Irrevocable Transfer Agent Instructions



 Exhibit 10.12 
  
 IRREVOCABLE TRANSFER AGENT INSTRUCTIONS 
  
 January 9, 2006 
  
 Continental Stock Transfer & Trust Company 
 18 Battery Place 
 New York, NY 10004 
 Attn: Compliance Department 
  
 RE: i2 TELECOM INTERNATIONAL, INC. 
  
 Ladies and Gentlemen: 
  
 Reference is made to that certain Securities Purchase Agreement (the “Securities Purchase Agreement”) of
even date herewith by and between i2 Telecom International, Inc., a Washington corporation (the “Company”), and the Buyers set forth on Schedule I attached thereto (collectively the “Buyers”) and that certain
Pledge and Escrow Agreement (the “Pledge Agreement”) of even date herewith among the Company, the Buyers and David Gonzalez, as escrow agent (the “Escrow Agent”). Pursuant to the Securities Purchase Agreement, the
Company shall sell to the Buyers, an the Buyers shall purchase from the Company, convertible debentures (collectively, the “Debentures”) in the aggregate principal amount of One Million Seven Hundred Fifty Thousand Dollars
($1,750,000), plus accrued interest, which are convertible into shares of the Company’s common stock, no par value per share (the “Common Stock”), at the Buyers discretion. The Company has also issued to the Buyer warrants to
purchase up to 7,150,000 shares of Common Stock, at the Buyer’s discretion (the “Warrant”). These instructions relate to the following stock or proposed stock issuances or transfers: 
  

	 	1.	100,000,000 Shares of Common Stock to be issued to the Buyers upon conversion of the Debentures (“Conversion Shares”) plus the shares of Common Stock to be issued
to the Buyers upon conversion of accrued interest and liquidated damages into Common Stock (the “Interest Shares”). 

  

	 	2.	Up to 7,150,000 shares of Common Stock to be issued to the Buyers upon exercise of the Warrant (the “Warrant Shares”). 

  

	 	3.	The transfer of up to one hundred million (100,000,000) shares of Common Stock (the “Escrowed Shares”) pursuant to the Pledge Agreement of which 21,300,000
Escrowed Shares have been delivered to the Escrow Agent and the remaining 78,700,000 Escrowed shares are to be delivered to the Escrow Agent upon the increase in authorized. 








 This letter shall serve as our irrevocable authorization and direction to Continental Stock
Transfer & Trust Company (the “Transfer Agent”) (provided that you are acting as the Transfer Agent of the Company at such time) to do the following: 
  
 1. Conversion Shares and Warrant Shares. 
  

	 	a.	Instructions Applicable to Transfer Agent. With respect to the Conversion Shares, Warrant Shares and the Interest Shares, the Transfer Agent shall issue the Conversion
Shares, Warrant Shares and the Interest Shares to the Buyers from time to time upon delivery to the Transfer Agent of a properly completed and duly executed Conversion Notice (the “Conversion Notice”) in the form attached as Exhibit
A to the Debentures, or a properly completed and duly executed Exercise Notice (the “Exercise Notice”) in the form attached as Exhibit A to the Warrant, delivered to the Transfer Agent by the Escrow Agent on behalf of the Company
together with the Transfer Agent’s fee for such issuance. Upon receipt of a Conversion Notice or an Exercise Notice, the Transfer Agent shall within ten (10) Trading Days thereafter (i) issue and surrender to a common carrier for
overnight delivery to the address as specified in the Conversion Notice or the Exercise Notice, a certificate, registered in the name of the Buyer or its designees, for the number of shares of Common Stock to which the Buyer shall be entitled as set
forth in the Conversion Notice or Exercise Notice or (ii) provided the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program, upon the request of the Buyers, credit
such aggregate number of shares of Common Stock to which the Buyers shall be entitled to the Buyer’s or their designees’ balance account with DTC through its Deposit Withdrawal At Custodian (“DWAC”) system provided
the Buyer causes its bank or broker to initiate the DWAC transaction. For purposes hereof “Trading Day” shall mean any day on which the Nasdaq Market is open for customary trading. 

  

	 	b.	The Company hereby confirms to the Transfer Agent and the Buyer that certificates representing the Conversion Shares and the Warrant Shares shall not bear any legend restricting
transfer and should not be subject to any stop-transfer restrictions and shall otherwise be freely transferable on the books and records of the Company; provided that counsel to the Company delivers (i) the Notice of Effectiveness set
forth in Exhibit I attached hereto and (ii) an opinion of counsel in the form set forth in Exhibit II attached hereto, and that if the Conversion Shares, Warrant Shares and the Interest Shares are not registered for sale under the
Securities Act of 1933, as amended (the “Act”) and the Transfer Agent has received an opinion of Counsel to the Company that the issuance of the Conversion Shares, Warrant Shares and Interest Shares 

  

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 is an exempt transaction under the Act, then the certificates for the Conversion Shares, Warrant Shares
and Interest Shares shall bear the following legend: 
  
 “THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE
TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.” 
  

	 	c.	In the event that counsel to the Company fails or refuses to render an opinion as required to issue the Conversion Shares or the Warrant Shares in accordance with the preceding
paragraph (either with or without restrictive legends, as applicable), then the Company irrevocably and expressly authorizes counsel to the Buyer to render such opinion. The Transfer Agent shall accept and be entitled to rely on such opinion for the
purposes of issuing the Conversion Shares. 

  

	 	d.	Instructions Applicable to Escrow Agent. Upon the Escrow Agent’s receipt of a properly completed Conversion Notice or Exercise Notice and the Aggregate Exercise Price
(as defined in the Warrant), the Escrow Agent shall, within one (1) Trading Day thereafter, send to the Transfer Agent the Conversion Notice or Exercise Notice as the case may be, which shall constitute an irrevocable instruction to the
Transfer Agent to process such Conversion Notice or Exercise Notice in accordance with the terms of these instructions and shall send to Transfer Agent payment of all transfer fees associated with the issuance of Conversion Shares or the Warrant
Shares pursuant to such Conversion Notice or Exercise Notice as the case may be. 

  
 2. Escrowed Shares. 
  

	 	a.	With respect to the Escrowed Shares, upon an event of default as set forth in the Pledge Agreement, the Escrow Agent shall send written notice to the Transfer Agent (“Escrow
Notice”) to transfer such number of Escrow Shares as set forth in the Escrow Notice to the Buyers. Upon receipt of an Escrow Notice, an opinion of Counsel to the Company with respect to the registration or the exemption therefrom under the
Act and the share certificate along with a properly executed stock power with medallion guarantee, the Transfer Agent shall promptly transfer such number of Escrow Shares to the Buyers as shall be set forth in the Escrow Notice delivered to the
Transfer Agent by the Escrow Agent. Further, the Transfer Agent shall promptly transfer such shares from the Buyers to any subsequent transferee promptly upon receipt of written 

  

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 notice from the Buyers or their counsel and the share certificate along with a properly executed stock
power. If the Escrow Shares are not registered for sale under the Securities Act of 1933, as amended, then the certificates for the Escrow Shares shall bear the legend set forth in Section 1b. 
  

	 	b.	In the event that counsel to the Company fails or refuses to render an opinion as may be required by the Transfer Agent to affect a transfer of the Escrow Shares in accordance with
the preceding paragraph (either with or without restrictive legends, as applicable), then the Company irrevocably and expressly authorizes counsel to the Buyers to render such opinion. The Transfer Agent shall accept and be entitles to rely on such
opinion for the purpose of transferring the Escrow Shares. 

  
 3. All Shares. 
  

	 	a.	The Transfer Agent shall reserve for issuance to the Buyers a minimum of 100,000,000 Conversion Shares and 5,000,000 Warrant Shares. All such shares shall remain in reserve with the
Transfer Agent until the Buyers provides the Transfer Agent instructions that the shares or any part of them shall be taken out of reserve and shall no longer be subject to the terms of these instructions. 

  

	 	b.	The Company hereby irrevocably appoints the Escrow Agent as a duly authorized agent of the Company for the purposes of authorizing the Transfer Agent to process issuances and
transfers specifically contemplated herein. 

  

	 	c.	The Transfer Agent shall rely exclusively on the Conversion Notice, the Escrow Notice, or the Exercise Notice and shall have no liability for relying on such instructions. Any
Conversion Notice, Escrow Notice, or Exercise Notice delivered hereunder shall constitute an irrevocable instruction to the Transfer Agent to process such notice or notices in accordance with the terms thereof. Such notice or notices may be
transmitted to the Transfer Agent by facsimile or any commercially reasonable method. 

  

	 	d.	The Company hereby confirms to the Transfer Agent and the Buyers that no instructions other than as contemplated herein will be given to Transfer Agent by the Company with respect
to the matters referenced herein. The Company hereby authorizes the Transfer Agent, and the Transfer Agent shall be obligated, to disregard any contrary instructions received by or on behalf of the Company. 

  
 Certain Notice Regarding the Escrow Agent. The Company and the
Transfer Agent hereby acknowledge that the Escrow Agent is general counsel to the Buyers, a partner of the general partner of the Buyers and counsel to the Buyers in connection with the transactions contemplated and referred herein. The Company and
the Transfer Agent agree that in the event of any dispute arising in connection with this Agreement or otherwise in connection with any transaction or agreement contemplated and referred herein, the Escrow Agent shall be permitted to continue to
represent the Buyers and neither the Company nor the Transfer Agent will seek to disqualify such counsel. 
  

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 The Company agrees that, in the event that the Transfer Agent resigns as the Company’s Transfer
Agent, the Company shall use its best efforts to obtain a suitable replacement transfer agent which agent shall have agreed to serve as transfer agent and to be bound by the terms and conditions of these Transfer Agent Instructions within forty five
(45) calendar days of such resignation. 
  
 The Company herby
confirms and the Transfer Agent acknowledges that while any portion of the Debenture remains unpaid and unconverted the Company and the Transfer Agent shall not, without the prior consent of the Buyers, (i) issue any Common Stock or
Preferred Stock without consideration or for a consideration per share less than closing bid price determined immediately prior to its issuance not including Common Stock to issued upon exercise of previously issued warrants, options or convertible
promissory notes, (ii) issue any Preferred Stock, warrant, option, right, contract, call, or other security or instrument granting the holder thereof the right to acquire Common Stock without consideration or for a consideration per share less
than the closing bid price of the Common Stock determined immediately prior to its issuance, (iii) issue any S-8 shares of the Company’s Common Stock except for shares issued pursuant to the Company’s 2004 Stock Incentive Plan. If the
Company seeks Buyers consent for the issuance of shares of the Company’s Common Stock or shares of the Company’s Preferred Stock, Buyer shall within three (3) Trading Days of such request respond to such request and shall copy the
Transfer Agent on such response. Failure of the Buyer to timely respond shall be deemed to be Buyer’s consent to the request. 
  
 The Company hereby acknowledges and confirm that complying with the terms of this Agreement does not and shall not prohibit the Transfer Agent from
satisfying any and all responsibilities and duties it may owe to the Company. 
  
 The Company acknowledges that the Buyers is relying on the representations and covenants made by the Company hereunder and are a material inducement to the Buyers purchasing convertible debentures under the Securities
Purchase Agreement. The Company further acknowledges that without such representations and covenants of the Company made hereunder, the Buyers would not purchase the Debentures. 
  
 Each party hereto specifically acknowledges and agrees that in the event of a breach or threatened breach by a party hereto
of any provision hereof, the Buyers will be irreparably damaged and that damages at law would be an inadequate remedy if these Irrevocable Transfer Agent Instructions were not specifically enforced. Therefore, in the event of a breach or threatened
breach by a party hereto, including, without limitation, the attempted termination of the agency relationship created by this instrument, the Buyers shall be entitled, in addition to all other rights or remedies, to an injunction restraining such
breach, without being required to show any actual damage or to post any bond or other security, and/or to a decree for specific performance of the provisions of these Irrevocable Transfer Agent Instructions. Any action for injunctive relief brought
against Transfer Agent shall be brought in a court of general jurisdiction in New York county, New York and in no other court or forum. 
  
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 IN WITNESS WHEREOF, the parties have caused this letter agreement regarding Irrevocable Transfer
Agent Instructions to be duly executed and delivered as of the date first written above. 
  

			
	COMPANY:
	
	i2 Telecom International, Inc.
		
	By:	 	  


	Name:	 	Paul Arena
	Title:	 	Chief Executive Officer
	
	  


	David Gonzalez, Esq.


  
 Continental Stock
Transfer & Trust Company 
  

			
	By:	 	  


	Name:	 	William F. Seegraber
	Title:	 	Vice President

  

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 SCHEDULE I 
  
 SCHEDULE OF BUYERS 
  

							
	 Name

	 	 Signature

	 	 Address/Facsimile Number of Buyers


	Cornell Capital Partners, LP	 	By:	 	Yorkville Advisors, LLC	 	101 Hudson Street – Suite 3700
	 	 	Its:	 	General Partner	 	Jersey City, NJ 07303
	 	 	 	 	 	 	Facsimile: (201) 985-8266
	 	 	By:	 	  

	 	 
	 	 	Name:	 	Mark Angelo	 	 
	 	 	Its:	 	Portfolio Manager	 	 

  

 SCHEDULE I-1 








 EXHIBIT I 
  
 TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS 
  
 FORM OF NOTICE OF EFFECTIVENESS OF REGISTRATION STATEMENT 
  
                     , 2005 
  
 _________ 
  
 Attention: 
  
 RE:      i2 TELECOM INTERNATIONAL, INC. 
  
 Ladies and Gentlemen: 
  
 We are counsel to i2 Telecom International, Inc., (the “Company”), and have represented the Company in connection with that certain
Securities Purchase Agreement, dated as of December     , 2005 (the “Securities Purchase Agreement”), entered into by and among the Company and the Buyers set forth on Schedule I attached thereto
(collectively the “Buyers”) pursuant to which the Company has agreed to sell to the Buyers up to $1,750,000 of secured convertible debentures, which shall be convertible into shares (the “Conversion Shares”) of the
Company’s common stock, no par value per share (the “Common Stock”), in accordance with the terms of the Securities Purchase Agreement. Pursuant to the Securities Purchase Agreement, the Company also has entered into a
Registration Rights Agreement, dated as of December     , 2005, with the Buyers (the “Investor Registration Rights Agreement”) pursuant to which the Company agreed, among other things, to register the
Conversion Shares under the Securities Act of 1933, as amended (the “1933 Act”). In connection with the Company’s obligations under the Securities Purchase Agreement and the Registration Rights Agreement, on
                    , 2005, the Company filed a Registration Statement (File No.
        -            ) (the “Registration Statement”) with the Securities and Exchange Commission (the
“SEC”) relating to the sale of the Conversion Shares. 
  
 In connection with the foregoing, we advise the Transfer Agent that a member of the SEC’s staff has advised us by telephone that the SEC has entered an order declaring the Registration Statement effective under the 1933 Act at
         P.M. on                     , 2005 and we have no knowledge, after telephonic inquiry
of a member of the SEC’s staff, that any stop order suspending its effectiveness has been issued or that any proceedings for that purpose are pending before, or threatened by, the SEC and the Conversion Shares are available for sale under the
1933 Act pursuant to the Registration Statement. 
  

 EXHIBIT I-1 








 The Buyers has confirmed it shall comply with all securities laws and regulations applicable to it
including applicable prospectus delivery requirements upon sale of the Conversion Shares. 
  

			
	Very truly yours,
		
	By:	 	  




  

 EXHIBIT I-2 








 EXHIBIT II 
  
 TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS 
  
 FORM OF OPINION 
  
                      2005

  
 VIA FACSIMILE AND REGULAR MAIL 
  
 __________ 
  

	Attention:	

  
 RE:        i2 TELECOM INTERNATIONAL, INC. 
  
 Ladies and Gentlemen: 
  
 We have acted as special counsel to i2 Telecom International, Inc. (the “Company”), in connection with the registration of
                     shares (the “Shares”) of its common stock with the Securities and Exchange Commission (the
“SEC”). We have not acted as your counsel. This opinion is given at the request and with the consent of the Company. 
  
 In rendering this opinion we have relied on the accuracy of the Company’s Registration Statement on Form SB-2, as amended (the
“Registration Statement”), filed by the Company with the SEC on                     , 2005. The Company filed the
Registration Statement on behalf of certain selling stockholders (the “Selling Stockholders”). This opinion relates solely to the Selling Shareholders listed on Exhibit “A” hereto and number of Shares set
forth opposite such Selling Stockholders’ names. The SEC declared the Registration Statement effective on                     
    , 2005. 
  
 We understand that the
Selling Stockholders acquired the Shares in a private offering exempt from registration under the Securities Act of 1933, as amended. Information regarding the Shares to be sold by the Selling Shareholders is contained under the heading
“Selling Stockholders” in the Registration Statement, which information is incorporated herein by reference. This opinion does not relate to the issuance of the Shares to the Selling Stockholders. The opinions set forth herein relate
solely to the sale or transfer by the Selling Stockholders pursuant to the Registration Statement under the Federal laws of the United States of America. We do not express any opinion concerning any law of any state or other jurisdiction.

  
 In rendering this opinion we have relied upon the accuracy of
the foregoing statements. 
  

 EXHIBIT II 








 Based on the foregoing, it is our opinion that the Shares have been registered with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, and that                      may remove the restrictive legends contained
on the Shares. This opinion relates solely to the number of Shares set forth opposite the Selling Stockholders listed on Exhibit “A” hereto. 
  
 This opinion is furnished to Transfer Agent specifically in connection with the sale or transfer of the Shares, and solely
for your information and benefit. This letter may not be relied upon by Transfer Agent in any other connection, and it may not be relied upon by any other person or entity for any purpose without our prior written consent. This opinion may not be
assigned, quoted or used without our prior written consent. The opinions set forth herein are rendered as of the date hereof and we will not supplement this opinion with respect to changes in the law or factual matters subsequent to the date hereof.

  
 Very truly yours, 
  

 EXHIBIT II-2 








 EXHIBIT A 
  
 (LIST OF SELLING STOCKHOLDERS) 
  

			
	 Name:

	  	No. of Shares:



  

 EXHIBIT A