8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): September 25, 2006

ARBINET-THEXCHANGE, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	0-51063	13-3930916
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

120 Albany Street, Tower II, Suite 450 New Brunswick, New Jersey	08901
(Address of Principal Executive Offices)	(Zip Code)

(732) 509-9100

(Registrant’s telephone number, including area code)

Not applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425).

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12).

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)).

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).

Item 1.01 Entry into a Material Definitive Agreement.

Effective September 25, 2006, W. Terrell “Terry” Wingfield, Jr. became General Counsel and Secretary of Arbinet-thexchange, Inc. (“Arbinet” or the “Company”). Pursuant to an offer letter with Mr. Wingfield, Mr. Wingfield is entitled to receive an annual base salary of $250,000 and is eligible for an annual target bonus of up to 45% of his base salary based on the achievement of assigned performance goals and subject to the approval of Arbinet’s Board of Directors, with a prorated bonus for 2006 of $28,125 payable on February 28, 2007, provided that Mr. Wingfield has not been terminated for cause (as defined in the offer letter). Mr. Wingfield was also paid a one-time sign-on bonus of $25,000.

In addition, subject to certain approvals, Mr. Wingfield will also be granted an option to purchase 175,000 shares of common stock, par value $0.001 per share, of the Company (“Common Stock”), with these options vesting over a four-year period. In the event of a Change in Control (as defined in the offer letter):

• on the day of the Change in Control event one-half of the unvested options shall vest, with the remaining unvested portion vesting equally over the remaining portion of the vesting term (provided that Mr. Wingfield is employed by the Company or a subsidiary or is associated with the Company or a subsidiary as a director or consultant on the applicable vesting date); and

• and if within 12 months of such Change in Control, Mr. Wingfield’s employment with Arbinet is terminated (other than a termination for cause), then all restrictions shall lapse.

Additionally, under Mr. Wingfield’s offer letter, Mr. Wingfield was awarded performance shares, which provide Mr. Wingfield with the opportunity to earn shares of Common Stock, the number of which shall be determined pursuant to, and subject to, the attainment of performance goals. The maximum number of shares that Mr. Wingfield can earn is up to approximately 68,000 shares of Common Stock.

Under Mr. Wingfield’s offer letter, either the Company or Mr. Wingfield may terminate his employment at any time for any reason without notice. If Mr. Wingfield’s employment is terminated by the Company without cause, Arbinet is required to:

• pay him severance in an amount equal to 12 months’ base salary at the rate in effect on the date of termination;

• reimburse him for certain COBRA payments for a period of 12 months following the date of termination;

• pay him an amount equal to employer contributions to Arbinet’s retirement plan for a period of 12 months following the date of termination; and

• pay him his accrued and unpaid salary and vacation time as of the date of termination.

In addition, if Arbinet terminates Mr. Wingfield’s employment without cause during the first three years of employment, Arbinet will pay certain fees and moving expenses in connection with Mr. Wingfield’s relocation at that time, subject to certain limitations.

Mr. Wingfield’s offer letter also contains noncompetition and nonsolicitation provisions. The noncompetition and nonsolicitation provisions of Mr. Wingfield’s offer letter prevent Mr. Wingfield from competing with the Company or soliciting the Company’s customers, suppliers or employees for a period of 12 months following the termination of his employment.

The above summary of the offer letter does not purport to be complete and is qualified in its entirety by reference to Mr. Wingfield’s offer letter, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated into this Item 1.01 by reference.

Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

(c) On September 25, 2006, Arbinet announced the appointment of W. Terrell “Terry” Wingfield, Jr., 53, as General Counsel and Secretary.

From October 2005 until his appointment as General Counsel and Secretary at Arbinet, Mr. Wingfield had been Corporate Vice President of Business Development at Current Communications Group, LLC. From September 2004 until October 2005, he was a Principal with River Park Consulting, LLC. From November 2002 until August 2004, he was Executive Vice President, General Counsel and Corporate Secretary of RCN Corporation, and from October 2000 until November 2002 he was Senior Vice President, General Counsel and Secretary of Velocita Corp. Mr. Wingfield received a B.B.A. in Finance from the University of Georgia and a J.D. from the Walter F. George School of Law at Mercer University.

There is no arrangement or understanding pursuant to which Mr. Wingfield was selected as General Counsel and Secretary. There are no related party transactions between Arbinet and Mr. Wingfield reportable under Item 404(a) of Regulation S-K.

The information in Item 1.01 regarding the terms of Mr. Wingfield’s offer letter with the Company is incorporated by reference herein.

On September 25, 2006, the Company issued a press release regarding the appointments described in this Current Report on Form 8-K, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit No.	Description
10.1	Offer Letter by and between W. Terrell Wingfield, Jr. and Arbinet-thexchange, Inc., dated as of September 25, 2006*
99.1	Press Release of Arbinet-thexchange, Inc. dated September 25, 2006.*

* Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

ARBINET-THEXCHANGE, INC.
By:	/s/ J. Curt Hockemeier
Name:	J. Curt Hockemeier
Title:	Chief Executive Officer and President

Date: October 12, 2006

Exhibit Index

Exhibit No.	Description
10.1	Offer Letter by and between W. Terrell Wingfield, Jr. and Arbinet-thexchange, Inc., dated as of September 25, 2006*
99.1	Press Release of Arbinet-thexchange, Inc. dated September 25, 2006.*

* Filed herewith.

EX-10.1

EXHIBIT 10.1

[On Arbinet-thexchange, Inc. Letterhead]

September 20, 2006

William Terrell Wingfield

175 River Park Drive

Great Falls, VA 22066

Dear Terry:

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

Title: You will serve as General Counsel & Corporate Secretary. You will report to the President and CEO, and office in New Brunswick, New Jersey. The Company agrees to office you in our Herndon, Virginia office until you are able to relocate to New Jersey.

Start Date: Upon acceptance by you, your employment shall commence September 25, 2006, or a later date as we may mutually agree.

Duties and Obligations: During your employment you will devote your full business interest and effort to the performance of your duties commonly associated with a Corporate General Counsel.

Employment Relationship: Your employment will be “at will” and may be terminated by either you or the Company at any time for any reason or no reason, by providing sixty (60) days written notice to the other party. Your participation in any Company benefit or equity program does not constitute an agreement by the Company to employ or continue to employ you for any period of time. Nothing in this letter creates any express or implied contract. This at-will relationship will remain in effect throughout your employment with the Company and can be changed only by an express written agreement.

Salary and Bonus: While you are employed on a full-time basis by the Company the Company will pay you a base salary which annualizes to $250,000, payable in accordance with the usual payroll practices of the Company including the withholding of all income and employment taxes. You will be eligible for a 45% target bonus based upon achievement of assigned performance goals and subject to the approval of the Board of Directors. The Company will pay you a prorated 2006 bonus of $28,125 on February 28^th, 2007, provided that you have not been terminated for cause (as defined in section “d)” in “Termination” below). You will be paid a “sign-on bonus” of $25,000 payable in your first paycheck.

Equity: You will also be eligible to participate in the Company’s employee stock option plan. Under the option plan and subject to the approval of the compensation committee and Board of Directors, the Company will grant you an option to purchase 175,000 shares of common stock of the Company at an exercise price of the last reported sale price on the trading date immediately prior to the date of grant. These options will be granted on September 30^th, 2006, or your actual date of employment if later, and vest monthly over a 4-year period commencing with your date of employment.

Notwithstanding the foregoing, in the event of a Change in Control (as defined below), (i) on the day of a change in control event, one-half of the unvested options shall vest, with the remaining unvested portion vesting annually and equally over the remaining portion of the vesting term; provided that the grantee is employed by the Company or a subsidiary, or is associated with the Company or subsidiary as a director or consultant, on the applicable vesting dates; and (ii) if there is a “change in control” event (as defined below) and if within twelve months of such Change of Control the grantee’s employment with the Company is terminated (other than a termination for “cause” as defined in Section 1.6.5 of the Plan) then all restrictions shall lapse.

For purposes hereof, a “Change in Control” event shall mean a change in ownership or control of the Company effected through any of the following transactions:

I. a merger, consolidation or other reorganization approved by the Company’s stockholders, unless securities representing more than fifty percent (50%) of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Company’s outstanding voting securities immediately prior to such transaction, or

II. a stockholder-approved sale, transfer or other disposition of all or substantially all of the Company’s assets, or

III. the closing of any transaction or series of related transactions pursuant to which any person or any group of persons comprising a “group” within the meaning of Rule 13d-5(b)(1) of the Securities Exchange Act of 1934 Act (other than the Company or a person that, prior to such transaction or series of related transactions, directly or indirectly controls, is controlled by or is under common control with, the Company) becomes directly or indirectly the beneficial owner (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934) of securities possessing (or convertible into or exercisable for securities possessing) more than fifty percent (50%) of the total combined voting power of the Company’s securities (as measured in terms of the power to vote with respect to the election of Board members) outstanding immediately after the consummation of such transaction or series of related transactions, whether such transaction involves a direct issuance from the Company or the acquisition of outstanding securities held by one or more of the Company’s existing stockholders, or

IV. a change in the composition of the Board over a period of thirty-six (36) consecutive months or less such that a majority of the Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time the Board approved such election or nomination.

These options will be subject to various restrictions, including restrictions on transfer, forfeiture and repurchase provisions. Further details regarding the option plan will be provided to you once you have been granted options.

Additionally, you will be awarded a performance share grant of 35,000 common stock shares that can be earned pursuant to a performance agreement that will be executed upon your first day of employment. Further details regarding the performance requirements will be provided to you at that time.

Benefits: You will participate to the extent eligible and subject to confirming coverage with applicable underwriters (if any), in all of the Company’s employee benefit programs generally provided to other executives, in accordance with the terms thereof as in effect from time to time. These benefits are described in the enclosed materials along with a copy of the employee handbook, which describes the Company’s policies and procedures that will govern certain aspects of your employment. Please be sure to review the handbook and sign and return the acknowledgement of receipt page at the end of the handbook to Kathy Cunningham on or prior to your first day of employment.

Vacation: The Company’s vacation year runs from January 1^st to December 31^st and you will be eligible for a 4-week vacation, which is accrued based on your date of hire as explained in the handbook.

Termination of Employment:

a) In the event that your employment is terminated by the Company without cause, the Company will pay you, subject to your compliance with this and paragraphs b, c and d following, (i) any unpaid base salary through the date of termination and any accrued vacation; (ii) severance pay equal to twelve (12) months base salary at the rate in effect on the date of termination (iii) an amount reimbursing you for the applicable premium payment for any COBRA coverage payable under the Company health or welfare plan for you and your dependents during the twelve (12) month period following the date of termination (the “Twelve Month Period”); (iv) an amount equal to any employer contribution that would have been made by the Company pursuant to any retirement plan of the Company on your behalf and you remained employed by the Company during the Twelve Month Period assuming you contribute the maximum amount to the plan. Notwithstanding the foregoing, the amounts paid to you pursuant to subsections (iii) and (iv) of this paragraph (a) shall not exceed $25,000 and (v) during the first

three (3) years of employment, should employment be terminated by the Company without cause Arbinet will pay the broker’s commission to sell your home in New Jersey and pay your documented moving expenses to Virginia or other destination of similar distance. The aggregate brokerage and moving expense reimbursement shall not exceed one hundred and fifty thousand dollars ($150,000).

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

c) In addition, in all termination events the Company will pay you any other amounts or benefits owing to you under the then applicable employee benefit plans and programs of the Company in accordance with such plans and programs.

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

e) You may terminate your employment for Good Reason. “Good Reason” means, without your written consent: (i) a material adverse change in your title or the duties assigned to you; (ii) any material failure by the Company to comply with the provisions of this Agreement; or (iii) any requirement by the Company that your primary office location be other than in the states of New York, New Jersey or Connecticut.

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

Non-Competition/Non-Solicitation

a) You acknowledge and recognize the highly competitive nature of the Company’s business and that access to the Company’s confidential records and proprietary information renders you special and unique within the Company’s industry. In consideration of the payment by the Company to Employee of amounts that may hereafter be paid to Employee pursuant to this offer, you agree that during your employment hereunder and for a twelve (12) month period after the termination of your employment with the Company (the “Covered Time”), without the prior written consent of the Company, you will not enter into Competition with the Company. “Competition” shall mean participating, directly or indirectly, as an individual proprietor, partner, stockholder, officer, employee, director, joint venturer, investor, lender, consultant or in any capacity whatsoever in a business in competition with any business conducted by the Company or its affiliates (a “Competitor”) in any jurisdiction where the Company and/or its affiliates conduct such business as of the date Employee’s employment terminates, and shall be deemed to include, without limitation, any business activity or jurisdiction which is covered by or included in a written proposal or business plan existing on the date of the termination of Employee’s employment with the Company; provided, however, that such participation shall not include (i) the ownership of not more than one percent (1%) of the total outstanding stock of a publicly held company, (ii) the performance of services for any enterprise to the extent such services are not performed, directly or indirectly, for a business unit of the enterprise in the aforesaid Competition or (iii) any activity engaged in with the prior approval of the Board.

b) In further consideration of the payment by the Company to you of amounts that may hereafter be paid to you pursuant to this offer, you agree that during the Covered Time you shall not (i) directly or indirectly solicit or attempt to solicit any of the employees, agents, consultants or representatives of the Company to terminate his, her or its relationship with the Company; (ii) directly or indirectly solicit or attempt to solicit any of the employees, agents, consultants or representatives of the Company to become employees, agents, representatives or consultants of any other person or entity (including yourself or any person or entity owned or controlled by you); or (iii) directly or indirectly solicit or attempt to solicit any customer, vendor or distributor of the Company with respect to any product or service being furnished, made, sold or leased by the Company or proposed to be furnished, made, sold or leased by the Company and which is covered in a written proposal or business plan by the Company.

c) You understand that the provisions of this section (a) and (b) may limit your ability to earn a livelihood in a business similar to the business of the Company but nevertheless agree and hereby acknowledge that the consideration provided under this offer is sufficient to justify the restrictions contained in such provisions. In consideration thereof and in light of your education, skills and abilities, you agree that you will not assert in any forum that such provisions prevent you from earning a living or otherwise are void or unenforceable or should be held void or unenforceable.

Governing Law/Miscellaneous: This offer is subject to the laws of the State of New York. This offer, along with the Confidentiality Agreement, sets forth the terms of your employment with the Company and supersedes all prior agreements, arrangements and communications, whether oral or written, between the Company and you. This letter may not be altered, modified or amended except by written instrument signed by an individual authorized to sign on behalf of the Company (other than you) and by you. This letter may not be assigned in whole or in part, except that the Company may assign it to an acquirer of all or substantially all of the assets of the Company. This letter shall be binding on the successors and permitted assignees of the parties hereto.

This offer of employment is contingent on a successful background check and verification of your employment eligibility as required by the Immigration Reform and Control Act of 1986, which requires us to verify your employment eligibility. On the first day of work, please bring documents that show both your identification and authorization to work in the United States. These documents can be a U.S. birth certificate or social security card and driver’s license; a U.S. passport; or a Certificate of Naturalization.

This offer is made to you based on your representation to the Company that your acceptance of employment with the Company and performance of the contemplated services does not and will not conflict with or result in any breach or default or violate any other legal restriction. If you find this offer of employment acceptable, please sign and return this offer letter to me.

Sincerely,

/s/ J. Curt Hockemeier

J. Curt Hockemeier

Accepted by:

/s/ William Terrell Wingfield

William Terrell Wingfield

Date: September 25, 2006

EX-99.1

EXHIBIT 99.1

Arbinet Expands Legal Department

NEW BRUNSWICK, N.J., Sept. 25 /PRNewswire-FirstCall/ — Arbinet-thexchange, Inc. (Nasdaq: ARBX), the leading provider of solutions to simplify the exchange of digital communications, announced today the appointment of its General Counsel Mr. Chi K. Eng, Esq., to the newly created position of Senior Vice President, Intellectual Property Counsel. The position of General Counsel will be assumed by Mr. William Terrell “Terry” Wingfield Jr., Esq.

“Intellectual Property is one of our most critical assets and a major focus of the organization. The creation of a dedicated Intellectual Property position is in-line with our growth strategy,” commented Curt Hockemeier, President and Chief Executive Officer of Arbinet. “Chi has been with Arbinet since 2000, and with his engineering and legal experience, is an ideal fit for the position. We are also pleased to welcome Terry Wingfield to the Arbinet team. I am confident Terry will be an invaluable asset to Arbinet’s growth strategy given his tremendous knowledge and expertise as General Counsel for large, high profile public corporations, including many household names in the telecommunications industry.”

Terry Wingfield brings more than 20 years of legal and communications industry experience, including an extensive background in driving strategic partnerships and acquisitions in the areas of cable television, Internet, local and long distance telephony. Prior to joining Arbinet, Wingfield was most recently the Corporate Vice President of Business Development for Current Communications Group, LLC. Prior to this he served as Executive Vice President and General Counsel at RCN Corporation, where he was responsible for SEC reporting, corporate governance and regulatory compliance.

In his previous role as Senior Vice President and General Counsel of Velocita Corporation, Wingfield successfully negotiated a $200 million private equity infusion and $350 million debt commitment, as well as the sale of the company’s assets to AT&T. Wingfield also spearheaded several high profile projects that included creating AT&T’s first residential cable telephony venture as Senior Vice President, AT&T Broadband and Internet Services, and supervising Teleport Communications Group’s $1.3 billion Initial Public Offering and subsequent merger with AT&T as Vice President and General Counsel.

Eng also contributes over 20 years of communications industry experience. Prior to joining Arbinet, Eng spent six years with the law firm of Cohen, Pontani, Lieberman & Pavane, focusing on communications technology intellectual property law. Prior to CPLP, he spent seven years as an engineer at AT&T Bell Labs (now Lucent) developing communications industry software and systems. A graduate of the Fordham University School of Law, Eng is a member of the State Bar of New York and New Jersey, and a Registered Patent Attorney with the U.S. Patent and Trademark Office.

About Arbinet

Arbinet solutions simplify the exchange of digital communications in a converging world. These include exchanges, a transaction management platform and managed services, which streamline performance and improve profitability for Members.

Arbinet’s 600+ voice and data Members, including all 10 of the world’s 10 largest international carriers, use Arbinet’s Internet based electronic platforms to buy, sell, deliver and settle transactions valued at about $500 million in 2005. These Members include fixed, mobile and VoIP carriers, ISPs and content providers from more than 60 countries who exchange voice, data, content and value added services.

Chris Reid

Arbinet-thexchange

1.732.509.9160

creid@arbinet.com