LOAN S U B O R D I N A T I O N

A G R E E M E N T

 

THIS SECOND LOAN SUBORDINATION AGREEMENT is made the 9th day of July, 2007
between UNIVERSITY BANK, (the “Lender”) having its registered office at 2015
Washtenaw Avenue, Ann Arbor, MI 48104 and i2 TELECOM INTERNATIONAL, INC., (the
“Borrower”) having its registered office at 5070 Old Ellis Point Road, Suite
110, Roswell, GA 30076.       

 

WHEREAS, the Borrower and the Lender have entered to that certain Security
Agreement, dated January 4, 2007, securing the principal amount of $1,000,000,
in favor of the Lender in a second secured position the (“Subordinated Debt”)
behind a $1.2 million first security loan by Troon & Co., (the “First Senior
Lender”) executed by the Company in favor of the First Senior Lender; and

 

The Borrower has retired the first security loan by Troon & Co. as of March 5,
2007 and the Borrower has requested that the Lender remain in a Subordinated
Debt position in favor of another short term lender Vestal Venture Capital (the
“Senior Lender”) who has funded $600,000 on May 4, 2007 and is prepared to fund
an additional $650,000 bridge loan and has requested all other debt be
subordinated upon the terms of this Loan Subordination Agreement.

 

NOW IT IS HEREBY AGREED AS FOLLOWS:

 

1.

The Lender shall agree to remain the Subordinated Debt to the Borrower on an
aggregate amount of $1,250,000 behind a first security loan by Vestal Venture
Capital, executed by the Company in favor of the Senior Lender

 

2.

The Senior Lender debt in the amount of $600,000 shall have a maturity of August
4, 2007 and is extendable and debt in the amount of $650,000 shall have a
maturity of September 9, 2007 and is extendable. The debt shall not become
repayable before these dates unless the Borrower closes on a minimum of

$5,000,000 of new financing (the “Triggering Event”). Upon occurrence of
Triggering Event, the Company shall retire the New Senior Debt and then also
retire the Subordinated Debt.

 

3.

In exchange for agreeing to subordinate the Subordinated Debt to the New Senior
Debt, the Company agrees to lower the exercise price of the option held by
University Bank to purchase 250,000 shares of common stock at $0.15 per share,
expiring 2/8/2008, to $0.10 per share.

 

4.

If any of the provisions of this Loan Subordination Agreement is or becomes
invalid, illegal or unenforceable under any law, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired.

 

5.

This Loan Subordination Agreement forms the entire agreement as to the
subordinated liabilities. If there are any other terms relating to the
subordinated liabilities existing at the date hereof and not comprised in this
Agreement such terms shall be of no further force and effect.

 

 

6.

This Loan Subordination Agreement shall be governed by, and construed in
accordance with, the law of Georgia.

 

 

 

 

 

 

IN WITNESS whereof the parties hereto have caused this Loan Subordination
Agreement to be executed the day and the year first herein written.

 

i2 TELECOM INTERNATIONAL, INC.

 

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By: Paul R, Arena

 

Title: Chief Executive Officer

 

 

LENDER:

UNIVERSITY BANK

 

 

By:_______________________

Title:______________________

 

 

 

By:________________________

Title:_______________________