NEITHER THIS
SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS
EXERCISABLE
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
"1933 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 1933 ACT AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES
LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
REASONABLY
ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE
REASONABLY ACCEPTABLE TO THE COMPANY.
WARRANT
To Purchase [_________] Shares of Common Stock of
i2 TELECOM INTERNATIONAL, INC.
THIS WARRANT (the "Warrant") certifies that, for value
received,
[__________] (the "Holder"), is entitled, upon the terms and
subject to the
limitations on exercise and the conditions hereinafter set forth,
at any time on
or after ___________, 2006 (the "Initial Exercise Date") and on or
prior to the
third-year anniversary of the Initial Exercise Date (the
"Termination Date"),
but not thereafter, to subscribe for and purchase from i2 Telecom
International,
Inc., a Washington corporation (the "Company"), up to [________]
shares (the
"Warrant Shares") of common stock, no par value per share, of the
Company (the
"Common Stock"). The purchase price of each share of Common Stock
(the "Exercise
Price") under this Warrant shall be $0.07, subject to adjustment
hereunder.
1. Title to Warrant. Prior to the Termination Date and subject to
compliance
with applicable laws and Section 7 of this Warrant, this Warrant
and all rights
hereunder are transferable, in whole or in part, at the office or
agency of the
Company by the Holder in person or by duly authorized attorney,
upon surrender
of this Warrant together with the Assignment Form attached hereto
as Exhibit A
(the "Assignment Form"), properly endorsed.
2. Authorization of Shares. The Company covenants that all Warrant
Shares which
may be issued upon the exercise of the purchase rights represented
by this
Warrant will, upon exercise of the purchase rights represented by
this Warrant,
be duly authorized, validly issued, fully paid and nonassessable
and free from
all taxes, liens and charges in respect of the issue thereof (other
than taxes
in respect of any transfer occurring contemporaneously with such
issue).
3. Exercise of Warrant.
(a) Exercise of the purchase rights represented by this
Warrant may be made
<PAGE>
at any time or times on or after the Initial Exercise Date and on or before
the
Termination Date by
delivery to the Company (or such other office or agency of
the Company as it may designate by notice in writing to the
registered Holder at
the address of such
Holder appearing on the books of the Company) of a duly
executed facsimile copy of the Notice of Exercise in the form
attached hereto as
Exhibit B (the "Notice
of Exercise"); provided, however, within three (3)
Business Days of the
date said Notice of Exercise is delivered to the Company,
the Holder shall have
surrendered
this Warrant to the Company, and, if the
Holder has not elected
to make a cashless
exercise as provided below, the
Company shall have
received payment of the aggregate Exercise Price of the
shares thereby
purchased by wire transfer or cashier's check drawn on a United
States bank.
Certificates
for Warrant
Shares purchased hereunder shall be
delivered to the Holder no later than five (5) Business
Days after the
delivery
to the Company of the Notice of Exercise, surrender of this Warrant and, if
the
Holder has not elected to make a cashless exercise as provided
below, payment of
the aggregate Exercise Price as set forth above ("Warrant Share
Delivery Date").
Prior to the issuance of such Warrant Shares, if the Company fails
to deliver to
the Holder a
certificate
or certificates representing the Warrant Shares
pursuant to this
Section 3(a) by the
Warrant Share
Delivery Date, then the
Holder will have the right to rescind such exercise. Nothing herein shall limit
a Holder's right to pursue any other remedies available to it
hereunder, at law
or in equity,
including, without
limitation, a decree
of specific performance
and/or injunctive relief with respect to the Company's failure to
timely deliver
certificates
representing Warrant
Shares as required pursuant to the terms
hereof.
(b) If this Warrant shall have been exercised in part, then the
Company shall,
at the time of delivery of the certificate or certificates
representing the
Warrant Shares, deliver to Holder a new Warrant evidencing the
rights of Holder
to purchase the unpurchased Warrant Shares called for by this
Warrant, which new
Warrant shall in all other respects be identical with this
Warrant.
(c) In the event that the Holder elects to make a cashless
exercise as provided above, the Company shall issue to the Holder
the number of
shares of Common Stock equal to the result obtained by (i)
subtracting B from A,
(ii) multiplying the difference by C, and (iii) dividing the
product by A, as
set forth in the following equation:
X = (A - B) x C where:
A
X
= the number of shares of Common Stock issuable upon
a cashless exercise of the Warrant pursuant to the
provisions of this Section 3.
A
= the Fair Market Value (as defined below) of one
share of Common Stock on the date of net issuance
exercise.
B = the Exercise Price for one share of Common Stock under
this Warrant.
C = the number of shares of Common Stock as to which this
Warrant is exercisable.
If the foregoing calculation results in a negative number,
then no shares of Common Stock shall be issued upon a cashless
exercise.
<PAGE>
For the purpose of such calculations, the fair market value
per share of the shares of Common Stock shall be, (i) if the
cashless exercise
of the Warrant is in connection with a public offering of the
Company's Common
Stock, the public offering price (before deducting commission,
discounts or
expenses) at which the Common Stock is sold in such offering, (ii)
if a public
market for the Company's Common Stock exists at the time of such
exercise, the
average of the closing bid and asked prices of the Common Stock
quoted in the
Over-The-Counter Market Summary or the last reported sale price of
the Common
Stock or closing price quoted on the Nasdaq National Market or on
any exchange
on which the Common Stock is listed, whichever is applicable, as
published in
The Wall Street Journal for the five (5) trading days prior to the
date of
determination of fair market value; or (iii) if there is no public
market for
the Company's Common Stock, determined by the Company's Board of
Directors in
good faith.
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing
fractional shares shall be issued upon the exercise of this
Warrant. As to any
fraction of a share which Holder would otherwise be entitled to
purchase upon
such exercise, the Company shall round such fraction of a share up
to the
nearest whole share.
5. Charges, Taxes and Expenses. Issuance of certificates for
Warrant Shares
shall be made without charge to the Holder for any issue or
transfer tax or
other incidental expense in respect of the issuance of such
certificate, all of
which taxes and expenses shall be paid by the Company, and such
certificates
shall be issued in the name of the Holder or in such name or names
as may be
directed by the Holder; provided, however, that in the event
certificates for
Warrant Shares are to be issued in a name other than the name of
the Holder,
this Warrant when surrendered for exercise shall be accompanied by
the
Assignment Form duly executed by the Holder, and the Company may
require, as a
condition thereto, the payment of a sum sufficient to reimburse it
for any
transfer tax incidental thereto.
6. Closing of Books. The Company will not close its shareholder
books or records
in any manner which prevents the timely exercise of this Warrant,
pursuant to
the terms hereof.
7. Transfer, Division and Combination.
(a) Subject to compliance with any applicable securities laws and
with the
provisions of Sections 1, 5 and 7(e) hereof, this Warrant and all
rights
hereunder are transferable, in whole or in part, upon surrender of
this Warrant
at the principal office of the Company, together with an Assignment
Form
completed and duly executed by the Holder or its agent or attorney
and funds
sufficient to pay any transfer taxes payable upon the making of
such transfer.
Upon such surrender and, if required, such payment, the Company
shall execute
and deliver a new Warrant or Warrants in the name of the assignee
or assignees
and in the denomination or denominations specified in the
Assignment Form, and
shall issue to the assignor a new Warrant evidencing the portion of
this Warrant
not so assigned, and this Warrant shall promptly be cancelled. A
Warrant, if
properly assigned, may be exercised by a new holder for the
purchase of Warrant
Shares without having a new Warrant issued.
(b) This Warrant may be divided or combined with other Warrants
upon
presentation hereof at the aforesaid office of the Company,
together with a
written notice specifying the names and denominations in which new
Warrants are
to be issued, signed by the Holder or its agent or attorney.
Subject to
compliance with Section 7(a), as to any transfer which
<PAGE>
may be involved in such division or combination, the Company shall execute and
deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to
be
divided or combined in accordance with such notice.
(c) The Company shall prepare, issue and deliver at its own expense
(other than
transfer taxes) the new Warrant or Warrants under this Section
7.
(d) The Company agrees to maintain, at its aforesaid office, books
for the
registration and the registration of transfer of the Warrants.
(e) If, at the time of the surrender of this Warrant in connection
with any
transfer of this Warrant, the transfer of this Warrant shall not be
registered
pursuant to an effective registration statement under the 1933 Act
and under
applicable state securities or blue sky laws, the Company may
require, as a
condition of allowing such transfer: (i) that the Holder or
assignee of this
Warrant, as the case may be, furnish to the Company a written
opinion of counsel
(which opinion shall be in form, substance and scope customary for
opinions of
counsel in comparable transactions) to the effect that such
transfer may be made
without registration under the 1933 Act and under applicable state
securities or
blue sky laws; (ii) that the Holder or assignee execute and deliver
to the
Company an investment representation letter in form and substance
reasonably
satisfactory to the Company; and (iii) that the assignee be an
"accredited
investor" as defined in Rule 501(a) promulgated under the 1933 Act
or a
qualified institutional buyer as defined in Rule 144A(a) under the
1933 Act.
8. No Rights as Shareholder until Exercise. This Warrant does not
entitle the
Holder to any voting rights or other rights as a shareholder of the
Company
prior to the exercise hereof. Upon the surrender of this Warrant,
the delivery
of the Notice of Exercise by facsimile copy, and the payment of the
aggregate
Exercise Price and the payment of all taxes required to be paid by
the Holder
prior to the issuance of the Warrant Shares pursuant to Section 5,
if any, the
Warrant Shares so purchased shall be and be deemed to be issued to
such Holder
as the record owner of such shares as of the close of business on
the later of
the date of such surrender, delivery or payment.
9. Loss, Theft, Destruction or Mutilation of Warrant. The Company
covenants that
upon receipt by the Company of evidence reasonably satisfactory to
it of the
loss, theft, destruction or mutilation of this Warrant or any stock
certificate
relating to the Warrant Shares, and in case of loss, theft or
destruction, of
indemnity or security reasonably satisfactory to it (which, in the
case of the
Warra
