-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FYj91OTDIbM5kzVIxYxqAlawhZ0Cp6nhCiD5YiMfz+wz3Q4FZ9M5D5V1QF96U7yK V9+70p9vr2y3qcuvVOD19Q== 0001144204-06-053020.txt : 20061218 0001144204-06-053020.hdr.sgml : 20061218 20061215173142 ACCESSION NUMBER: 0001144204-06-053020 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 20061218 DATE AS OF CHANGE: 20061215 GROUP MEMBERS: GOVERNING DYNAMICS INVESTMENTS, LLC GROUP MEMBERS: MS. THAI LEE GROUP MEMBERS: THAI LEE 2003 GRAT AGREEMENT A SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ARBINET THEXCHANGE INC CENTRAL INDEX KEY: 0001136655 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 133930916 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-80439 FILM NUMBER: 061281521 BUSINESS ADDRESS: STREET 1: 120 ALBANY STREET, TOWER II STREET 2: SUITE 450 CITY: NEW BRUNSWICK STATE: NJ ZIP: 08901 BUSINESS PHONE: 7325099100 MAIL ADDRESS: STREET 1: 120 ALBANY STREET, TOWER II STREET 2: SUITE 450 CITY: NEW BRUNSWICK STATE: NJ ZIP: 08901 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Mashinsky Alex CENTRAL INDEX KEY: 0001341810 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: BUSINESS PHONE: 646-552-4499 MAIL ADDRESS: STREET 1: 510 BERKLEY SQUARE CITY: MEMPHIS STATE: TN ZIP: 38120 SC 13D/A 1 v060537_sc13d.htm

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No. 1)

Arbinet-thExchange, Inc.

(Name of Issuer)

————————————————

Common Stock, $0.001 par value

(Title of Class of Securities)

03875P100

————————————————

(CUSIP NUMBER)

Alex Mashinsky

Governing Dynamics Investments, LLC

510 Berkeley Square

Memphis, Tennessee 38120

(646) 662-2909

With a copy to

Joseph Cannella, Esq.

Eaton & Van Winkle LLP

3 Park Avenue

New York, New York 10016

(212) 779-9910

————————————————

(Name, Address and Telephone Number of Person Authorized

to Receive Notices and Communications)

June 16, 2006

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box o.

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are sent.

(Page of 12)

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

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act.

Page 2 of 12

SCHEDULE 13D

CUSIP NO. 03875P100

Name of Reporting Person;

S.S. or I.R.S. Identification No. of Above Person

Alex Mashinsky

I.D. No.:

Check the Appropriate Box if a Member of a Group

(a) x

(b) o

SEC Use Only

Source of Funds: PF, OO

Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)

Citizenship or Place of Organization: United States

Number of Shares

Sole Voting Power: 20,320

Beneficially Owned By

Shared Voting Power: 1,626,089

Each Reporting

Sole Dispositive Power: 20,320

Person with

10.

Shared Dispositive Power: 1,626,089

11.

Aggregate Amount Beneficially Owned by Each Reporting Person:

1,646,409 shares of common stock.

12.

Check if the Aggregate Amount in Row 11 Excludes Certain Shares (See Instructions)

13.

Percent of Class Represented by Amount In Row 11: 6.4%**

14.

Type of Reporting Person: IN

______________________

** Based upon 25,855,140 shares of the Issuer’s Common Stock issued and outstanding as of September 30, 2006.

Page 3 of 12

SCHEDULE 13D

CUSIP NO. 03875P100

Name of Reporting Person;

S.S. or I.R.S. Identification No. of Above Person

Governing Dynamics Investments, LLC

I.D. No.:

Check the Appropriate Box if a Member of a Group

(a) x

(b) o

SEC Use Only

Source of Funds: WC

Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)

Citizenship or Place of Organization: Delaware

Number of Shares

Sole Voting Power: None

Beneficially Owned By

Shared Voting Power: 1,626,089

Each Reporting

Sole Dispositive Power: None

Person with

10.

Shared Dispositive Power: 1,626,089

11.

Aggregate Amount Beneficially Owned by Each Reporting Person:

1,626,089 shares of common stock.

12.

Check if the Aggregate Amount in Row 11 Excludes Certain Shares (See Instructions)

13.

Percent of Class Represented by Amount In Row 11: 6.3%**

14.

Type of Reporting Person: OO

______________________

** Based upon 25,855,140 shares of the Issuer’s Common Stock issued and outstanding as of September 30, 2006.

Page 4 of 12

SCHEDULE 13D

CUSIP NO. 03875P100

Name of Reporting Person;

S.S. or I.R.S. Identification No. of Above Person

Ms. Thai Lee^*

I.D. No.:

Check the Appropriate Box if a Member of a Group

(a) x *

(b) o

SEC Use Only

Source of Funds: Not applicable

Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)

Citizenship or Place of Organization: United States

Number of Shares

Sole Voting Power: None

Beneficially Owned By

Shared Voting Power: None

Each Reporting

Sole Dispositive Power: None

Person with

10.

Shared Dispositive Power: None

11.

Aggregate Amount Beneficially Owned by Each Reporting Person: None

12.

Check if the Aggregate Amount in Row 11 Excludes Certain Shares (See Instructions)

13.

Percent of Class Represented by Amount In Row 11: 0%

14.

Type of Reporting Person: IN

______________________

^* Ms. Thai Lee and the Thai Lee 2003 GRAT Agreement A are included as Reporting Persons solely because they may be deemed members of a group as a result of (a) the loans and pledge arrangements described in Items 3 and 6 below and (b) their right to 50% of any profit which may be realized upon the sale of 1,079,961 shares of Common Stock of the Issuer which were acquired with the proceeds of certain of the loans made by Ms. Lee and the Thai Lee 2003 GRAT Agreement A described in Items 3 and 6 below.

Page 5 of 12

SCHEDULE 13D

CUSIP NO. 03875P100

Name of Reporting Person;

S.S. or I.R.S. Identification No. of Above Person

Thai Lee 2003 GRAT AGREEMENT A^*

I.D. No.:

Check the Appropriate Box if a Member of a Group

(a) x*

(b) o

SEC Use Only

Source of Funds: Not applicable

Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)

Citizenship or Place of Organization: New Jersey

Number of Shares

Sole Voting Power: None

Beneficially Owned By

Shared Voting Power: None

Each Reporting

Sole Dispositive Power: None

Person with

10.

Shared Dispositive Power: None

11.

Aggregate Amount Beneficially Owned by Each Reporting Person: None.

12.

Check if the Aggregate Amount in Row 11 Excludes Certain Shares (See Instructions)

13.

Percent of Class Represented by Amount In Row 11: 0%

14.

Type of Reporting Person: OO

______________________

Page 6 of 12

Item 1. Security and Issuer.

This Amendment No. 1 to Schedule 13D (this “Amendment”) amends and supplements the Schedule 13D filed with the Securities and Exchange Commission on March 27, 2006 (the “Original Schedule 13D”).

This Amendment relates to shares of the common stock, par value $0.001 per share (the “Shares”), of Arbinet-thExchange, Inc., a Delaware corporation (the “Company”). The principal executive offices of the Company are located at 120 Albany Street, Tower II, Suite 450, New Brunswick, New Jersey 08901.

Item 2.Identity and Background.

Item 2 is amended and supplemented by adding thereto the following:

This Amendment is filed by (i) Alex Mashinsky, an individual (“Mr. Mashinsky”); (ii) Governing Dynamics Investments, LLC, a Delaware limited liability company of which Mr. Mashinsky is the sole member and manager (“Governing Dynamics” and, together with Mr. Mashinsky, the “Mashinsky Reporting Persons”); (iii) Thai Lee, an individual (“Ms. Lee”); and (iv) the Thai Lee 2003 GRAT Agreement A, a grantor retained annuity trust formed on January 29, 2003 of which Ms. Lee is the trustee with sole authority to make investment decisions (the “Trust” and, together with Ms. Lee, the “Lee Reporting Persons”). The Mashinsky Reporting Persons and the Lee Reporting Persons are occasionally referred to as the “Reporting Persons.”

The Original Schedule 13D was filed by a group comprising the Reporting Persons, as well as Mr. Robert A. Marmon (“Mr. Marmon”). For purposes of the Original Schedule 13D, the term “Mashinsky Reporting Persons” also included Mr. Marmon. As discussed further in Item 4 below, Mr. Marmon is no longer part the filing group; accordingly, he is no longer included as a Mashinsky Reporting Persons nor is he otherwise included as a person filing this Amendment.

The Trust is a member of the filing group solely by reason of its sharing arrangement with Mr. Mashinsky, as further described in Item 4 below, and the pledge of Shares by Mr. Mashinsky and Governing Dynamics to the Trust, as further described in Item 3 below. Ms. Lee is a member of the filing group solely by reason of her sharing arrangement with Mr. Mashinsky, as further described in Item 3 below, and the pledge of Shares by Mr. Mashinsky and Governing Dynamics to Ms. Lee, as further described in Item 3 below. Each Reporting Person disclaims beneficial ownership of the Shares of Common Stock held by each other Reporting Person; except that Mr. Mashinsky does not disclaim beneficial ownership of Shares of Common Stock held by Governing Dynamics.

Item 3.Source and Amount of Funds.

Item 3 of the Original Schedule 13D is amended and restated in its entirety as follows:

Page 7 of 12

The following loans were made to Mr. Mashinsky for the purpose of either acquiring Shares or in order to satisfy margin calls issued to Governing Dynamics:

A. On March 3, 2006, Ms. Lee loaned Mr. Mashinsky $3,500,000 for the purpose of acquiring 532,376 Shares. This loan was made pursuant to the terms of the Lee Loan Agreement described in the Original 13D. On December 15, 2006, Mr. Mashinsky delivered to Ms. Lee a Confirmatory Negotiable Promissory Note (the “First Note”), attached as Exhibit F, which sets forth the terms of the loan agreed to by the parties. Under the terms of the First Note: (a) the loan is due on May 31, 2007, (b) bears interest at the rate of 12% per annum commencing on January 1, 2007 and (c) Ms. Lee is entitled to 50% of the profit realized on any sale of the Shares acquired with the proceeds of this loan.

B. On March 21, 2006, Ms Lee loaned Mr. Mashinsky $1,600,000 for the purpose of acquiring 243,371 Shares. This loan was made pursuant to the terms of the Lee Loan Agreement described in the Original 13D. On December 15, 2006, Mr. Mashinsky delivered to Ms. Lee a Confirmatory Negotiable Promissory Note (the “Second Note”), attached as Exhibit G, which sets forth the terms of the loan agreed to by the parties. Under the terms of the Second Note: (a) the loan is due on May 31, 2007, (b) bears interest at the rate of 12% per annum commencing on January 1, 2007 and (c) Ms. Lee is entitled to 50% of the profit realized on any sale of the Shares acquired with the proceeds of this loan.

C. On March 27, 2006, the Trust loaned Mr. Mashinsky $2,000,000 for the purpose of acquiring 304,214 Shares. This loan was made pursuant to the terms of the Trust Loan Agreement described in the Original 13D. On December 15, 2006, Mr. Mashinsky delivered to Ms. Lee a Confirmatory Negotiable Promissory Note (the “Third Note”), attached as Exhibit H, which sets forth the terms of the loan agreed to by the parties. Under the terms of the Third Note: (a) the loan is due on December 31, 2007, (b) bears interest at the rate of 12% per annum commencing on January 1, 2007 and (c) Ms. Lee is entitled to 50% of the profit realized on any sale of the Shares acquired with the proceeds of this loan.

D. On May 23, 2006, Ms. Lee loaned Mr. Mashinsky $350,000 for the purpose of satisfying a margin call issued to Governing Dynamics by National Financial Services. On December 15, 2006, Mr. Mashinsky delivered to Ms. Lee a Confirmatory Negotiable Promissory Note (the “Fourth Note”), attached as Exhibit I, which sets forth the terms of the loan agreed to by the parties. Under the terms of the Fourth Note: (a) the loan is due on April 30, 2007, and (b) bears interest at the rate of six percent per annum from the date of the loan through December 31, 2006 and 12% per annum thereafter. Ms. Lee is not entitled to any profit realized on the sale of the Shares upon repayment of this loan.

E. On June 16, 2006, Ms Lee loaned Mr. Mashinsky $2,622,008.39 for the purpose of satisfying a margin call issued to Governing Dynamics by National Financial Services. On December 15, 2006, Mr. Mashinsky delivered to Ms. Lee a Confirmatory Negotiable Promissory Note (the “Fifth Note”), attached as Exhibit J, which sets forth the terms of the loan agreed to by the parties. Under the terms of the Fifth Note: (a) the loan is due on April 30, 2007, and (b) bears interest at the rate of six percent per annum from the date of the loan through December 31, 2006 and 12% per annum thereafter. Ms. Lee is not entitled to any profit realized on the sale of the Shares upon repayment of this loan.

Page 8 of 12

In addition, Mr. Mashinsky and each of Ms. Lee and the Trust entered into those certain Confirmatory Pledge Agreements (the “Pledge Agreements”), each dated as of December 15, 2006, attached as Exhibit K and L, respectively. Pursuant to the terms of the Pledge Agreements, Mr. Mashinsky pledged to Ms. Lee and the Trust, among other securities, all of the Shares acquired by the proceeds of the loans described in items (i)-(iii) above and any additional Shares owned, directly or indirectly, by Mr. Mashinsky. 1,646,409 Shares are currently subject to such pledge arrangements.

A portion of the working capital with which Governing Dynamics purchased its Shares was contributed to Governing Dynamics by Mr. Mashinsky subsequent to entering into the Lee Loan Agreement and the Trust Loan Agreement (as those terms are defined in the Original Schedule 13D).

Item 4.Purpose of Transaction.

Item 4 of the Original 13D is amended and restated in its entirety as follows:

The Mashinsky Reporting Persons originally acquired their respective Shares for investment purposes. In addition, the Mashinsky Reporting Persons, together with Mr. Marmon, originally acquired beneficial ownership of their respective Shares for purposes of exerting influence over the direction of the Company and filling then-extant vacancies on the Company’s board of directors after nominating Messrs. Mashinsky and Marmon and another individual for election to the Company’s board of directors. Since that time, Mr. Mashinsky was elected to the Company’s board of directors, but no other such nominee was elected. Because Mr. Marmon was not elected to the Company’s board of directors, he is no longer a member of the filing group, as provided in that certain “Amended and Restated Joint Filing Agreement,” a copy of which is attached hereto as Exhibit A.

Since Mr. Mashinsky’s election, with regard to the Mashinsky Reporting Persons generally, they continue to routinely monitor the performance of their investments in the Company, including evaluating the Company’s business, financial condition, operating results, capital structure, management, stock market performance, competitive outlook and other relevant aspects of its affairs. Depending on such evaluations, the Mashinsky Reporting Persons may, at any time and from time to time, purchase additional shares of Common Stock or may dispose of any and all shares of Common Stock held by them.

With regard to the Mashinsky Reporting Persons in particular, in order to pursue their desired goal of improving the Company’s overall financial condition and competitive position and increasing stockholder value, they expect to develop plans and propose changes regarding the Company’s current direction, which they do not believe to be optimal. Mr. Mashinsky believes that the fact that certain of the Company’s competitors are growing at a much faster rate underscores the need for aggressive action. As indicated in the Original Schedule 13D, Mr. Mashinsky has made various recommendations to the Company’s management and board of directors. However, while the Company’s Board of Directors has accepted certain of his recommendations, management and the board have not, as of yet, shown an inclination to pursue those recommendations Mr. Mashinsky believes are most important nor have they indicated the reasons they have not done so. The Mashinsky Reporting Persons will continue to press for such changes as they believe to be in the best interests of the Company and its stockholders, even though there have been significant disputes with Mr. Mashinsky on the part of the Company’s management and in certain cases its board of directors (including disagreements that are the subject of judicial proceedings initiated by the Company). Accordingly, in compliance with applicable laws, the Mashinsky Reporting Persons will continue to seek the views of and hold active discussions with the Company’s board of directors and its officers and any other representatives (including legal counsel) to the extent they are willing to do so, as well as its stockholders and other appropriate persons regarding the Company’s affairs, strategic alternatives, or possible relationships with the Company.

Page 9 of 12

Plans or proposals of the Mashinsky Reporting Persons in furtherance of increasing stockholder value and improving the Company’s financial condition and strategic alternatives may include (without being limited to) changes to the Company’s charter and/or by-laws, changes to the current composition of the management and board of directors, and changes to the current business model, plans, policies, operations, capital structure and business of the Company, including a possible acquisition of or by the Issuer, other business combinations, sale of the Company’s business or other extraordinary transactions involving the Issuer. In connection with these and/or other plans or proposals the Mashinsky Reporting persons may develop, the Mashinsky Reporting Persons may conduct investigations and, if warranted by such review, make and negotiate proposals to and with the Company or third persons concerning the foregoing and participate in any of the foregoing transactions and may enter into agreements with the Company or such third person in connection with those negotiations and proposals.

Without limiting the generality of the foregoing, the Mashinsky Reporting Persons expect to make an offer to acquire the Company in one transaction or in a series of related transactions. Such offer may involve only the Mashinsky Reporting Persons or, more likely, the Mashinsky Reporting Persons together with such other persons as may be identified, and may take the form of an offer to purchase a controlling interest in the Company’s common stock, an offer to acquire all or substantially all of the Company’s assets, or such other form as the Mashinsky Reporting Persons may determine in consultation with their financial, legal, tax and other professional advisors. The consummation of any such transaction would likely be conditioned on the securing of necessary financing.

Except as set forth herein, the Mashinsky Reporting Persons do not have any other plans or proposals that relate to or would result in any of the actions specified in clauses (a) through (j) of the instructions to Item 4 of Schedule 13D. However, the Mashinsky Reporting Persons reserve the right to formulate other plans or proposals, and take such action with respect to their investment in the Company, including any or all of the items set forth in paragraphs (a) through (j) of Item 4 of Schedule 13D and any other actions, as they may determine.

Page 10 of 12

Item 5. Interest in Securities of the Company.

Item 5 of the Original 13D is amended and supplemented as follows:

(a) Mr. Mashinsky directly owns an aggregate of 20,320 Shares (the “Mashinsky Shares”), or approximately 0.1% of the aggregate issued and outstanding Shares (based upon 25,855,140 Shares issued and outstanding as of September 30, 2006). Mr. Mashinsky indirectly owns, through direct ownership by Governing Dynamics of which he is the sole member, 1,626,089 Shares (the “GD Shares”), or approximately 6.3% of the aggregate issued and outstanding Shares (based upon 25,855,140 Shares issued and outstanding as of September 30, 2006). Neither Lee Reporting Person owns any Shares.

(b) Mr. Mashinsky has the sole power to vote or direct to vote of, and to dispose or direct the disposition of, the Mashinsky Shares. Mr. Mashinsky and Governing Dynamics together have the shared power to vote or direct to vote of, and to dispose or direct the disposition of, the GD Shares.

(c) No Reporting Person has effected any transaction involving the Company’s securities within the sixty (60) preceding days, except that Ms. Lee sold 50,000 Shares on October 26, 2006 and 150,000 Shares on October 27, 2006, all at a price of US$5.50 per Share.

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Company.

The information set forth, or incorporated by reference, in Item 3 of this Amendment is hereby incorporated in this Item 6.

Page 11 of 12

Item 7.Material to be filed as Exhibits

Exhibit No.		Exhibit

E		Amended and Restated Joint Filing Agreement, dated as of December 15, 2006, by and among Alex Mashinsky, Governing Dynamics Investments, LLC, Thai Lee and the Thai Lee 2003 GRAT Agreement A
F		Confirmatory Negotiable Promissory Note in the amount of $3,500,000 payable by Alex Mashinsky to Thai Lee.
G		Confirmatory Negotiable Promissory Note in the amount of $1,600,000 payable by Alex Mashinsky to Thai Lee.
H		Confirmatory Negotiable Promissory Note in the about of $2,000,000 payable by Alex Mashinsky to the Thai Lee 2003 GRAT Agreement A.
I		Confirmatory Negotiable Promissory Note in the amount of $350,000 payable by Alex Mashinsky to Thai Lee.
J		Confirmatory Negotiable Promissory Note in the amount of $2,622,008.39 payable by Alex Mashinsky to Thai Lee.
K		Confirmatory Pledge Agreement, dated as of December 15, 2006, between Alex Mashinsky and Thai Lee.
L		Confirmatory Pledge Agreement, dated as of December 15, 2006, between Alex Mashinsky and the Thai Lee 2003 GRAT A Trust.
M		Schedule of Transactions in the Shares.

Page 12 of 12

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

December 15, 2006 GOVERNING DYNAMICS INVESTMENTS, LLC

By: /s/ Alex Mashinsky_____________________

Alex Mashinsky,

Sole member and manager

/s/ Alex Mashinsky_____________________

Alex Mashinsky (individually)

THAI LEE 2003 GRAT AGREEMENT A

By: /s/ Thai Lee_____________________

Thai Lee, Trustee

/s/ Thai Lee_____________________

Thai Lee(individually)

EXHIBIT E

AMENDED AND RESTATED JOINT FILING AGREEMENT

Alex Mashinsky, Governing Dynamics Investments, LLC, Thai Lee and Thai Lee 2003 Grat Agreement A, each hereby agrees to, in accordance with Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended, that the Schedule 13D filed herewith , and any amendment thereto, relating to the shares of common stock, $0.001 par value per share, of Arbinet-thexchange, Inc. are, and will be, filed jointly on behalf of such person. This agreement may be executed in two or more counterparts, each of which shall be deemed an original, but of all which together shall constitute one and the same instrument.

GOVERNING DYNAMICS

INVESTMENTS, LLC

By: /s/ Alex Mashinsky_____________________

Alex Mashinsky,

Sole member and manager

/s/ Alex Mashinsky_____________________

Alex Mashinsky (individually)

THAI LEE 2003 GRAT AGREEMENT A

By: /s/ Thai Lee_____________________

Thai Lee, Trustee

/s/ Thai Lee_____________________

Thai Lee(individually)

EX-99.F 2 v060537_ex99-f.htm

Exhibit F

CONFIRMATORY NEGOTIABLE PROMISSORY NOTE

$3,500,000.00

As of March 3, 2006

FOR VALUE RECEIVED, Alex Mashinsky (“Maker”), an individual residing at 510 Berkeley Square, Memphis, TN 38120, confirming his existing indebtedness to Holder hereunder, hereby unconditionally promises to pay to the order of Thai Lee, an individual, or her assignee (“Holder”), in lawful money of the United States of America and in immediately available funds, at c/o Software House International, Inc., 2 Riverview Drive, Somerset, NJ 08873 or at such other address as the Holder may from time to time designate by written notice to Maker, the principal sum of THREE MILLION FIVE HUNDRED THOUSAND DOLLARS AND NO CENTS ($3,500,000.00) together with interest at the rate of 12% per annum on the outstanding principal amount of this Note from January 1, 2007 to the date of final payment.

1. Use of Proceeds. The proceeds of this Note shall be used by Maker solely to purchase shares of common stock of Arbinet - the Exchange Inc. (“ARBX”), a Delaware corporation.

2. Additional Consideration. Holder shall be entitled to 50% of any gain realized upon the sale of shares of common stock of ARBX (“ARBX Shares”) acquired, directly or indirectly, by Maker with the proceeds of this Note, as a profit participation; provided, however, that Holder shall have no obligation with respect to any losses incurred in connection with the sale of the ARBX Shares. In determining gain on the sale of the ARBX Shares, the sale price for the ARBX Shares which are sold shall be matched against ARBX Shares with the lowest acquisition price. Concurrent with the execution and delivery of this Note, Maker shall provide Holder with a schedule of the ARBX Shares heretofore acquired or disposed of, setting forth the date of acquisition or disposition, the number of shares purchased or sold and the purchase or sale price, and Maker shall promptly update such schedule within three business days after acquiring additional ARBX Shares or disposing of any ARBX Shares.

3. Payment. The principal amount of this Note together with accrued and unpaid interest hereon shall be due and payable on May 31, 2007. Accrued and unpaid interest hereof shall be payable on the last day of each month commencing January 31, 2007 and on the due date of this Note.

4. Letter Agreement. This Note is issued in furtherance of that certain Letter Agreement, dated March 3, 2006 (the “Letter Agreement”), between Maker and Holder.

5. Mandatory Sale. This Note and the other notes issued by Maker to Holder or her affiliates is secured by a pledge of the ARBX Shares and certain shares of common stock of Migo Software, Inc., formerly, Powerhouse Technologies Group, Inc. (“PWHT Shares”). If the aggregate fair market value of the PWHT Shares and the ARBX Shares serving as security for such Notes equals less than 80% of the principal and interest balance of such Notes then outstanding, sufficient shares of PWHT and/or ARBX will be sold and the proceeds of such sale used to reduce the outstanding principal and interest balance such that the fair market value of the remaining security is not less that 80% of the outstanding principal and interest balance of such Notes (the “Required Loan Balance”). Maker may elect whether PWHT or ARBX Shares or a combination thereof should be liquidated to pay down such Notes. Prior to any such sale of PWHT and/or ARBX Shares, Maker will be given 48 hours notice within which period Maker may make prepayments of the outstanding principal and interest balance of this Note so that the balance outstanding will not be greater than the Required Loan Balance. If Maker reduces the outstanding principal and interest balance of such Notes below the Required Loan Balance and provided that an Event of Default has not occurred hereunder, Maker shall not be required to sell the PWHT or ARBX Shares.

6. Prepayment.

6.1 Optional Prepayment. Maker may, at any time and from time to time, prepay, in whole or in part, this Note without penalty or premium. Any partial prepayment shall be credited first to accrued interest, then to principal. No prepayment shall extend or postpone the due date or change the amount of any subsequent payment.

6.2 Mandatory Prepayment. This Note shall be subject to immediate and mandatory prepayment to the full extent of any proceeds paid to Maker or any affiliate of Maker in connection with the sale of the ARBX or PWHT Shares or shares of Q Limo. Any partial prepayment shall be credited first to accrued interest, then to the profit participation and then to principal. No prepayment shall extend or postpone the due date or change the amount of any subsequent payment.

7. Default Interest. Upon the occurrence of an Event of Default as such term is hereinafter defined, Maker and any signer, guarantor or endorser hereof shall pay interest on the unpaid principal and interest balance of the Note from the date of occurrence of such Event of Default until such unpaid balance is paid in full at a rate of interest equal to 12% per annum. It is expressly stipulated and agreed to be the intent of Maker and Holder at all times to comply with applicable law and that this paragraph shall control every other covenant and agreement in this Note. If the applicable law is ever judicially interpreted so as to render usurious any amount called for under this Note or results in Maker having paid any interest in excess of that permitted by applicable law, then it is Holder’s express intent that all excess amounts theretofore collected by Holder shall be credited against the principal balance of this Note and the provisions of this Note immediately be deemed reformed and the amounts thereafter collectible hereunder reduced, without the necessity of the execution of any new documents, so as to comply with applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder.

8. Events of Default. The occurrence of any one or more of the following events with respect to Maker shall constitute an event of default (“Event of Default”) hereunder: (a) Maker fails to make any payment when due under the terms of this Note or under any other indebtedness of Maker; (b) Maker fails to observe or perform any obligation or agreement contained in this (i) Note or (ii) in that certain Pledge Agreement (the “Pledge Agreement”), dated of even date herewith, between Maker, as pledgor, and Holder, as pledgee, and such failure continues for five days or more after Holder notifies Maker thereof in writing; (c) Maker or ARBX files a voluntary petition in bankruptcy or initiates any other proceeding under any bankruptcy or insolvency laws relating to the relief of debtors; (d) Maker, ARBX or any endorser, guarantor, surety or other person liable for any amount due hereunder (collectively and individually with Maker hereinafter in this paragraph referred to as “them”) has an involuntary petition in bankruptcy filed against them and such petition remains unstayed, undismissed and undischarged for 60 days or more; (e) any of them makes a general assignment for the benefit of creditors; (f) any of them becomes insolvent; (g) any proceeding supplementary to any execution relating to any judgment is commenced against any of them; (h) attachment, distraint, levy, execution or final judgment is entered against any of them or against their property; (i) a receiver, conservation, rehabilitation or similar person is appointed or installed for any of them or any of their property which appointment remains undismissed for 30 days or more; (j) the United States government, any state or political subdivision therein or any foreign government makes a tax assessment against any of them; (k) the United States government, any state or political subdivision thereof or any foreign government takes possession of or assumes control over any substantial portion of the property of any of them; (l) Maker dies; or (m) Holder deems herself insecure. Upon the occurrence of an Event of Default hereunder and for so long as such Event of Default continues, Holder may, at its option, by written notice to Maker, declare immediately due and payable the entire principal balance of this Note, together with all accrued interest, without presentment, protest, demand or notice and regardless of any prior forbearance. No delay or omission by Holder in exercising any right or remedy under this Note, or any other agreement executed in connection with this Note, shall operate as a waiver of the future exercise of that right or remedy or of any other rights or remedies under this Note or any other agreement executed in connection with this Note. To the extent permitted by law, Maker waives the right, in any action on this Note, to assert that the action was not commenced within the time required by applicable law for commencement of the action. All rights of Holder stated in this Note are cumulative and in addition to all other rights provided by law, in equity, or in any agreement executed in connection with this Note.

9. Attorneys’ Fees. In the event of a default in payment of interest or principal under this Note, Maker shall pay all reasonable costs, expenses, and attorneys’ fees paid or incurred by Holder of this Note in connection with the collection or enforcement of this Note, whether or not suit is filed.

10. Governing Law. This Note shall be governed by, construed in accordance with, and all rights and obligations hereunder determined in accordance with the internal laws of the State of Delaware without reference to the conflict of law principles thereof.

11. Jurisdiction. Maker hereby irrevocably consents that any legal action or proceeding against him arising out of or in any way connected with this Note may be instituted in any state court or United States Federal court located in New Castle County, State of Delaware, and Maker hereby submits to the jurisdiction of such courts. Maker further irrevocably consents to the service of process in any such action or proceeding by the mailing of copies of such service by registered or certified mail, postage prepaid, return receipt requested, to Maker at the address set forth in Section 16 of the Pledge Agreement. The foregoing, however, shall not limit the right of Holder to serve process in any other manner permitted by law or to commence any legal action or proceeding or to obtain execution of judgment in any appropriate jurisdiction.

12. Trial by Jury; Right of Setoff. MAKER WAIVES TRIAL BY JURY IN ANY ACTION AND/OR PROCEEDING ARISING ON, OUT OF OR BY REASON OF THIS NOTE, AND WAIVES ALL RIGHTS OF SETOFF AND RIGHTS TO INTERPOSE COUNTERCLAIMS OR CROSS-CLAIMS IN CONNECTION WITH HOLDER’S ENFORCEMENT OF ITS RIGHTS UNDER THIS NOTE.

13. Validity. The invalidity or unenforceability of any particular provision of this Note shall be construed as if such invalid or unenforceable provision was omitted and the balance of the Note shall be enforced to the fullest extent permitted by law.

14. Entire Agreement. This Note constitutes the entire agreement between the parties regarding the obligations contained herein. All oral agreements are merged herein, and supersede all prior representations. Any agreement hereafter made shall be ineffective to change or modify this Note in whole or in part unless subsequent agreement is in writing signed by the party against whom enforcement of the change, modification or discharge is sought.

15. Successors and Assigns. This Note is binding upon and shall inure to the benefit of the Holder and Maker and their legal representatives, assigns and successors.

16. Waivers. Maker hereby waives presentment for payment, demand, protest, notice of protest, diligence in collection and the benefit of any exemption under the homestead exemption laws, if any, or under any other exemption or insolvency laws, and consents that Holder may release, surrender, exchange or substitute any of Maker’s personal property or other collateral security now held or which may hereafter be held as security for the payment of this Note, and may extend the time for payment or otherwise modify the terms of payment of any part or the whole of the indebtedness evidenced hereby without relieving Maker or any endorser, guarantor, surety or other person liable for any amount due hereunder of his obligations hereunder. Maker agrees that his liabilities under this Note are absolute and unconditional without regard to the liability of any other party. Acceptance of any payments hereunder shall not waive or affect any prior demand or acceleration of the amounts due hereunder.



		MAKER:



		ALEX MASHINSKY

Schedule of Purchase and Sale of ARBX Shares
Quantity	Cost Basis per Share	Cost Basis	Sale Price
532,376	$6.5743	$3,499,999.54

EX-99.G 3 v060537_ex99-g.htm

Exhibit G

CONFIRMATORY NEGOTIABLE PROMISSORY NOTE

$1,600,000.00As of March 21, 2006

FOR VALUE RECEIVED, Alex Mashinsky (“Maker”), an individual residing at 510 Berkeley Square, Memphis, TN 38120, confirming his existing indebtedness to Holder hereunder, hereby unconditionally promises to pay to the order of Thai Lee, an individual, or her assignee (“Holder”), in lawful money of the United States of America and in immediately available funds, at c/o Software House International, Inc., 2 Riverview Drive, Somerset, NJ 08873 or at such other address as the Holder may from time to time designate by written notice to Maker, the principal sum of ONE MILLION SIX HUNDRED THOUSAND DOLLARS AND NO CENTS ($1,600,000.00) together with interest at the rate of 12% per annum on the outstanding principal amount of this Note from January 1, 2007 to the date of final payment.

1. Use of Proceeds. The proceeds of this Note shall be used by Maker solely to purchase shares of common stock of Arbinet - the Exchange Inc. (“ARBX”), a Delaware corporation.

4. Letter Agreement. This Note is issued in furtherance of that certain Letter Agreement, dated March 3, 2006 (the “Letter Agreement”), between Maker and Holder.

6. Prepayment.

15. Successors and Assigns. This Note is binding upon and shall inure to the benefit of the Holder and Maker and their legal representatives, assigns and successors.



		MAKER:



		ALEX MASHINSKY

Schedule of Purchase and Sale of ARBX Shares
Quantity	Cast Basis per Share	Cost Basis	Sale Price
243,371	$6.5743	$1,599,993.96

EX-99.H 4 v060537_ex99-h.htm

CONFIRMATORY NEGOTIABLE PROMISSORY NOTE

$2,000,000As of March 27, 2006

FOR VALUE RECEIVED, Alex Mashinsky (“Maker”), an individual residing at 510 Berkeley Square, Memphis, TN 38120, confirming his existing indebtedness to Holder hereunder, hereby unconditionally promises to pay to the order of Thai Lee 2003 GRAT Agreement A, a grantor related annuity trust formed on January 29, 2003, or its assignee (“Holder”), in lawful money of the United States of America and in immediately available funds, at c/o Software House International, Inc., 2 Riverview Drive, Somerset, NJ 08873 or at such other address as the Holder may from time to time designate by written notice to Maker, the principal sum of TWO MILLION DOLLARS AND NO CENTS ($2,000,000.00) together with interest at the rate of 12% per annum on the outstanding principal amount of this Note from January 1, 2007 to the date of final payment.

1. Use of Proceeds. The proceeds of this Note shall be used by Maker solely to purchase shares of common stock of Arbinet - the Exchange Inc. (“ARBX”), a Delaware corporation.

3. Payment. The principal amount of this Note together with accrued and unpaid interest hereon shall be due and payable on December 31, 2007. Accrued and unpaid interest hereof shall be payable on the last day of each month commencing January 31, 2007 and on the due date of this Note.

4. Letter Agreement. This Note is issued in furtherance of that certain Letter Agreement, dated March 21, 2006 (the “Letter Agreement”), between Maker and Holder.

5. Mandatory Sale. This Note and the other notes issued by Maker to Holder or its affiliates is secured by a pledge of the ARBX Shares and certain shares of common stock of Migo Software, Inc., formerly, Powerhouse Technologies Group, Inc. (“PWHT Shares”). If the aggregate fair market value of the PWHT Shares and the ARBX Shares serving as security for such Notes equals less than 80% of the principal and interest balance of such Notes then outstanding, sufficient shares of PWHT and/or ARBX will be sold and the proceeds of such sale used to reduce the outstanding principal and interest balance such that the fair market value of the remaining security is not less that 80% of the outstanding principal and interest balance of such Notes (the “Required Loan Balance”). Maker may elect whether PWHT or ARBX Shares or a combination thereof should be liquidated to pay down such Notes. Prior to any such sale of PWHT and/or ARBX Shares, Maker will be given 48 hours notice within which period Maker may make prepayments of the outstanding principal and interest balance of this Note so that the balance outstanding will not be greater than the Required Loan Balance. If Maker reduces the outstanding principal and interest balance of such Notes below the Required Loan Balance and provided that an Event of Default has not occurred hereunder, Maker shall not be required to sell the PWHT or ARBX Shares.

6. Prepayment.

15. Successors and Assigns. This Note is binding upon and shall inure to the benefit of the Holder and Maker and their legal representatives, assigns and successors.

MAKER:

ALEX MASHINSKY

Schedule of Purchase and Sale of ARBX Shares
Quantity	Cost Basis per Share	Cost Basis	Sale Price
304,214	$6.5743	$1,999,994.10

EX-99.I 5 v060537_ex99-i.htm

CONFIRMATORY NEGOTIABLE PROMISSORY NOTE

$350,000.00As of May 23, 2006

FOR VALUE RECEIVED, Alex Mashinsky (“Maker”), an individual residing at 510 Berkeley Square, Memphis, TN 38120, confirming his existing indebtedness to Holder hereunder, hereby unconditionally promises to pay to the order of Thai Lee, an individual, or her assignee (“Holder”), in lawful money of the United States of America and in immediately available funds, at c/o Software House International, Inc., 2 Riverview Drive, Somerset, NJ 08873 or at such other address as the Holder may from time to time designate by written notice to Maker, the principal sum of THREE HUNDRED FIFTY THOUSAND DOLLARS AND NO CENTS ($350,000.00) together with interest at the rate of (a) 6% per annum on the outstanding principal amount of this Note from May 23, 2006 through December 31, 2006, and (b) 12% per annum on the outstanding principal amount of this Note from January 1, 2007 to the date of final payment.

1. Use of Proceeds. The proceeds of this Note shall be used by Maker solely to meet certain margin calls in respect of Arbinet - the Exchange Inc. (“ARBX”), a Delaware corporation issued to Maker or his affiliates.

2. Payment. The principal amount of this Note together with accrued and unpaid interest hereon shall be due and payable on April 30, 2007. Accrued and unpaid interest hereof shall be payable on the last day of each month commencing January 31, 2007 and on the due date of this Note.

3. Mandatory Sale. This Note and the other notes issued by Maker to Holder or her affiliates is secured by a pledge of certain shares of common stock of ARBX (“ARBX Shares”) and certain shares of common stock of Migo Software, Inc., formerly, Powerhouse Technologies Group, Inc. (“PWHT Shares”). If the aggregate fair market value of the PWHT Shares and the ARBX Shares serving as security for such Notes equals less than 80% of the principal and interest balance of such Notes then outstanding, sufficient shares of PWHT and/or ARBX will be sold and the proceeds of such sale used to reduce the outstanding principal and interest balance such that the fair market value of the remaining security is not less that 80% of the outstanding principal and interest balance of such Notes (the “Required Loan Balance”). Maker may elect whether PWHT or ARBX Shares or a combination thereof should be liquidated to pay down such Notes. Prior to any such sale of PWHT and/or ARBX Shares, Maker will be given 48 hours notice within which period Maker may make prepayments of the outstanding principal and interest balance of this Note so that the balance outstanding will not be greater than the Required Loan Balance. If Maker reduces the outstanding principal and interest balance of such Notes below the Required Loan Balance and provided that an Event of Default has not occurred hereunder, Maker shall not be required to sell the PWHT or ARBX Shares.

4. Prepayment.

4.1 Optional Prepayment. Maker may, at any time and from time to time, prepay, in whole or in part, this Note without penalty or premium. Any partial prepayment shall be credited first to accrued interest, then to principal. No prepayment shall extend or postpone the due date or change the amount of any subsequent payment.

4.2 Mandatory Prepayment. This Note shall be subject to immediate and mandatory prepayment to the full extent of any proceeds paid to Maker or any affiliate of Maker in connection with the sale of the ARBX or PWHT Shares or shares of Q Limo. Any partial prepayment shall be credited first to accrued interest and then to principal. No prepayment shall extend or postpone the due date or change the amount of any subsequent payment.

5. Default Interest. Upon the occurrence of an Event of Default as such term is hereinafter defined, Maker and any signer, guarantor or endorser hereof shall pay interest on the unpaid principal and interest balance of the Note from the date of occurrence of such Event of Default until such unpaid balance is paid in full at a rate of interest equal to 12% per annum. It is expressly stipulated and agreed to be the intent of Maker and Holder at all times to comply with applicable law and that this paragraph shall control every other covenant and agreement in this Note. If the applicable law is ever judicially interpreted so as to render usurious any amount called for under this Note or results in Maker having paid any interest in excess of that permitted by applicable law, then it is Holder’s express intent that all excess amounts theretofore collected by Holder shall be credited against the principal balance of this Note and the provisions of this Note immediately be deemed reformed and the amounts thereafter collectible hereunder reduced, without the necessity of the execution of any new documents, so as to comply with applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder.

6. Events of Default. The occurrence of any one or more of the following events with respect to Maker shall constitute an event of default (“Event of Default”) hereunder: (a) Maker fails to make any payment when due under the terms of this Note or under any other indebtedness of Maker; (b) Maker fails to observe or perform any obligation or agreement contained in this (i) Note or (ii) in that certain Pledge Agreement (the “Pledge Agreement”), dated of even date herewith, between Maker, as pledgor, and Holder, as pledgee, and such failure continues for five days or more after Holder notifies Maker thereof in writing; (c) Maker or ARBX files a voluntary petition in bankruptcy or initiates any other proceeding under any bankruptcy or insolvency laws relating to the relief of debtors; (d) Maker, ARBX or any endorser, guarantor, surety or other person liable for any amount due hereunder (collectively and individually with Maker hereinafter in this paragraph referred to as “them”) has an involuntary petition in bankruptcy filed against them and such petition remains unstayed, undismissed and undischarged for 60 days or more; (e) any of them makes a general assignment for the benefit of creditors; (f) any of them becomes insolvent; (g) any proceeding supplementary to any execution relating to any judgment is commenced against any of them; (h) attachment, distraint, levy, execution or final judgment is entered against any of them or against their property; (i) a receiver, conservation, rehabilitation or similar person is appointed or installed for any of them or any of their property which appointment remains undismissed for 30 days or more; (j) the United States government, any state or political subdivision therein or any foreign government makes a tax assessment against any of them; (k) the United States government, any state or political subdivision thereof or any foreign government takes possession of or assumes control over any substantial portion of the property of any of them; (l) Maker dies; or (m) Holder deems herself insecure. Upon the occurrence of an Event of Default hereunder and for so long as such Event of Default continues, Holder may, at its option, by written notice to Maker, declare immediately due and payable the entire principal balance of this Note, together with all accrued interest, without presentment, protest, demand or notice and regardless of any prior forbearance. No delay or omission by Holder in exercising any right or remedy under this Note, or any other agreement executed in connection with this Note, shall operate as a waiver of the future exercise of that right or remedy or of any other rights or remedies under this Note or any other agreement executed in connection with this Note. To the extent permitted by law, Maker waives the right, in any action on this Note, to assert that the action was not commenced within the time required by applicable law for commencement of the action. All rights of Holder stated in this Note are cumulative and in addition to all other rights provided by law, in equity, or in any agreement executed in connection with this Note.

7. Attorneys’ Fees. In the event of a default in payment of interest or principal under this Note, Maker shall pay all reasonable costs, expenses, and attorneys’ fees paid or incurred by Holder of this Note in connection with the collection or enforcement of this Note, whether or not suit is filed.

8. Governing Law. This Note shall be governed by, construed in accordance with, and all rights and obligations hereunder determined in accordance with the internal laws of the State of Delaware without reference to the conflict of law principles thereof.

9. Jurisdiction. Maker hereby irrevocably consents that any legal action or proceeding against him arising out of or in any way connected with this Note may be instituted in any state court or United States Federal court located in New Castle County, State of Delaware, and Maker hereby submits to the jurisdiction of such courts. Maker further irrevocably consents to the service of process in any such action or proceeding by the mailing of copies of such service by registered or certified mail, postage prepaid, return receipt requested, to Maker at the address set forth in Section 16 of the Pledge Agreement. The foregoing, however, shall not limit the right of Holder to serve process in any other manner permitted by law or to commence any legal action or proceeding or to obtain execution of judgment in any appropriate jurisdiction.

10. Trial by Jury; Right of Setoff. MAKER WAIVES TRIAL BY JURY IN ANY ACTION AND/OR PROCEEDING ARISING ON, OUT OF OR BY REASON OF THIS NOTE, AND WAIVES ALL RIGHTS OF SETOFF AND RIGHTS TO INTERPOSE COUNTERCLAIMS OR CROSS-CLAIMS IN CONNECTION WITH HOLDER’S ENFORCEMENT OF ITS RIGHTS UNDER THIS NOTE.

11. Validity. The invalidity or unenforceability of any particular provision of this Note shall be construed as if such invalid or unenforceable provision was omitted and the balance of the Note shall be enforced to the fullest extent permitted by law.

12. Entire Agreement. This Note constitutes the entire agreement between the parties regarding the obligations contained herein. All oral agreements are merged herein, and supersede all prior representations. Any agreement hereafter made shall be ineffective to change or modify this Note in whole or in part unless subsequent agreement is in writing signed by the party against whom enforcement of the change, modification or discharge is sought.

13. Successors and Assigns. This Note is binding upon and shall inure to the benefit of the Holder and Maker and their legal representatives, assigns and successors.

14. Waivers. Maker hereby waives presentment for payment, demand, protest, notice of protest, diligence in collection and the benefit of any exemption under the homestead exemption laws, if any, or under any other exemption or insolvency laws, and consents that Holder may release, surrender, exchange or substitute any of Maker’s personal property or other collateral security now held or which may hereafter be held as security for the payment of this Note, and may extend the time for payment or otherwise modify the terms of payment of any part or the whole of the indebtedness evidenced hereby without relieving Maker or any endorser, guarantor, surety or other person liable for any amount due hereunder of his obligations hereunder. Maker agrees that his liabilities under this Note are absolute and unconditional without regard to the liability of any other party. Acceptance of any payments hereunder shall not waive or affect any prior demand or acceleration of the amounts due hereunder.

MAKER:

______________________________

ALEX MASHINSKY

EX-99.J 6 v060537_ex99-j.htm

CONFIRMATORY NEGOTIABLE PROMISSORY NOTE

$2,622,008.39

As of June 16, 2006

FOR VALUE RECEIVED, Alex Mashinsky (“Maker”), an individual residing at 510 Berkeley Square, Memphis, TN 38120, confirming his existing indebtedness to Holder hereunder, hereby unconditionally promises to pay to the order of Thai Lee, an individual, or her assignee (“Holder”), in lawful money of the United States of America and in immediately available funds, at c/o Software House International, Inc., 2 Riverview Drive, Somerset, NJ 08873 or at such other address as the Holder may from time to time designate by written notice to Maker, the principal sum of TWO MILLION SIX HUNDRED TWENTY-TWO THOUSAND EIGHT DOLLARS AND THIRTY-NINE CENTS ($2,622,008.39) together with interest at the rate of (a) 6% per annum on the outstanding principal amount of this Note from May 23, 2006 through December 31, 2006, and (b) 12% per annum on the outstanding principal amount of this Note from January 1, 2007 to the date of final payment.

3. Mandatory Sale. This Note and the other notes issued by Maker to Holder or her affiliates is secured by a pledge of certain shares of common stock of ARBX (“ARBX Shares”) and certain shares of common stock of Migo Software, Inc., formerly, Powerhouse Technologies Group, Inc. (“PWHT Shares”). If the aggregate fair market value of the PWHT Shares and the ARBX Shares serving as security for such Notes equals less than 80% of the principal and interest balance of such Notes then outstanding, sufficient shares of PWHT, and/or ARBX will be sold and the proceeds of such sale used to reduce the outstanding principal and interest balance such that the fair market value of the remaining security is not less that 80% of the outstanding principal and interest balance of such Notes (the “Required Loan Balance”). Maker may elect whether PWHT or ARBX Shares or a combination thereof should be liquidated to pay down such Notes. Prior to any such sale of PWHT and/or ARBX Shares, Maker will be given 48 hours notice within which period Maker may make prepayments of the outstanding principal and interest balance of this Note so that the balance outstanding will not be greater than the Required Loan Balance. If Maker reduces the outstanding principal and interest balance of such Notes below the Required Loan Balance and provided that an Event of Default has not occurred hereunder, Maker shall not be required to sell the PWHT or ARBX Shares.

4. Prepayment.

6. Events of Default. The occurrence of any one or more of the following events with respect to Maker shall constitute an event of default (“Event of Default”) hereunder: (a) Maker fails to make any payment when due under the terms of this Note or under any other indebtedness of Maker; (b) Maker fails to observe or perform any obligation or agreement contained in this (i) Note or (ii) in that certain Pledge Agreement (the “Pledge Agreement”), dated of even date herewith, between Maker, as pledgor, and Holder, as pledgee, and such failure continues for five days or more after Holder notifies Maker thereof in writing; (c) Maker or ARBX files a voluntary petition in bankruptcy or initiates any other proceeding under any bankruptcy or insolvency laws relating to the relief of debtors; (d) Maker, ARBX or any endorser, guarantor, surety or other person liable for any amount due hereunder (collectively and individually with Maker hereinafter in this paragraph referred to as “them”) has an involuntary petition in bankruptcy filed against them and such petition remains unstayed, undismissed and undischarged for 60 days or more; (e) any of them makes a general assignment for the benefit of creditors; (f) any of them becomes insolvent; (g) any proceeding supplementary to any execution relating to any judgment is commenced against any of them; (h) attachment, distraint, levy, execution or final judgment is entered against any of them or against their property; (i) a receiver, conservation, rehabilitation or similar person is appointed or installed for any of them or any of their property which appointment remains undismissed for 30 days or more; (j) the United States government, any state or political subdivision therein or any foreign government makes a tax assessment against any of them; (k) the United States government, any state or political subdivision thereof or any foreign government takes possession of or assumes control over any substantial portion of the property of any of them; (l) Maker dies; or (m) Holder deems herself insecure. Upon the occurrence of an Event of Default hereunder and for so long as such Event of Default continues, Holder may, at its option, by written notice to Maker, declare immediately due and payable the entire principal balance of this Note, together with all accrued interest, without presentment, protest, demand or notice and regardless of any prior forbearance. No delay or omission by Holder in exercising any right or remedy under this Note, or any other agreement executed in connection with this Note, shall operate as a waiver of the future exercise of that right or remedy or of any other rights or remedies under this Note or any other agreement executed in connection with this Note. To the extent permitted by law, Maker waives the right, in any action on this Note, to assert that the action was not commenced within the time required by applicable law for commencement of the action. All rights of Holder stated in this Note are cumulative and in addition to all other rights provided by law, in equity, or in any agreement executed in connection with this Note.

13. Successors and Assigns. This Note is binding upon and shall inure to the benefit of the Holder and Maker and their legal representatives, assigns and successors.

MAKER:

ALEX MASHINSKY

EX-99.K 7 v060537_ex99-k.htm Unassociated Document

CONFIRMATORY PLEDGE AGREEMENT

CONFIRMATORY PLEDGE AGREEMENT dated as of December 15, 2006 between Alex Mashinsky, an individual with an address at 510 Berkeley Square, Memphis, TN 38120 (the “Pledgor”), and Thai Lee, an individual with an address at c/o Software House International, Inc., 2 Riverview Drive, Somerset, NJ 08873 (the “Pledgee”).

PRELIMINARY STATEMENT

This Agreement is being entered into in furtherance of that certain Letter Agreement (the “Letter Agreement”) dated March 3, 2006 between Pledgor and Pledgee and in order to confirm the pledge of securities contemplated thereby. Unless the context otherwise requires, capitalized terms used but not defined herein shall have the meanings given to such terms in the Letter Agreement.

Pledgee loaned to Pledgor $8,072,008.39 (the “Loan”) and Pledgor agreed to use the proceeds of the Loan to acquire shares of common stock of Arbinet- theExchange, Inc. (“ARBX”) or to meet certain margin calls in respect thereof.

Pledgor and its affiliates own shares of ARBX (the “ARBX Shares”) listed on Schedule I hereto.

Pledgor is today delivering to Pledgee a series of Promissory Notes (the “Promissory Notes”) evidencing the obligation of Pledgor to pay to Pledgee $3,500,000 principal amount of the Loan not later than May 31, 2007, $1,600,000 principal amount of the Loan not later than May 31, 2007, $350,000 principal amount of the Loan not later than April 30, 2007 and $2,622,008.39 principal amount of the Loan not later than April 30, 2007, and Pledgee has agreed to accept the Promissory Notes on the condition that Pledgor grants to Pledgee a perfected security interest in the assets of Pledgor.

Pledgor has agreed to pledge to Pledgee the ARBX Shares, the shares (the “PWHT Shares”) of Migo Software, Inc., formerly Powerhouse Technologies Group, Inc. (“PWHT”) and the membership interests (the “Q Limo Shares”) of Q Limo LLC (“Q Limo”) set forth on Schedule I which are owned by Pledgor or an affiliate of Pledgor, as security for the payment by Pledgor of the Loan.

NOW THEREFORE, for good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereunder agree as follows:

1. Pledge.

1.1 Pledge. As security for (a) the due, full and punctual payment of all amounts and liabilities specified in this Agreement, the Promissory Notes, and in any other agreement or instrument delivered to Pledgee by Pledgor (such agreements and instruments are collectively referred to as the “Ancillary Documents”), (b) the due, punctual and faithful performance of and compliance with all other obligations, terms, conditions, covenants, representation and warranties and agreements arising under this Agreement, the Promissory Notes or any Ancillary Document, and (c) all expenses, costs and fees, including but not limited to attorneys' fees and expenses, incurred by Pledgee in connection with the collection of all amounts due by Pledgor to Pledgee, perfection and enforcement of Pledgee's security interest in the Pledged Securities and the maintenance, preservation, taking possession of and disposition of the Pledged Securities (collectively referred to herein as the “Obligations”), Pledgor hereby transfers, hypothecates, pledges, sets over and delivers unto Pledgee and grants to Pledgee a security interest in, all right, title and interest Pledgor now has or hereafter may acquire in (a) the ARBX Shares, the PWHT Shares, the Q Limo Shares and all other securities of ARBX, PWHT and Q Limo obtained in the future by Pledgor or any affiliate of Pledgor and the certificates representing or evidencing all such interests, (b) all other property which may be delivered to and held by Pledgee pursuant to the terms hereof, (c) all payments of principal, interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon the conversion of the securities referred to in clause (a) or clause (b) above, (d) except as provided in Section 4 below, all rights and privileges of Pledgor with respect to the securities and other property referred to in clauses (a), (b) and (c) above, and (e) all proceeds of any of the foregoing (the items referred to in clauses (a) through (e) being collectively called the “Pledged Securities”). All stock certificates, notes or other securities or instruments now or hereafter included in the Pledged Securities shall be duly endorsed to Pledgee or accompanied by stock powers duly executed in blank or other instruments of transfer satisfactory to Pledgee and by such other instruments and documents as Pledgee may reasonably request, and all other property comprising part of the Pledged Securities shall be accompanied by proper instruments of assignment duly executed by Pledgor or, if owned by an affiliate of Pledgor, by such affiliate and such other instruments or documents as Pledgee may reasonably request.

1.2 Delivery of the Pledged Securities. Pledgor has delivered certain shares (as described on Schedule I) to the account of Pledgee. The parties hereto acknowledge that such shares are part of the Pledged Securities described herein and any certificates or instruments that have been delivered to Pledgee with respect to such shares are part of the Pledged Securities and such shares have not been delivered to Pledgee in satisfaction of the Loan. In addition, concurrent with the execution and delivery of this Agreement, Pledgor shall deliver, or cause its affiliate to deliver, certificates representing the ARBX Shares, the PWHT Shares and the Q Limo Shares accompanied by stock powers duly endorsed in blank in proper form for transfer to Pledgee, and Pledgor shall immediately upon receipt deliver or cause to be delivered to Pledgee any and all certificates or other instruments or documents representing additional Pledged Securities, endorsed or assigned in blank or in favor of Pledgee, as directed by Pledgee and Pledgor shall deliver or cause to be delivered to Pledgee certificates or instruments for all other securities obtained in the future by Pledgor or any affiliate of Pledgor.

2. Representations, Warranties and Covenants. Pledgor hereby represents, warrants and covenants to and with Pledgee that:

2.1 Pledgor (a) is and will at all times continue to be the direct owner, beneficially and of record, of the Pledged Securities, (b) holds the same free and clear of any and all liens, charges, claims, security interests, pledges, rights of first refusal, preemptive rights, hypothecations or other encumbrances (collectively, “Liens”), (c) will make no assignment, pledge, hypothecation or transfer of, or create any Lien in, the Pledged Securities, (d) will cause all securities included within the Pledged Securities to be certificated securities, and (e) will cause any and all certificates, instruments or other documents representing or evidencing Pledged Securities to be forthwith deposited with Pledgee and pledged or assigned thereunder. If the Pledged Securities shall hereafter become subject to any Lien, (other than with the express written consent of Pledgee), Pledgor warrants that it will immediately undertake to secure the release of such Pledged Securities from such Lien claim at Pledgor’s own cost and expense. Pledgor will appear in and defend any action or proceeding which may affect the security interest of Pledgee.

2.2 The shares of ARBX stock listed on Schedule I include all of the shares purchased by Pledgor with the proceeds of the Loan.

2.3 By virtue of the execution and delivery by Pledgor of this Agreement and the delivery of the Pledged Securities to Pledgee in accordance with this Agreement, Pledgee will obtain a valid, legal and perfected first priority lien and security interest in such Pledged Securities as security for the repayment of the Obligations, free and clear of all Liens.

2.4 All financial information (and all information relating to the Pledged Securities) heretofore submitted to Pledgee by Pledgor or at Pledgor’s request is true and correct, and all financial information hereafter submitted to Pledgee by Pledgor or at Pledgor’s request will be true and correct when given.

2.5 Pledgor shall promptly reimburse Pledgee for any and all legal and accounting expenses, including reasonable attorneys’ and accountants’ fees and court costs incurred in collecting any sums payable by Pledgor in enforcing this Agreement or any obligations secured thereby or in verifying, handling, retrieving, repossessing, selling or otherwise disposing of the Pledged Securities, all of which sums shall become part of the indebtedness secured hereby.

2.6 Pledgor shall not grant any security interest to anyone other than Pledgee in any of the Pledged Securities without Pledgee’s prior written consent.

3. Delivery of Notice; Denominations. Pledgor shall promptly give to Pledgee copies of any notices or other communications received by it with respect to Pledged Securities registered in the name of Pledgor. Pledgee shall at all times have the right to exchange the certificates representing Pledged Securities for certificates of smaller or larger denominations for any purposes consistent with this Agreement.

4. Voting Rights; Dividends and Interests.

4.1 Except as provided in Section 4.2 and 4.3:

4.1.1 Pledgor shall be entitled to exercise any and all voting rights accruing to it as the owner of Pledged Securities for any purpose consistent with the terms of this Agreement, the Promissory Notes and the Ancillary Documents so long as such exercise of rights could not, and could not reasonably be expected to, adversely affect the rights and remedies of Pledgee under this Agreement, the Promissory Notes or the Ancillary Documents or the ability of Pledgee to exercise the same.

4.1.2 Pledgee shall execute and deliver to Pledgor, or cause to be executed and delivered to Pledgor, all such proxies, powers of attorney, and other instruments as Pledgor may reasonably request for the purpose of enabling Pledgor to exercise the voting rights which it is entitled to exercise pursuant to Section 4.1.1.

4.1.3 All payments, dividends and distributions made on or in respect of Pledged Securities, whether paid or payable in cash, securities or other property, and whether resulting from a subdivision, combination or reclassification of the outstanding capital stock of the issuer of any Pledged Securities or received in exchange for or in redemption of Pledged Securities or any part thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise, shall be and become part of the Pledged Securities and, if received by Pledgor, shall not be commingled by Pledgor with any of its other funds or property but shall be held separate and apart therefrom in trust for the benefit of Pledgee and shall be delivered to Pledgee in the same form as so received (with any necessary endorsement).

4.1.4 Prior to the occurrence of an event of Default, Pledgor may, on three business days' notice to Pledgee, sell the Pledged Securities; provided that (a) Pledgee complies with the terms of the Promissory Notes evidencing the Loans and (b) such sales are made in the ordinary course of business.

4.2 Upon the occurrence of any event of Default under this Agreement, all rights of Pledgor to dividends which Pledgor is authorized to receive pursuant to Section 4.1.3 shall cease, and all such rights shall thereupon become vested in Pledgee, who shall have the sole and exclusive right and authority to receive and retain such dividend payments. All dividends which are received by Pledgor contrary to the provisions of this Section 4.2 shall be received in trust for the benefit of Pledgee, shall be segregated from other property or funds of Pledgor and shall be immediately delivered to Pledgee in the same form as so received (with any necessary endorsement). Any and all money and other property paid over to or received by Pledgee pursuant to the provisions of this Section 4.2 shall be deposited by Pledgee in an account to be established by Pledgee for the benefit of Pledgee, upon receipt of such money or other property and shall be applied in accordance with the provisions of Section 7.

4.3 Upon the occurrence of any event of Default under this Agreement, all rights of Pledgor to exercise the voting rights which it is entitled to exercise pursuant to Section 4.1.1 shall immediately cease, and all such rights shall thereupon become vested in Pledgee, which shall have the sole and exclusive right (but not the obligation) and authority to exercise such voting rights. Pledgor shall execute and deliver to Pledgee all such proxies, powers of attorney, and other instruments as Pledgee shall request for the purpose of enabling Pledgee to exercise the voting rights which it is entitled to exercise pursuant to this Section 4.3.

5. Default. Any one of the following events shall constitute a default (“Default”) of Pledgor’s performance hereunder:

5.1 Failure of Pledgor to pay or perform as and when due any of the Obligations.

5.2 Failure of Pledgor to perform or observe any of the material terms, conditions, covenants, representations or warranties contained in this Agreement, the Promissory Notes or any Ancillary Document.

5.3 Failure to pay when due (including within any applicable grace period) any indebtedness evidenced by or included in or secured or covered by any bond, note, indenture, loan agreement, guaranty, trust agreement, mortgage or similar instrument to which Pledgor is a party or by which he is bound, or by which any of his properties or assets may be affected (a “Debt Instrument”) or failure to perform any term, condition or covenant of any Debt Instrument so that, as a result of such failure and the passage of any applicable grace period, the indebtedness evidenced thereby is or may be declared due and payable prior to the date on which such indebtedness would otherwise become due and payable.

5.4 The filing by Pledgor of a petition under any section or chapter of the Federal Bankruptcy Code; the making by Pledgor of an assignment for the benefit of creditors; the filing by Pledgor of a proceeding for dissolution or liquidation; the appointment of or the application for the appointment of a receiver, trustee, controller or custodian for all or part of the assets of Pledgor; the attempt of Pledgor to make an adjustment, settlement or extension of its debts with his creditors generally.

5.5 Pledgor’s becoming insolvent, becoming unable to meet his obligations as they come due.

5.6 The issuance of a writ of attachment, garnishment, execution or similar legal process against Pledgor or any of Pledgor’s property, which remains unstayed, undismissed and undischarged for 60 days or more.

5.7 The making of any assessment for taxes against Pledgor by the United States of America, any state or any subdivision of either, which remains unstayed, undismissed and undischarged for 60 days or more.

5.8 Pledgor shall have concealed, removed or permitted to be concealed or removed any part of his property, with intent to hinder, delay or defraud any of his creditors, or made or suffered a transfer of any of his property which may be fraudulent under any bankruptcy, fraudulent conveyance or similar law; or shall have made any transfer of his property to or for the benefit of a creditor at a time when other creditors similarly situated have not been paid; or shall have suffered or permitted, while insolvent, any creditor to obtain a lien upon any of his property through legal proceedings or distraint which is not vacated within 30 days from the date thereof.

5.9 There shall have been a material adverse change in the financial condition, property or assets of Pledgor.

6. Remedies upon Default. Upon the occurrence of a Default, whether or not all of the Obligations shall have become due and payable, in addition to its rights under this Agreement, the Promissory Notes or any Ancillary Document:

6.1 Pledgee may, without notice to or demand upon Pledgor, declare any and all Obligations immediately due and payable;

6.2 Pledgee shall have all of the rights and remedies with respect to the Pledged Securities of a secured party under the Uniform Commercial Code as in effect in the State of Tennessee (whether or not said Code is in effect in the jurisdiction where the rights and remedies are asserted) and such additional rights and remedies to which a secured party is entitled under the laws in effect in any jurisdiction where any rights and remedies hereunder may be asserted (to the extent such other rights are not inconsistent with the provisions of this Agreement), including without limitation the right, to the maximum extent permitted by law, to exercise all voting, consensual and other powers of ownership pertaining to the Pledged Securities as if Pledgee were the sole and absolute owner thereof (and Pledgor agrees to take all such action as may be appropriate to give effect to such right);

6.3 Pledgee in its discretion may, consistent with the other provisions of this Agreement, in its name or in the name of Pledgor or otherwise, demand, sue for, collect or receive any money or property at any time payable or receivable on account of or in exchange for any of the Pledged Securities, but shall be under no obligation to do so;

6.4 Pledgee may, upon five days’ prior written notice to Pledgor, with respect to the Pledged Securities or any part thereof which shall then be or shall thereafter come into the possession, custody or control of Pledgee, or any of its agents, sell, lease, assign or otherwise dispose of all or part of the Pledged Securities, at such place or places as Pledgee deems best, and for cash or for credit or for future delivery (without thereby assuming any credit risk), at public or private sale, without demand of performance or notice of intention to effect any such disposition or of the time or place thereof (except such notice as is required above or by applicable statute and cannot be waived), and Pledgee or anyone else may be the purchaser, lessee, assignee or recipient of any or all of the Pledged Securities so disposed of at any public sale (or, to the extent permitted by law, at any private sale) and thereafter hold the same absolutely, free from any claim or right of whatsoever kind, including any right or equity of redemption (statutory or otherwise) of Pledgor, any such demand, notice and right or equity being hereby expressly waived and released. During such five-day period, Pledgor may satisfy the Obligations and/or substitute collateral for the Pledged Securities which shall be acceptable to Pledgee, in its sole and absolute discretion. Pledgee may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the sale may be so adjourned; and

6.5 Pledgor recognizes that, by reason of certain prohibitions contained in the Securities Act of 1933, as amended, and applicable state securities laws, Pledgee may be compelled, with respect to any sale of all or any part of the Pledged Securities, to limit purchasers to those who will agree, among other things, to acquire the collateral for their own account, for investment and not with a view to the distribution or resale thereof. Pledgor acknowledges that any such private sales may be at prices and on terms less favorable to Pledgee than those obtainable through a public sale without such restrictions, and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner and that Pledgee shall have no obligation to engage in public sales and no obligation to delay the sale of any Pledged Securities for the period of time necessary to permit registration of such Pledged Securities for public sale.

7. Application of Proceeds of Sale. Pledgee may apply the cash proceeds actually received from any sale or other disposition of the Pledged Securities to the expenses of retaking, holding, preparing for sale, selling, advertising and the like, to attorneys’ fees and all legal, travel and other expenses which may be incurred by Pledgee in attempting to collect any of the Obligations or enforce this Agreement or in the prosecution or defense of any action or proceeding related to the subject matter of this Agreement; and then to the Obligations in such order and as to principal or interest as Pledgee may desire; and Pledgor shall remain liable and shall pay Pledgee on demand any deficiency remaining, together with interest thereon at the highest rate then payable on the Obligations and the balance of any expenses unpaid, with any surplus to be paid to Pledgor.

8. Pledgee Appointed Attorney-in-Fact. Except as otherwise provided herein, Pledgor hereby appoints Pledgee the attorney-in-fact of Pledgor for the purposes of carrying out the provisions of this Agreement or taking any action or executing any instrument which Pledgee may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, Pledgee shall have the right, upon the occurrence of a Default, with full power of substitution either in Pledgee’s name or in the name of Pledgor, to ask for, demand, sue for, collect, receive and give acquittance for any and all monies due or to become due under or by virtue of the Pledged Securities, to endorse checks, drafts, orders and other instruments for the payment of money payable to Pledgor constituting Pledged Securities or any part thereof or on account thereof and to give full discharge for the same, to settle, compromise, prosecute or defend any action, claim or proceeding with respect thereto, and to sell, assign, endorse, pledge, transfer and make any agreement respecting, or otherwise deal with, the same; provided, however, that nothing herein contained shall be construed as requiring or obligating Pledgee to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by Pledgee, or to present or file any claim or notice, or to take any action with respect to the Pledged Securities or any part thereof or the monies due or to become due in respect thereof or any property covered thereby, and no action taken by Pledgee or omitted to be taken with respect to the Pledged Securities or any part thereof shall give rise to any defense, counterclaim or offset in favor of any Pledgor or to any claim or action against Pledgee, except in the case of, and then solely to the extent of the proximate damage resulting from the, gross negligence or willful misconduct by Pledgee.

9. No Waiver. No failure on the part of Pledgee to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy by Pledgee preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law. Pledgee shall not be deemed to have waived any rights hereunder or under any other agreement or instrument unless such waiver shall be in writing and signed by such parties.

10. Security Interest Absolute.

10.1 All rights of Pledgee hereunder, the grant of a security interest in the Pledged Securities and all obligations of Pledgor hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of this Agreement, the Ancillary Documents, any agreement with respect to any of the Obligations or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the terms of this Agreement, the Ancillary Documents or any other agreement or instrument, (c) any exchange, release, amendment or waiver of, or consent to or departure from, any guaranty for all or any of the Obligations or (d) any other circumstance which might otherwise constitute a defense available to, or a discharge of, Pledgor in respect of the Obligations or in respect of this Agreement or the Ancillary Documents.

10.2 Upon payment of all of the Obligations to Pledgee, Pledgee shall return to Pledgor all of the Pledged Securities which has not been transferred, sold or otherwise applied pursuant to this Agreement or previously returned to Pledgor. Until such termination, this Agreement shall bind Pledgor and its successors and assigns, and shall inure to the benefit of Pledgee and its successors and assigns.

11. Further Assurances. Pledgor agrees to do such further acts and things, and to execute and deliver such additional conveyances, assignments, agreements and instruments, as Pledgee may at any time request in connection with the administration and enforcement of this Agreement, with respect to the Pledged Securities or any part thereof or in order better to assure and confirm unto Pledgee its rights and remedies hereunder.

12. Pledgee’s Fees and Expenses. Pledgor agrees to pay upon demand to Pledgee the amount of any and all expenses, including the reasonable fees and expenses of its counsel and of any experts or agents, which Pledgee may incur in connection with (a) the administration of this Agreement, (b) the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Pledged Securities, (c) the exercise or enforcement of any of the rights of Pledgee hereunder, or (d) the failure by Pledgor to perform or observe any of the provisions hereof. Any such amounts payable as provided hereunder or thereunder shall be additional obligations secured by this Agreement.

13. Entire Agreement; Binding Agreement; Assignments. This Agreement contains the entire agreement between the parties concerning its subject matter, and supersedes and replaces all prior agreements and understandings including, but not limited to, the Letter Agreement, with respect to such subject matter. This Agreement, and the terms, covenants and conditions hereof, shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, except that Pledgor shall not assign or transfer this Agreement or any interest herein or the Pledged Securities or any part thereof. Pledgor shall not pledge, encumber or grant any option with respect to the Pledged Securities or any part thereof, except as contemplated by this Agreement.

14. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware and any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of laws of all jurisdictions other than the State of Delaware.

15. Waiver of Jury Trial. Pledgor hereby waives, to the extent permitted by applicable law, trial by jury in any litigation in any court with respect to, in connection with, or arising out of this Agreement, or the validity, protection, interpretation, collection or enforcement hereof; and Pledgor hereby waives, to the extent permitted by applicable law, the right to interpose any setoff or counterclaim or cross-claim in connection with any such litigation, irrespective of the nature of such setoff, counterclaim or crossclaim. Notwithstanding anything contained in this Agreement to the contrary, no claim may be made by Pledgor against Pledgee for any lost profits or any special, indirect or consequential damages in respect of any breach or wrongful conduct (other than willful misconduct constituting actual fraud) in connection with, arising out of or in any way related to the transactions contemplated hereunder, or any act, omission or event occurring in connection therewith; and Pledgor hereby waives, releases and agrees not to sue upon any such claim for any such damages.

16. Notices. All notices hereunder shall be in writing and be given by registered or certified mail, return receipt requested, postage and registration fess prepaid, and shall be deemed given when so mailed as follows:

If to Pledgor:	Alex Mashinsky 510 Berkeley Square Memphis, TN 38120 Facsimile No.: [________]
with a copy to:	Eaton & Van Winkle LLP 3 Park Avenue New York, New York 10016 Attention: Joseph L. Cannella Facsimile No.: (212) 561-3633
If to Pledgee:	c/o Software House International, Inc. 2 Riverview Drive Somerset, NJ 08873 Facsimile No.: (732) 868-8889
with a copy to:	Orrick, Herrington & Sutcliffe LLP 666 Fifth Avenue New York, NY 10103-0001 Attention: George H. Wang, Esq. Facsimile No.: (212) 506-5151

17. Severability. In case any one or more of the provisions contained in this Agreement should be invalid, illegal or unenforceable in any respect, no party hereto shall he required to comply with such provision for so long as such provision is held to be invalid, illegal or unenforceable and the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired. The parties shall endeavor in good faith negotiations to replace the invalid, illegal and unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

18. Section Headings. The section and other headings used herein are for convenience only and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

19. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument.

20. Continued Effect. Notwithstanding anything to the contrary contained in this Agreement, this Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against Pledgor for liquidation or reorganization, should Pledgor become insolvent, or make an assignment for any benefit of creditors or should a receiver or trustee be appointed for all or any significant part of Pledgor’s assets and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the obligations, whether as a “voidable, preference,” “fraudulent conveyance” or otherwise, all as though such payment, or any part thereof, is rescinded, reduced, restored or returned.

21. Rights Cumulative. All of Pledgee’s rights and remedies with respect to the Pledged Securities, whether established hereby or under, arising out of or in any way connected with this Agreement, or by any other agreements, instruments or documents or by law, shall be cumulative and may be exercised singly or concurrently.

22. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN NEW CASTLE COUNTY IN THE STATE OF DELAWARE AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT (AND SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY PLEDGOR WITH THE CONSENT OF PLEDGEE AS ITS PLEDGEE) TO RECEIVE ON ITS BEHALF, SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY PLEDGOR TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A COPY OF SUCH PROCESS SO SERVED SHALL BE MAILED BY REGISTERED MAIL TO PLEDGOR AT ITS ADDRESS PROVIDED HEREIN, EXCEPT THAT UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS. TO THE EXTENT PERMITTED BY LAW, IF ANY PLEDGEE APPOINTED BY PLEDGOR REFUSES TO ACCEPT SERVICE, PLEDGOR HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF PLEDGEE TO BRING PROCEEDINGS AGAINST PLEDGOR IN THE COURTS OF ANY OTHER JURISDICTION.

23. Facsimile Signatures. This Agreement and any other document or agreement executed in connection herewith (other than any document for which an originally executed signature page is required by law) may be executed by delivery of a facsimile copy of an executed signature page with the same force and effect as the delivery of an originally executed signature page. If any party delivers a facsimile copy of a signature page to this Agreement or any other document or agreement executed in connection herewith, such party shall deliver an originally executed signature page within three business days of delivering such facsimile signature page or at any time thereafter upon request; provided, however, that the failure to deliver any such originally executed signature page shall not affect the validity of the signature page delivered by facsimile, which has and shall continue to have the same force and effect as the originally executed signature page.

[The remainder of this page has been intentionally left blank signature page follows]

AMENDED AND RESTATED JOINT FILING AGREEMENT

GOVERNING DYNAMICS

INVESTMENTS, LLC

By: _________________________________

Alex Mashinsky,

Sole member and manager

____________________________________

Alex Mashinsky (individually)

THAI LEE 2003 GRAT AGREEMENT A

By: _________________________________

Thai Lee, Trustee

____________________________________

Thai Lee (individually)

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, or caused this Agreement to be duly executed, as of the day and year first above written.

PLEDGOR:

_____________________________

ALEX MASHINSKY

PLEDGEE:

_____________________________

THAI LEE

SCHEDULE I

SHARES DELIVERED TO PLEDGEE

ARBX Shares

1,626,089 Shares

20,320 Shares

PWHT Shares

2,955,500 Shares

Q Limo Shares

100% of the Q Limo Shares owned by Pledgor

EX-99.L 8 v060537_ex99-l.htm Unassociated Document

CONFIRMATORY PLEDGE AGREEMENT

CONFIRMATORY PLEDGE AGREEMENT dated as of December 15, 2006 between Alex Mashinsky, an individual with an address at 510 Berkeley Square, Memphis, TN 38120 (the “Pledgor”), and Thai Lee 2003 GRAT Agreement A, a grantor retained annuity trust formed on January 29, 2003, with an address at c/o Software House International, Inc., 2 Riverview Drive, Somerset, NJ 08873 (the “Pledgee”).

PRELIMINARY STATEMENT

This Agreement is being entered into in furtherance of that certain Letter Agreement (the “Letter Agreement”) dated March 21, 2006 between Pledgor and Pledgee and in order to confirm the pledge of securities contemplated thereby. Unless the context otherwise requires, capitalized terms used but not defined herein shall have the meanings given to such terms in the Letter Agreement.

Pledgee loaned to Pledgor $2,000,000.00 (the “Loan”) and Pledgor agreed to use the proceeds of the Loan to acquire shares of common stock of Arbinet- theExchange, Inc. (“ARBX”).

Pledgor and its affiliates own the shares of ARBX (the “ARBX Shares”) listed on Schedule I hereto.

Pledgor is today delivering to Pledgee a Promissory Note (the “Promissory Note”) evidencing the obligation of Pledgor to pay to Pledgee $2,000,000 principal amount of the Loan not later than December 31, 2007, and Pledgee has agreed to accept the Promissory Note on the condition that Pledgor grants to Pledgee a perfected security interest in the assets of Pledgor.

NOW THEREFORE, for good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereunder agree as follows:

1. Pledge.

1.1 Pledge. As security for (a) the due, full and punctual payment of all amounts and liabilities specified in this Agreement, the Promissory Note, and in any other agreement or instrument delivered to Pledgee by Pledgor (such agreements and instruments are collectively referred to as the “Ancillary Documents”), (b) the due, punctual and faithful performance of and compliance with all other obligations, terms, conditions, covenants, representation and warranties and agreements arising under this Agreement, the Promissory Note or any Ancillary Document, and (c) all expenses, costs and fees, including but not limited to attorneys' fees and expenses, incurred by Pledgee in connection with the collection of all amounts due by Pledgor to Pledgee, perfection and enforcement of Pledgee's security interest in the Pledged Securities and the maintenance, preservation, taking possession of and disposition of the Pledged Securities (collectively referred to herein as the “Obligations”), Pledgor hereby transfers, hypothecates, pledges, sets over and delivers unto Pledgee and grants to Pledgee a security interest in, all right, title and interest Pledgor now has or hereafter may acquire in (a) the ARBX Shares, the PWHT Shares, the Q Limo Shares and all other securities of ARBX, PWHT and Q Limo obtained in the future by Pledgor or any affiliate of Pledgor and the certificates representing or evidencing all such interests, (b) all other property which may be delivered to and held by Pledgee pursuant to the terms hereof, (c) all payments of principal, interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon the conversion of the securities referred to in clause (a) or clause (b) above, (d) except as provided in Section 4 below, all rights and privileges of Pledgor with respect to the securities and other property referred to in clauses (a), (b) and (c) above, and (e) all proceeds of any of the foregoing (the items referred to in clauses (a) through (e) being collectively called the “Pledged Securities”). All stock certificates, notes or other securities or instruments now or hereafter included in the Pledged Securities shall be duly endorsed to Pledgee or accompanied by stock powers duly executed in blank or other instruments of transfer satisfactory to Pledgee and by such other instruments and documents as Pledgee may reasonably request, and all other property comprising part of the Pledged Securities shall be accompanied by proper instruments of assignment duly executed by Pledgor or, if owned by an affiliate of Pledgor, by such affiliate and such other instruments or documents as Pledgee may reasonably request.

2. Representations, Warranties and Covenants. Pledgor hereby represents, warrants and covenants to and with Pledgee that:

2.2 The shares of ARBX stock listed on Schedule I include all of the shares purchased by Pledgor with the proceeds of the Loan.

2.5 Pledgor shall promptly reimburse Pledgee for any and all legal and accounting expenses, including reasonable attorneys’ and accountants’ fees and court costs incurred in collecting any sums payable by Pledgee in enforcing this Agreement or any obligations secured thereby or in verifying, handling, retrieving, repossessing, selling or otherwise disposing of the Pledged Securities, all of which sums shall become part of the indebtedness secured hereby.

2.6 Pledgor shall not grant any security interest to anyone other than Pledgee in any of the Pledged Securities without Pledgee’s prior written consent.

4. Voting Rights; Dividends and Interests.

4.1 Except as provided in Section 4.2 and 4.3:

4.1.1 Pledgor shall be entitled to exercise any and all voting rights accruing to it as the owner of Pledged Securities for any purpose consistent with the terms of this Agreement, the Promissory Note and the Ancillary Documents so long as such exercise of rights could not, and could not reasonably be expected to, adversely affect the rights and remedies of Pledgee under this Agreement, the Promissory Note or the Ancillary Documents or the ability of Pledgee to exercise the same.

5. Default. Any one of the following events shall constitute a default (“Default”) of Pledgor’s performance hereunder:

5.1 Failure of Pledgor to pay or perform as and when due any of the Obligations.

5.2 Failure of Pledgor to perform or observe any of the material terms, conditions, covenants, representations or warranties contained in this Agreement, the Promissory Note or any Ancillary Document.

5.5 Pledgor’s becoming insolvent, becoming unable to meet his obligations as they come due.

5.9 There shall have been a material adverse change in the financial condition, property or assets of Pledgor.

6.1 Pledgee may, without notice to or demand upon Pledgor, declare any and all Obligations immediately due and payable;

6.4 Pledgee may, upon five days’ prior written notice to Pledgor, with respect to the Pledged Securities or any part thereof which shall then be or shall thereafter come into the possession, custody or control of Pledgee, or any of its agents, sell, lease, assign or otherwise dispose of all or part of the Pledged Securities, at such place or places as Pledgee deems best, and for cash or for credit or for future delivery (without thereby assuming any credit risk), at public or private sale, without demand of performance or notice of intention to effect any such disposition or of the time or place thereof (except such notice as is required above or by applicable statute and cannot be waived), and Pledgee or anyone else may be the purchaser, lessee, assignee or recipient of any or all of the Pledged Securities so disposed of at any public sale (or, to the extent permitted by law, at any private sale) and thereafter hold the same absolutely, free from any claim or right of whatsoever kind, including any right or equity of redemption (statutory or otherwise) of Pledgor, any such demand, notice and right or equity being hereby expressly waived and released. During such five-day period, Pledgor may satisfy the obligations and/or substitute collateral for the Pledged Securities which shall be acceptable to Pledgee, in its sole and absolute discretion. Pledgee may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the sale may be so adjourned; and

10. Security Interest Absolute.

13. Entire Agreement; Binding Agreement; Assignments. This Agreement contains the entire agreement between the parties concerning its subject matter, and supersedes and replaces all prior agreements and understandings including, but not limited to, the Letter Agreement, with respect to the subject matter contained herein. This Agreement, and the terms, covenants and conditions hereof, shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, except that Pledgor shall not assign or transfer this Agreement or any interest herein or the Pledged Securities or any part thereof. Pledgor shall not pledge, encumber or grant any option with respect to the Pledged Securities or any part thereof, except as contemplated by this Agreement.

If to Pledgor:	Alex Mashinsky 510 Berkeley Square Memphis, TN 38120 Facsimile No.: [________]
with a copy to:	Eaton & Van Winkle LLP 3 Park Avenue New York, New York 10016 Attention: Joseph L. Cannella Facsimile No.: (212) 561-3633
If to Pledgee:	c/o Software House International, Inc. 2 Riverview Drive Somerset, NJ 08873 Facsimile No.: (732) 868-8889
with a copy to:	Orrick, Herrington & Sutcliffe LLP 666 Fifth Avenue New York, NY 10103-0001 Attention: George H. Wang, Esq. Facsimile No.: (212) 506-5151

18. Section Headings. The section and other headings used herein are for convenience only and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

19. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument.

[The remainder of this page has been intentionally left blank signature page follows]

AMENDED AND RESTATED JOINT FILING AGREEMENT

GOVERNING DYNAMICS

INVESTMENTS, LLC

By: _________________________________

Alex Mashinsky,

Sole member and manager

____________________________________

Alex Mashinsky (individually)

THAI LEE 2003 GRAT AGREEMENT A

By: _________________________________

Thai Lee, Trustee

____________________________________

Thai Lee (individually)

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, or caused this Agreement to be duly executed, as of the day and year first above written.

PLEDGOR:

_____________________________

ALEX MASHINSKY

PLEDGEE:

THAI LEE 2003 GRAT AGREEMENT A

By: _____________________________

Thai Lee, as Trustee

SCHEDULE I

SHARES DELIVERED TO PLEDGEE

ARBX Shares

1,626,089 Shares

20,320 Shares

PWHT Shares

2,955,500 Shares

Q Limo Shares

100% of the Q Limo Shares owned by Pledgor

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