EXECUTION COPY

FOURTH LOAN AND SECURITY AGREEMENT
 
THIS FOURTH LOAN AND SECURITY AGREEMENT (this “Agreement”), dated as of
September 12, 2011 (the “Effective Date”) is entered into by and between (i)
deltathree, Inc., a Delaware corporation, Delta Three Israel, Ltd., an Israeli
company (the “Israeli Subsidiary”), (ii) DME Solutions, Inc., a New York
corporation (jointly and severally, the “Borrower”), and (iii) D4 Holdings, LLC,
a Delaware limited liability company (“Lender”).
 
RECITALS
 
WHEREAS, Lender is a shareholder of deltathree, Inc.;
 
WHEREAS, Borrower has entered into (i) that certain Loan and Security Agreement
dated as of March 1, 2010, among Borrower and Lender (the “First Loan
Agreement”) for advances from the Lender in an aggregate principal amount not to
exceed $1,200,000; (ii) that certain Second Loan and Security Agreement dated as
of August 10, 2010 (the “Second Loan Agreement”) for advances from the Lender in
an aggregate principal amount not to exceed $1,000,000; and (iii) that certain
Third Loan and Security Agreement dated as of March 2, 2011 (the “Third Loan
Agreement”) for advances from the Lender in an aggregate principal amount not to
exceed $1,600,000  (the First Loan Agreement, Second Loan Agreement and Third
Loan Agreement are referred to collectively as the “Existing Loan Agreements”);
 
WHEREAS, Borrower has requested that Lender make advances to Borrower under this
Agreement in an aggregate principal amount thereof not to exceed three hundred
thousand dollars ($300,000) (the “Maximum Principal Amount”), which advances and
obligations will be subordinated to the Borrower’s obligations under the
Existing Loan Agreements; and
 
WHEREAS, Lender is willing to make such advances to Borrower on the terms and
subject to the conditions set forth herein.
 
AGREEMENT
 
NOW, THEREFORE, in consideration of the premises and covenants contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Borrower and Lender, intending to be legally
bound, hereby agree as follows:
 
1.    Loans and Promissory Note.
 
(a)    Commitment to Lend.  Subject to the terms and conditions set forth in
this Agreement, Lender hereby agrees to make advances to Borrower (each a “Loan
Advance” and collectively, the “Loan Advances”) from time to time, in an amount
up to, but not to exceed, the Maximum Principal Amount in the aggregate
outstanding at any time, solely for the purposes expressly stated
herein.  Subject to the terms and conditions of this Agreement, during any
thirty day period (i) Borrower may make no more than one request for a Loan
Advance and (ii) Borrower may borrow no more than the Maximum Advance Amount (as
defined below).  Borrower acknowledges and agrees that the Lender’s commitment
to make Loan Advances hereunder is expressly subject to the satisfaction of the
terms and conditions set forth in this Agreement.

 
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(b)    Promissory Note.  The Loan Advances made by Lender hereunder shall be
evidenced by the duly executed Promissory Note of Borrower to Lender, dated as
of the date hereof in an original principal amount up to the Maximum Principal
Amount and in the form attached hereto as Exhibit A (as amended, modified,
extended, renewed or replaced from time to time, the “Note”).

(c)    Repayments.  Borrower shall pay in full any outstanding principal amount,
all accrued but unpaid interest, and all other Obligations on the Maturity Date.
 
(d)    Payment of Interest.
 
(i)   Subject to Section 7(b)(ii), the principal amount outstanding under each
Loan Advance shall accrue interest from the date of issuance of such Loan
Advance until the Maturity Date at the rate of twelve percent (12%) per annum,
compounding daily. All interest shall be due on the Maturity Date.
 
(ii)   Interest will be computed on the basis of a year deemed to consist of 360
days and shall be paid for the actual number of days elapsed.

2.    Creation of a Security Interest.
 
(a)    Grant of Security Interest.
 
(i)   Borrower hereby grants to Lender, to secure the payment and performance in
full of all of the Obligations, a continuing security interest in, and pledges
to Lender, all of Borrower’s right, title and interest in, to and under all the
Collateral, wherever located, whether now owned or hereafter acquired or
arising, and all proceeds and products thereof.  Borrower represents, warrants,
and covenants that the security interest granted herein is and shall at all
times be a first priority perfected security interest in the Collateral other
than with respect to Permitted Liens.  If Borrower shall acquire a commercial
tort claim, Borrower shall promptly notify Lender in writing of the general
details thereof and grant to Lender a security interest therein and in the
proceeds thereof, all upon the terms of this Agreement, with such writing to be
in form and substance reasonably satisfactory to Lender.
 
(ii)   If this Agreement is terminated, Lender’s security interest in the
Collateral shall continue until the Obligations are repaid in full in
cash.  Upon payment in full in cash of the Obligations and at such time as
Lender’s obligation to make Loan Advances has terminated, Lender shall, at
Borrower’s sole cost and expense, release its security interest in the
Collateral and all rights therein shall revert to Borrower.
 
 
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(b)    Authorization to File Financing Statements.  Borrower hereby authorizes
Lender to file financing statements, or any document similar thereto (including,
without limitation, collateral agreements and filings with the United States
Patent and Trademark Office), without notice to Borrower, with all appropriate
jurisdictions to perfect or protect Lender’s interest or rights hereunder.  Such
financing statements may indicate the Collateral as “all assets of the Debtor”
or words of similar effect, or as being of an equal or lesser scope, or with
greater detail, all in Lender’s discretion, and may include a notice that any
disposition of the Collateral, either by Borrower or any other person, shall be
deemed to violate the rights of Lender under the Code.  

(c)     Subordination.  Notwithstanding anything contained herein to the
contrary, and notwithstanding the date, manner or order of grant, attachment or
perfection of any lien or security interest created hereunder or any other Loan
Document, the Liens created hereby and by the other Loan Documents, and payment
of the Obligations hereunder and under the Note, are each subordinated to the
security interests and liens granted under the Existing Loan Agreements.

3.    Conditions of Loan Advances; Repayment of Excess Cash.
 
(a)    Operating Budget.  Borrower has prepared an operating budget dated the
date hereof in form and substance acceptable to Lender covering the period from
the date hereof through December 31, 2011, setting forth in reasonable detail
all anticipated receipts and disbursements proposed to be made by Borrower on a
weekly basis during such period (the “Operating Budget”).  Any modification or
change to the Operating Budget shall be subject to the written approval and
agreement by the Lender in its sole and absolute discretion.  Borrower
acknowledges and agrees that (i) no Loan Advances will be made except in
accordance with the Operating Budget for the applicable period, (ii) the
approval of any modification or change to the Operating Budget is subject to the
sole and absolute discretion of the Lender, and (iii) Lender’s approval of any
modification or change to the Operating Budget for any period shall in no way
require or commit Lender to approve or accept any other modification or change
to the Operating Budget for any subsequent period.

(b)    Conditions Precedent to All Loan Advances.  Lender’s obligation to make
each Loan Advance is subject to satisfaction of the following additional
conditions:
 
(i)      Receipt of an executed Notice of Borrowing (as defined below), executed
by an officer of the Borrower;
 
(ii)     The representations and warranties in Section 4 shall be true in all
material respects on the date of each Notice of Borrowing and each Loan Date (as
defined below);
 
(iii)    No Event of Default shall have occurred and be continuing or result
from such Loan Advance;

(iv)   There shall not have occurred, in Lender’s sole discretion, any Material
Adverse Change; and

 
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(v)    Without limiting the generality of any of the foregoing, Borrower shall
have demonstrated, to the satisfaction of Lender in its sole discretion, that
Borrower has complied in all respects with Sections 5(a)(iv) and 5(b)(vii) of
this Agreement.

(c)     Limits on Monthly Loan Advances.  The maximum amount of any Loan Advance
shall be  $100,000 (the “Maximum Advance Amount”).

(d)    Procedure for Borrowing.  Loan Advances may be requested by Borrower only
during the period beginning on the date hereof and ending on December 31, 2011
(the “Draw Period”). Subject to the prior or simultaneous satisfaction of the
conditions set forth in Section 3(b), to obtain a Loan Advance, Borrower shall
give written notice to Lender in the form attached as Exhibit B (a “Notice of
Borrowing”) not later than the tenth (10th) Business Day prior to the date of
the proposed Loan Advance (a “Loan Date”); provided that the first Notice of
Borrowing may be made on the date of this Agreement in connection with the
execution of this Agreement.  Each Notice of Borrowing shall be in writing and
shall specify (a) the proposed Loan Date; (b) the account of Borrower to be
funded and the wire instructions applicable thereto; and (c) the amount of such
proposed Loan Advance (in accordance and consistent with the Operating
Budget).  Following Lender’s receipt of a Notice of Borrowing and satisfaction
of the terms and conditions of this Agreement (including the conditions set
forth in Section 3), Lender shall deliver the applicable Loan Advance to
Borrower on the Loan Date by wire transfer of immediately available funds to the
account specified by Borrower.

4.    Representations and Warranties of Borrower.  Each Borrower hereby
represents and warrants to Lender as of the date hereof as follows:
 
(a)    Binding Agreement.  The Loan Documents constitute or will constitute,
when issued and delivered, valid and binding obligations of Borrower,
enforceable in accordance with their respective terms, subject to bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors’ rights
in general, and general principles of equity.
 
(b)    Organization; Power; Authorization.  Each Borrower is a Registered
Organization duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is organized.  Each Borrower has all
requisite power and authority (corporate and otherwise) to execute, deliver and
perform the Loan Documents and to consummate the transactions contemplated
thereby.  The execution, delivery and performance by Borrower of the Loan
Documents and the consummation of the transactions contemplated thereby have
been duly authorized by all necessary action on the part of Borrower.
 
 (c)   Non-Contravention.  Neither the execution and the delivery of the Loan
Documents, nor the consummation of the transactions contemplated hereby, will
(a) violate any injunction, judgment, order, decree, ruling, charge or any
provision of Borrower’s charter documents, or, to Borrower’s knowledge, any
restriction of any government, governmental agency, or court to which Borrower
is subject, or (b) conflict with, result in a material breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, any material agreement, contract,
lease, license, instrument, or other arrangement to which Borrower is a party or
by which it is bound or to which any of its assets are subject.

 
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(d)    Collateral.
 
(i)     Borrower has good title to, has rights in, and the power to transfer
each item of the Collateral upon which it purports to grant a Lien hereunder,
free and clear of any and all Liens except (A) Permitted Liens and (B) the Lien
created under the Existing Loan Agreements. The security interests and Liens
granted to Lender under this Agreement and the other Loan Documents to which
Borrower is a party constitute valid and perfected first priority liens and
security interests in and upon the Collateral to which Borrower now has or
hereafter acquires rights other than with respect to Permitted Liens.  Borrower
has no deposit accounts other than the deposit accounts described in Exhibit C,
or of which Borrower has given Lender notice and taken such actions as are
necessary to give Lender a perfected security interest therein. The Accounts are
bona fide, existing obligations of the Account Debtors.
 
(ii)     The Collateral is not in the possession of any third party bailee (such
as a warehouse). None of the components of the Collateral shall be maintained at
locations other than (A) the primary business address of Borrower, (B)
collocation sites at which Borrower leases space and (C) storage facilities
utilized by Borrower, in the case of (B) and (C) at such locations as have been
previously disclosed to Lender.  In the event that Borrower, after the date
hereof, intends to store or otherwise deliver any portion of the Collateral to a
bailee, then Borrower will first receive the written consent of Lender and such
bailee must execute and deliver a bailee agreement in form and substance
satisfactory to Lender in its sole discretion.

(iii)    All Inventory is in all material respects of good and marketable
quality, free from material defects.
 
(iv)   Borrower is the sole owner of its intellectual property, except for
non-exclusive licenses granted to its customers in the ordinary course of
business. Borrower’s intellectual property does not include any patents, nor
does Borrower have any patents pending or any applications for patents on file.
No part of the intellectual property has been judged invalid or unenforceable,
in whole or in part, and to the best of Borrower’s knowledge and except as
previously disclosed to Lender, no claim has been made that any part of the
intellectual property violates the rights of any third party.
 
(v)    Borrower is not a party to, nor is bound by, any material license or
other agreement with respect to which Borrower is the licensee (A) that
prohibits or otherwise restricts Borrower from granting a security interest in
Borrower’s interest in such license or agreement or any other property, or (B)
for which a default under or termination of could interfere with Lender’s right
to sell any Collateral.  Borrower shall provide written notice to Lender within
ten (10) days of entering or becoming bound by any such license or agreement
which is reasonably likely to have a material impact on Borrower’s business or
financial condition (other than over-the-counter software that is commercially
available to the public). Borrower shall take such steps as Lender requests to
obtain the consent of, or waiver by, any Person whose consent or waiver is
necessary for (Y) all such licenses or agreements to be deemed “Collateral” and
for Lender to have a security interest in it that might otherwise be restricted
or prohibited by law or by the terms of any such license or agreement, whether
now existing or entered into in the future, and (Z) Lender to have the ability
in the event of a liquidation of any Collateral to dispose of such Collateral in
accordance with Lender’s rights and remedies under this Agreement and the other
Loan Documents.

 
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(e)    Good Faith and Arm’s Length Transaction.  The loan contemplated by this
Agreement is being made on a good faith, arms length basis on what the Borrower
reasonably believes to be the best available market terms, Borrower reasonably
believes in good faith that the terms and conditions of the Loan Documents are
substantially equivalent to and at least as favorable in the aggregate as those
Borrower would be able to receive from an unaffiliated lender.  After having
reviewed its financial position and forecast, the Borrower reasonably believes
that it will be in position to fulfill its obligations under the terms of this
Agreement.
    
(f)     Tax Returns and Payments.  Except as previously disclosed to Lender, and
in no event in excess of $50,000 in the aggregate unpaid, Borrower has filed, or
caused to be filed, in a timely manner all material tax returns, reports and
declarations which are required to be filed by it (without requests for
extension except as previously disclosed in writing to Lender).  All information
in tax returns, reports and declarations filed by Borrower is complete and
accurate in all material respects.  Except as previously disclosed to Lender,
and in no event in excess of $50,000 in the aggregate unpaid, Borrower has paid
or caused to be paid prior to delinquency all taxes due and payable or claimed
due and payable in any assessment received by it, except taxes the validity of
which are being contested in good faith by appropriate proceedings diligently
pursued and available to Borrower and with respect to which adequate reserves
have been set aside on its books.  Adequate provision has been made by Borrower
for the payment of all accrued and unpaid federal, state, county, local, foreign
and other taxes whether or not yet due and payable and whether or not disputed.

(g)    Operating Budget.  Borrower represents and warrants to the Lender that
the expenditures set forth in each Operating Budget are and will be Borrower’s
bona fide estimated expenditures for the periods covered thereby.

(h)    Prior Loan Outstanding Balance.   Borrower represents and warrants to
Lender that the amounts outstanding for principal and interest disclosed to
Lender are the true, correct and actual amounts of principal and interest
outstanding under the Existing Loan Agreements.
 
5.    Covenants.
 
(a)    Affirmative Covenants.
 
(i)     Maintenance of Properties.  Borrower shall maintain all tangible
property included in the Collateral in good order and repair, subject to normal
wear and tear, and make all needed and proper repairs to its properties so that
Borrower’s business may be properly conducted at all times in accordance with
prudent business management and in compliance with all governmental requirements
and regulations.

 
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(ii)    Government Compliance.  Borrower shall maintain its legal existence and
good standing in its jurisdiction of formation and maintain qualification in
each jurisdiction in which the failure to so qualify would reasonably be
expected to have a material adverse effect on Borrower’s business or operations.
Borrower shall comply with all laws, ordinances and regulations to which it is
subject, the noncompliance with which could reasonably be expected to cause, or
causes, a Material Adverse Change.
 
(iii)    Intellectual Property Rights.  Borrower shall: (a) take reasonable
steps to protect, defend and maintain the validity and enforceability of its
intellectual property, (b) promptly advise Lender in writing of material
infringements of its intellectual property; and (c) not allow any intellectual
property material to Borrower’s business to be abandoned, forfeited or dedicated
to the public without Lender’s written consent.  If after the date hereof
Borrower (i) obtains any patent, registered trademark or service mark,
registered copyright, registered mask work, or any pending application for any
of the foregoing, whether as owner, licensee or otherwise, or (ii) applies for
any patent or the registration of any trademark or service mark, then Borrower
shall provide written notice thereof to Lender on a quarterly basis and shall
execute such intellectual property security agreements and other documents and
take such other actions as Lender shall request in its good faith business
judgment to perfect and maintain a first priority perfected security interest in
favor of Lender in such property.  If Borrower registers any copyrights or mask
works in the United States Copyright Office, Borrower shall: (x) provide Lender
with at least fifteen (15) days prior written notice of Borrower’s registration
of such copyrights; (y) execute an intellectual property security agreement and
such other documents and take such other actions as Lender may reasonably
request in its good faith business judgment to perfect and maintain a first
priority perfected security interest in favor of Lender in the copyrights or
mask works intended to be registered with the United States Copyright Office;
and (z) record such intellectual property security agreement with the United
States Copyright Office contemporaneously with filing the copyright or mask work
application(s) with the United States Copyright Office. Borrower shall promptly
provide to Lender copies of all applications that it files for patents or for
the registration of trademarks, service marks, copyrights or mask works,
together with evidence of the recording of the intellectual property security
agreement necessary for Lender to perfect and maintain a first priority
perfected security interest in such property.

(iv)   Use of Funds in Accordance with Operating Budget.  Borrower shall use its
Cash Reserves (including the proceeds of any Loan Advance) solely for the
purposes set forth in the Operating Budget.  Borrower shall not use any portion
of any Loan Advance for personal, family, household or agricultural
purposes.  Borrower shall not make any payments, or make payments in an amount,
that are/is not set forth in the Operating Budget.

(v)    Insurance.  Borrower shall, at all times, maintain with financially sound
and reputable insurers insurance with respect to the Collateral against loss or
damage and all other insurance of the kinds and in the amounts customarily
insured against or carried by corporations of established reputation engaged in
the same or similar businesses and similarly situated.

 
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(vi)   Operational and Assets Preservation Upon Cash Shortage.  In the event
that  Borrower has fully borrowed the Maximum Principal Amount under this
Agreement, and Borrower’s actual cash and cash equivalents on hand equals or is
less than $75,000, regardless of Borrower’s status under this Agreement,
Borrower shall immediately:

 
(a)
Advise its board of directors and Lender of such fact, as far in advance as is
reasonably practicable and when reasonably apparent to Borrower’s management;

 
(b)
As directed by the mutual agreement of Borrower’s board of directors and Lender,
reduce its personnel to the minimum number necessary to allow Borrower’s voice
over internet protocol communications network (the “Network”) to continue to
operate at a minimal level to serve all of Borrower’s customers according to
their various service agreements with Borrower;

 
(c)
Take immediate steps to create, to the extent not already existing at that time,
complete industry-standard server redundancy for the Network, such that were
Borrower no longer able to operate the network, any one or more of Borrower’s
customers could have access to and maintain minimal operations of, the Network,
for the benefit of all of Borrower’s customers;

 
(d)
Take immediate steps to escrow all servers, hardware, and software, including
source code, such that the Network, and Borrower’s ‘JOIP’ application continue
to operate and be available for sale by Borrower’s customers;

 
(e)
Take immediate steps to secure its relationships with all of its vendors
necessary for the items in sections 5(vi)(c and d) to occur, including, if
necessary and if Borrower has the ability, making prepayments or special payment
arrangements for the services of such vendors; and

 
(f)
Takes immediate steps to assist its white label wholesale platform customers and
joip Mobile resellers in creating a cooperative transition plan to allow those
customers to migrate their end user customers to an alternative platform, with
Borrower providing appropriate and commercially reasonable support for them to
do so.

(vii) Further Assurances.  Borrower shall execute any further instruments and
take further action as Lender reasonably requests to perfect or continue
Lender’s security interest in the Collateral or to otherwise effect the purposes
of this Agreement.
 
(b)    Negative Covenants.  Borrower shall not, without Lender’s prior written
consent:
 
 
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(i)      Dispositions.  Convey, sell, lease, transfer, assign or otherwise
dispose of (collectively, “Transfer”), or permit any of its subsidiaries to
Transfer, all or any part of its business or property, except for Transfers (a)
of Inventory in the ordinary course of business; (b) of worn-out or obsolete
Equipment; and (c) of non-exclusive licenses for the use of the property of
Borrower or its subsidiaries in the ordinary course of business;
 
 (ii)    Mergers; Acquisitions; Liquidations.  Merge or consolidate, or permit
any of its subsidiaries to merge or consolidate, with any other Person; acquire,
or permit any of its subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person; or liquidate, wind-up or dissolve
(or suffer any liquidation, winding up or dissolution), terminate or discontinue
its business.  A subsidiary may merge or consolidate into another subsidiary or
into Borrower; provided that, in the case of a merger of a subsidiary into
Borrower, Borrower shall remain the surviving entity;
 
(iii)    Indebtedness.  Borrow money or engage in any debt or other financing
transaction for borrowed money, except under this Agreement or the Existing Loan
Agreements and except for trade payables incurred in the ordinary course of
Borrower’s business individually in an amount of up to $25,000 individually or
up to $100,000 in the aggregate;
 
(iv)   Encumbrances.  Create, incur, allow, or suffer any Lien on any
Collateral, or assign or convey any right to receive income or permit any of
Borrower’s subsidiaries to do so, or permit any Collateral not to be subject to
the first priority security interest granted herein, in each case, other than
with respect to Permitted Liens; provided however, that Borrower shall not,
directly or indirectly, take any action to accelerate or increase the
obligations secured by any Permitted Lien;
 
(v)    Loans.  Make any loan to any Person except receivable, prepaid items or
deposits incurred in the ordinary course of business;
 
(vi)   Capital Expenditures.  Make nor agree to make any material capital
expenditures;

(vii)  Other Payments.  Pay or prepay any indebtedness to creditors or make any
expenditures (or enter into any agreement or understanding with any person to
make any such payment, prepayment or expenditure) other than payments expressly
identified in the Operating Budget.
  
6.    Representations and Warranties of Lender.
 
(a)   Binding Agreement.  This Agreement constitutes or will constitute, when
issued and delivered, a valid and binding obligation of Lender, enforceable in
accordance with its terms, subject to bankruptcy, insolvency and other similar
laws affecting the enforcement of creditors’ rights in general, and general
principles of equity.

 
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(b)    Organization; Power; Authorization.  Lender is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware.  Lender has full limited liability company power and
authority to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby.  The execution, delivery and performance by
Lender of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary limited liability company
action.
 
(c)    Non-Contravention.  Neither the execution and the delivery of the Loan
Documents, nor the consummation of the transactions contemplated hereby, will
(a) violate any injunction, judgment, order, decree, ruling, charge or any
provision of Lender’s charter documents, or, to Lender’s knowledge, any
restriction of any government, governmental agency, or court to which Lender is
subject, or (b) conflict with, result in a material breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, any material agreement, contract,
lease, license, instrument, or other arrangement to which Lender is a party or
by which it is bound or to which any of its assets are subject.
 
7.    Events of Default; Remedies Upon Default.
 
(a)    Events of Default.  The occurrence of any of the following events shall
constitute an event of default (each, an “Event of Default”) hereunder:
 
(i)      Borrower fails to pay timely any of the principal and/or any accrued
interest or other amounts due under the Loan Documents, or under any other loan
agreement or promissory note among Borrower and Lender (including the Existing
Loan Agreements), when the same becomes due and payable;
 
(ii)    Borrower (A) files any petition or action for relief under any
bankruptcy, reorganization, insolvency or moratorium law, or any other law for
the relief of, or relating to, debtors, now or hereafter in effect; (B) applies
for or consents to the appointment of a custodian, receiver, trustee,
sequestrator, conservator or similar official for Borrower or for a substantial
part of Borrower’s assets; (C) makes a general assignment for the benefit of
creditors; (D) becomes unable to, or admits in writing its inability to, pay its
debts generally as they come due; or (E)  takes any corporate action in
furtherance of any of the foregoing;
 
(iii)    An involuntary petition is filed against Borrower (unless such petition
is dismissed or discharged within sixty (60) days) under any bankruptcy statute
now or hereafter in effect, or a custodian, receiver, trustee, sequestrator,
conservator, assignee for the benefit of creditors (or other similar official)
is appointed to take possession, custody or control of any property of Borrower;
 
(iv)    One or more judgments for the payment of money in an amount,
individually or in the aggregate,  that could reasonably be expected to have a
material adverse effect on Borrower’s business or operations (not covered by
independent third-party insurance as to which liability has been accepted by
such insurance carrier) are entered by a court of competent jurisdiction against
Borrower which judgment remains undischarged, unsatisfied, unvacated or unstayed
for a period of ten (10) days after such judgment becomes final and
non-appealable (and Lender shall not be required to make any Loan Advances prior
to the satisfaction, vacation or stay of such judgment, order or decree);

 
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(v)     A default or breach occurs under any agreement between Borrower and any
creditor of Borrower that signed a subordination, intercreditor, or other
similar agreement with Lender, or any creditor that has signed such an agreement
with Lender breaches any terms of such agreement;
 
(vi)    Any representation, warranty or other statement made by Borrower in the
Loan Documents, or any other agreement or other document delivered in connection
with any of the Loan Documents, shall prove to have been false or misleading in
any material respect when made;
 
 (vii)  Borrower violates any covenant set forth in Section 5 hereof;

(viii)  After the date hereof, Borrower grants any Person, other than Lender,
any Lien or other encumbrance on all or any substantial part of its assets,
other than (A) with respect to Permitted Liens or (B) with respect to any Lien
or other encumbrance that is junior in priority to the Lien created by Section 2
hereof;

(ix)     There is a default in any agreement to which any Borrower is a party
with a third party or parties resulting in a right by such third party or
parties, whether or not exercised, to accelerate the maturity of any
indebtedness in an amount that could, in Lender’s sole discretion, reasonably be
expected to result in a Material Adverse Change; provided, however, that the
Event of Default under this Section 7(a)(ix) caused by the occurrence of a
default under such other agreement shall be cured or waived for purposes of this
Agreement upon Lender receiving written notice from the party asserting such
default of such cure or waiver of the default under such other agreement, if at
the time of such cure or waiver under such other agreement (a) Lender has not
declared an Event of Default under this Agreement and/or exercised any rights
with respect thereto; (b) any such cure or waiver does not result in an Event of
Default under any other provision of this Agreement or any Loan Document; and
(c) in connection with any such cure or waiver under such other agreement, the
terms of any agreement with such third party are not modified or amended in any
manner which could in the good faith judgment of Lender be materially less
advantageous to Borrower;

(x)      Any Loan Document, at any time after its execution and delivery and for
any reason or the indefeasible satisfaction in full, in cash, of all the
Obligations, ceases to be in full force and effect; or any Borrower contests in
any manner the validity or enforceability of any Loan Document; or any Borrower
denies that it has any or further liability or obligation under any Loan
Document, or purports to revoke, terminate or rescind any Loan Document; or

(xi)     There shall have occurred, as determined by Lender its sole discretion,
any Material Adverse Change.
 
 
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 (b)  Remedies Upon Default.
 
 
(i)     Upon the occurrence of an Event of Default hereunder:
 
(A)  all unpaid principal, accrued interest and other amounts owing hereunder
shall, at the option of Lender, be immediately due and payable by Borrower (but
if an Event of Default described in Section 7(a)(ii) or (iii) occurs, all
Obligations are immediately due and payable without any action by Lender);
 
(B)   Lender may terminate its commitment to make additional Loan Advances;

(C)   Lender shall have the right to exercise all the remedies of a secured
party under the Code, including without limitation the right to require Borrower
to assemble the Collateral and to make it available to Lender at a place
designated by Lender. Borrower will pay any reasonable expenses (including
reasonable attorneys’ fees) incurred by Lender in connection with the exercise
of any of Lender’s rights hereunder, including without limitation any expense
incurred in disposing of the Collateral.

 (D)  Lender may proceed to protect and enforce its right by suit in the
specific performance of any covenant or agreement contained in the Loan
Documents or in aid of the exercise of any power granted in the Loan Documents
or may proceed to enforce the payment of the Loan Documents or to enforce any
other legal or equitable rights as Lender may have, including exercising any
right or remedies available to Lender under the Loan Documents and under the
Code (including disposal of the Collateral pursuant to the terms thereof); and

(ii)    Any and all amounts (including principal, unpaid interest and all
reasonable costs and expenses of collection, including reasonable attorneys’
fees) outstanding hereunder after an Event of Default shall bear interest from
the date due until paid at the rate of eighteen percent (18%) per annum.

(iii)   Upon the occurrence of an Event of Default, and upon the filing of a
suit or other commencement of judicial proceedings to enforce the rights of
Lender under this Agreement, Lender shall be entitled, as a matter of right, to
the appointment of a receiver or receivers of the Borrower and of the revenues,
issues, payments and profits thereof, pending such proceedings, with such powers
as the court making such appointment shall confer.

(iv)   If an Event of Default occurs, in addition to any other right under this
Agreement, Lender shall have the right to require, in writing, the Borrower to
hire either an independent management consultant with sufficient expertise in
and knowledge of the business of the Borrower, or new management, and shall have
the right to consent, in writing, to the independent management consultant,
management personnel and/or company that the Borrower recommends as consultant
or replacement management, as applicable.
 
 
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(c)       Power of Attorney.  Borrower hereby irrevocably appoints Lender as its
lawful attorney-in-fact, exercisable upon the occurrence and during the
continuance of an Event of Default, to: (a) endorse Borrower’s name on any
checks or other forms of payment or security; (b) sign Borrower’s name on any
invoice or bill of lading for any Account or drafts against Account Debtors; (c)
settle and adjust disputes and claims about the Accounts directly with Account
Debtors, for amounts and on terms Lender determines reasonable; (d) make,
settle, and adjust all claims under Borrower’s insurance policies; (e) pay,
contest or settle any Lien (except for Permitted Liens), charge, encumbrance,
security interest, and adverse claim in or to the Collateral, or any judgment
based thereon, or otherwise take any action to terminate or discharge the same;
and (f) transfer the Collateral into the name of Lender or a third party as the
Code permits. Borrower hereby appoints Lender as its lawful attorney-in-fact to
sign Borrower’s name on any documents necessary to perfect or continue the
perfection of Lender’s security interest in the Collateral regardless of whether
an Event of Default has occurred until all Obligations have been satisfied in
full and Lender is under no further obligation to make Loan Advances
hereunder.  Lender’s foregoing appointment as Borrower’s attorney-in-fact, and
all of Lender’s rights and powers, coupled with an interest, are irrevocable
until all Obligations have been fully repaid and performed and Lender’s
obligation to provide Loan Advances terminates.
 
 (d)      Application of Payments and Proceeds.  If an Event of Default has
occurred and is continuing, Borrower shall have no right to specify the order or
the accounts to which Lender shall allocate or apply any payments required to be
made by Borrower to Lender or otherwise received by Lender under this Agreement
when any such allocation or application is not specified elsewhere in this
Agreement.  If an Event of Default has occurred and is continuing, Lender may
apply any funds in its possession, whether from Borrower account balances,
payments, proceeds realized as the result of any collection of Accounts or other
disposition of the Collateral, or otherwise, to the Obligations in such order as
Lender shall determine in its sole discretion.  If Lender, in its good faith
business judgment, directly or indirectly enters into a deferred payment or
other credit transaction with any purchaser at any sale of Collateral, Lender
shall have the option, exercisable at any time, of either reducing the
Obligations by the principal amount of the purchase price or deferring the
reduction of the Obligations until the actual receipt by Lender of cash
therefor.
 
(e)       Lender’s Liability for the Collateral.  So long as Lender complies
with reasonable practices regarding the safekeeping of the Collateral in the
possession or under the control of Lender customary for Persons in possession or
having control of items similar to the Collateral, Lender shall not be liable or
responsible for: (i) any loss or damage to the Collateral; (ii) any diminution
in the value of the Collateral; or (iii) any act or default of any carrier,
warehouseman, bailee, or other Person. Borrower bears all risk of loss, damage
or destruction of the Collateral.
 
8.    Other Provisions.
 
(a)       Demand Waiver; Representations and Expenses.  Borrower waives
presentment, notice of dishonor, protest and notice of protest of this Agreement
and the Note and all other notices or demands in connection with the delivery,
acceptance, performance, default or endorsement of the Loan Documents, and shall
pay reasonable out-of-pocket costs and expenses of collection when incurred by
Lender, including, without limitation, reasonable attorneys’ fees and expenses.
 
 
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(b)      Waivers by Lender; Remedies Cumulative.  Either party’s failure, at any
time or times, to require strict performance by the other party of any provision
of this Agreement or any other Loan Document shall not waive, affect, or
diminish any right of such party thereafter to demand strict performance and
compliance herewith or therewith. Any waiver is only effective for the specific
instance and purpose for which it is given. Lender’s rights and remedies under
this Agreement and the other Loan Documents are cumulative.  Lender has all
rights and remedies provided under the Code, by law, or in equity.  Lender’s
exercise of one right or remedy is not an election, and Lender’s waiver of any
Event of Default is not a continuing waiver. Any delay in exercising any remedy
by a party is not a waiver, election, or acquiescence.
 
 (c)     Binding Agreement; Governing Law.  This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.  This Agreement shall be governed by and construed in
accordance with the internal and substantive laws of the State of Delaware and
without regard to any conflicts of laws concepts which would apply the
substantive law of some other jurisdiction.
 
(d)      Further Assurances.  The parties hereto agree to execute and deliver
all such other papers and documents and to take such other further actions that
may be reasonably necessary or appropriate to carry out the terms of this
Agreement.
 
(e)       Entire Agreement; Amendment.  The Loan Documents contain the entire
agreement among the parties with respect to the subject matter hereof and there
are no agreements, understandings, representations, or warranties regarding the
subject matter hereof that are not set forth herein.  This Agreement may not be
amended or revised except by a writing signed by Borrower and Lender. This
Agreement does not replace the Existing Loan Agreements.
 
(f)      Notices.  Any notices required or permitted to be sent to Borrower or
Lender shall be delivered to the address of Borrower or Lender, as applicable,
as set forth below.  All notices required or permitted hereunder, to be
effective, shall be in writing and shall be deemed effectively given: (i) when
sent by confirmed facsimile if sent during normal business hours of the
recipient, and if not, then on the next Business Day, (ii) three (3) days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid, or (iii) one (1) Business Day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt.
 
If to Borrower, to:

deltathree, Inc.
Jerusalem Technology Park – Bldg. #9
P.O. Box 48265, Jerusalem 91481, Israel
Attention: Chief Executive Officer
Facsimile: 011.972.2.649.1200

 
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with a copy (which shall not constitute notice) to:

deltathree, Inc.
Jerusalem Technology Park – Bldg. #9
P.O. Box 48265, Jerusalem 91481, Israel
Attention: General Counsel
Facsimile: 011.972.2.649.1200
 
If to Lender, to:

D4 Holdings, LLC
349-L Copperfield Blvd, #407
Concord, NC 28025
Attention:  Robert Stevanovski, Manager
Facsimile:  704.260.3304

with a copy (which shall not constitute notice) to:

D4 Holdings, LLC
349-L Copperfield Blvd, #407
Concord, NC 28025
Attention:  General Counsel
Facsimile:  704.260.3304

(g)     Counterparts.  This Agreement may be executed in one or more
counterparts, all of which when taken together shall constitute but one
instrument, and in the event any signature is delivered by facsimile or “.pdf”
transmission, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or “.pdf” were an original thereof.
 
(h)      Severability.  The provisions of this Agreement are severable, and the
invalidity of any provision shall not affect the validity or enforceability of
any other provision hereof.
 
(i)       Captions.  The captions herein have been inserted solely for
convenience of reference and in no way define, limit, or describe the scope or
substance of any provision of this Agreement.
 
(j)      Interpretation.  All pronouns used herein shall include the masculine,
feminine, and neuter gender as the context requires.  All defined terms shall
include both the plural and singular case as the context requires.
 
(k)      Restriction on Assignment.  Notwithstanding anything herein to the
contrary, Borrower shall not assign this Agreement without obtaining the prior
written approval of Lender.  Lender may assign or transfer any of its rights or
obligations under the Loan Documents without the consent of Borrower, and the
provisions of the Loan Documents shall be binding upon and inure to the benefit
of such assignee or transferee.  Any attempted assignment in violation of this
Section 8(k) shall be void and the other party hereto shall not recognize any
such purported assignment.

 
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(l)        Borrower Matters.  Any Borrower may, acting singly, request a Loan
Advance hereunder. Each Borrower hereby appoints each other Borrower as such
Borrower’s agent for all purposes hereunder, including with respect to
requesting Loan Advances hereunder. Each Borrower hereunder shall be jointly and
severally obligated to repay all Loan Advances made hereunder, regardless of
which Borrower actually receives said Loan Advances, as if each Borrower
hereunder directly received all Loan Advances. Each Borrower waives any
suretyship defenses available to it under the Code or any other applicable
law.  Each Borrower waives any right to require Lender to: (i) proceed against
any Borrower or any other Person; (ii) proceed against or exhaust any security;
or (iii) pursue any other remedy. Lender may exercise or not exercise any right
or remedy it has against any Borrower or any security it holds (including the
right to foreclose by judicial or non-judicial sale) without affecting any
Borrower’s liability hereunder. Notwithstanding any other provision of this
Agreement or any other Loan Document, each Borrower irrevocably waives all
rights that it may have at law or in equity (including, without limitation, any
law subrogating Borrower to the rights of Lender under this Agreement) to seek
contribution, indemnification or any other form of reimbursement from any other
Borrower, or any other Person now or hereafter primarily or secondarily liable
for any of the Obligations, for any payment made by Borrower with respect to the
Obligations in connection with this Agreement, any other Loan Document or
otherwise and all rights that it might have to benefit from, or to participate
in, any security for the Obligations as a result of any payment made by Borrower
with respect to the Obligations in connection with this Agreement or otherwise.
Any agreement providing for indemnification, reimbursement or any other
arrangement prohibited under this Section 8(l) shall be null and void. If any
payment is made to a Borrower in contravention of this Section 8(l), such
Borrower shall hold such payment in trust for Lender and such payment shall be
promptly delivered to Lender for application to the Obligations, whether matured
or unmatured.

(m)      Maximum Legal Rate.  Anything herein to the contrary notwithstanding,
if during any period for which interest is computed hereunder, the amount of
interest computed on the basis provided for in this Agreement, together with all
fees, charges, and other payments or rights which are treated as interest under
applicable law, as provided for herein or in any other document executed in
connection herewith, would exceed the amount of such interest computed on the
basis of the Highest Lawful Rate (as defined below), the Borrower shall not be
obligated to pay, and the Lender shall not be entitled to charge, collect,
receive, reserve, or take, interest in excess of the Highest Lawful Rate, and
during any such period the interest payable hereunder shall be computed on the
basis of the Highest Lawful Rate.  “Highest Lawful Rate” means the maximum
non-usurious rate of interest, as in effect from time to time, which may be
charged, contracted for, reserved, received, or collected by the Lender in
connection with this Agreement under applicable law.  In accordance with this
paragraph, any amounts received in excess of the Highest Lawful Rate shall be
applied towards the prepayment of principal then outstanding.
 
 
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9.    Definitions.  As used in this Agreement:
 
(a)    “Account” means all present and future rights of Borrower to payment for
goods sold or leased or for services rendered, which are not evidenced by
instruments or chattel paper, and whether or not earned by performance.
 
(b)    “Account Debtor” is any “account debtor” as defined in the Code with such
additions to such term as may hereafter be made.
 
(c)    “Business Day” means any day except Saturday, Sunday and any day which
shall be a federal legal holiday or a day on which banking institutions in the
State of Delaware are authorized or required by law or governmental action to
close.
 
(d)   “Code” means the Uniform Commercial Code, as the same may, from time to
time, be enacted and in effect in the State of Delaware; provided, that, to the
extent that the Code is used to define any term herein or in any Loan Document
and such term is defined differently in different Articles or Divisions of the
Code, the definition of such term contained in Article or Division 9 shall
govern; provided further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection, or priority of, or
remedies with respect to, Lender’s security interest in any Collateral is
governed by the Uniform Commercial Code in effect in a jurisdiction other than
the State of Delaware, the term “Code” shall mean the Uniform Commercial Code as
enacted and in effect in such other jurisdiction solely for purposes on the
provisions thereof relating to such attachment, perfection, priority, or
remedies and for purposes of definitions relating to such provisions.
 
(e)    “Collateral” is any and all properties, rights and assets of Borrower
described on Exhibit C.
 
(f)     “Equipment” is all “equipment” as defined in the Code with such
additions to such term as may hereafter be made, and includes without limitation
all machinery, fixtures, goods, vehicles (including motor vehicles and
trailers), and any interest in any of the foregoing.
 
(g)    “Inventory” means all “inventory” as defined in the Code in effect on the
date hereof with such additions to such term as may hereafter be made, and
includes without limitation all merchandise, raw materials, parts, supplies,
packing and shipping materials, work in process and finished products, including
without limitation such inventory as is temporarily out of Borrower’s custody or
possession or in transit and including any returned goods and any documents of
title representing any of the above.
 
(h)    “Lien” means any claim, mortgage, deed of trust, levy, charge, pledge,
security interest or other encumbrance of any kind, whether voluntarily incurred
or arising by operation of law or otherwise against any property.
 
(i)     “Loan Documents” means this Agreement and the Note, each as may be
amended, restated, supplemented, varied or otherwise modified.
 
 
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(j)     “Material Adverse Change” means (i) any impairment in the perfection or
priority of Lender’s security interest in the Collateral, other than with
respect to any Permitted Lien, or in the value of such Collateral; (ii) a
material adverse change in the business, operations or condition (financial or
otherwise) of Borrower;  (iii) a material impairment in the prospect of
repayment of any portion of the Obligations; or (iv) any deviation, whether
material or not, from the Operating Budget that has not been approved in writing
by Lender.
 
(k)    “Maturity Date” means January 2, ,2012.
 
(l)     “Obligations” means Borrower’s obligation to pay when due any debts,
principal, interest, and other amounts Borrower owes Lender now or later under
the Loan Documents.
 
(m)   “Permitted Liens” means the following, which under no circumstances will
exceed the amounts set forth below: (i) the Lien provided to Jerusalem
Technology Park Ltd., the landlord for the offices leased by the Israeli
Subsidiary as of the date hereof, equal to approximately $140,0001 as of the
date hereof (and as adjusted pursuant to the Consumer Price Index) on the
deposit in the bank account of the Israeli Subsidiary maintained at First
International Bank of Israel Ltd., (ii) the Lien provided to First International
Bank of Israel Ltd. equal to approximately $30,000 as of the date hereof on the
deposit in the bank account of the Israeli Subsidiary maintained at First
International Bank of Israel Ltd., and (iii) Liens pursuant to the Existing Loan
Agreements, as amended, restated, modified, or supplemented from time to time,
or pursuant to agreements entered into pursuant thereto.
 
(n)    “Person” means an individual, corporation association, partnership,
limited liability company, joint venture, trust, government, agency department
or any other entity.
 
(o)    “Previously disclosed to Lender” means those matters described in writing
in the disclosure letter provided by Borrower to Lender on the date of this
Agreement.

(p)   “Records” means all of Borrower’s present and future books of account of
every kind or nature, purchase and sale agreements, invoices, ledger cards,
bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to the Collateral or any account
debtor, together with the tapes, disks, diskettes and other data and software
storage media and devices, file cabinets or containers in or on which the
foregoing are stored (including any rights of Borrower with respect to the
foregoing maintained with or by any other person).
 
(q)   “Registered Organization” means any “registered organization” as defined
in the Code with such additions to such term as may hereafter be made.

[SIGNATURE PAGE FOLLOWS]
 

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IN WITNESS WHEREOF, the parties hereto have executed this Loan and Security
Agreement as of the date first above written.

BORROWER:
 
LENDER:
     
DELTATHREE, INC.
 
D4 HOLDINGS, LLC
         
By:
Praescient, LLC, its Manager
By:
/s/ Effi Baruch
     
Name: Effi Baruch
     
Title: CEO and President
 
By:
/s/ Robert Stevanovski
   
Name: Robert Stevanovski
   
Title: Manager
DELTA THREE ISRAEL, LTD.
               
By:
/s/ Effi Baruch
     
Name: Effi Baruch
     
Title: CEO and President
             
DME SOLUTIONS, INC.
             
By:
/s/ Effi Baruch
     
Name: Effi Baruch
     
Title: CEO and President
     

 
 
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Exhibit A

Form of Promissory Note

PROMISSORY NOTE

Up to $300,000
[_________], 2011

FOR VALUE RECEIVED, DELTATHREE, INC., a Delaware corporation, DELTA THREE
ISRAEL, LTD., an Israeli company, and DME SOLUTIONS, INC., a New York
corporation (jointly and severally, the “Borrower”), hereby absolutely,
irrevocably, unconditionally and jointly and severally promises to pay to the
order of D4 HOLDINGS, LLC, a Delaware limited liability company (“Lender”), in
United States dollars and in immediately available funds, the principal sum of
THREE HUNDRED THOUSAND DOLLARS ($300,000), or such lesser amount as may be
advanced by Lender to the Borrower from time to time in accordance with the
terms and conditions of that certain Fourth Loan and Security Agreement dated of
even date herewith, between the Borrower and Lender (as it may be amended,
modified, extended or restated from time to time, the “Loan Agreement”),
together with interest thereon, as provided in the Loan
Agreement.  Notwithstanding the foregoing, the aggregate principal amount
outstanding under this Promissory Note (this “Note”) shall not exceed three
hundred thousand dollars ($300,000).  This Note is subject to all of the terms
and conditions set forth in, and such terms and conditions are hereby
incorporated herein by reference to, the Loan Agreement.  All capitalized terms
not otherwise defined herein shall have the meanings set forth in the Loan
Agreement.  In the event of any conflict between the provisions of this Note and
the Loan Agreement, the provisions of the Loan Agreement shall prevail.

The obligations of the Borrower evidenced by this Note are secured as set forth
in the Loan Agreement.  Payment of such obligations, and the liens securing such
obligations, are subordinated as set forth in the Loan Agreement.

Except as otherwise provided in the Loan Documents, all outstanding principal
and interest with respect to Loan Advances shall be due and payable in full on
the Maturity Date.  The daily unpaid principal balance outstanding under this
Note shall bear interest at the rate(s) set forth in the Loan Agreement.

All payments in respect of amounts outstanding under this Note shall be paid in
immediately available funds to the account(s) specified by Lender from time to
time.  Any payment due in respect of this Note which falls due on a day other
than a Business Day shall be made on the next Business Day.

Upon the occurrence of an Event of Default, Lender shall have, and shall be
entitled to exercise, all of the rights and remedies set forth in the Loan
Agreement and the other Loan Documents.

 
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The Borrower hereby waives presentment and demand for payment, notice of
dishonor, protest and notice of protest of this Note.  No release of any
security for the payment of this Note or extension of time for payment of this
Note, and no alteration, amendment or waiver of any provision of this Note made
by agreement between Lender and any other Person shall release, discharge,
modify, change or affect the liability of the Borrower under this Note.

Each right, power and remedy of Lender under this Note, the Loan Agreement, any
other Loan Document, or under applicable laws shall be cumulative and
concurrent, and the exercise of any one or more of them shall not preclude the
simultaneous or later exercise by Lender of any or all such other rights, powers
or remedies.  No failure or delay by Lender to insist upon the strict
performance of any one or more provisions of this Note, the Loan Agreement, any
other Loan Document, or to exercise any right, power or remedy consequent upon
an Event of Default shall constitute a waiver thereof, or preclude Lender from
exercising any such right, power or remedy.  No modification, change, waiver or
amendment of this Note shall be deemed to be made unless in writing signed by
the Borrower and Lender. This Note shall inure to the benefit of and be binding
upon the Borrower and Lender and their respective successors and assigns;
provided that except as set forth in the Loan Agreement, the Borrower shall have
no right to assign any of its rights or delegate any of its obligations under
this Note; and provided further that there shall be no restrictions of any
nature on Lender’s right to assign this Note or its rights hereunder.  The
invalidity, illegality or unenforceability of any provision of this Note shall
not affect or impair the validity, legality or enforceability of any other
provision.  This Note shall be deemed to be made in, and shall be governed by
the laws of, the State of Delaware (without regard to its conflicts of laws
principles).

[signature page follows]

 
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IN WITNESS WHEREOF, this Promissory Note has been duly executed by the
undersigned as of the day and year first above written.

 
BORROWER:
     
DELTATHREE, INC.
     
By:
     
Name: Effi Baruch
 
Title: CEO and President
     
DELTA THREE ISRAEL, LTD.
     
By:
     
Name: Effi Baruch
 
Title: CEO and President
     
DME SOLUTIONS, INC.
     
By:
     
Name: Effi Baruch
 
Title: CEO and President

 
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Exhibit B

Form of Notice of Borrowing/Loan Advance Request
 
NOTICE OF BORROWING/LOAN ADVANCE REQUEST
 
Date:                      [________], 20__

D4 HOLDINGS, LLC
349-L Copperfield Blvd, #407
Concord, NC 28025

Attention:      Robert Stevanovski, Manager
 
Advance Request

Dear Robert:

Reference is made to that certain Fourth Loan and Security Agreement (as from
time to time amended, restated, varied, supplemented or otherwise modified, the
“Loan Agreement”), dated as of March 2, 2011, by and between (i) deltathree,
Inc., a Delaware corporation, Delta Three Israel, Ltd., an Israeli company, and
DME Solutions, Inc., a New York corporation (jointly and severally, the
“Borrower”), and (ii) D4 Holdings, LLC, a Delaware limited liability company
(“Lender”).

This is a Notice of Borrowing.  All capitalized terms used herein and not
otherwise defined shall have the meanings given to them in the Loan Agreement.

1.           LOAN ADVANCE REQUEST

In accordance with the Loan Agreement, the undersigned hereby requests that
Lender make a Loan Advance as follows:
 
 
a.
Loan Date:  [________], 20__

 
 

 
b.
Amount of Loan Advance:  US [$___________], to be disbursed as follows:

 
[INSERT APPLICABLE BORROWER]

Account Information
[INSERT APPLICABLE INFORMATION]

 
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2.           CERTIFICATION OF CASH RESERVES.  The undersigned hereby certifies
that:

(a)           as of the date hereof, the aggregate Cash Reserves of the Borrower
are $_____________; and

(b)           based on the Borrower’s bona fide projections for receipts and
disbursements, the aggregate Cash Reserves of the Borrower as of the Loan Date
are expected to be $_____________, without giving effect to the Loan Advance
requested hereby.

3.         CERTIFICATION.  The undersigned hereby certifies that (a) the
representations and warranties in Section 4 of the Loan Agreement are true in
all material respects as of the date hereof; (b) the Operating Budget currently
in effect for the period to be covered by the proposed Loan Advance represents
the Borrower’s bona fide estimated expenditures for the period covered by such
Operating Budget; (c) the proceeds of each prior Loan Advance were used and
applied as set forth in the Operating Budget relating to such prior Loan
Advance; (d) no Event of Default (i) has occurred that is continuing as of the
date hereof or (ii) will result from the Loan Advance requested hereunder; (e)
no Material Adverse Change has occurred; and (f) the conditions and agreements
set forth in Section 3 have been met and complied with by Borrower.

IN WITNESS WHEREOF, the undersigned hereby certifies the accuracy of the
foregoing information on behalf of the Borrower.

 
By:
     
Name:
 
Title:

 
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Exhibit C

Description of Collateral

The Collateral consists of all of Borrower’s right, title and interest in and to
the following personal property:

1.
All Accounts and other indebtedness owed to Borrower;

2.
All present and future contract rights, general intangibles (including, but not
limited to, tax and duty refunds, intellectual property, registered and
unregistered patents, trademarks, service marks, copyrights, trade names,
applications for the foregoing, technology, software, know-how, designs, trade
secrets, goodwill, processes, drawings, blueprints, customer lists, mailing
lists, licenses, whether as licensor or licensee, choses in action and other
claims and existing and future leasehold interests in equipment, real estate and
fixtures), chattel paper, documents, instruments, securities, investment
property, letters of credit, proceeds of letters of credit, bankers’ acceptances
and guaranties;

3.
All present and future monies, securities, credit balances, deposits, deposit
accounts and other property of Borrower, including without limitation any such
items now or hereafter held or received by or in transit to Lender or any of its
affiliates or at any other depository or other institution from or for the
account of Borrower, whether for safekeeping, pledge, custody, transmission,
collection or otherwise; and all present and future Liens, security interests,
rights, remedies, title and interest in, to and in respect of Accounts and other
Collateral, including, without limitation, (a) rights and remedies under or
relating to guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, (b) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (c) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Accounts or other Collateral, including, without limitation,
returned, repossessed and reclaimed goods, and (d) deposits by and property of
Account Debtors or other Persons securing the obligations of Account Debtors;

4.
All Inventory;

5.
All Equipment;

6.
All Records; and

7.
All products and proceeds of the foregoing, in any form, including, without
limitation, insurance proceeds and any claims against third parties for loss or
damage to or destruction of any or all of the foregoing.

 
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