Secured Convertible debenture dated April 6, 2006



 Exhibit 10.1 
 Dated: April 6, 2006 
 NEITHER THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. 
  

			
	No. CCP-2	  	$600,000

 i2 TELECOM INTERNATIONAL, INC. 
 Secured Convertible Debenture 
 Due April 6, 2009 
 This Secured Convertible Debenture (the “Debenture”) is issued by i2 TELECOM INTERNATIONAL, INC., a Washington corporation (the
“Obligor”), to CORNELL CAPITAL PARTNERS, LP (the “Holder”), pursuant to that certain Securities Purchase Agreement (the “Securities Purchase Agreement”) dated January 9, 2006.

 FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or its successors and assigns the principal sum of Six Hundred
Thousand Dollars ($600,000) together with accrued but unpaid interest on or before April 6, 2009 (the “Maturity Date”) in accordance with the following terms: 
 Interest. Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to ten percent (10%). Interest shall be
calculated on the basis of a 360-day year and the actual number of days elapsed, to the extent permitted by applicable law. Interest hereunder will be paid to the Holder or its assignee (as defined in Section 5) in whose name this
Debenture is registered on the records of the Obligor regarding registration and transfers of Debentures (the “Debenture Register”). 
 Right of Redemption. The Obligor at its option shall have the right, with three (3) business days advance written notice (the “Redemption Notice”), to redeem a portion or all
amounts outstanding under this Debenture prior to the Maturity Date provided that the Closing Bid Price of the of the Obligor’s Common Stock, as reported by Bloomberg, LP, is less than the Fixed Conversion Price at the time of the Redemption
Notice. The Obligor shall pay an amount equal to the principal amount being redeemed plus a redemption premium (“Redemption Premium”) equal to twenty percent (20%) of the principal amount being redeemed, and accrued interest,
(collectively referred to as the “Redemption Amount”). The Obligor shall deliver to the Holder the Redemption Amount on the third (3rd) business day after the Redemption Notice. 
  

 1 








 In the event the Obligor exercises a redemption of either all or a portion of the outstanding principal
amounts plus accrued interest due and outstanding under this debenture as outlined herein, the Holder shall receive a warrant to purchase one hundred thousand (100,000) shares of the Company’s Common Stock for every One Hundred Thousand
Dollars ($100,000) redeemed, pro rata. (the “Warrant”) The Warrant shall be exercisable on a “cash basis” and have an exercise price of one hundred ten percent (110%) of the Closing Bid Price of the Company’s
Common Stock on the Closing Date, as quoted by Bloomberg, LP, per share. The Warrant shall have “piggy-back” and demand registration rights and shall survive for five (5) years from the Closing Date. 
 Notwithstanding the foregoing in the event that the Company is a party to a Change of Control Transaction and the Holder is being redeemed and the
Redemption Amount is equal to a two hundred percent (200%) rate of return the Obligor shall not be obligated to issue the Holder redemption Warrants . 
 Notwithstanding the foregoing in the event that the Obligor has elected to redeem a portion of the outstanding principal amount and accrued interest under this Debenture the Holder shall be permitted to convert all or
any portion of this Debenture during such three business day period. 
 Security Agreements. This Debenture is secured by a
Pledge and Escrow Agreement (the “Pledge Agreement”) dated January 9, 2006 among the Obligor, the Holder, the Escrow Agent, a Security Agreement (the “Security Agreement”) dated January 9, 2006 between the
Obligor and the Holder, and a Subsidiary Security Agreement (the “Subsidiary Security Agreement”) dated January 9, 2006 between i2 Telecom International, Inc, and the Holder. 
 Consent of Holder to Sell Capital Stock or Grant Security Interests. So long as any of the principal amount or interest on
this Debenture remains unpaid and unconverted, the Obligor shall not, without the prior consent of the Holder, (i) issue or sell any shares of Common Stock or preferred stock without consideration or for consideration per share less than the
Closing Bid Price of the Common Stock determined immediately prior to its issuance, provided; however, that Troon & Co., Jordan E. Glazov and Gregory P. McGraw (collectively, the “Senior Lenders”) and other lenders from
time to time that become parties to the Loan Agreement dated September 7, 2005, by and among the Obligor and the Senior Lenders (the “Loan Agreements”), may exercise the warrants issued pursuant thereto to purchase shares of
the Obligor’s Common Stock without the prior consent of the Holder, (ii) issue or sell 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 consideration per share less than the Closing Bid Price of the Common Stock determined immediately prior to its issuance, (iii) enter into any security instrument granting the holder a security interest in any
of the assets of the Obligor, or (iv) file any registration statements on Form S-8, with the exception of the Company’s 2004 Stock Incentive Plan. 
  

 2 








 Notwithstanding the foregoing the Company shall not, without the prior written consent of the Holder, which shall not be
unreasonably withheld (i) issue or sell shares of Common Stock or Preferred Stock with or without consideration, including to the Senior Lenders and any exercise of the warrants issued to them pursuant to the Loan Agreement to purchase shares
of the Obligor’s Common Stock except for shares of the Company’s Common Stock to be issued to Company Counsel, provided that such issuances do not alter the holdings of shareholders of the Company who are the beneficial owners of an excess
of fifty percent (50%) of the Company’s outstanding shares of Common Stock as of the date hereof, (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 with or without consideration, including to the Senior Lenders and any exercise of the warrants issued to them pursuant to the Loan Agreement to purchase shares of the Obligor’s Common Stock or (iv) file any
registration statement on Form S-8, except pursuant to the Company’s 2004 Stock Incentive Plan and the registration of shares of the Company’s Common Stock to be issued to Company Counsel, provided that such issuances do not alter the
holdings of shareholders of the Company who are the beneficial owners of an excess of fifty percent (50%) of the Company’s outstanding shares of Common Stock as of the date hereof, until such time as the authorized shares of the
Company’s Common Stock is increased to at least two hundred fifty million (250,000,000) shares of Common Stock, 
 Rights of
Participation. So long as any portion of this Debenture is outstanding (including principal or accrued interest), if the Obligor intends to raise additional capital by the issuance or sale of capital stock of the Obligor, including
without limitation shares of any class of Common Stock, any class of preferred stock, options, warrants or any other securities convertible or exercisable into shares of Common Stock (whether the offering is conducted by the Obligor, underwriter,
placement agent or any third party) the Obligor shall be obligated to offer to the Holder such issuance or sale of capital stock, by providing in writing the principal amount of capital it intends to raise and outline of the material terms of such
capital raise, simultaneous with the offering such issuance or sale of capital stock to any third parties including, but not limited to, current or former officers or directors, current or former shareholders and/or investors of the obligor,
underwriters, brokers, agents or other third parties. The Holder shall have ten (10) business days from receipt of such notice of the sale or issuance of capital stock to participate in such capital raising offer on a pro rata basis based
on the amount of the Debentures. 
 This Debenture is subject to the following additional provisions: 
 Section 1. This Debenture is exchangeable for an equal aggregate principal amount of Debentures of different authorized denominations,
as requested by the Holder surrendering the same. No service charge will be made for such registration of transfer or exchange. 
 Section 2. Events of Default. 
 (a) An “Event of Default”, wherever used herein, means
any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative
or governmental body): 
  

 3 








 (i) Any default in the payment of the principal of, interest on or other charges in respect of this
Debenture, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise); 
 (ii) The Obligor shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of
any provision of this Debenture (except as may be covered by Section 2(a)(i) hereof) or any Transaction Document (as defined in Section 5) which is not cured with in the time prescribed; 
 (iii) The Obligor or any subsidiary of the Obligor shall commence, or there shall be commenced against the Obligor or any subsidiary of the Obligor under
any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Obligor or any subsidiary of the Obligor commences any other proceeding under any reorganization, arrangement, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Obligor or any subsidiary of the Obligor or there is commenced against the Obligor or any subsidiary of the Obligor any such
bankruptcy, insolvency or other proceeding which remains undismissed for a period of ninety one (91) days; or the Obligor or any subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order of relief or other order approving any
such case or proceeding is entered; or the Obligor or any subsidiary of the Obligor suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property which continues undischarged
or unstayed for a period of ninety one (91); or the Obligor or any subsidiary of the Obligor makes a general assignment for the benefit of creditors; or the Obligor or any subsidiary of the Obligor shall fail to pay, or shall state that it is unable
to pay, or shall be unable to pay, its debts generally as they become due; or the Obligor or any subsidiary of the Obligor shall call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or the
Obligor or any subsidiary of the Obligor shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Obligor or any subsidiary of the
Obligor for the purpose of effecting any of the foregoing; 
 (iv) The Obligor or any subsidiary of the Obligor shall default in any of its
obligations under any other debenture or any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced any indebtedness
for borrowed money or money due under any long term leasing or factoring arrangement of the Obligor or any subsidiary of the Obligor in an amount exceeding Two Hundred Fifty Thousand Dollars ($250,000), whether such indebtedness now exists or shall
hereafter be created and such default shall result in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable provided; however, that a default under the Loan Agreement shall
not constitute a default under this Debenture; 
 (v) The Common Stock shall cease to be quoted for trading or listed for trading on either
the Nasdaq OTC Bulletin Board (“OTC”), Nasdaq Capital Market, New York Stock Exchange, American Stock Exchange or the Nasdaq National Market (each, a “Subsequent Market”) and shall not again be quoted or listed for
trading thereon within five (5) Trading Days of such delisting; 
  

 4 








 (vi) The Obligor or any subsidiary of the Obligor shall be a party to any Change of Control Transaction
(as defined in Section 5); 
 (vii) The Obligor shall fail to file the Underlying Shares Registration Statement (as defined in
Section 5) with the Commission (as defined in Section 5), or the Underlying Shares Registration Statement shall not have been declared effective by the Commission, in each case within the time periods set forth in the
Investor Registration Rights Agreement (“Registration Rights Agreement”) dated January 9, 2006 between the Obligor and the Holder; 
 (viii) If the effectiveness of the Underlying Shares Registration Statement lapses for any reason or the Holder shall not be permitted to resell the shares of Common Stock underlying this Debenture under the
Underlying Shares Registration Statement, in either case, for more than ten (10) consecutive Trading Days or an aggregate of eighteen (18) Trading Days (which need not be consecutive Trading Days); 
 (ix) The Obligor shall fail for any reason to deliver Common Stock certificates to a Holder prior to the tenth (10th) Trading Day after a Conversion Date or the Obligor shall provide notice to the Holder, including by way of public announcement, at any time, of
its intention not to comply with requests for conversions of this Debenture in accordance with the terms hereof; 
 (x) The Obligor shall
fail for any reason to deliver the payment in cash pursuant to a Buy-In (as defined herein) within three (3) days after notice is claimed delivered hereunder; 
 (b) During the time that any portion of this Debenture is outstanding, if any Event of Default has occurred, the full principal amount of this Debenture, together with interest and other amounts owing in respect
thereof, to the date of acceleration shall become at the Holder’s election, immediately due and payable in cash, provided however, the Holder may request (but shall have no obligation to request) payment of such amounts in Common Stock
of the Obligor. In addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Debenture at any time after (x) an Event of Default or (y) the Maturity Date at the Conversion Price then
in-effect. The Holder need not provide and the Obligor hereby waives any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and
remedies hereunder and all other remedies available to it under applicable law. Such declaration may be rescinded and annulled by Holder at any time prior to payment hereunder. No such rescission or annulment shall affect any subsequent Event of
Default or impair any right consequent thereon. Upon an Event of Default, notwithstanding any other provision of this Debenture or any Transaction Document, the Holder shall have no obligation to comply with or adhere to any limitations, if any, on
the conversion of this Debenture or the sale of the Underlying Shares. 
  

 5 








 Section 3. Conversion. 
 (a) Conversion at Option of Holder. 
 (i) This Debenture shall be convertible into shares of Common Stock at the option of the Holder, in whole or in part at any time and from time to time, after the Original Issue Date (as defined in Section 5) (subject to the
limitations on conversion set forth in Section 3(b) hereof). The number of shares of Common Stock issuable upon a conversion hereunder equals the quotient obtained by dividing (x) the outstanding amount of this Debenture to be
converted by (y) the Conversion Price (as defined in Section 3(c)(i)). The Obligor shall deliver Common Stock certificates to the Holder prior to the Fifth (5th) Trading Day after a Conversion Date. 
 (ii)
Notwithstanding anything to the contrary contained herein, if on any Conversion Date: (1) the number of shares of Common Stock at the time authorized, unissued and unreserved for all purposes, or held as treasury stock, is insufficient to pay
principal and interest hereunder in shares of Common Stock; (2) the Common Stock is not listed or quoted for trading on the OTC or on a Subsequent Market; (3) the Obligor has failed to timely satisfy its conversion; or (4) the
issuance of such shares of Common Stock would result in a violation of Section 3(b), then, at the option of the Holder, the Obligor, in lieu of delivering shares of Common Stock pursuant to Section 3(a)(i), shall deliver,
within three (3) Trading Days of each applicable Conversion Date, an amount in cash equal to the product of the outstanding principal amount to be converted plus any interest due therein divided by the Conversion Price, chosen by the Holder,
and multiplied by the highest closing price of the stock from date of the conversion notice till the date that such cash payment is made. 
 Further, if the Obligor shall not have delivered any cash due in respect of conversion of this Debenture or as payment of interest thereon by the fifth (5th) Trading Day after the Conversion Date, the Holder may, by notice to the Obligor, require the Obligor to issue shares of Common Stock pursuant to Section 3(c), except that for such
purpose the Conversion Price applicable thereto shall be the lesser of the Conversion Price on the Conversion Date and the Conversion Price on the date of such Holder demand. Any such shares will be subject to the provisions of this Section.

 (iii) The Holder shall effect conversions by delivering to the Obligor a completed notice in the form attached hereto as Exhibit A (a
“Conversion Notice”). The date on which a Conversion Notice is delivered is the “Conversion Date.” Unless the Holder is converting the entire principal amount outstanding under this Debenture, the Holder is not
required to physically surrender this Debenture to the Obligor in order to effect conversions. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Debenture plus all accrued and unpaid interest thereon in
an amount equal to the applicable conversion. The Holder and the Obligor shall maintain records showing the principal amount converted and the date of such conversions. In the event of any dispute or discrepancy, the records of the Holder shall be
controlling and determinative in the absence of manifest error. 
 (b) Certain Conversion Restrictions. 
 (i) A Holder may not convert this Debenture or receive shares of Common Stock as payment of interest hereunder to the extent such conversion or receipt of
such interest payment would result in the Holder, together with any affiliate thereof, beneficially owning (as determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated 
  

 6 








 thereunder) in excess of 4.9% of the then issued and outstanding shares of Common Stock, including shares issuable upon
conversion of, and payment of interest on, this Debenture held by such Holder after application of this Section. Since the Holder will not be obligated to report to the Obligor the number of shares of Common Stock it may hold at the time of a
conversion hereunder, unless the conversion at issue would result in the issuance of shares of Common Stock in excess of 4.9% of the then outstanding shares of Common Stock without regard to any other shares which may be beneficially owned by the
Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine whether the restriction contained in this Section will limit any particular conversion hereunder and to the extent that the Holder determines that the
limitation contained in this Section applies, the determination of which portion of the principal amount of this Debenture is convertible shall be the responsibility and obligation of the Holder. If the Holder has delivered a Conversion Notice for a
principal amount of this Debenture that, without regard to any other shares that the Holder or its affiliates may beneficially own, would result in the issuance in excess of the permitted amount hereunder, the Obligor shall notify the Holder of this
fact and shall honor the conversion for the maximum principal amount permitted to be converted on such Conversion Date in accordance with the periods described in Section 3(a)(i) and, at the option of the Holder, either retain any
principal amount tendered for conversion in excess of the permitted amount hereunder for future conversions or return such excess principal amount to the Holder. The provisions of this Section may be waived by a Holder (but only as to itself and not
to any other Holder) upon not less than 65 days prior notice to the Obligor. Other Holders shall be unaffected by any such waiver. 
 (ii) In
the event that the volume weighted average price of the Company’s Common Stock, as quoted by Bloomberg, LP, is below Four Cents ($0.04) for ten (10) consecutive Trading Days the Holder shall not, unless waived by the Obligor, convert more
than Two Hundred Thousand Dollars ($200,000) of principal and interest due and outstanding under this Debenture into shares of the Obligor’s Common Stock in any thirty (30) calendar day period. Such conversion limitation shall terminate on
the earlier to occur of : (i) the date the volume weighted average price of the Company’s Common Stock, as quoted by Bloomberg, LP is Four Cents ($0.04) or above or (ii) thirty (30) calendar days following the date volume
weighted average price of the Company’s, as quoted by Bloomberg, LP is below Four Cents ($0.04). 
 (c) Conversion Price and
Adjustments to Conversion Price. 
 (i) The Holder shall be entitled to convert, at its sole option, at any time a portion or all amounts
of principal and interest due and outstanding under this Debenture into shares of the Obligor’s Common Stock at the lesser of (i) at a price equal to Ten Cents ($0.10) ( the “Fixed Conversion Price”) or (ii) ninety
five percent (95%) of the lowest Volume Weighted Average Price of the Common Stock during the thirty (30) trading days immediately preceding the Conversion Date as quoted by Bloomberg, LP (the “Market Conversion Price”).
The Fixed Conversion Price and the Market Conversion Price are collectively referred to as the “Conversion Price.” The Conversion Price may be adjusted pursuant to the other terms of this Debenture. 
 Provided that the Underlying Shares Registration Statement has been declared effective by the SEC and the Volume Weighted Average Price of the Company’s Common
Stock is equal to or greater than two hundred percent (200%) of the Fixed Conversion Price for a period of twenty 
  

 7 








 (20) consecutive Trading Days the Obligor shall have the right to force the Holder to convert a portion or all amounts of
principal and interest due and outstanding under this Debenture into shares of the Obligor’s Common Stock as provided for in this Section. 
 (ii) If the Obligor, at any time while this Debenture is outstanding, shall (a) pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares,
or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Obligor, then the Fixed Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective
immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 (iii) If the Obligor, at any time while this Debenture is outstanding, shall issue rights, options or warrants to all holders of Common
Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Fixed Conversion Price, then the Fixed Conversion Price shall be multiplied by a fraction, of which the denominator
shall be the number of shares of the Common Stock (excluding treasury shares, if any) outstanding on the date of issuance of such rights or warrants (plus the number of additional shares of Common Stock offered for subscription or purchase), and of
which the numerator shall be the number of shares of the Common Stock (excluding treasury shares, if any) outstanding on the date of issuance of such rights or warrants, plus the number of shares which the aggregate offering price of the total
number of shares so offered would purchase at the Fixed Conversion Price. Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders
entitled to receive such rights, options or warrants. However, upon the expiration of any such right, option or warrant to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Fixed Conversion Price pursuant to
this Section, if any such right, option or warrant shall expire and shall not have been exercised, the Fixed Conversion Price shall immediately upon such expiration be recomputed and effective immediately upon such expiration be increased to the
price which it would have been (but reflecting any other adjustments in the Fixed Conversion Price made pursuant to the provisions of this Section after the issuance of such rights or warrants) had the adjustment of the Fixed Conversion Price made
upon the issuance of such rights, options or warrants been made on the basis of offering for subscription or purchase only that number of shares of the Common Stock actually purchased upon the exercise of such rights, options or warrants actually
exercised. 
 (iv) If the Obligor or any subsidiary thereof, as applicable, at any time while this Debenture is outstanding, shall issue
shares of Common Stock or rights, warrants, options or other securities or debt that are convertible into or exchangeable for shares of Common Stock (“Common Stock Equivalents”) entitling any Person to acquire shares of Common
Stock, at a price per share less than the Fixed Conversion Price (if the holder of the Common Stock or 
  

 8 








 Common Stock Equivalent so issued shall at any time, whether by operation of purchase price adjustments, reset
provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which is issued in connection with such issuance, be entitled to receive shares of Common Stock at a price per share which is
less than the Fixed Conversion Price, such issuance shall be deemed to have occurred for less than the Fixed Conversion Price), then, at the sole option of the Holder, the Fixed Conversion Price shall be adjusted to mirror the conversion, exchange
or purchase price for such Common Stock or Common Stock Equivalents (including any reset provisions thereof) at issue. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. The Obligor shall notify the
Holder in writing, no later than one (1) business day following the issuance of any Common Stock or Common Stock Equivalent subject to this Section, indicating therein the applicable issuance price, or of applicable reset price, exchange price,
conversion price and other pricing terms. No adjustment under this Section shall be made as a result of issuances and exercises of options to purchase shares of Common Stock issued for compensatory purposes pursuant to any of the Obligor’s
stock option or stock purchase plans. 
 (v) If the Obligor, at any time while this Debenture is outstanding, shall distribute to all holders
of Common Stock (and not to the Holder) evidences of its indebtedness or assets or rights or warrants to subscribe for or purchase any security, then in each such case the Fixed Conversion Price at which this Debenture shall thereafter be
convertible shall be determined by multiplying the Fixed Conversion Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be
the Closing Bid Price determined as of the record date mentioned above, and of which the numerator shall be such Closing Bid Price on such record date less the then fair market value at such record date of the portion of such assets or evidence of
indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith. In either case the adjustments shall be described in a statement provided to the Holder of the portion of
assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date
mentioned above. 
 (vi) In case of any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common
Stock is converted into other securities, cash or property, the Holder shall have the right thereafter to, at its option, (A) convert the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts
then owing hereunder in respect of this Debenture into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share exchange (which shall not
include a reverse stock split), and the Holder of this Debenture shall be entitled upon such event to receive such amount of securities, cash or property as the shares of the Common Stock of the Obligor into which the then outstanding principal
amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Debenture could have been converted immediately prior to such reclassification or share exchange would have been entitled, or
(B) require the Obligor to prepay the outstanding principal amount of this Debenture, plus all interest and other amounts due and payable thereon. The entire prepayment price shall be paid in cash. This provision shall similarly apply to
successive reclassifications or share exchanges. 
  

 9 








 (vii) The Obligor shall at all times reserve and keep available out of its authorized Common Stock the
full number of shares of Common Stock issuable upon conversion of all outstanding amounts under this Debenture; and within three (3) Business Days following the receipt by the Obligor of a Holder’s notice that such minimum number of
Underlying Shares is not so reserved, the Obligor shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement. 
 (viii) All calculations under this Section 3 shall be rounded up to the nearest $0.001 or whole share. 
 (ix) Whenever the Conversion Price is adjusted pursuant to Section 3 hereof, the Obligor shall promptly mail to the Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment. 
 (x) If (A) the Obligor shall declare a dividend (or any other distribution) on the Common Stock;
(B) the Obligor shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (C) the Obligor shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any rights; (D) the approval of any stockholders of the Obligor shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Obligor is a
party, any sale or transfer of all or substantially all of the assets of the Obligor, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; or (E) the Obligor shall authorize the
voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Obligor; then, in each case, the Obligor shall cause to be filed at each office or agency maintained for the purpose of conversion of this Debenture, and shall
cause to be mailed to the Holder at its last address as it shall appear upon the stock books of the Obligor, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as
of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange, provided, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. The Holder is entitled to convert this
Debenture during the 20-day calendar period commencing the date of such notice to the effective date of the event triggering such notice. 
 (xi) In case of any (1) merger or consolidation of the Obligor or any subsidiary of the Obligor with or into another Person, or (2) sale by the Obligor or any subsidiary of the Obligor of more than one-half of the assets of the
Obligor in one or a series of related transactions, a Holder shall have the right to (A) exercise any rights under Section 2(b), (B) convert the aggregate amount of this Debenture then outstanding into the shares of stock and
other securities, cash and property receivable upon or deemed to be held by holders of Common 
  

 10 








 Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of
related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Debenture could have been converted immediately prior to such merger, consolidation or sales
would have been entitled, or (C) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible Debenture with a principal amount equal to the aggregate principal amount of this Debenture then held
by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible Debenture shall have terms identical (including with respect to conversion) to the terms of this Debenture, and shall be
entitled to all of the rights and privileges of the Holder of this Debenture set forth herein and the agreements pursuant to which this Debentures were issued. In the case of clause (C), the conversion price applicable for the newly issued shares of
convertible preferred stock or convertible Debentures shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the
effectiveness or closing date for such transaction. The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section
upon any conversion or redemption following such event. This provision shall similarly apply to successive such events. 
 (d) Other
Provisions. 
 (i) The Obligor covenants that it will at all times reserve and keep available out of its authorized and unissued shares of
Common Stock solely for the purpose of issuance upon conversion of this Debenture and payment of interest on this Debenture, each as herein provided, free from preemptive rights or any other actual contingent purchase rights of persons other than
the Holder, not less than such number of shares of the Common Stock as shall (subject to any additional requirements of the Obligor as to reservation of such shares set forth in this Debenture) be issuable (taking into account the adjustments and
restrictions of Sections 2(b) and 3(c)) upon the conversion of the outstanding principal amount of this Debenture and payment of interest hereunder. The Obligor covenants that all shares of Common Stock that shall be so issuable shall, upon
issue, be duly and validly authorized, issued and fully paid, nonassessable and, if the Underlying Shares Registration Statement has been declared effective under the Securities Act, registered for public sale in accordance with such Underlying
Shares Registration Statement. 
 (ii) Upon a conversion hereunder the Obligor shall not be required to issue stock certificates representing
fractions of shares of the Common Stock, but may if otherwise permitted, make a cash payment in respect of any final fraction of a share based on the Closing Bid Price at such time. If the Obligor elects not, or is unable, to make such a cash
payment, the Holder shall be entitled to receive, in lieu of the final fraction of a share, one whole share of Common Stock. 
 (iii) The
issuance of certificates for shares of the Common Stock on conversion of this Debenture shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such
certificate, provided that the Obligor shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate 
  

 11 








 upon conversion in a name other than that of the Holder of such Debenture so converted and the Obligor shall not be
required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Obligor the amount of such tax or shall have established to the satisfaction of the Obligor that such tax has
been paid. 
 (iv) Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to
Section 2 herein for the Obligor ‘s failure to deliver certificates representing shares of Common Stock upon conversion within the period specified herein and such Holder shall have the right to pursue all remedies available to it
at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief, in each case without the need to post a bond or provide other security. The exercise of any such rights shall not prohibit the Holder from
seeking to enforce damages pursuant to any other Section hereof or under applicable law. 
 (v) In addition to any other rights available to
the Holder, if the Obligor fails to deliver to the Holder such certificate or certificates pursuant to Section 3(a)(i) by the tenth (10th) Trading Day after the Conversion Date, and if after such tenth (10th) Trading Day the Holder purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by such Holder of the Underlying Shares which the Holder anticipated receiving upon such
conversion (a “Buy-In”), then the Obligor shall (A) pay in cash to the Holder (in addition to any remedies available to or elected by the Holder) the amount by which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that such Holder anticipated receiving from the conversion at issue multiplied by (2) the
market price of the Common Stock at the time of the sale giving rise to such purchase obligation and (B) at the option of the Holder, either reissue a Debenture in the principal amount equal to the principal amount of the attempted conversion
or deliver to the Holder the number of shares of Common Stock that would have been issued had the Obligor timely complied with its delivery requirements under Section 3(a)(i). For example, if the Holder purchases Common Stock having a
total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of Debentures with respect to which the market price of the Underlying Shares on the date of conversion was a total of $10,000 under clause (A) of the
immediately preceding sentence, the Obligor shall be required to pay the Holder $1,000. The Holder shall provide the Obligor written notice indicating the amounts payable to the Holder in respect of the Buy-In. 
 Section 4. Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms
hereof must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated
and kept on file by the sending party); or (iii) one (1) trading day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile
numbers for such communications shall be: 
  

 12 









			
	If to the Company, to:	  	i2 Telecom International, Inc.
		  	1200 Abernathy Road, Suite 1800
		  	Atlanta, GA 30328
		  	Attention: Paul Arena
		  	Telephone: (770) 512-7174
		  	Facsimile: (770) 844-9427
		
	With a copy to:	  	Richard Patel, LLP
		  	10900 Wilshire Boulevard, Suite 500
		  	Los Angeles, CA 90024
		  	Attention: Peter Hogan, Esq.
		  	Telephone: (310) 208-1182
		  	Facsimile: (310) 208-1154
		
	If to the Holder:	  	Cornell Capital Partners, LP
		  	101 Hudson Street, Suite 3700
		  	Jersey City, NJ 07303
		  	Attention: Mark Angelo
		  	Telephone: (201) 985-8300
		
	With a copy to:	  	David Gonzalez, Esq.
		  	101 Hudson Street – Suite 3700
		  	Jersey City, NJ 07302
		  	Telephone: (201) 985-8300
		  	Facsimile: (201) 985-8266

 or at such other address and/or facsimile number and/or to the attention of such other person as the recipient
party has specified by written notice given to each other party three (3) business days prior to the effectiveness of such change. Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other
communication, (ii) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally
recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above,
respectively. 
 Section 5. Definitions. For the purposes hereof, the following terms shall have the following
meanings: 
 “Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the
United States or a day on which banking institutions are authorized or required by law or other government action to close. 
 “Change of Control Transaction” means the occurrence of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange
Act) of effective control (whether through legal or beneficial ownership of 
  

 13 








 capital stock of the Obligor, by contract or otherwise) of in excess of fifty percent (50%) of the voting securities
of the Obligor (except that the acquisition of voting securities by the Holder shall not constitute a Change of Control Transaction for purposes hereof), (b) not including the addition of board members within ninety (90) days from the
First Closing, a replacement at one time or over time of more than one-half of the members of the board of directors of the Obligor which is not approved by a majority of those individuals who are members of the board of directors on the date hereof
(or by those individuals who are serving as members of the board of directors on any date whose nomination to the board of directors was approved by a majority of the members of the board of directors who are members on the date hereof),
(c) the merger, consolidation or sale of fifty percent (50%) or more of the assets of the Obligor or any subsidiary of the Obligor in one or a series of related transactions with or into another entity, or (d) the execution by the
Obligor of an agreement to which the Obligor is a party or by which it is bound, providing for any of the events set forth above in (a), (b) or (c). 
 “Commission” means the Securities and Exchange Commission. 
 “Common
Stock” means the common stock, par value $.001, of the Obligor and stock of any other class into which such shares may hereafter be changed or reclassified. 
 “Conversion Date” shall mean the date upon which the Holder gives the Obligor notice of their intention to effectuate a conversion of this Debenture into shares of the Company’s Common Stock as
outlined herein. 
 “Closing Bid Price” means the price per share in the last reported trade of the Common Stock on the OTC
or on the exchange which the Common Stock is then listed as quoted by Bloomberg, LP. 
 “Exchange Act” means the Securities
Exchange Act of 1934, as amended. 
 “Original Issue Date” shall mean the date of the first issuance of this Debenture
regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Debenture. 
 “Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency. 
 “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. 
 “Trading Day” means a day on which the shares of Common Stock are quoted on the OTC or quoted or traded on such Subsequent Market on
which the shares of Common Stock are then quoted or listed; provided, that in the event that the shares of Common Stock are not listed or quoted, then Trading Day shall mean a Business Day. 
 “Transaction Documents” means the Securities Purchase Agreement or any other agreement delivered in connection with the Securities
Purchase Agreement, including, without limitation, the Security Agreement, the Subsidiary Security Agreement, the Pledge Agreement, the Insider Pledge Agreement, the Irrevocable Transfer Agent Instructions, and the Registration Rights Agreement.

  

 14 








 “Underlying Shares” means the shares of Common Stock issuable upon conversion of this
Debenture or as payment of interest in accordance with the terms hereof. 
 “Underlying Shares Registration Statement” means
a registration statement meeting the requirements set forth in the Registration Rights Agreement, covering among other things the resale of the Underlying Shares and naming the Holder as a “selling stockholder” thereunder. 
 “Volume Weighted Average Price” means the Volume Weighted Average Price per share on the OTC or on the exchange which the Common Stock
is then listed as quoted by Bloomberg, LP. 
 Section 6. Except as expressly provided herein, no provision of this
Debenture shall alter or impair the obligations of the Obligor, which are absolute and unconditional, to pay the principal of, interest and other charges (if any) on, this Debenture at the time, place, and rate, and in the coin or currency, herein
prescribed. This Debenture is a direct obligation of the Obligor. This Debenture ranks pari passu with all other Debentures now or hereafter issued under the terms set forth herein. As long as this Debenture is outstanding, the Obligor shall not and
shall cause their subsidiaries not to, without the consent of the Holder, (i) amend its certificate of incorporation, bylaws or other charter documents so as to adversely affect any rights of the Holder; (ii) repay, repurchase or offer to
repay, repurchase or otherwise acquire shares of its Common Stock or other equity securities other than as to the Underlying Shares to the extent permitted or required under the Transaction Documents; or (iii) enter into any agreement with
respect to any of the foregoing. 
 Section 7. This Debenture shall not entitle the Holder to any of the rights of a
stockholder of the Obligor, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Obligor, unless and to the
extent converted into shares of Common Stock in accordance with the terms hereof. 
 Section 8. If this Debenture is
mutilated, lost, stolen or destroyed, the Obligor shall execute and deliver, in exchange and substitution for and upon cancellation of the mutilated Debenture, or in lieu of or in substitution for a lost, stolen or destroyed Debenture, a new
Debenture for the principal amount of this Debenture so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such Debenture, and of the ownership hereof, and indemnity, if requested, all
reasonably satisfactory to the Obligor. 
 Section 9. With the exception of the Obligor’s indebtedness to the Senior
Lenders under the Loan Agreement under which the Obligor granted the Senior Lenders a first-priorty security interest, no indebtedness of the Obligor is senior to this Debenture in right of payment, whether with respect to interest, damages or upon
liquidation or dissolution or otherwise. Without the Holder’s consent, the Obligor will not and will not permit any of their subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any
kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits there from that is senior in any respect to the obligations of the Obligor under this Debenture. 

 

 15 








 Section 10. This Debenture shall be governed by and construed in accordance with the
laws of the State of New Jersey, without giving effect to conflicts of laws thereof. Each of the parties consents to the jurisdiction of the Superior Courts of the State of New Jersey sitting in Hudson County, New Jersey and the U.S. District
Court for the District of New Jersey sitting in Newark, New Jersey in connection with any dispute arising under this Debenture and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum
non conveniens to the bringing of any such proceeding in such jurisdictions. 
 Section 11. If the Obligor
fails to strictly comply with the terms of this Debenture, then the Obligor shall reimburse the Holder promptly for all fees, costs and expenses, including, without limitation, attorneys’ fees and expenses incurred by the Holder in any action
in connection with this Debenture, including, without limitation, those incurred: (i) during any workout, attempted workout, and/or in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations,
(ii) collecting any sums which become due to the Holder, (iii) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (iv) the protection, preservation or enforcement of any rights or remedies of
the Holder. 
 Section 12. Any waiver by the Holder of a breach of any provision of this Debenture shall not operate as or
be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture. The failure of the Holder to insist upon strict adherence to any term of this Debenture on one or more occasions shall not
be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Debenture. Any waiver must be in writing. 
 Section 13. If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in
effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder shall
violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Obligor covenants (to the extent that it may lawfully do so) that it shall not
at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Obligor from paying all or any portion of the principal of or
interest on this Debenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this indenture, and the Obligor (to the extent it may lawfully do so) hereby
expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impeded the execution of any power herein granted to the Holder, but will suffer and permit the execution of
every such as though no such law has been enacted. 
  

 16 








 Section 14. Whenever any payment or other obligation hereunder shall be due on a day
other than a Business Day, such payment shall be made on the next succeeding Business Day. 
 Section 15. THE PARTIES
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT. 
 [REMAINDER OF PAGE INTENTIONLLY LEFT BLANK] 
  

 17 








 IN WITNESS WHEREOF, the Obligor has caused this Secured Convertible Debenture to be duly executed
by a duly authorized officer as of the date set forth above. 
  

			
	i2 TELECOM INTERNATIONAL, INC.
		
	By:	 	  

	Name:	 	Paul Arena
	Title:	 	Chief Executive Officer


  

 18 








 EXHIBIT “A” 
 NOTICE OF CONVERSION 
 (To be executed by the Holder in order to
convert the Debenture) 
 TO: 
 The
undersigned hereby irrevocably elects to convert $             of the principal amount of the above Debenture into Shares of Common Stock of i2 Telecom International, Inc., according
to the conditions stated therein, as of the Conversion Date written below. 
  

			
	Conversion Date:	  	_____________________________
		
	Applicable Conversion Price:	  	_____________________________
		
	Signature:	  	_____________________________
		
	Name:	  	_____________________________
		
	Address:	  	_____________________________
		
	Amount to be converted:	  	$_____________________________
		
	Amount of Debenture unconverted:	  	$_____________________________
		
	Conversion Price per share:	  	$_____________________________
		
	Number of shares of Common Stock to be issued:	  	_____________________________
		
	 Please issue the shares of Common Stock in the following
 name and to the following address:
	  	
 _____________________________

		
	Issue to:	  	_____________________________
		
	Authorized Signature:	  	_____________________________
		
	Name:	  	_____________________________
		
	Title:	  	_____________________________
		
	Phone Number:	  	_____________________________
		
	Broker DTC Participant Code:	  	_____________________________
		
	Account Number:	  	_____________________________

  

 19