PLEDGE AGREEMENT
This PLEDGE AGREEMENT, dated as of
January 30, 2009 (this “ Agreement ”) between i2
Telecom International, Inc., a Washington corporation (herein
called the “ Pledgor ”), and Vestal Venture
Capital , (“Payee”) located at 6471 Enclave Way,
Boca Raton, Florida 33496 for itself, as lender, and as agent for
other lenders that now are or hereafter become parties to the Loan
Agreement (defined below) (“ Agent ”). Vestal
Venture Capital and such other lenders are individually
referred to as a “ Lender ” and collectively as
the “ Lenders .”
W I T N E S S E T H
:
WHEREAS, Pledgor and Lender, among
others, are parties to that certain Loan Agreement, dated as of
even date herewith (the “ Loan Agreement
”);
WHEREAS, Pledgor is the record and
beneficial owner of all of the shares of stock of i2 Telecom
International, Inc., a Delaware corporation (“i2(DE)”)
as described in Schedule I hereto; and
WHEREAS, as a condition to the
making of the Term Loan under the Loan Agreement and as security
for all of the Liabilities of the Borrower under the Loan Agreement
Lenders are requiring that Pledgor execute and deliver this
Agreement and grant the security interests contemplated
hereby.
NOW, THEREFORE, in consideration of
the premises and the covenants hereinafter contained and to induce
the Lenders to make the Term Loan under the Loan Agreement, the
parties have agreed as follows:
1.
Definitions
. Unless otherwise defined herein,
terms defined in the Loan Agreement are used herein as therein
defined, and the following shall have (unless otherwise provided
elsewhere in this Agreement) the following respective meanings
(such meanings being equally applicable to both the singular and
plural form of the terms defined):
“ Bankruptcy Code
” shall mean title 11, United States Code, as amended from
time to time, and any successor statute thereto.
“ Pledged Collateral
” shall have the meaning assigned to such term in Section
2 hereof.
“ Pledged Shares
” shall be all authorized, issued and outstanding shares of
capital stock of i2(DE) as listed on Schedule I
hereto.
“ Secured Obligations
” shall have the meaning assigned to such term in Section
3 hereof.
2.
Pledge . Pledgor hereby agrees to pledge to Agent within
ninety (90) days if the loan is not paid, for the benefit of the
Lender, and grants to Agent, for the benefit of the
Lender, a first priority security
interest in all of the following (collectively, the “
Pledged Collateral ”):
(a) all
of Pledgor’s right, title and interest in and to the Pledged
Shares and the certificates representing the Pledged Shares, and
all dividends, distributions, cash, instruments and other property
or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the
Pledged Shares of Pledgor;
(b) all
additional shares of stock of i2(DE) and any new securities, or any
other property from time to time acquired by Pledgor in any manner
(which shares shall then be deemed to be part of the Pledged
Shares), and the certificates representing such additional shares,
and all dividends, distributions, cash, instruments and other
property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all
of such shares; and
(c) the
products or proceeds of any sale or other disposition of the
Pledged Shares.
3.
Security for Obligations . This Agreement secures, and the
Pledged Collateral is security for, the prompt payment in full when
due, whether at stated maturity, by acceleration or otherwise, and
performance of, all Liabilities now or hereafter existing under and
as defined in the Loan Agreement and all obligations of Pledgor now
or hereafter existing under this Agreement including, without
limitation, for all fees, costs and expenses of Agent whether in
connection with collection actions hereunder or otherwise
(collectively, the “ Secured Obligations
”).
4.
Delivery of Pledged Collateral . All certificates
representing or evidencing the Pledged Shares shall be delivered to
and held by or on behalf of Agent within ninety (90) days if the
loan is not paid, for the benefit of the Lender, pursuant hereto
and shall be accompanied by duly executed instruments of transfer
or assignment in blank, all in form and substance satisfactory to
Agent. If Pledgor receives any other property described in Section
2 above, Pledgor shall immediately deliver such property to Agent
to be held by Agent in the same manner as the property held
pursuant to this Agreement.
5.
Representations and Warranties . Pledgor represents and
warrants to Agent that as of the date of this Agreement:
(a) Pledgor
is, and at the time of delivery of the Pledged Shares to Agent
pursuant to Section 4 hereof will be, the sole holder of
record and the sole beneficial owner of the Pledged Collateral
pledged by Pledgor free and clear of any Lien thereon or affecting
the title thereto, except for any Lien created by this Agreement or
the Loan Agreement.
(b) All
of the Pledged Shares have been duly authorized, validly issued and
are fully paid and non-assessable.
(c) Pledgor
has the right and requisite corporate power and authority to
pledge, assign, transfer, deliver, deposit and set over the Pledged
Collateral pledged by Pledgor to Agent, for the benefit of the
Lender, as provided herein.
(d) None
of the Pledged Shares has been issued or transferred in violation
of the securities regulations, securities disclosure or similar
laws of any jurisdiction to which such issuance or transfer may be
subject.
(e) All
of the Pledged Shares are presently owned by Pledgor, and are
presently represented by the stock certificates delivered to Agent
pursuant to this Agreement and as listed on Schedule I
hereto. As of the date hereof, there are no existing options,
warrants, calls or commitments of any character whatsoever relating
to the Pledged Shares or any other securities of i2(DE).
(f) No
consent, approval, authorization or other order of any Person and
no consent, authorization, approval, or other action by, and no
notice to or filing with, any governmental authority is required
(i) for the pledge by Pledgor of the Pledged Collateral pursuant to
this Agreement or for the execution, delivery or performance of
this Agreement by Pledgor or (ii) for the exercise by Agent, for
its benefit, of the voting or other rights provided for in this
Agreement or the remedies in respect of the Pledged Collateral
pursuant to this Agreement, except as may be required in connection
with such disposition by laws affecting the offering and sale of
securities generally.
(g) The
pledge, assignment and delivery of the Pledged Collateral pursuant
to this Agreement will create a valid first priority Lien on and a
first priority perfected security interest in the Pledged
Collateral pledged by Pledgor, and the proceeds thereof, securing
the payment of the Secured Obligations, subject to no other Lien or
security interest.
(h) This
Agreement has been duly authorized, executed and delivered by
Pledgor and constitutes a legal, valid and binding obligation of
Pledgor enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting
creditors’ rights generally or the application of general
equitable principles.
(i) The
Pledged Shares constitute 100% of the issued and outstanding shares
of capital stock of i2(DE).
The representations and warranties
set forth in this Section 5 shall survive the execution and
delivery of this Agreement.
6.
Covenants . Pledgor covenants and agrees that until the
termination of this Agreement:
(a) Without
the prior written consent of Agent, Pledgor will not sell, assign,
transfer, pledge, or otherwise encumber any of its rights in or to
the Pledged Collateral pledged by Pledgor, or any unpaid dividends
or other distributions or payments with respect to the Pledged
Collateral or grant a Lien in the Pledged Collateral.
(b) Pledgor
will, at its expense, promptly execute, acknowledge and deliver all
such instruments and take all such action as Agent from time to
time may reasonably request in order to ensure to Agent the
benefits of the Liens in and to the Pledged Collateral intended to
be created by this Agreement, including the filing of any necessary
Uniform Commercial Code
financing statements, which may be
filed by Agent with or without the signature of Pledgor, and will
cooperate with Agent, at Pledgor’s expense, in obtaining all
necessary approvals and making all necessary filings under federal
or state law in connection with such Liens or any sale or transfer
of the Pledged Collateral.
(c) Pledgor
has and will defend the title to the Pledged Collateral and the
Liens of Agent in the Pledged Collateral against the claim of any
Person and will maintain and preserve such Liens until the
indefeasible payment in full of the Secured Obligations.
(d) Pledgor
will, upon obtaining any additional shares of stock of i2(DE),
which shares are not already Pledged Collateral or any products or
proceeds of the stock of i2(DE), promptly, and in no event in less
than two Business Days, deliver to Agent certificates representing
such stock in form suitable for transfer and duly executed
instruments of transfer or assignment in blank, all in form and
substance satisfactory to Agent, to be held by Agent in the same
manner as the Pledged Shares, and such stock shall be pledged under
this Agreement and constitute a part of the Pledged
Collateral.
7.
Pledgor’s Rights . As long as no Default or Event of
Default shall have occurred and be continuing and until written
notice shall be given to Pledgor in accordance with Section
8(a) hereof, Pledgor shall have the right, from time to time,
to vote and give consents with respect to the Pledged Collateral,
or any part thereof for all purposes not inconsistent with the
provisions of this Agreement, the Loan Agreement, and any other
Ancillary Agreement; provided , however , that no
vote shall be cast, and no consent shall be given or action taken,
which would have the effect of impairing the position or interest
of Agent in respect of the Pledged Collateral or which would
authorize or effect (except as and to the extent expressly
permitted by the Loan Agreement) (i) the dissolution or
liquidation, in whole or in part, of i2(DE), (ii) the consolidation
or merger of i2(DE) with any other Person other than Pledgor, (iii)
the sale, disposition or encumbrance of all or substantially all of
the assets of i2(DE) other than as permitted by the Loan Agreement,
(iv) any change in the authorized number of shares, the stated
capital or the authorized share capital of i2(DE) or the issuance
of any additional shares of i2(DE) stock, or (v) the alteration of
the voting rights with respect to the stock of i2(DE).
8.
Defaults and Remedies . (a) Upon the occurrence of an Event
of Default (as defined in the Loan Agreement) and during the
continuation of such Event of Default, then on or at any time after
such declaration (provided that such declaration is not rescinded
by the Agent) and upon written notice to Pledgor, Agent (personally
or through an agent) is hereby authorized and empowered to transfer
and register in its name or in the name of its nominee the whole or
any part of the Pledged Collateral, to exchange certificates or
instruments representing or evidencing Pledged Shares for
certificates or instruments of smaller or larger denominations, to
exercise the voting and all other rights as a stockholder with
respect thereto, to collect and receive all cash dividends and
other distributions made thereon, to sell in one or more sales
after ten (10) days’ notice of the time and place of any
public sale or of the time after which a private sale is to take
place (which notice Pledgor agrees is commercially reasonable) the
whole or any part of the Pledged Collateral and to otherwise act
with respect to the Pledged Collateral as though Agent was the
outright owner thereof, Pledgor hereby irrevocably constituting and
appointing Agent as the proxy and attorney-in-fact of Pledgor, with
full power of substitution to do so, and which shall remain in
effect until the Secured Obligations are indefeasibly paid in
full;
provided , however , Agent shall not have any duty
to exercise any such right or to preserve the same and shall not be
liable for any failure to do so or for any delay in doing so. Any
sale shall be made at a public or private sale at Agent’s
place of business, or at any place to be named in the notice of
sale, either for cash or upon credit or for future delivery at such
price as Agent may deem fair, and Agent may be the purchaser of the
whole or any part of the Pledged Collateral so sold and hold the
same thereafter in its own right free from any claim of Pledgor or
any right of redemption. Each sale shall be made to the highest
bidder, but Agent reserves the right to reject any and all bids at
such sale which, in its discretion, it shall deem inadequate.
Demands of performance, except as otherwise herein specifically
provided for, notices of sale, advertisements and the presence of
property at sale are hereby waived and any sale hereunder may be
conducted by an auctioneer or any officer or agent of
Agent.
(b) If,
at the original time or times appointed for the sale of the whole
or any part of the Pledged Collateral, the highest bid, if there be
but one sale, shall be inadequate to discharge in full all the
Secured Obligations, or if the Pledged Collateral be offered for
sale in lots, if at any of such sales, the highest bid for the lot
offered for sale would indicate to Agent, in its discretion, the
unlikelihood of the proceeds of the sales of the whole of the
Pledged Collateral being sufficient to discharge all the Secured
Obligations, Agent may, on one or more occasions and in its
discretion, postpone any of said sales by public announcement at
the time of sale or the time of previous postponement of sale, and
no other notice o
