TRANSFER
      AGENT INSTRUCTIONS

     

    PHANTOM
      FIBER CORPORATION

     

    January
      4, 2006

     

    


    PacWest
      Transfer, LLC

    360
      Main
      Street

    P.O.
      Box
      393

    Washington,
      Virgina 22747

    Attention:
      Laurel Poffenroth

    Ladies
      and Gentlemen:

     

    Reference
      is made to that certain Securities Purchase Agreement, dated as of January
      5,
      2006 (the "Agreement"),
      by and among Phantom Fiber Corporation, a Delaware corporation (the
"Company"),
      and the investors named on the Schedule of Buyers attached thereto
      (collectively, the "Holders"),
      pursuant to which the Company (x) is issuing to the Holders (i) convertible
      notes (the "Notes"),
      which are convertible into shares of the common stock of the Company, $0.001
      par
      value per share (the "Common
      Stock"),
      and (ii) warrants (the "Warrants"),
      which are exercisable to purchase shares of Common Stock.

     

    This
      letter shall serve as our authorization and direction to you (provided that
      you
      are the transfer agent of the Company at such time):

     

    (i)  to
      issue
      shares of Common Stock upon conversion of the Notes (the "Conversion
      Shares")
      to or
      upon the order of a Holder from time to time upon delivery to you of a properly
      completed and duly executed Conversion Notice, in the form attached hereto
      as
Exhibit
      I,
      which
      has been acknowledged by the Company as indicated by the signature of a duly
      authorized officer of the Company thereon;

     

    (ii)  to
      issue
      shares of Common Stock upon exercise of the Warrants (the "Warrant
      Shares")
      to or
      upon the order of a Holder from time to time upon delivery to you of a properly
      completed and duly executed Exercise Notice, in the form attached hereto as
      Exhibit
      II,
      which
      has been acknowledged by the Company as indicated by the signature of a duly
      authorized officer of the Company thereon.

     


      You
        acknowledge and agree that so long as you have previously received (a) written
        confirmation from the General Counsel of the Company (or its outside legal
        counsel) that either (i) a registration statement covering resales of the
        Conversion Shares or the Warrant Shares has been declared effective by the
        Securities and Exchange Commission (the "SEC")
        under the Securities Act of 1933, as amended (the "1933
        Act"), or (ii) that sales of the Conversion Shares and the
        Warrant Shares may be made in conformity with Rule 144 under the 1933 Act,
        and
        (b) if applicable, a copy of such registration statement, then, within three
        (3)
        business days after your receipt of a notice of transfer, Conversion Notice
        or
        the Exercise Notice, you shall issue the certificates representing the
        Conversion Shares and/or the Warrant Shares, as applicable, and such
        certificates shall not bear any legend restricting transfer of the Conversion
        Shares or the Warrant Shares thereby and should not be subject to any
        stop-transfer restriction; provided, however, that if such Conversion Shares
        and
        Warrant Shares are not registered for resale under the 1933 Act or able to
        be
        sold under Rule 144, then the certificates for such Conversion Shares and/or
        Warrant 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 MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN
      THE
      ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
      THE
      SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY
      ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
      SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
      FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
      ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
      SECURITIES.

     

    A
      form of
      written confirmation from the General Counsel of the Company or the Company's
      outside legal counsel that a registration statement covering resales of the
      Conversion Shares and the Warrant Shares has been declared effective by the
      SEC
      under the 1933 Act is attached hereto as Exhibit
      III.

     

    Please
      execute this letter in the space indicated to acknowledge your agreement to
      act
      in accordance with these instructions. Should you have any questions concerning
      this matter, please contact me at (416) 703-0900.

     

    Very
      truly yours,

     

    PHANTOM
      FIBER CORPORATION

     

    


    By:
      /s/
      Jeffrey Halloran_______________

    Name: Jeffrey
      Halloran

    Title: Chief
      Executive Officer

     

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    THE
      FOREGOING INSTRUCTIONS ARE

    ACKNOWLEDGED
      AND AGREED TO

     

    this
      5th
      day of
      January 2006

     

    PACWEST
      TRANSFER, LLC

     

     

    By: 
      /s/
      Laurel Poffenroth

    Name:
      Laurel Poffenroth 

    Title:
      President 

     

    Enclosures

     

    cc:    
       Magnetar
      Capital Master Fund, Ltd.

    Eleazer
      N. Klein, Esq.

    Mark
      J.
      Nuovo

    Konstantine
      (Gus) John Luas

    Pamela
      Ritchie

    The
      Sutherland Family Trust

    Linda
      Anne Abrams

    Russo
      Living Trust 5/1/98

    Mark
      P.
      DeVitre

    Howard
      Shapiro

    Financial
      Trading Consultants Pension Plan

    Meuqer
      Masters International Pension Plan

    Timothy
      Livak

    John
      Cramer and Sharon R. Hawkins

    Robert
      Kantor

    Harry
      D.
      Forman

    Philip
      Barone

     

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      I

    


    PHANTOM
      FIBER CORPORATION

    CONVERSION
      NOTICE

    


    Reference
      is made to the Senior Secured Convertible Note (the "Note")
      issued
      to the undersigned by PHANTOM FIBER CORPORATION (the "Company").
      In
      accordance with and pursuant to the Note, the undersigned hereby elects to
      convert the Conversion Amount (as defined in the Note) of the Note indicated
      below into shares of Common Stock $0.001 par value per share (the "Common
      Stock"),
      as of
      the date specified below.

     

    
      	
               

              Date
                of Conversion:

            	 
	
               

              Aggregate
                Conversion Amount to be converted:

            	 
	
               

              Please
                confirm the following information:

            
	
               

              Conversion
                Price:

            	 
	
               

              Number
                of shares of Common Stock to be issued:

            	 
	
               

              Please
                issue the Common Stock into which the Note is being converted in
                the
                following name and to the following address:

            
	
               

              Issue
                to:

            	 
	 	 
	 	 
	
               

              Facsimile
                Number:

            	 
	
               

              Authorization:

            	 
	
               

              By:

            	 
	
               

              Title:

            	 
	
               

              Dated:

            	 
	
               

              Account
                Number:

            	 
	
                (if
                electronic book entry transfer)

            	 
	
               

              Transaction
                Code Number:

            	 
	
                (if
                electronic book entry transfer)

            	 


    

    


     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    ACKNOWLEDGMENT

     

    The
      Company hereby acknowledges this Conversion Notice and hereby directs PacWest
      Transfer, LLC to
      issue
      the above indicated number of shares of Common Stock in accordance with the
      Transfer Agent Instructions dated January __, 2006 from the Company and
      acknowledged and agreed to by PacWest Transfer, LLC.

     

    
      	 	 	 
	 	PHANTOM
              FIBER
              CORPORATION
	 
 	 
 	 
 
	 	By:  	/s/ 
	 	
              

              Name:
                

              Title:

            
	 	
               

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      II

    


    


    The
      undersigned holder hereby exercises the right to purchase _________________
      of
      the shares of Common Stock ("Warrant
      Shares")
      of Phantom Fiber Corporation, a Delaware corporation (the
"Company"),
      evidenced by the attached Warrant to Purchase Common Stock (the
"Warrant").
      Capitalized terms used herein and not otherwise defined shall have the
      respective meanings set forth in the Warrant.

    


    1.
      Form
      of Exercise Price. The Holder intends that payment of the Exercise Price shall
      be made as:

    


    ____________ a
      "Cash
      Exercise"
      with
      respect to _________________ Warrant Shares; and/or

    


    ____________ a
      "Cashless
      Exercise"
      with
      respect to _______________ Warrant Shares.

    


    2.
      Notwithstanding anything to the contrary contained herein, this Exercise Notice
      shall constitute a representation by the Holder of the Warrant submitting this
      Exercise Notice that, after giving effect to the exercise provided for in this
      Exercise Notice, such Holder (together with its affiliates) will not have
      beneficial ownership (together with the beneficial ownership of such Person's
      affiliates) of a number of shares of Common Stock which exceeds the maximum
      percentage of the total outstanding shares of Common Stock as determined
      pursuant to the provisions of Section 1(f)(i) of the Warrant.

    


    3.
      Payment of Exercise Price. In the event that the holder has elected a Cash
      Exercise with respect to some or all of the Warrant Shares to be issued pursuant
      hereto, the holder shall pay the Aggregate Exercise Price in the sum of
      $___________________ to the Company in accordance with the terms of the
      Warrant.

    


    4.
      Delivery of Warrant Shares. The Company shall deliver to the holder __________
      Warrant Shares in accordance with the terms of the Warrant.

    


    Date:
      _____________________, ______

     

     

    _________________________________

    Name
      of
      Registered Holder

    


    


    By:
      ______________________________   

    Name:

    Title:


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    ACKNOWLEDGMENT

    


    


    The
      Company hereby acknowledges this Exercise Notice and hereby directs PacWest
      Transfer, LLC to issue the above indicated number of shares of Common Stock
      in
      accordance with the Transfer Agent Instructions dated January [ ], 2006 from
      the
      Company and acknowledged and agreed to by PacWest Transfer, LLC.

    


    PHANTOM
      FIBER CORPORATION

    


    


    


    By:
      _______________________________

    Name:

    Title:

    


    
      


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      III

     

    FORM
      OF NOTICE OF EFFECTIVENESS

    OF
      REGISTRATION STATEMENT

     

     

    [Transfer
      Agent]

    [Address]

    Attention:
      

    


    Re: Phantom
      Fiber Corporation

     

    Ladies
      and Gentlemen:

     

     

    [We
      are][I am] counsel to Phantom Fiber Corporation, a Delaware corporation (the
      "Company"),
      and have represented the Company in connection with that certain Securities
      Purchase Agreement (the "Securities
      Purchase Agreement")
      entered into by and among the Company and the buyers named therein
      (collectively, the "Holders")
      pursuant to which the Company issued to the Holders senior secured convertible
      notes (the "Notes")
      convertible into the Company's common stock, $0.001 par value per share
      (the "Common
      Stock"),
      warrants exercisable for shares of Common Stock (the
"Warrants").
      Pursuant to the Securities Purchase Agreement, the Company also has entered
      into
      a Registration Rights Agreement with the Holders (the
"Registration
      Rights Agreement")
      pursuant to which the Company agreed, among other things, to register the
      Registrable Securities (as defined in the Registration Rights Agreement),
      including the shares of Common Stock issuable upon conversion of the Notes
      and
      the shares of Common Stock issuable upon exercise of the Warrants, under the
      Securities Act of 1933, as amended (the "1933
      Act").
      In connection with the Company's obligations under the Registration Rights
      Agreement, on January ___, 2006, the Company filed a Registration Statement
      on
      Form SB-2 (File No. 333-_____________) (the "Registration
      Statement")
      with the Securities and Exchange Commission (the "SEC")
      relating to the Registrable Securities which names each of the Holders as a
      selling shareholder thereunder.

     

    In
      connection with the foregoing, [we][I] advise you that a member of the SEC's
      staff has advised [us][me] by telephone that the SEC has entered an order
      declaring the Registration Statement effective under the 1933 Act at
[ENTER
      TIME OF EFFECTIVENESS]
      on
[ENTER
      DATE OF EFFECTIVENESS]
      and
      [we][I] 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 Registrable Securities are available for resale under the 1933 Act
      pursuant to the Registration Statement.

     

    This
      letter shall serve as our standing opinion to you that the shares of Common
      Stock are freely transferable by the Holders pursuant to the Registration
      Statement. You need not require further letters from us to effect any future
      legend-free issuance or reissuance of shares of Common Stock to the Holders
      as
      contemplated by the Company's Irrevocable Transfer 

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Agent
      Instructions dated January __, 2006. 

     

     

    Very
      truly yours,

     

    [ISSUER'S
      COUNSEL]

     

    By:_____________________

    CC: [LIST
      NAMES OF HOLDERS]