Document:

Unassociated Document

    Exhibit
      10.3

     

    NEITHER
      THIS NOTE NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN THE
      SUBJECT OF REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
      THE SECURITIES LAWS OF ANY STATE, AND THE SAME HAVE BEEN (OR WILL BE, WITH
      RESPECT TO THE SECURITIES ISSUABLE UPON CONVERSION HEREOF) ISSUED IN RELIANCE
      ON
      EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. NEITHER
      THIS NOTE NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE SOLD,
      TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT AS PERMITTED
      UNDER SUCH SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
      THEREFROM.

     

    2%
      SECURED CONVERTIBLE PROMISSORY NOTE

     

    
      	
              $60,000

            	
              Ridgefield,
                Connecticut

            
	
              January
                24, 2007

            	 

    

    

    FOR
      VALUE
      RECEIVED, the undersigned, Global Matrechs, Inc., a Delaware corporation (the
      “Maker”),
      hereby promises to pay to Southridge Partners LP (the “Payee”)
      the
      principal sum of sixty thousand dollars ($60,000) in one installment due on
      December 31, 2007 (the “Maturity
      Date”)
      together with interest from and after the date hereof at the rate of two percent
      (2%) per annum computed on the unpaid principal balance on the basis of a
      365-day year. All payments made hereunder shall be made in immediately available
      funds. By acceptance of this Note, the Payee represents, warrants, covenants
      and
      agrees that it will abide by and be bound by its terms. 

     

    1. Conversion.
      The
      Payee shall have the option at any time to convert all or a portion of the
      outstanding principal and interest on this Note into a number of shares of
      common stock, $0.001 par value per share (the “Common
      Stock”)
      equal
      to a fraction, the numerator of which shall be the amount of principal and
      interest being so converted and the denominator of which shall be equal to
      the
      Conversion Price (the “Conversion
      Shares”).
“The
      “Conversion
      Price”
shall
      be equal to eighty percent (80%) of the average of the seven lowest closing
      bid
      prices for the ten (10) trading days immediately preceding the Conversion Date.
      The “Conversion Date” shall be defined as the date in which the Issuer receives
      written notice by Holder of its election to convert all or a portion of the
      Note
      pursuant to this Section 1.

     

    2. Restrictions
      on Conversion.
      Notwithstanding anything to the contrary contained herein, the number of
      Conversion Shares that may be acquired by the Payee upon any conversion of
      this
      Note (or otherwise in respect hereof) shall be limited to the extent necessary
      to insure that, following such conversion, the total number of shares of Common
      Stock then beneficially owned by such Payee and its affiliates and any other
      persons whose beneficial ownership of Common Stock would be aggregated with
      the
      Payee’s for purposes of Section 13(d) of the Securities Exchange Act of 1934, as
      amended (the “Exchange
      Act”),
      does
      not exceed 4.999% of the total number of issued and outstanding shares of Common
      Stock (including for such purpose the shares of Common Stock issuable upon
      such
      conversion). For such purposes, beneficial ownership shall be determined in
      accordance with Section 13(d) of the Exchange Act and the rules and regulations
      promulgated thereunder.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    3. Prepayment The
      Maker
      shall have the right to redeem this Note at any time by providing written notice
      to the Payee by making a cash payment to the Payee of the outstanding principal
      amount of the Note multiplied by 120%, plus all accrued interest: Written notice
      to the Payee shall be received at least 5 business days prior to the date of
      redemption payment (“Redemption Date”). If the redemption payment is not made on
      or before the Redemption Date, the redemption notice shall be rendered null
      and
      void and the Payee thereafter shall have the right to convert any portion of
      the
      outstanding principal of the Note.

     

    4. Adjustment
      for Dividends, Distributions, Subdivisions, Combinations, Mergers,
      Consolidations or Sale of Assets.

     

    (a) Manner
      of Adjustment.

     

    (i) Stock
      Dividends, Distributions or Subdivisions.
      In the
      event the Maker shall issue shares of Common Stock in a stock dividend, stock
      distribution or subdivision, the Conversion Price in effect immediately before
      such stock dividend, stock distribution or subdivision shall, concurrently
      with
      the effectiveness of such stock dividend, stock distribution or subdivision,
      be
      proportionately decreased and the number of shares of Common Stock issuable
      upon
      conversion of this Note shall be proportionately increased.

     

    (ii) Combinations
      or Consolidations.
      In the
      event the outstanding shares of Common Stock shall be combined or consolidated,
      by reclassification or otherwise, into a lesser number of shares of Common
      Stock, the Conversion Price in effect immediately prior to such combination
      or
      consolidation shall, concurrently with the effectiveness of such combination
      or
      consolidation, be proportionately increased and the number of shares of Common
      Stock issuable upon conversion of this Note shall be proportionately
      decreased.

     

    (iii) Adjustment
      for Reclassification, Exchange or Substitution.
      In the
      event that the class of securities issuable upon the conversion of this Note
      shall be changed into the same or a different number of shares of any class
      or
      classes of stock, whether by capital reorganization, reclassification or
      otherwise, then and in each such event the Payee shall have the right thereafter
      to convert this Note for the kind and amount of shares of stock and other
      securities and property receivable upon such reorganization, reclassification,
      or other change, by Payees of the number of shares of the class of securities
      into which such Note might have been convertible for immediately prior to such
      reorganization, reclassification, or change, all subject to further adjustment
      as provided herein.

     

    (iv) Adjustment
      for Merger, Consolidation or Sale of Assets.
      In the
      event that the Maker shall merge or consolidate with or into another entity
      or
      sell all or substantially all of its assets, this Note shall thereafter be
      convertible for the kind and amount of shares of stock or other securities
      or
      property to which a Payee of the number of shares of Common Stock of the Maker
      deliverable upon conversion of this Note would have been entitled upon such
      consolidation, merger or sale; and, in such case, appropriate adjustment (as
      determined in good faith by the Maker’s Board of Directors) shall be made in the
      application of the provisions set forth in this Section 4 with respect to
      the rights and interest thereafter of the Payee of this Note, to the end that
      the provisions set forth in this Section 4 shall thereafter be applicable,
      as nearly as reasonably may be, in relation to any shares of stock or other
      property thereafter deliverable upon the conversion of this Note.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

     

    (b) Certificate
      as to Adjustments.
      Upon
      the occurrence of each adjustment or readjustment of the Conversion Price
      pursuant to this Section 4, the Maker at its expense shall promptly compute
      such adjustment or readjustment in accordance with the terms hereof and furnish
      to the Payee a certificate setting forth such adjustment or readjustment and
      showing in detail the facts upon which such adjustment or readjustment is
      based.

     

    (c) Closing
      of Books.
      The
      Maker shall at no time close its transfer books against the transfer of any
      shares of Common Stock issued or issuable upon the conversion of this Note
      in
      any manner which interferes with the timely and proper issuance of such
      shares.

     

    5. Miscellaneous.

     

    (a) Restricted
      Securities.
      By
      acceptance hereof, the Payee understands and agrees that this Note is a
“restricted security” under the federal securities laws inasmuch as it is being
      acquired from the Maker in a transaction not involving a public offering and
      has
      not been the subject of registration under the Securities Act and that under
      such laws and applicable regulations such securities may be resold in the
      absence of registration under the Securities Act only in certain limited
      circumstances. The Payee hereby represents that it is familiar with Rule 144,
      as
      promulgated by the Securities and Exchange Commission under the Securities
      Act,
      as currently in effect, and understands the resale limitations imposed thereby
      and by the Securities Act.

     

    (b) Legends.
      It is
      understood that this Note shall bear the legend (in addition to any legends
      which may be required, in the opinion of the Maker’s counsel, by the securities
      laws of the state where the Payee is located) set forth on the first page of
      this Note.

     

    

     

    6. The
      following shall constitute an “Event of Default”:

    

    
      	 	
              a.

            	
              The
                Maker shall default in the payment of principal or interest on this
                Note
                and same shall continue for a period of twenty (20) days;
                or

            

    

    

    
      	 	
              b.

            	
              The
                Maker shall (1) make an assignment for the benefit of creditors or
                commence proceedings for its dissolution; or (2) apply for or consent
                to
                the appointment of a trustee, liquidator or receiver for its or for
                a
                substantial part of its property or business;
                or

            

    

    

    
      	 	
              c.

            	
              A
                trustee, liquidator or receiver shall be appointed for the Maker
                or for a
                substantial part of its property or business without its consent
                and shall
                not be discharged within sixty (60) days after such appointment;
                or

            

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    

    
      	 	
              d.

            	
              Any
                governmental agency or any court of competent jurisdiction at the
                instance
                of any governmental agency shall assume custody or control of the
                whole or
                any substantial portion of the properties or assets of the Maker
                and shall
                not be dismissed within sixty (60) days thereafter;
                or

            

    

    

    
      	 	
              e.

            	
              Except
                for any judgments, settlements or related litigations or actions
                disclosed
                in the Maker’s Annual Report on Form 10-K for the year ended December 31,
                2005, any money judgment, writ or warrant of attachment, or similar
                process in excess of One Hundred Fifty Thousand ($150,000) Dollars
                in the
                aggregate shall be entered or filed against the Maker or any of its
                properties or other assets and shall remain unpaid, unvacated, unbonded
                or
                unstayed for a period of sixty (60) days;
                or

            

    

    

    
      	 	
              f.

            	
              Bankruptcy,
                reorganization, insolvency or liquidation proceedings or other proceedings
                for relief under any bankruptcy law or any law for the relief of
                debtors
                shall be instituted by or against the Maker and, if instituted against
                the
                Maker, shall not be dismissed within sixty (60) days after such
                institution or the Maker shall by any action or answer approve of,
                consent
                to, or acquiesce in any such proceedings or admit the material allegations
                of, or default in answering a petition filed in any such proceeding;
                

            

    

    

    Upon
      the
      occurrence of an Event of Default, or at any time thereafter, and in each and
      every such case, unless such Event of Default shall have been waived in writing
      by the Payee (which waiver shall not be deemed to be a waiver of any subsequent
      default) at the option of the Payee and in the Payee's sole discretion, the
      Payee may consider all obligations under this Note immediately due and payable,
      without presentment, demand, protest or notice of any kind, all of which are
      hereby expressly waived by the Company, anything herein or in any note or other
      instruments contained to the contrary notwithstanding, and the Payee may
      immediately enforce any and all of the Payee's rights and remedies provided
      herein or any other rights or remedies afforded by law. Upon the occurrence
      of
      any Event of Default as set forth herein and during any period that the Company
      shall have failed to make payment of any principal or Interest due hereunder,
      at
      the option of Payee and without notice to the Company, the Interest shall be
      added to the outstanding principal balance hereof, and the entire outstanding
      principal balance, as so adjusted, shall bear interest thereafter until paid
      at
      an annual rate of eighteen percent (18%) (the “Default Rate”). 

    

     

    7. Presentment.
      Except as set forth herein, the Maker waives presentment, demand and
      presentation for payment, notice of nonpayment and dishonor, protest and notice
      of protest and expressly agrees that this Note or any payment hereunder may
      be
      extended from time to time by the Payee without in any way affecting the
      liability of the Maker.

     

    8
      . All
      provisions herein made are expressly limited so that in no event whatsoever,
      whether by reason of advancement of proceeds hereof, acceleration of maturity
      of
      the unpaid balance hereof or otherwise, shall the amount paid or agreed to
      be
      paid to Payee for the use of the money advanced or to be advanced hereunder
      exceed the maximum rate of interest allowed to be charged under applicable
      law
      (the “Maximum Rate”), regardless of whether or not there has been an
      acceleration of the payment of principal as set forth herein. If, from any
      circumstances whatsoever, the fulfillment of any provision of this Note or
      any
      other agreement or instrument now or hereafter evidencing, securing or in any
      way relating to the indebtedness evidenced hereby shall involve the payment
      of
      interest in excess of the Maximum Rate, then, ipso
      facto,
      the
      obligation to pay interest hereunder shall be reduced to the Maximum Rate;
      and
      if from any circumstance whatsoever, Payee shall ever receive interest, the
      amount of which would exceed the amount collectible at the Maximum Rate, such
      amount as would be excessive interest shall be applied to the reduction of
      the
      principal balance remaining unpaid hereunder and not to the payment of interest.
      This provision shall control every other provision in any and all other
      agreements and instruments existing or hereafter arising between the Maker
      and
      Payee with respect to the indebtedness evidenced hereby. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

     

    9. In
      the
      event this Note is placed in the hands of an attorney for collection, or if
      Payee incurs any costs incident to the collection of the indebtedness evidenced
      hereby, the Maker agrees to pay to Payee an amount equal to all such costs,
      including without limitation all reasonable attorneys' fees and all court costs.
      

     

    10. Notices.

     

    (c) Notices
      to the Payee.
      Whenever any provision of this Note requires a notice to be given or a request
      to be made to the Payee by the Maker, then and in each such case, any such
      notice or request shall be in writing and shall be sent by registered or
      certified mail, return receipt requested with postage thereon fully prepaid
      to
      the Payee at its address set forth on the first page of this Note or at such
      other address as the Payee may from time to time designate in
      writing.

     

    (d) Notices
      to the Maker.
      Whenever any provision of this Note requires a notice to be given or a request
      to be made to the Maker by the Payee, any such notice or request shall be in
      writing and shall be sent by registered or certified mail, return receipt
      requested with postage thereon fully prepaid to the Maker at its address set
      forth on the signature page or at such other address as the Maker may from
      time
      to time designate in writing.

     

    11. Construction;
      Governing Law.
      The
      validity and construction of this Note and all matters pertaining hereto are
      to
      be determined in accordance with the laws of the state of New York without
      regard to the conflicts of law principles thereof.

     

    12. Amendments.
      Neither
      this Note nor any of its provisions may be changed, waived or modified without
      the written consent of both the Maker and the Payee.

     

    13. Successors.
      This
      Note shall be a binding obligation of any successor of the Maker. 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

     

    IN
      WITNESS WHEREOF, the Maker, by its appropriate officers thereunto duly
      authorized, has executed this Note as of this 24th day of January
      2007.

     

    
      	 	
              Global
                Matrechs, Inc. 

            
	 	 	 
	 	 	 
	 	
              By:

            	/s/
              Michael Sheppard
	 	 	
              Name:
                Michael Sheppard

            
	 	 	
              Title:
                President

            
	 	 	 
	 	 	
              Address:
                90 Grove Street, Suite 201

            
	 	 	
               Ridgefield,
                CT 06877

            

    

    

     

    

     

    
      
        
        

      

      
        6Exhibit
      10.1

    

    ASSIGNMENT
      OF SECURED SUBORDINATED PROMISSORY NOTE, DATED JUNE 1, 2004

    

    This
      Assignment of Secured Subordinated Promissory Note, dated June 1, 2004
      (“Assignment”)
      is
      entered into as of this 31st day of January, 2007 by and among the parties
      listed on Exhibit
      A
      hereto
      (“Lenders”
or
      collectively, “Holder”) and , VoIP, Inc., a Delaware corporation, Caerus, Inc.,
      a Delaware corporation (“Caerus”), Volo Communications, Inc., a Delaware
      corporation (“Volo”), Caerus Networks, Inc., a Delaware corporation (“Caerus
      Networks”), Caerus Billing, Inc., a Delaware corporation (“Caerus Billing”),
      Volo Communications of Arizona, Inc., a Delaware corporation (“Volo Arizona”),
      Volo Communications of California, Inc., a Delaware corporation (“Volo
      California”), Volo Communications of Colorado, Inc., a Delaware corporation
      (“Volo Colorado”), Volo Communications of Connecticut, Inc., a Delaware
      corporation (“Volo Connecticut”), Volo Communications of Delaware, Inc., a
      Delaware corporation (“Volo Delaware”), Volo Communications of Florida, Inc., a
      Delaware corporation (“Volo Florida”), Volo Communications of Georgia, Inc., a
      Delaware corporation (“Volo Georgia”), Volo Communications of Idaho, Inc., a
      Delaware corporation (“Volo Idaho”), Volo Communications of Illinois, Inc., a
      Delaware corporation (“Volo Illinois”), Volo Communications of Indiana, Inc., a
      Delaware corporation (“Volo Indiana”), Volo Communications of Maryland, Inc., a
      Delaware corporation (“Volo Maryland”), Volo Communications of Massachusetts,
      Inc., a Delaware corporation (“Volo Massachusetts”), Volo Communications of
      Michigan, Inc., a Delaware corporation (“Volo Michigan”), Volo Communications of
      Nevada, Inc., a Delaware corporation (“Volo Nevada”), Volo Communications of New
      Hampshire, Inc., a Delaware corporation (“Volo New Hampshire”), Volo
      Communications of New Jersey, Inc., a Delaware corporation (“Volo New Jersey”),
      Volo Communications of New York, Inc., a Delaware corporation (“Volo New York”),
      Volo Communications of North Carolina, Inc., a Delaware corporation (“Volo North
      Carolina”), Volo Communications of Ohio, Inc., a Delaware corporation (“Volo
      Ohio”), Volo Communications of Pennsylvania, Inc., a Delaware corporation (“Volo
      Pennsylvania”), Volo Communications of Rhode Island, Inc., a Delaware
      corporation (“Volo Rhode Island”), Volo Communications of Texas, Inc., a
      Delaware corporation (“Volo Texas”), Volo Communications of Vermont, Inc., a
      Delaware corporation (“Volo Vermont”), Volo Communications of Virginia, Inc., a
      Delaware corporation (“Volo Virginia”), Volo Communications of Washington, Inc.,
      a Delaware corporation (“Volo Washington”), Volo Communications of Wisconsin,
      Inc., a Delaware corporation (“Volo Wisconsin”) and Volo Communications of South
      Carolina, Inc., a Delaware corporation (“Volo South Carolina”, and together with
      VoIP, Caerus, Volo, Caerus Networks, Caerus Billing, Volo Arizona, Volo
      California, Volo Colorado, Volo Connecticut, Volo Delaware, Volo Florida, Volo
      Georgia, Volo Idaho, Volo Illinois, Volo Indiana, Volo Maryland, Volo
      Massachusetts, Volo Michigan, Volo Nevada, Volo New Hampshire, Volo New Jersey,
      Volo New York, Volo North Carolina, Volo Ohio, Volo Pennsylvania, Volo Rhode
      Island, Volo Texas, Volo Vermont, Volo Virginia, Volo Washington and Volo
      Wisconsin, the “Borrower”).

    

    WITNESSETH:

    

    WHEREAS,
      Cedar Boulevard Lease Funding LLC (“Cedar”) loaned to Borrower the principal
      amount of $7,000,000 pursuant to that certain Secured Subordinated Promissory
      Note, dated June 1, 2004, issued by Borrower in favor of Cedar (the
“Note”),
      purchased under that certain Subordinated Loan and Security Agreement, dated
      as
      of Jun 1, 2004 between Borrower and Cedar, as amended by that certain First
      Amendment to Subordinated Loan and Security Agreement, dated July 22, 2004,
      that
      certain Second Amendment to Subordinated Loan and Security Agreement, dated
      August 27, 2007, and that certain Consent, Waiver and Amendment Agreement,
      dated
      January 14, 2006 (collectively, the “Subordinated Loan Agreement”). The Note and
      the other agreements and instruments between Borrower (or its subsidiaries)
      and
      Cedar, including the Subordinated Loan Agreement and any other agreements and
      instruments identified on Exhibit B hereto shall be known as the “Assigned Loan
      Documents”; and

     

    WHEREAS,
      in conjunction therewith, Cedar will assign the Assigned Loan Documents, and
      its
      security interests in and to the Collateral to Lenders.

    

    NOW,
      THEREFORE, intending to be legally bound hereby, the parties hereto agree as
      follows:

    

    1.
      RESERVED

    
      
        
        

      

      
        1

        
          

        

      

       

    

    

    2.
      Borrower represents and warrants that all of the representations and warranties
      in this Assignment are true and correct as of the date hereof. 

    

    3.
      This
      Assignment may be executed in two or more counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute one
      instrument. 

     

    4.
      At the
      Closing, Cedar is concurrently irrevocably selling and assigning to Lenders
      in
      full Cedar’s rights and obligations under the Assigned Loan Documents, and
      Lenders are irrevocably purchasing and assuming in full Cedar’s rights and
      obligations thereunder, and as of such time Cedar shall cease to have any rights
      and/or obligations under the Assigned Loan Documents. This sale and assignment
      is set forth in the Addendum. From and after the Closing, the term “Cedar”
as
      set
      forth in the Assigned Loan Documents shall refer to the “Lenders”.

     

    5.
      For
      purposes of the Assigned Loan Documents, at any time the term “Obligations”
shall
      include the then outstanding principal amounts due under the Note and all of
      the
      notes being issued in connection with any other agreements heretofore entered
      into, contemporaneously entered into or previously entered into between Borrower
      and Lenders and all accrued and unpaid interest thereon and any fees and
      penalties owed by Borrower to Lenders arising in connection with the Assigned
      Loan Documents and any other agreements heretofore entered into,
      contemporaneously entered into or previously entered into between Borrower
      and
      Lenders, including, but not limited to including, any and all indemnification
      rights and penalties for liquidated damages.

     

    6.
      An
      Event of Default shall occur under the Notes if there is an Event of Default
      under any other agreement entered into between the Borrower and the Lenders
      or
      under any other material agreement between the Borrower and any third
      party.

     

    7.
      a.
      Borrower
      hereby represents and warrants
      for the
      express benefit of the Lenders
      that for
      purposes of Rule 144 promulgated under the Securities Act of 1933, as amended,
      the holding period for any shares to be issued or issuable to
      the
      Lenders in
      connection with the Note and for the Note tacks back to the date of execution
      of
      the Note,
      which
      dates is June 1, 2004, so that the holding period for the Lenders is deemed
      to
      have commenced on June
      1,
      2004. Borrower’s counsel shall provide a legal opinion, at closing, which will,
      among other things, opine that the holding period for any shares to be issued
      or
      issuable to the Lenders in connection with the Note and for the Note tacks
      back
      to the date of execution of the Note, which dates is June 1, 2004, so that
      the
      holding period for the Lenders is deemed to have commenced on June 1, 2004.
      Borrower acknowledges that if for any reason whatsoever Rule 144 is not
      available as a method by which the Lenders could resell their shares under
      the
      Notes, an automatic Event of Default shall occur with respect to the
      Notes.

     

    b.
      Borrower hereby represents and warrants that no third party or regulatory
      approval is necessary to enter into the transactions contemplated
      hereby,
      other
      than of Cedar, which approval is evidenced by a fully executed and delivered
      Addendum.

     

    c.
      Notwithstanding the reference in the Note to a Subordination Agreement, Borrower
      has not entered into any Subordination Agreement, nor is the Note subordinated
      to any other obligations of Borrower.

     

    d.
      The
      only subsidiaries of VOIP, Inc. with assets, are: Caerus Billing, Inc., a
      Delaware corporation, Caerus Network, Inc, a Delaware corporation., VoIP
      Solutions, Inc., a Florida corporation, Caerus, Inc., a Delaware corporation,
      and Volo Communications, Inc., a Delaware corporation.

     

    8.
      Notwithstanding anything to the contrary in the foregoing, Borrower and Lenders
      agree that all provisions of all of the Assigned Loan Documents are incorporated
      herein by reference. 

     

    9.
      Borrower makes the representations and warranties set forth in the Assigned
      Loan
      Documents as of the date of execution of each Assigned Loan Document and as
      of
      the date of execution of this Assignment and as of the Closing Date.

    
      
        
        

      

      
        2

        
          

        

      

       

    

     

    10.
      Each
      of the parties hereto agrees that (a) all repayments of the Note (including
      any
      accrued interest thereon) by Borrower (other than by conversion of the Note)
      will be paid pro rata to the holders thereof based upon the principal amount
      then outstanding to each of such holders, and (b) except as otherwise set forth
      herein, all payments on the Note shall be applied to the payment of accrued
      but
      unpaid interest before being applied to the payment of the
      principal.

     

    11.
      At
      all times after the date hereof, Borrower will not take or permit any action,
      or
      cause or permit any Subsidiary to take or permit any action that impairs or
      adversely affects the rights of Lenders under any Assigned Loan
      Document.

     

    12.
      Borrower hereby represents and warrants that to the best of its knowledge the
      Assigned Loan Documents are hereby assigned by Cedar to Lenders free and clear
      of any liens, encumbrances, etc.

     

    13.
      Borrower
      expressly waives for the benefit of Lenders any rights it may have to offset,
      defense, counterclaim or right of rescission as to the Assigned Loans which
      it
      may have had against Cedar.

     

    14.
      Borrower expressly agrees that each and every representation and warranty made
      under any of the Subscription Documents, the Assigned Loan Documents or any
      other agreement between the Borrower and Lenders is deemed to have been made
      with respect to all agreements entered into between the parties as of the date
      of execution of this Assignment.

     

    15.
      The
      parties hereby agree that each of the Assigned Loan Documents is hereby amended
      as set forth on Exhibit D hereto, and references herein to any Assigned Loan
      Document, refer to the Assigned Loan Document as amended hereby. Borrower
      further agrees to conform the Assigned Loan Documents to reflect all of the
      terms and conditions of the documents to be executed and delivered pursuant
      to
      the contemplated $2,000,000 further investment to be made by the Lenders in
      the
      Borrower, and the conformity of the Assigned Loan Documents to the terms of
      the
      newly negotiated documents is a condition precedent to such
      funding.

     

    16.
      The
      Note assigned in conjunction herewith is secured by a security interest granted
      to the Collateral Agent for the benefit of the Holder pursuant to a Security
      Agreement, as delivered by Borrower to Holder. The Borrower acknowledges and
      agrees that should a proceeding under any bankruptcy or insolvency law be
      commenced by or against the Borrower, or if any of the Collateral (as defined
      in
      the Security Agreement) should become the subject of any bankruptcy or
      insolvency proceeding, then the Holder should be entitled to, among other relief
      to which the Holder may be entitled under the Assigned Loan and Subscription
      Documents and any other agreement to which the Borrower and Holder are parties
      (collectively, "Transaction Documents") and/or applicable law, an order from
      the
      court granting immediate relief from the automatic stay pursuant to 11 U.S.C.
      Section 362 to permit the Holder to exercise all of its rights and remedies
      pursuant to the Transaction Documents and/or applicable law. THE BORROWER
      EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION
      362. FURTHERMORE, THE BORROWER EXPRESSLY ACKNOWLEDGES AND AGREES THAT NEITHER
      11
      U.S.C. SECTION 362 NOR ANY OTHER SECTION OF THE BANKRUPTCY CODE OR OTHER STATUTE
      OR RULE (INCLUDING, WITHOUT LIMITATION, 11 U.S.C. SECTION 105) SHALL STAY,
      INTERDICT, CONDITION, REDUCE OR INHIBIT IN ANY WAY THE ABILITY OF THE HOLDER
      TO
      ENFORCE ANY OF ITS RIGHTS AND REMEDIES UNDER THE TRANSACTION DOCUMENTS AND/OR
      APPLICABLE LAW. The Borrower hereby consents to any motion for relief from
      stay
      that may be filed by the Holder in any bankruptcy or insolvency proceeding
      initiated by or against the Borrower and, further, agrees not to file any
      opposition to any motion for relief from stay filed by the Holder. The Borrower
      represents, acknowledges and agrees that this provision is a specific and
      material aspect of the Transaction Documents, and that the Holder would not
      agree to the terms of the Transaction Documents if this waiver were not a part
      of this Note. The Borrower further represents, acknowledges and agrees that
      this
      waiver is knowingly, intelligently and voluntarily made, that neither the Holder
      nor any person acting on behalf of the Holder has made any representations
      to
      induce this waiver, that the Borrower has been represented (or has had the
      opportunity to he represented) in the signing of this Note and the Transaction
      Documents and in the making of this waiver by independent legal counsel selected
      by the Borrower and that the Borrower has discussed this waiver with
      counsel.

    
      
        
        

      

      
        3

        
          

        

      

       

    

     

    17.
      Borrower acknowledges that the Lenders are not waiving any currently existing
      defaults or events of default under the Assigned Loan Documents, and that the
      maturity date of the Assigned Loan remains as originally stated in the Note
      and
      that the Assigned Loan is due on the maturity date as set forth in the
      Note.

     

    18.
      The
      Borrower also agrees to “recut” the Note into pro rata portions to each Lender,
      all dated as of the date of the original Note sent to the Borrower to be recut.
      The Borrower shall have five (5) business days from the date of receipt of
      the
      Note to deliver “recut” Notes to the Lenders. Thereafter Lenders may deliver
      written notice to Borrower of failure to deliver the “recut” notes, and failure
      to deliver “recut” Notes within five(5) business days of notice shall be an
      Event of Default under the Note.

     

     

    [THE
      BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]

    
      
        
        

      

      
        4

        
          

        

      

       

    

    IN
      WITNESS WHEREOF, the undersigned have executed this Assignment as of the date
      first above written.

     

    VoIP,
      Inc.

     

    
      	 	 	 	 
	By:	 	 	
            
	
              
                

              

              Name: Robert
                Staats

            	 	 	
            
	
              Title: Chief
                Accounting Officer

            	 	 	
            

    

     

    Caerus
      Billing, Inc.

     

    
      
        	 	 	 	 
	By:	 	 	
              
	
                
                  

                

                Name: Robert
                  Staats

              	 	 	
              
	
                Title: Chief
                  Accounting Officer

              	 	 	
              

      

       

    

    Caerus
      Network, Inc.

     

    
      
        	 	 	 	 
	By:	 	 	
              
	
                
                  

                

                Name: Robert
                  Staats

              	 	 	
              
	
                Title: Chief
                  Accounting Officer

              	 	 	
              

      

    

     

    Caerus,
      Inc.

     

    
      
        	 	 	 	 
	By:	 	 	
              
	
                
                  

                

                Name: Robert
                  Staats

              	 	 	
              
	
                Title: Chief
                  Accounting Officer

              	 	 	
              

      

    

     

    VoIP
      Solutions, Inc.

     

    
      
        	 	 	 	 
	By:	 	 	
              
	
                
                  

                

                Name: Robert
                  Staats

              	 	 	
              
	
                Title: Chief
                  Accounting Officer

              	 	 	
              

      

    

     

    Volo
      Communications, Inc.

     

    
      
        	 	 	 	 
	By:	 	 	
              
	
                
                  

                

                Name: Robert
                  Staats

              	 	 	
              
	
                Title: Chief
                  Accounting Officer

              	 	 	
              

      

    

    
      
        
        

      

      
        5

        
          

        

      

       

    

    

    LENDERS:

    

    ASSIGNEES

    

    
      	
              SUBSCRIBERS

            	 	
              AMOUNT
                OF SUBSCRIPTION

            	 	
              PRINCIPAL
                AMOUNT

            	 
	
              ALPHA
                CAPITAL ANSTALT

               

              By:_____________________________________

              Name:

              Title:

              Pradafant
                7

              9490
                Furstentums

              Vaduz,
                Lichtenstein

              Fax:
                011-42-32323196

            	 	
              $

            	
              297,076.00

            	 	
              $

            	
              356,156.73

            	 
	 	 	 	 	 	 	 	 
	
              WHALEHAVEN
                CAPITAL FUND LIMITED

               

              By:_____________________________________

              Name:

              Title:

              3rd
                Floor, 14 Par-Laville Road

              Hamilton,
                Bermuda HM08

              Fax:
                (441) 292-1373

            	 	
              $

            	
              249,102.00

            	 	
              $

            	
              298,523.84

            	 
	 	 	 	 	 	 	 	 
	
              ELLIS
                INTERNATIONAL LTD.

               

              By:_____________________________________

              Name:

              Title:

              53rd
                Street Urbanizacion Obarrio

              Swiss
                Tower, 16th
                Floor, Panama

              Republic
                of Panama

              Fax:
                (516) 887-8990

            	 	
              $

            	
              249,102.00

            	 	
              $

            	
              298,523.84

            	 
	 	 	 	 	 	 	 	 
	
              BRISTOL
                INVESTMENT FUND, LTD.

               

              By:_____________________________________

              Name:

              Title:

              c/o
                Caledonian Fund Services Limited

              69
                Dr. Roy’s Drive

              George
                Town, Grand Cayman

              Cayman
                Islands

              Fax:
                (310) 696-0334

            	 	
              $

            	
              287,400.00

            	 	
              $

            	
              344,420.16

            	 
	 	 	 	 	 	 	 	 
	
              CHESTNUT
                RIDGE PARTNERS LP

               

              By:_____________________________________

              Name:

              Title:

              50
                Tice Boulevard

              Woodcliff
                Lake, NJ 07677

              Fax:
                (201) 802-9450

            	 	
              $

            	
              114,960.00

            	 	
              $

            	
              137,768.06

            	 

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	
              CENTURION
                MICROCAP, L.P.

               

              By:______________________________________

              Name:

              Title:

              3014
                Avenue L

              Brooklyn,
                NY 11210

              Fax:
                (718) 228-9570

            	 	
              $

            	
              191,600.00

            	 	
              $

            	
              229,613.44

            	 
	 	 	 	 	 	 	 	 
	
              PLATINUM
                LONG TERM GROWTH II INC.

               

              By:_____________________________________

              Name:

              Title:

              152
                West 57th
                Street

              New
                York, New York 10019

              Attn:
                Mark Nordlicht

              Fax:
                (212)

            	 	
              $

            	
              95,800.00

            	 	
              $

            	
              114,806.72

            	 
	 	 	 	 	 	 	 	 
	
              DOUBLE
                U MASTER FUND L.P.

               

              By:_____________________________________

              Name:

              Title:

              P.
                O. Box 972

              Harbour
                House

              Roadtown,
                Tortola, BVI

              Fax:
                (284) 494-4770

            	 	
              $

            	
              114,960.00

            	 	
              $

            	
              137,768.06

            	 
	
              
              

            	 	 	  
 	 	 	  
 	 
	
              TOTAL

            	 	
              $

            	
              1,600,000.00

            	 	
              $

            	
              1,917,580.85

            	 

    

     

    
      
        
        

      

      
        7

        
          

        

      

       

    

    EXHIBIT
      A

    

    Lenders

    
      
        
        

      

      
        8

        
          

        

      

       

    

    VOIP
      - CEDAR NOTE ASSIGNMENT

    

    

    
      	
              SUBSCRIBERS

            	
               

            	
              AMOUNT
                OF SUBSCRIPTION

            	
               

            	
              PRINCIPAL
                AMOUNT

            	
               

            
	
              ALPHA
                CAPITAL ANSTALT

               

              By:_____________________________________

              Name:

              Title:

              Pradafant
                7

              9490
                Furstentums

              Vaduz,
                Lichtenstein

              Fax:
                011-42-32323196

            	 	
              $

            	
              297,076.00

            	 	
              $

            	
              356,156.73

            	 
	 	 	 	 	 	 	 	 
	
              WHALEHAVEN
                CAPITAL FUND LIMITED

               

              By:_____________________________________

              Name:

              Title:

              3rd
                Floor, 14 Par-Laville Road

              Hamilton,
                Bermuda HM08

              Fax:
                (441) 292-1373

            	 	
              $

            	
              249,102.00

            	 	
              $

            	
              298,523.84

            	 
	 	 	 	 	 	 	 	 
	
              ELLIS
                INTERNATIONAL LTD.

               

              By:_____________________________________

              Name:

              Title:

              53rd
                Street Urbanizacion Obarrio

              Swiss
                Tower, 16th
                Floor, Panama

              Republic
                of Panama

              Fax:
                (516) 887-8990

            	 	
              $

            	
              249,102.00

            	 	
              $

            	
              298,523.84

            	 
	 	 	 	 	 	 	 	 
	
              BRISTOL
                INVESTMENT FUND, LTD.

               

              By:_____________________________________

              Name:

              Title:

              c/o
                Caledonian Fund Services Limited

              69
                Dr. Roy’s Drive

              George
                Town, Grand Cayman

              Cayman
                Islands

              Fax:
                (310) 696-0334

            	 	
              $

            	
              287,400.00

            	 	
              $

            	
              344,420.16

            	 
	 	 	 	 	 	 	 	 
	
              CHESTNUT
                RIDGE PARTNERS LP

               

              By:_____________________________________

              Name:

              Title:

              50
                Tice Boulevard

              Woodcliff
                Lake, NJ 07677

              Fax:
                (201) 802-9450

            	 	
              
              

              $

            	
              
              

              114,960.00

            	 	
              
              

              $

            	
              
              

              137,768.06

            	 

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      	
              CENTURION
                MICROCAP, L.P.

               

              By:______________________________________

              Name:

              Title:

              3014
                Avenue L

              Brooklyn,
                NY 11210

              Fax:
                (718) 228-9570

            	 	
              $

            	
              191,600.00

            	 	
              $

            	
              229,613.44

            	 
	 	 	 	 	 	 	 	 
	
              PLATINUM
                LONG TERM GROWTH II INC.

               

              By:____________________________________

              Name:

              Title:

              152
                West 57th
                Street

              New
                York, New York 10019

              Attn:
                Mark Nordlicht

              Fax:
                (212)

            	 	
              $

            	
              95,800.00

            	 	
              $

            	
              114,806.72

            	 
	 	 	 	 	 	 	 	 
	
              DOUBLE
                U MASTER FUND L.P.

               

              By:____________________________________

              Name:

              Title:

              P.
                O. Box 972

              Harbour
                House

              Roadtown,
                Tortola, BVI

              Fax:
                (284) 494-4770

            	 	
              $

            	
              114,960.00

            	 	
              $

            	
              137,768.06

            	 
	 	 	 	 
 	 	 	  
 	 
	
              TOTAL

            	 	
              $

            	
              1,600,000.00

            	 	
              $

            	
              1,917,580.85

            	 

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

    

    Assigned
      Loan Documents

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     SCHEDULE
      OF LOAN DOCUMENTS

     

    CAERUS,
      INC. AND SUBSIDIARIES

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    1. Subordinated
      Loan and Security Agreement dated June 1, 2004, plus Exhibits

    

    2. Secured
      Subordinated Promissory Note dated June 1, 2004 ($7,000,000)

    

    3. Pledge
      Agreement, dated as of June 1, 2004, by and between Caerus and Lender of stock
      in CNI, CBI and Volo

    

    4. Pledge
      Agreement, dated as of June 1, 2004, by and between Volo and Lender of stock
      in
      Subsidiaries

    

    5. Deposit
      Account Control Agreement, dated as of June 1, 2004, by and among Wachovia
      Bank, Caerus and Lender

    

    6. Deposit
      Account Control Agreement, dated as of June 1, 2004, by and among Wachovia
      Bank, Volo and Lender

    

    7. Equipment
      Lien Waiver, dated June 1, 2004, by and among Volo, Lender, and Level
      3
      Communications LLC

    

    8. UCC
      Financing Statements for Caerus, Inc. and subsidiaries filed with DE Secretary
      of State as filing no. 41543539 on 6/3/04

    

    9. Landlord
      Waiver dated July, 2004, for 151 South Wymore Road, Suite 3000, Altamonte
      Springs, Florida

    

    10. Opinion
      Letter

    

    11. Consent
      to Transfer of Sonus Licenses and UCC-3 releases of Sonus' liens

    

    12. Filing
      of
      Caerus Third Amendment of Certif of Inc.

    

    13. Delivery
      of Original Stock Certificates with Endorsements 

    

    14. Certificates
      of Insurance naming Lender as additional insured of Loss Payee and complying
      with Section 6.01 (d)

    

    15. Evidence
      that Caerus Networks, Inc., has been dissolved

    

    16. Acknowledgment
      Copy of UCC-1 Financing Statement for Each Borrower

    

    17. Search
      UCC records in all relevant jurisdictions.

     

    18. First
      Amendment to Subordinated Loan and Security Agreement dated July 22,
      2004

     

    19. Second
      Amendment to Subordinated Loan and Security Agreement dated August 27,
      2004

    

    20. Security
      Agreement dated as of May, 2005, by and among VOIP, Inc., Eglobalphone, VOIP
      Solutions, Inc., VCG Technologies, VOX Consulting and Cedar Boulevard Lease
      Funding, LLC

    

    21.
      Guaranty
      Agreement dated as of May, 2005, by and among VOIP, Inc., Eglobalphone, VOIP
      Solutions, Inc., VCG Technologies, VOX Consulting and Cedar Boulevard Lease
      Funding, LLC

    

    22.
      Guaranty
      dated as of May 21, 2005, by VOIP Acquisition in favor of Lender

    

    23.
      Security
      Agreement, dated May 21, 2005, by and between VOIP Acquisition and
      Lender

    
      
        
        

      

      
        13

        
          

        

      

       

    

    

    24.
      Release
      Agreement dated as of May 31, 2005 among VOIP, Inc., Eglobalphone, Inc., VOIP
      Solutions, Inc., DNET Technologies, VOIP Americas, Inc. and Volo Acquisition
      Corp., in favor of Cedar Boulevard Lease Funding, LLC.

    

    25.
      UCC
      Financing Statements for VOIP, Inc. filed with TX Secretary of State as filing
      no. 05-0017629737 on 6/7/05

    

    26.
      Third
      Amendment to Subordinated Loan and Security Agreement dated August,
      2005

    

    27.
      Consent,
      Waiver and Acknowledgment dated August 1, 2005

    

    28.
      Security
      Agreement, dated as of August [5], 2005, by and between VOIP, Inc. and
      WQN

    

    29.
      UCC
      Financing Statements for VOIP Acquisition Corporation filed with DE Secretary
      of
      State as filing no. 52922491 on 9/21/05

    

    30. Consent,
      Waiver and Amendment Agreement dated January 4, 2006

     

    31. Consent,
      Waiver and Amendment Agreement dated January 30, 2006

     

    32. Consent
      dated April 18, 2006

     

    33. Notice
      of
      Pending Event of Default dated May 8, 2006

     

    34. Notice
      of
      Pending Event of Default dated August 2, 2006

     

    35. Notice
      of
      Pending Event of Default dated October 9, 2006

     

    36. Notice
      of
      Pending Event of Default dated December 15, 2006

     

    37. Waiver
      and Amendment Agreement dated January 23, 2007

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      C

    

    Addendum
      to Assignment of Convertible Debentures

    

    (attached
      hereto)

    
      
        
        

      

      
        15

        
          

        

      

       

    

    EXHIBIT
      D

    

    Amended
      Terms of Assigned Loan Documents

    

    THIS
      NOTE
      AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE
      COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED
      FOR
      SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
      STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
      SATISFACTORY TO VOIP INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

    

    ARTICLE
      IIA

     

    CONVERSION
      RIGHTS

     

    The
      Holder shall have the right to convert the principal and any interest due under
      this Note into Shares of the Borrower's Common Stock, $.001 par value per share
      (“Common Stock”) as set forth below.

    

    2A.1. Conversion
      into the Borrower's Common Stock.

    

    (a) 
      the
      Holder shall have the right from and after the date of the issuance of this
      Note
      and then at any time until this Note is fully paid, to convert any outstanding
      and unpaid principal portion of this Note, at the election of the Holder (the
      date of giving of such notice of conversion being a "Conversion Date") into
      fully paid and nonassessable shares of Common Stock as such stock exists on
      the
      date of issuance of this Note, or any shares of capital stock of Borrower into
      which such Common Stock shall hereafter be changed or reclassified, at the
      conversion price of $.26 per share (the "Conversion Price"), determined as
      provided herein. Upon delivery to the Borrower of a completed Notice of
      Conversion, a form of which is annexed hereto, Borrower shall issue and deliver
      to the Holder within three (3) business days after the Conversion Date (such
      third day being the “Delivery Date”) that number of shares of Common Stock for
      the portion of the Note converted in accordance with the foregoing. At the
      election of the Holder, the Borrower will deliver accrued but unpaid interest
      on
      the Note, if any, through the Conversion Date directly to the Holder on or
      before the Delivery Date (as defined in the Subscription Agreement). The number
      of shares of Common Stock to be issued upon each conversion of this Note shall
      be determined by dividing that portion of the principal of the Note to be
      converted by the Conversion Price.

    

    (b)  Subject
      to adjustment as provided in Section 2A.1(c) hereof, the Conversion Price per
      share shall be $0.26, subject to adjustment as described herein and in the
      Subscription Agreement.

    

    (c) 
      The
      Conversion Price and number and kind of shares or other securities to be issued
      upon conversion determined pursuant to Section 2A.1(a), shall be subject to
      adjustment from time to time upon the happening of certain events while this
      conversion right remains outstanding, as follows:

    

    A. Merger,
      Sale of Assets, etc. If the Borrower at any time shall consolidate with or
      merge
      into or sell or convey all or substantially all its assets to any other
      corporation, this Note, as to the unpaid principal portion thereof and accrued
      interest thereon, shall thereafter be deemed to evidence the right to purchase
      such number and kind of shares or other securities and property as would have
      been issuable or distributable on account of such consolidation, merger, sale
      or
      conveyance, upon or with respect to the securities subject to the conversion
      or
      purchase right immediately prior to such consolidation, merger, sale or
      conveyance. The foregoing provision shall similarly apply to successive
      transactions of a similar nature by any such successor or purchaser. Without
      limiting the generality of the foregoing, the anti-dilution provisions of this
      Section shall apply to such securities of such successor or purchaser after
      any
      such consolidation, merger, sale or conveyance.

    

    B. Reclassification,
      etc. If the Borrower at any time shall, by reclassification or otherwise, change
      the Common Stock into the same or a different number of securities of any class
      or classes that may be issued or outstanding, this Note, as to the unpaid
      principal portion thereof and accrued interest thereon, shall thereafter be
      deemed to evidence the right to purchase an adjusted number of such securities
      and kind of securities as would have been issuable as the result of such change
      with respect to the Common Stock immediately prior to such reclassification
      or
      other change.

    
      
        
        

      

      
        16

        
          

        

      

       

    

     

    C. Stock
      Splits, Combinations and Dividends. If the shares of Common Stock are subdivided
      or combined into a greater or smaller number of shares of Common Stock, or
      if a
      dividend is paid on the Common Stock in shares of Common Stock, the Conversion
      Price shall be proportionately reduced in case of subdivision of shares or
      stock
      dividend or proportionately increased in the case of combination of shares,
      in
      each such case by the ratio which the total number of shares of Common Stock
      outstanding immediately after such event bears to the total number of shares
      of
      Common Stock outstanding immediately prior to such event..

     

    D. Share
      Issuance. So long as this Note is outstanding, if the Borrower shall issue
      or
      agree to issue any shares of Common Stock except for the Excepted Issuances
      (as
      defined in the Subscription Agreement) for a consideration less than the
      Conversion Price in effect at the time of such issue, then, and thereafter
      successively upon each such issue, the Conversion Price shall be reduced to
      such
      other lower issue price. For purposes of this adjustment, the issuance of any
      security carrying the right to convert such security into shares of Common
      Stock
      or of any warrant, right or option to purchase Common Stock shall result in
      an
      adjustment to the Conversion Price upon the issuance of the above-described
      security and again upon the issuance of shares of Common Stock upon exercise
      of
      such conversion or purchase rights if such issuance is at a price lower than
      the
      then applicable Conversion Price. The reduction of the Conversion Price
      described in this paragraph is in addition to other rights of the Holder
      described in this Note and the Subscription Agreement.

    

    (d) Whenever
      the Conversion Price is adjusted pursuant to Section 2A.1(c) above, the Borrower
      shall promptly mail to the Holder a notice setting forth the Conversion Price
      after such adjustment and setting forth a statement of the facts requiring
      such
      adjustment.

    

    (e) During
      the period the conversion right exists, Borrower will reserve from its
      authorized and unissued Common Stock a sufficient number of shares to provide
      for the issuance of Common Stock issuable upon the full conversion of this
      Note
      and as described in the Subscription Agreement. Borrower represents that upon
      issuance, such shares will be duly and validly issued, fully paid and
      non-assessable. Borrower agrees that its issuance of this Note shall constitute
      full authority to its officers, agents, and transfer agents who are charged
      with
      the duty of executing and issuing stock certificates to execute and issue the
      necessary certificates for shares of Common Stock upon the conversion of this
      Note.

    

    2A.2. Method
      of Conversion.
      This
      Note may be converted by the Holder in whole or in part. Upon partial conversion
      of this Note, a new Note containing the same date and provisions of this Note
      shall, at the request of the Holder, be issued by the Borrower to the Holder
      for
      the principal balance of this Note and interest which shall not have been
      converted or paid.

    

    2A.3. Maximum
      Conversion.
      The
      Holder shall not be entitled to convert on a Conversion Date that amount of
      the
      Note in connection with that number of shares of Common Stock which would be
      in
      excess of the sum of (i) the number of shares of Common Stock beneficially
      owned
      by the Holder and its affiliates on a Conversion Date, (ii) any Common Stock
      issuable in connection with the unconverted portion of the Note, and (iii)
      the
      number of shares of Common Stock issuable upon the conversion of the Note with
      respect to which the determination of this provision is being made on a
      Conversion Date, which would result in beneficial ownership by the Holder and
      its affiliates of more than 4.99% of the outstanding shares of Common Stock
      of
      the Borrower on such Conversion Date. For the purposes of the provision to
      the
      immediately preceding sentence, beneficial ownership shall be determined in
      accordance with Section 13(d) of the Securities Exchange Act of 1934, as
      amended, and Regulation 13d-3 thereunder. Subject to the foregoing, the Holder
      shall not be limited to aggregate conversions of only 4.99% and aggregate
      conversion by the Holder may exceed 4.99%. The Holder shall have the authority
      and obligation to determine whether the restriction contained in this Section
      2A.3 will limit any 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 Notes are convertible shall be the
      responsibility and obligation of the Holder. The Holder may waive the conversion
      limitation described in this Section 2.3, in whole or in part, upon and
      effective after 61 days prior written notice to the Borrower to increase such
      percentage to up to 9.99%. The Holder may allocate which of the equity of the
      Borrower deemed beneficially owned by the Holder shall be included in the 4.99%
      amount or up to 9.99% amount as described above.

    
      
        
        

      

      
        17

        
          

        

      

       

    

     

    NOTICE
      OF CONVERSION

    

    (To
      be
      executed by the Registered Holder in order to convert the Note)

     

    The
      undersigned hereby elects to convert $_________ of the principal and $_________
      of the interest due on the Note issued by VoIP Inc. on January ___, 2007 into
      Shares of Common Stock of VoIP Inc. (the "Borrower") according to the conditions
      set forth in such Note, as of the date written below.

    

    Date
      of
      Conversion:
      ____________________________________________________________________

    

    

    Conversion
      Price:
      ______________________________________________________________________

    

    

    Shares
      To
      Be Delivered:
      _________________________________________________________________

    

    

    Signature:
      ____________________________________________________________________

    

    

    Print
      Name:
      ______________________________________________________________________

    

    

    Address:
      _____________________________________________________________________

    

     ____________________________________________________________________________

    

    
      
        
        

      

      
        18

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