any
shares of Common Stock acquired pursuant to the award, a requirement that the
grantee acknowledge that such shares are acquired for investment purposes only,
a right of first refusal exercisable by the Company in the event that the
grantee wishes to transfer any such shares, and a call right exercisable by the
Company following the termination of employment. By accepting an award pursuant
to the Plan, a grantee thereby agrees that the award shall be subject to all of
the terms and provisions of the Plan and the applicable Plan Agreement.

      II.2 No Rights as a Shareholder

            No grantee of an option or stock appreciation right (or other person
having the right to exercise such award) shall have any of the rights of a
shareholder of the Company with respect to shares subject to such award until
the issuance of a stock certificate to such person for such shares. Except as
otherwise provided in Section 1.5.3, no adjustment shall be made for dividends,
distributions or other rights (whether ordinary or extraordinary, and whether in
cash, securities or other property) for which the record date is prior to the
date such stock certificate is issued.

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      II.3 Grant of Stock Options, Stock Appreciation
           Rights and Dividend Equivalent Rights

            II.3.1 The Committee may grant incentive stock options and
nonqualified stock options (collectively, "options") to purchase shares of
Common Stock from the Company, to such key persons, in such amounts and subject
to such terms and conditions, as the Committee shall determine in its
discretion, subject to the provisions of the Plan.

            II.3.2 The Committee may grant stock appreciation rights to such key
persons, in such amounts and subject to such terms and conditions, as the
Committee shall determine in its discretion, subject to the provisions of the
Plan. Stock appreciation rights may be granted in connection with all or any
part of, or independently of, any option granted under the Plan. A stock
appreciation right granted in connection with a nonqualified stock option may be
granted at or after the time of grant of such option. A stock appreciation right
granted in connection with an incentive stock option may be granted only at the
time of grant of such option.

            II.3.3 The grantee of a stock appreciation right shall have the
right, subject to the terms of the Plan and the applicable Plan Agreement, to
receive from the Company an amount equal to (a) the excess of the Fair Market
Value of a share of Common Stock on the date of exercise of the stock
appreciation right over (b) the exercise price of such right as set forth in the
Plan Agreement (or over the option exercise price if the stock appreciation
right is granted in connection with an option), multiplied by (c) the number of
shares with respect to which the stock appreciation right is exercised. Payment
upon exercise of a stock appreciation right shall be in cash or in

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shares of Common Stock (valued at their Fair Market Value on the date of
exercise of the stock appreciation right) or both, all as the Committee shall
determine in its discretion. Upon the exercise of a stock appreciation right
granted in connection with an option, the number of shares subject to the option
shall be correspondingly reduced by the number of shares with respect to which
the stock appreciation right is exercised. Upon the exercise of an option in
connection with which a stock appreciation right has been granted, the number of
shares subject to the stock appreciation right shall be correspondingly reduced
by the number of shares with respect to which the option is exercised.

            II.3.4 Each Plan Agreement with respect to an option shall set forth
the amount (the "option exercise price") payable by the grantee to the Company
upon exercise of the option evidenced thereby. The option exercise price per
share shall be determined by the Committee in its discretion; provided, however,
that the option exercise price of an incentive stock option shall be at least
100% of the Fair Market Value of a share of Common Stock on the date the option
is granted, and provided further that in no event shall the option exercise
price be less than the par value of a share of Common Stock.

            II.3.5 Each Plan Agreement with respect to an option or stock
appreciation right shall set forth the periods during which the award evidenced
thereby shall be exercisable, whether in whole or in part. Such periods shall be
determined by the Committee in its discretion; provided, however, that no
incentive stock option (or a stock

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appreciation right granted in connection with an incentive stock option) shall
be exercisable more than 10 years after the date of grant.

            II.3.6 The Committee may in its discretion include in any Plan
Agreement with respect to an option (the "original option") a provision that an
additional option (the "additional option") shall be granted to any grantee who,
pursuant to Section 2.4.3(b), delivers shares of Common Stock in partial or full
payment of the exercise price of the original option. The additional option
shall be for a number of shares of Common Stock equal to the number thus
delivered, shall have an exercise price equal to the Fair Market Value of a
share of Common Stock on the date of exercise of the original option, and shall
have an expiration date no later than the expiration date of the original
option. In the event that a Plan Agreement provides for the grant of an
additional option, such Agreement shall also provide that the exercise price of
the original option be no less than the Fair Market Value of a share of Common
Stock on its date of grant, and that any shares that are delivered pursuant to
Section 2.4.3(b) in payment of such exercise price shall have been held for at
least six months.

            II.3.7 To the extent that the aggregate Fair Market Value
(determined as of the time the option is granted) of the stock with respect to
which incentive stock options granted under this Plan and all other plans of the
Company and any subsidiary are first exercisable by any employee during any
calendar year shall exceed the maximum limit (currently, $100,000), if any,
imposed from time to time under section 422 of the Code, such options shall be
treated as nonqualified stock options.

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            II.3.8 Notwithstanding the provisions of Sections 2.3.4 and 2.3.5,
to the extent required under section 422 of the Code, an incentive stock option
may not be granted under the Plan to an individual who, at the time the option
is granted, owns stock possessing more than 10% of the total combined voting
power of all classes of stock of his employer corporation or of its parent or
subsidiary corporations (as such ownership may be determined for purposes of
section 422(b)(6) of the Code) unless (a) at the time such incentive stock
option is granted the option exercise price is at least 110% of the Fair Market
Value of the shares subject thereto and (b) the incentive stock option by its
terms is not exercisable after the expiration of five (5) years from the date it
is granted.

      II.4 Exercise of Options and Stock Appreciation Rights

            Subject to the provisions of this Article 11, each option or stock
appreciation right granted under the Plan shall be exercisable as follows:

            II.4.1 An option or stock appreciation right shall become
exercisable as determined by the Committee and set forth in a Plan Agreement,
and once it becomes exercisable shall remain exercisable until expiration,
cancellation or termination of the award.

            II.4.2 Unless the applicable Plan Agreement otherwise provides, an
option or stock appreciation right may be exercised from time to time as to all
or part of the shares as to which such award is then exercisable (but, in any
event, only for whole shares). A stock appreciation right granted in connection
with an option may be exercised at any time when, and to the same extent that,
the related option may be

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exercised. An option or stock appreciation right shall be exercised by the
filing of a written notice with the Company, on such form and in such manner as
the Committee shall prescribe.

            II.4.3 Any written notice of exercise of an option shall be
accompanied by payment for the shares being purchased. Such payment shall be
made: (a) by certified or official bank check (or the equivalent thereof
acceptable to the Company) for the full option exercise price; or (b) unless the
applicable Plan Agreement provides otherwise, by delivery of shares of Common
Stock acquired at least six months prior to the option exercise date and having
a Fair Market Value (determined as of the exercise date) equal to all or part of
the option exercise price and a certified or official bank check (or the
equivalent thereof acceptable to the Company) for any remaining portion of the
full option exercise price; (c) on a "cashless" basis, by stating in the
exercise notice the number of shares the Optionee elects to purchase pursuant to
such exercise (in which case the Optionee shall receive a number of shares equal
to the number the Optionee would have received upon such exercise for cash less
such number of shares as shall then have a Fair Market Value in the aggregate
equal to the exercise price due in respect of such exercise); or (d) at the
discretion of the Committee and to the extent permitted by law, by such other
provision as the Committee may from time to time prescribe.

            II.4.4 Promptly after receiving payment of the full option exercise
price, or after receiving notice of the exercise of a stock appreciation right
for which payment will be made partly or entirely in shares, the Company shall,
subject to the provisions of

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Section 3.3 (relating to certain restrictions), deliver to the grantee or to
such other person as may then have the right to exercise the award, a
certificate or certificates for the shares of Common Stock for which the award
has been exercised. If the method of payment employed upon option exercise so
requires, and if applicable law permits, an optionee may direct the Company to
deliver the certificate(s) to the optionee's stockbroker.

      II.5 Termination of Employment; Death

            II.5.1 Except to the extent otherwise provided in Section 2.5.2 or
2.5.3 or in the applicable Plan Agreement, all options and stock appreciation
rights not theretofore exercised shall terminate upon termination of the
grantee's employment for any reason (including death).

            II.5.2 If a grantee's employment terminates for any reason other
than death or dismissal for cause, the grantee may exercise any outstanding
option or stock appreciation right on the following terms and conditions: (a)
exercise may be made only to the extent that the grantee was entitled to
exercise the award on the date of employment termination; and (b) exercise must
occur within three months after employment terminates, except that the
three-month period shall be increased to one year if the termination is by
reason of disability, but in no event after the expiration date of the award as
set forth in the Plan Agreement. In the case of an incentive stock option, the
term "disability" for purposes of the preceding sentence shall have the meaning
given to it by section 422(c)(7) of the Code.

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            II.5.3 If a grantee dies while employed by the Company or any
subsidiary, or after employment termination but during the period in which the
grantee's awards are exercisable pursuant to Section 2.5.2, any outstanding
option or stock appreciation right shall be exercisable on the following terms
and conditions: (a) exercise may be made only to the extent that the grantee was
entitled to exercise the award on the date of death; and (b) exercise must occur
by the earlier of the first anniversary of the grantee's death or the expiration
date of the award. Any such exercise of an award following a grantee's death
shall be made only by the grantee's executor or administrator, unless the
grantee's will specifically disposes of such award, in which case such exercise
shall be made only by the recipient of such specific disposition. If a grantee's
personal representative or the recipient of a specific disposition under the
grantee's will shall be entitled to exercise any award pursuant to the preceding
sentence, such representative or recipient shall be bound by all the terms and
conditions of the Plan and the applicable Plan Agreement which would have
applied to the grantee including, without limitation, the provisions of Sections
3.3 and 3.7 hereof.

      II.6 Grant of Restricted Stock

            II.6.1 The Committee may grant restricted shares of Common Stock to
such key persons, in such amounts, and subject to such terms and conditions as
the Committee shall determine in its discretion, subject to the provisions of
the Plan. Restricted stock awards may be made independently of or in connection
with any other award under the Plan. A grantee of a restricted stock award shall
have no rights with

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respect to such award unless such grantee accepts the award within such period
as the Committee shall specify by executing a Plan Agreement in such form as the
Committee shall determine and, if the Committee shall so require, makes payment
to the Company by certified or official bank check (or the equivalent thereof
acceptable to the Company) in such amount as the Committee may determine.

            II.6.2 Promptly after a grantee accepts a restricted stock award,
the Company shall issue in the grantee's name a certificate or certificates for
the shares of Common Stock covered by the award. Upon the issuance of such
certificate(s), the grantee shall have the rights of a shareholder with respect
to the restricted stock, subject to the nontransferability restrictions and
Company repurchase rights described in Sections 2.6.4 and 2.6.5 and to such
other restrictions and conditions as the Committee in its discretion may include
in the applicable Plan Agreement.

            II.6.3 Unless the Committee shall otherwise determine, any
certificate issued evidencing shares of restricted stock shall remain in the
possession of the Company until such shares are free of any restrictions
specified in the applicable Plan Agreement.

            II.6.4 Shares of restricted stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided in this Plan or the applicable Plan Agreement. The
Committee at the time of grant shall specify the date or dates (which may depend
upon or be related to the attainment of performance goals and other conditions)
on which the nontransferability of the restricted stock shall

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lapse. Unless the applicable Plan Agreement provides otherwise, additional
shares of Common Stock or other property distributed to the grantee in respect
of shares of restricted stock, as dividends or otherwise, shall be subject to
the same restrictions applicable to such restricted stock.

            II.6.5 During the 120 days following termination of the grantee's
employment for any reason, the Company shall have the right to require the
return of any shares to which restrictions on transferability apply, in exchange
for which the Company shall repay to the grantee (or the grantee's estate) any
amount paid by the grantee for such shares.

      II.7 Grant of Restricted Stock Units

            II.7.1 The Committee may grant awards of restricted stock units to
such key persons, in such amounts, and subject to such terms and conditions as
the Committee shall determine in its discretion, subject to the provisions of
the Plan. Restricted stock units may be awarded independently of or in
connection with any other award under the Plan.

            II.7.2 At the time of grant, the Committee shall specify the date or
dates on which the restricted stock units shall become fully vested and
nonforfeitable, and may specify such conditions to vesting as it deems
appropriate. In the event of the termination of the grantee's employment by the
Company and its subsidiaries for any reason, restricted stock units that have
not become nonforfeitable shall be forfeited and cancelled.

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The Committee at any time may accelerate vesting dates and otherwise waive or
amend any conditions of an award of restricted stock units.

            II.7.3 At the time of grant, the Committee shall specify the
maturity date applicable to each grant of restricted stock units, which may be
determined at the election of the grantee. Such date may be later than the
vesting date or dates of the award. On the maturity date, the Company shall
transfer to the grantee one unrestricted, fully transferable share of Common
Stock for each restricted stock unit scheduled to be paid out on such date and
not previously forfeited. The Committee shall specify the purchase price, if
any, to be paid by the grantee to the Company for such shares of Common Stock.

      II.8 Other Stock-Based Awards

            The Board may authorize other types of stock-based awards (including
the grant of unrestricted shares), which the Committee may grant to such key
persons, and in such amounts and subject to such terms and conditions, as the
Committee shall in its discretion determine, subject to the provisions of the
Plan. Such awards may entail the transfer of actual shares of Common Stock to
Plan participants, or payment in cash or otherwise of amounts based on the value
of shares of Common Stock.

      II.9 Grant of Dividend Equivalent Rights

            The Committee may in its discretion include in the Plan Agreement
with respect to any award a dividend equivalent right entitling the grantee to
receive amounts equal to the ordinary dividends that would be paid, during the
time such award is outstanding and unexercised, on the shares of Common Stock
covered by such award if

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such shares were then outstanding. In the event such a provision is included in
a Plan Agreement, the Committee shall determine whether such payments shall be
made in cash, in shares of Common Stock or in another form, whether they shall
be conditioned upon the exercise of the award to which they relate, the time or
times at which they shall be made, and such other terms and conditions as the
Committee shall deem appropriate.

                                   ARTICLE III
                                  MISCELLANEOUS

      III.1 Amendment of the Plan; Modification of Awards

            III.1.1 The Board may from time to time suspend, discontinue, revise
or amend the Plan in any respect whatsoever, except that no such amendment shall
materially impair any rights or materially increase any obligations under any
award theretofore made under the Plan without the consent of the grantee (or,
after the grantee's death, the person having the right to exercise the award).
For purposes of this Section 3.1, any action of the Board or the Committee that
alters or affects the tax treatment of any award shall not be considered to
materially impair any rights of any grantee.

            III.1.2 Shareholder approval of any amendment shall be obtained to
the extent necessary to comply with section 422 of the Code (relating to
incentive stock options) or other applicable law or regulation.

            III.1.3 The Committee may amend any outstanding Plan Agreement,
including, without limitation, by amendment which would accelerate the time or
times at which the award becomes unrestricted or may be exercised, or waive or
amend any goals,

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restrictions or conditions set forth in the Agreement. However, any such
amendment that materially impairs the rights or materially increases the
obligations of a grantee under an outstanding award shall be made only with the
consent of the grantee (or, upon the grantee's death, the person having the
right to exercise the award).

      III.2 Tax Withholding

            III.2.1 As a condition to the receipt of any shares of Common Stock
pursuant to any award or the lifting of restrictions on any award, or in
connection with any other event that gives rise to a federal or other
governmental tax withholding obligation on the part of the Company relating to
an award (including, without limitation, FICA tax), the Company shall be
entitled to require that the grantee remit to the Company an amount sufficient
in the opinion of the Company to satisfy such withholding obligation.

            III.2.2 If the event giving rise to the withholding obligation is a
transfer of shares of Common Stock, then, unless otherwise specified in the
applicable Plan Agreement, the grantee may satisfy the withholding obligation
imposed under Section 3.2.1 by electing to have the Company withhold shares of
Common Stock having a Fair Market Value equal to the amount of tax to be
withheld. For this purpose, Fair Market Value shall be determined as of the date
on which the amount of tax to be withheld is determined (and any fractional
share amount shall be settled in cash).

      III.3 Restrictions

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            III.3.1 If the Committee shall at any time determine that any
consent (as hereinafter defined) is necessary or desirable as a condition of, or
in connection with, the granting of any award under the Plan, the issuance or
purchase of shares or other rights thereunder, or the taking of any other action
thereunder (each such action being hereinafter referred to as a "plan action"),
then such plan action shall not be taken, in whole or in part, unless and until
such consent shall have been effected or obtained to the full satisfaction of
the Committee.

            III.3.2 The term "consent" as used herein with respect to any plan
action means (a) any and all listings, registrations or qualifications in
respect thereof upon any securities exchange or under any federal, state or
local law, rule or regulation, (b) any and all written agreements and
representations by the grantee with respect to the disposition of shares, or
with respect to any other matter, which the Committee shall deem necessary or
desirable to comply with the terms of any such listing, registration or
qualification or to obtain an exemption from the requirement that any such
listing, qualification or registration be made and (c) any and all consents,
clearances and approvals in respect of a plan action by any governmental or
other regulatory bodies.

      III.4 Nonassignability

            Except to the extent otherwise provided in the applicable Plan
Agreement, no award or right granted to any person under the Plan shall be
assignable or transferable other than by will or by the laws of descent and
distribution, and all such awards and

                                       21
<PAGE>

rights shall be exercisable during the life of the grantee only by the grantee
or the grantee's legal representative.

      III.5 Requirement of Notification of
            Election Under Section 83(b) of the Code

            If any grantee shall, in connection with the acquisition of shares
of Common Stock under the Plan, make the election permitted under section 83(b)
of the Code (that is, an election to include in gross income in the year of
transfer the amounts specified in section 83(b)), such grantee shall notify the
Company of such election within 10 days of filing notice of the election with
the Internal Revenue Service, in addition to any filing and notification
required pursuant to regulations issued under the authority of Code section
83(b).

      III.6 Requirement of Notification Upon Disqualifying
            Disposition Under Section 421(b) of the Code

            If any grantee shall make any disposition of shares of Common Stock
issued pursuant to the exercise of an incentive stock option under the
circumstances described in section 421(b) of the Code (relating to certain
disqualifying dispositions), such grantee shall notify the Company of such
disposition within 10 days thereof.

      III.7 Right of Discharge Reserved

            Nothing in the Plan or in any Plan Agreement shall confer upon any
grantee the right to continue in the employ of the Company or affect any right
which the Company may have to terminate such employment.

      III.8 Nature of Payments

                                       22
<PAGE>

            III.8.1 Any and all grants of awards and issuances of shares of
Common Stock under the Plan shall be in consideration of services performed for
the Company by the grantee.

            III.8.2 All such grants and issuances shall constitute a special
incentive payment to the grantee and shall not be taken into account in
computing the amount of salary or compensation of the grantee for the purpose of
determining any benefits under any pension, retirement, profit-sharing, bonus,
life insurance or other benefit plan of the Company or under any agreement
between the Company and the grantee, unless such plan or agreement specifically
provides otherwise.

      III.9 Non-Uniform Determinations

            The Committee's determinations under the Plan need not be uniform
and may be made by it selectively among persons who receive, or are eligible to
receive, awards under the Plan (whether or not such persons are similarly
situated). Without limiting the generality of the foregoing, the Committee shall
be entitled, among other things, to make non-uniform and selective
determinations, and to enter into non-uniform and selective Plan agreements, as
to (a) the persons to receive awards under the Plan, (b) the terms and
provisions of awards under the Plan, and (c) the treatment of leaves of absence
pursuant to Section 1.6.4.

      III.10 Other Payments or Awards

                                       23
<PAGE>

            Nothing contained in the Plan shall be deemed in any way to limit or
restrict the Company from making any award or payment to any person under any
other plan, arrangement or understanding, whether now existing or hereafter in
effect.

      III.11 Section Headings

            The section headings contained herein are for the purpose of
convenience only and are not intended to define or limit the contents of the
sections.

      III.12 Effective Date and Term of Plan

            III.12.1 The Plan was adopted by the Board and the Company's
shareholders on August 21, 1997, but effective as of November 14, 1996. All
awards under the Plan prior to such shareholder approval are subject in their
entirety to such approval. If such approval is not obtained prior to the first
anniversary of the date of adoption of the Plan, the Plan and all awards
thereunder shall terminate on that date.

            III.12.2 Unless sooner terminated by the Board, the provisions of
the Plan respecting the grant of incentive stock options shall terminate on the
day before the tenth anniversary of the adoption of the Plan by the Board, and
no incentive stock option awards shall thereafter be made under the Plan. All
awards made under the Plan prior to its termination shall remain in effect until
such awards have been satisfied or terminated in accordance with the terms and
provisions of the Plan and the applicable Plan Agreements.

      III.13 Governing Law

                                       24
<PAGE>

            All rights and obligations under the Plan shall be construed and
interpreted in accordance with the laws of the State of Delaware, without giving
effect to principles of conflict of laws.

                                       25
<PAGE>

                                    ARTICLE I

                                     GENERAL
1.1   Purpose                                                                  1
1.2   Administration                                                           1
1.3   Persons Eligible for Awards                                              3
1.4   Types of Awards Under Plan                                               3
1.5   Shares Available for Awards                                              3
1.6   Definitions of Certain Terms                                             5

                                   ARTICLE II

                              AWARDS UNDER THE PLAN

2.1   Agreements Evidencing Awards                                             8
2.2   No Rights as a Shareholder                                               8
2.3   Grant of Stock Options, Stock Appreciation
         Rights and Dividend Equivalent Rights                                 9
2.4   Exercise of Options and Stock Appreciation Rights                       12
2.5   Termination of Employment; Death                                        14
2.6   Grant of Restricted Stock                                               15
2.7   Grant of Restricted Stock Units                                         17
2.8   Other Stock-Based Awards                                                18
2.9   Grant of Dividend Equivalent Rights                                     18

                                       i
<PAGE>

                                   ARTICLE III

                                  MISCELLANEOUS

3.1   Amendment of the Plan; Modification of Awards                           19
3.2   Tax Withholding                                                         20
3.3   Restrictions                                                            21
3.4   Nonassignability                                                        21
3.5   Requirement of Notification of
         Election Under Section 83(b) of the Code                             22
3.6   Requirement of Notification Upon Disqualifying Disposition Under
         Section 421(b) of the Code                                           22
3.7   Right of Discharge Reserved                                             22
3.8   Nature of Payments                                                      23
3.9   Non-Uniform Determinations                                              23
3.10  Other Payments or Awards                                                24
3.11  Section Headings                                                        24
3.12  Effective Date and Term of Plan                                         24
3.13  Governing Law                                                           25

                                       ii<PAGE>

Exhibit 10.3

                              EMPLOYMENT AGREEMENT

      This EMPLOYMENT AGREEMENT (this "Agreement") is made as of the 3rd day of
December, 1999 (the "Effective Date"), by and between Arbinet Holdings, Inc., a
Delaware corporation (the "Company") and Anthony L. Craig (the "Employee").

                              W I T N E S S E T H:

      WHEREAS, the Company and Employee entered into that certain Letter
Agreement dated December 2, 1999 (the "Letter Agreement").

      WHEREAS, the Company and Employee desire to replace and supersede the
Letter 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.

            (a) Employee's employment will be "at-will" and may be terminated by
either Employee or the Company at any time for any reason (or no reason), by
providing sixty (60) days prior written notice to the other party.

            (b) Employee shall serve as the Chief Executive Officer and Chairman
of the Board of Directors (the "Board") of the Company and shall report to the
Board. The Company shall use its commercially reasonable efforts to cause
Employee to be elected to the Board. If so elected, and if Employee is not
otherwise receiving compensation from the Company, Employee 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, Employee shall serve on any advisory committee or
similar advisory body as may be established by the Company from time to time.

            (c) From the Effective Date, until the termination of Employee's
employment with the Company, Employee shall devote his full business and
professional time to the business and affairs of the Company; provided that the
foregoing shall not prevent Employee from serving on the board of directors of
Mitel Corp., Global Knowledge Network and Bell Industries, Ltd., as long as
these activities do not interfere with the performance of Employee's duties
hereunder or create a conflict of interest with the Company. Employee may
substitute another outside board membership for one of the

<PAGE>

foregoing outside board memberships, subject to approval of the Board (which
shall not be unreasonably withheld).

            (d) Employee shall be employed at the Company's offices in Florida,
and shall oversee its activities located in New York and Virginia. Performance
of Employee's duties hereunder may require travel from time-to-time.

      2. Compensation.

            (a) From the Effective Date, until the date on which the Company
consummates an initial public offering of the common stock of the Company (the
"IPO Date"), Company shall pay Employee salary compensation ("Salary") at a rate
of $300,000 per annum (the "Annual Rate"), payable semi-monthly and subject to
all legally required withholdings.

            (b) From and after the IPO Date, and until the expiration of the
Transition Period (as defined below) the Company shall pay Employee Salary at an
Annual Rate equal to $350,000, payable semi-monthly and subject to all legally
required withholdings.

            (c) While Employee remains employed by the Company, the Company
shall pay Employee a living allowance of up to Ten Thousand Dollars ($10,000)
per month to cover Employee's housing, automobile and other living expenses in
New York and Employee's travel to and from Employee's permanent residence in
Florida.

            (d) Employee's Salary will be reviewed by the Board (or a duly
authorized committee thereof) on an annual basis and may be subject to
adjustment upward based on various factors including, without limitation,
Employee's performance or the Company's achievement of its business plan (as
determined by the Board). During the Transition Period (as defined below),
Employee's salary will be prorated based on the amount of time Employee actually
spends performing duties for the Company as agreed between Employee and the then
acting chief executive officer of the Company; provided that Employee's salary
will not be less than $100,000 annualized.

            (e) Employee 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 (i) the Company's right to at any time
amend or terminate any such plan or program and (ii) terms not less favorable
than those granted to any other senior executive of the Company.

      3. Benefits.

                                       2
<PAGE>

            (a) The Company agrees to reimburse Employee for all reasonable and
necessary travel, business entertainment and other business expenses reasonably
incurred by Employee 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 Employee of vouchers in accordance with the Company's
standard procedures.

            (b) Employee 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 five
calendar weeks each year and paid holidays made available pursuant to the
Company's policy to all employees of the Company.

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

            (d) Employee has been granted the right to purchase 1, 147,091
shares of the Company's common stock (the "Shares"), at a price of $0.254 per
share, which, subject to the immediately following sentence and Sections 4(f)
and (g) below, are subject to a right (the "Repurchase Right") of repurchase by
the Company for a price of $0.254 per share (subject to adjustment 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 1/48th of the Shares on each one-month anniversary of December 1, 1999
that Employee remains employed by the Company and (ii) as to 100% of the Shares
in the event of a change of control (as defined below). Employee shall not be
entitled to vote or receive dividends with respect to any Shares which are
subject to the Repurchase Right and, if requested by the Company, Employee shall
exercise a written proxy in favor of the Company with respect to such Shares.
Notwithstanding the foregoing, in the event that the Employee breaches any of
the provisions contained in Section 6 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 Employee, to exercise the Repurchase Right with
respect to all of the Shares. During the Covered Time (as defined below in
Section 6(a)(i)), the Employee shall not sell, assign, pledge, encumber or
otherwise transfer any of the Shares without the prior written consent of the
Board. 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

                                       3
<PAGE>

recapitalization of the Company (or similar transaction), (b) the sale of 50% or
more of the voting securities of the Company in a single transaction or a series
of related transactions following an IPO; 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.

            (e) The Company hereby grants to Employee the right to purchase
286,773 shares (the "Bonus Shares") of Common Stock (the "Bonus Purchase
Right"), representing 1% of the fully diluted outstanding shares of the Company
as of December 1, 1999, at a price of $0.254 per share. The Bonus Purchase
Right, to the extent not exercised, will terminate upon the termination of
Employee's employment with the Company. Employee will be provided with a loan to
purchase the Bonus Shares, on substantially the terms of the loan provided for
the purchase of the Shares. Subject to the immediately following sentence and
Sections 4(f) and (g) below, the Bonus Shares will be subject to a right (the
"Bonus Share Repurchase Right") of repurchase by the Company for a price of
$0.254 per share (subject to adjustment 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 Bonus Share Repurchase Right will lapse (i) as to 50% of the Bonus
Shares upon implementation of back office systems (including but not limited to
Operations Support Systems (OSS) and clearing and settlement systems) of
sufficient quality and scale to support the Company's projected volume of
telecommunications traffic (as determined in good faith by the Board in its sole
discretion based on consultations with the Company's auditors) and (ii) 50% of
the Bonus Shares upon completion of an initial public offering of the common
stock of the Company resulting in a pre-offering valuation of the Company of at
least $500 million (based on mid-point of the filing range in the related
registration statement). Employee shall not be entitled to vote or receive
dividends with respect to any Bonus Shares which are subject to the Bonus
Repurchase Right and if requested by the Company, Employee shall exercise a
written proxy in favor of the Company with respect to such Bonus Shares.
Notwithstanding the foregoing, in the event that the Employee breaches any of
the provisions contained in Section 6 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 Employee, to exercise the Bonus Share
Repurchase Right with respect to all of the Bonus Shares. During the Covered
Time, the Employee shall not sell, assign, pledge, encumber or otherwise
transfer any of the Bonus Shares without the prior written consent of the Board.

            (f) Except as otherwise provided in Section 4(g) below, Employee
shall forfeit to the Company all unvested Shares on the date Employee's
employment with the Company terminates.

            (g) Notwithstanding anything else herein to the contrary, if
Employee's employment is terminated by the Company without cause (x) prior to
the hiring of another chief executive officer, the Repurchase Right and the
Bonus Share

                                       4

<PAGE>

Repurchase Right will lapse completely and Employee's Shares and Bonus Shares
shall immediately vest upon such termination (y) after the hiring of a new chief
executive officer, then the Repurchase Right and the Bonus Share Repurchase
Right will lapse completely as to 30/48 of the Shares and the Bonus Shares and
such shares shall immediately vest upon such termination, and the Repurchase
Right and Bonus Share Repurchase Right with respect to the remaining Shares and
Bonus Shares will lapse ratably (i.e., 1/18th per month) during the 18-month
period following the date Employee's employment terminates in return for
Employee's ongoing commitment, on a full-time or part-time basis as requested by
the then acting chief executive officer of the Company, to assist the Company in
transition during the 12-month period immediately after the hiring of such new
Chief Executive Officer (the "Transition Period"); provided, that to the extent
any Shares or Bonus Shares have vested already as of the date of such
termination, then the foregoing provisions of clause (y) shall not be applicable
to such vested Shares or Bonus Shares. For purposes of this Agreement "cause"
shall mean any of the following: (i) Employee's willful misconduct in the
performance of Employee's duties to the Company, or Employee's willful failure
to implement any legal policy or action set forth in a duly and validly adopted
resolution of the Board, (ii) conviction of or plea of guilty or any other plea
other than "not guilty" to a felony; (iii) the violation by Employee of any
material provision of this Agreement which either is not cured within ten days
after a written notice is given to Employee by the Board or constitutes a
habitual breach; or (iv) Employee's dishonesty, misappropriation or fraud with
regard to the property of the Company or its affiliates.

      4. Termination. Employee's employment hereunder may be terminated by
Employee or the Company at any time for any reason (or no reason), by providing
sixty (60) days prior written notice to the other party.

      5. Compensation Following Termination. In the event that Employee's
employment hereunder is terminated, Employee shall be entitled only to the
following compensation and benefits upon such termination:

            (a) Termination For Any Reason Other Than Cause. In the event that
Employee's employment is terminated for any reason other than for Cause, the
Company, subject to Employee's compliance with Section 6, shall pay the
following amounts to Employee:

                  (i) any accrued but unpaid Salary (as determined pursuant to
            Section 2);

                  (ii) severance pay equal to six (6) months' base salary at the
            Annual Rate in effect on the date of termination;

                  (iii) an amount reimbursing Employee for the applicable
            premium payment for any COBRA coverage payable under a Company
            health or welfare plan for Employee and Employee's dependents during

                                       5

<PAGE>

            the six (6) month period following the date of termination (the "Six
            Month Period");

                  (iv) an amount equal to any employer contribution that would
            have been made by the Company to any retirement plan of the Company
            on Employee's behalf had Employee remained employed by the Company
            during the Six Month Period assuming Employee contributed the
            maximum amount to such plan;

                  (v) any accrued but unpaid expenses required to be reimbursed
            pursuant to Section 3(a); and

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

Notwithstanding the foregoing, the amounts paid to Employee pursuant to
subsections (iii) and (iv) of this Section 5(a) shall not exceed $25,000.

            (b) Termination For Cause. In the event Employee's employment
hereunder is terminated by the Company for cause (including, without limitation,
a termination by the Company without cause on or after the commencement of the
Transition Period) the Company will pay Employee any unpaid base salary at the
Annual Rate in effect on the date of termination and compensation for accrued
vacation through the date of termination.

            (c) 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 Employee at the time of the
termination of Employee's employment, Employee 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.

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

            (a) Noncompetition: Nonsolicitation.

                  (i) Employee 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 Employee of amounts
            that may hereafter be paid to Employee pursuant to this Agreement
            (including, without limitation, pursuant to Sections 2 and 5
            hereof), Employee agrees that during the period commencing on the
            Effective Date and ending on the date which is twelve (12) months
            after the termination of Employee's

                                       6

<PAGE>

            employment with the Company (the "Covered Time"), without the prior
            written consent of the Company, Employee 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 whatsover 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 such business as of the date
            Employee's employment terminates, 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 Employee's employment
            with the Company; provided, however, that such participation shall
            not include (i) the ownership of not more than one percent (1%) of
            the total outstanding stock of a publicly held company or (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.

                  (ii) In further consideration of the payment by the Company to
            Employee of amounts that may hereafter be paid to Employee pursuant
            to this Agreement (including, without limitation, pursuant to
            Sections 2 and 5 hereof). Employee agrees that during the Covered
            Time he shall not (i) directly or indirectly solicit or attempt to
            solicit any of the employees (other than clerical or
            non-administrative 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 Employee or any person or entity owned or controlled
            by Employee); 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 Company and which is covered in a written proposal or
            business plan by the Company.

                  (iii) Employee understands that the provisions of this Section
            6(a) and Section 6(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 2 and 5 hereof, is sufficient to justify the restrictions
            contained in such provisions. In consideration thereof and in light
            of Employee's education,

                                       7

<PAGE>

            skills and abilities, Employee 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) Proprietary Information. Employee 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.
Employee 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 required by law. Employee
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.
Employee 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 Employee 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).

            (c) Confidentiality and Surrender of Records. Employee shall not
during the Term or at any time thereafter (irrespective of the circumstances
under which Employee'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

                                       8

<PAGE>

other than in the course of such individual's or entity's employment or
retention by the Company, nor shall Employee 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 Employee'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.

            (d) 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 Employee, 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. Employee 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 Employee 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 Employee shall have the burden of proof to establish
that any such inventions or innovations do not relate to the business of the
Company.

            (e) No Other Obligations. Employee 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. Employee covenants
that he shall not employ the trade secrets or proprietary information of any
other person in connection with his employment by the Company.

            (f) Confidentiality. Employee agrees to keep confidential the terms
of this Agreement. This provision does not prohibit Employee 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.

            (g) Enforcement. Employee 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 6

                                       9

<PAGE>

would cause the Company immediate, substantial and irreparable injury for which
it has no adequate remedy at law. Accordingly, Employee 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 6. 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 Employee of any undertaking contained in this Section 6. Employee
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 6 are cumulative and shall be in addition to rights and remedies
otherwise available to the parties hereunder or under any other agreement or
applicable law.

            (h) Notwithstanding anything in this Section 6 to the contrary, each
reference herein to the Company shall also include each subsidiary of the
Company unless the context expressly requires otherwise.

      7. Key Man Insurance. Employee 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 Employee, the proceeds of which would be
payable to the Company or such affiliate. Employee 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.

      8. 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.
                  33 Whitehall Street
                  19th Floor
                  New York, New York 10004
                  Attention: Chief Executive Officer

            With a copy to:

                                       10

<PAGE>

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

            To Employee:

                  Anthony L. Craig
                  27421 Country Club Dr.
                  Bonita Springs, FL  34134

      9. Assignability: Binding Effect. This Agreement is a personal services
contract calling for the provision of unique services by Employee, and
Employee'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 Employee 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.

      10. Complete Understanding: Amendment: Waiver. This Agreement constitutes
the complete understanding between the parties with respect to the employment of
Employee and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof
including but not limited to the Letter Agreement, 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 Employee 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 Employee of any such right or
remedy shall preclude other or further exercise thereof.

      11. 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

                                       11

<PAGE>

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 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 Employee breached any undertaking in Section 6, 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.

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

      13. 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 Employee by the Company, or any other matter arising out of or
relating to the relationship between Employee and the Company shall be entitled
to recover reasonable attorneys' fees and costs incurred in bringing or
defending the proceeding.

      14. 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.

                                       12

<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/ Anthony L. Craig
                                  --------------------
                                  Anthony L. Craig

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