Document:

Exhibit
      10.8

     

    SUBSCRIPTION
      AGREEMENT

     

    THIS
      SUBSCRIPTION AGREEMENT
      (this
“Agreement”),
      dated
      as of July 31, 2007 (the “Closing
      Date”),
      by and
      among VoIP, Inc., a Texas corporation (the “Company”),
      and
      the subscribers identified on the signature pages hereto (each a “Subscriber”
and
      collectively “Subscribers”).

     

    WHEREAS,
      the
      Company and the Subscribers are executing and delivering this Agreement in
      reliance upon an exemption from securities registration afforded by the
      provisions of Section 4(2), Section 4(6) and/or Regulation D (“Regulation
      D”)
      as
      promulgated by the United States Securities and Exchange Commission (the
“Commission”)
      under
      the Securities Act of 1933, as amended (the “1933
      Act”).

     

    WHEREAS,
      the
      parties desire that, upon the terms and subject to the conditions contained
      herein, the Company shall issue and sell to the Subscribers, as provided herein,
      and the Subscribers, in the aggregate, shall purchase up to $200,000 (the
“Aggregate
      Principal Amount”)
      of
      principal amount of promissory notes of the Company (“Note”
or
      “Notes”),
      a
      form of which is annexed hereto as Exhibit
      A,
      convertible into shares of the Company’s Class A common stock, $0.001 par value
      (the “Common
      Stock”),
      at a
      per share conversion price set forth in the Note (“Conversion
      Price”);
      share
      purchase warrants (the “Warrants”),
      in
      the form annexed hereto as Exhibit
      B,
      to
      purchase shares of Common Stock (the “Warrant
      Shares”);
      Coupon Demand Notes (the “Coupon
      Notes”)
      in the
      form annexed hereto as Exhibit
      C;
      and
      shares of common stock (the “Closing
      Shares”).
      The
      Notes, the shares of Common Stock issuable upon conversion of the Notes (the
      “Shares”),
      the
      Warrants, the Warrant Shares, the Coupon Notes, and the Closing Shares are
      collectively referred to herein as the “Securities”;
      and

     

    NOW,
      THEREFORE,
      in
      consideration of the mutual covenants and other agreements contained in this
      Agreement the Company and the Subscribers hereby agree as follows:

     

    1. Aggregate
      Purchase Price.
      The
      aggregate purchase price for the Notes (the “Aggregate
      Purchase Price”)
      shall
      equal the result of (x) divided by (y), where (x) equals the Aggregate Principal
      Amount and (y) equals 1.00.

     

    2. Closing.
      Subject
      to the satisfaction or waiver of the terms and conditions of this Agreement,
      on
      the Closing Date, each Subscriber shall purchase and the Company shall sell
      to
      each Subscriber a Note in the principal amount designated on the signature
      page
      hereto and Warrants as described in Section 3 of this Agreement. The Aggregate
      Purchase Amount of the Notes to be purchased by the Subscribers on the Initial
      Closing Date shall be $200,000 in exchange for $200,000 cash, representing
      the
      Aggregate Purchase Price. The Company acknowledges receipt of the Aggregate
      Purchase Price ($200,000 cash) on or about June 4, 2007.

    

    3. Warrants.
      On the
      Closing Date, the Company will issue and deliver Warrants to the Subscribers.
      A
      Warrant for the purchase of 1.75 Warrant Shares will be issued for each Share
      which would be issued on each Closing Date assuming the conversion of all of
      the
      Notes issued on the Closing Date at the Conversion Price in effect on the
      Closing Date. The per Warrant Share exercise price to acquire a Warrant Share
      upon exercise of a Warrant shall be equal to $0.08. The Warrants shall be
      exercisable until three years after the Closing Date.

    

    4. Coupon
      Demand Notes.
      On the
      Closing Date, the Company will issue and deliver to the Subscribers a coupon
      demand note, with principal equal to 10% of the Aggregate Purchase
      Price.

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    5. Common
      Stock.
      Within
      five days of the Closing Date, the Company will issue and deliver to the
      Subscribers one share of the Company’s common stock, par value $0.001 per share,
      for every dollar of the Aggregate Purchase Price.

    

    6. Subscriber's
      Representations and Warranties.
      Each
      Subscriber hereby represents and warrants to and agrees with the Company only
      as
      to such Subscriber that:

     

    (a) Organization
      and Standing of the Subscribers.
      If the
      Subscriber is an entity, such Subscriber is a corporation, partnership or other
      entity duly incorporated or organized, validly existing and in good standing
      under the laws of the jurisdiction of its incorporation or organization and
      has
      the requisite corporate power to own its assets and to carry on its
      business.

    

    (b) Authorization
      and Power.
      Each
      Subscriber has the requisite power and authority to enter into and perform
      this
      Agreement and to purchase the Notes and Warrants being sold to it hereunder.
      The
      execution, delivery and performance of this Agreement by such Subscriber and
      the
      consummation by it of the transactions contemplated hereby and thereby have
      been
      duly authorized by all necessary corporate or partnership action, and no further
      consent or authorization of such Subscriber or its Board of Directors,
      stockholders, partners, members, as the case may be, is required. This Agreement
      has been duly authorized, executed and delivered by such Subscriber and
      constitutes, or shall constitute when executed and delivered, a valid and
      binding obligation of the Subscriber enforceable against the Subscriber in
      accordance with the terms thereof.

     

    (c) No
      Conflicts.
      The
      execution, delivery and performance of this Agreement and the consummation
      by
      such Subscriber of the transactions contemplated hereby or relating hereto
      do
      not and will not (i) result in a violation of such Subscriber’s charter
      documents or bylaws or other organizational documents or (ii) conflict with,
      or
      constitute a default (or an event which with notice or lapse of time or both
      would become a default) under, or give to others any rights of termination,
      amendment, acceleration or cancellation of any agreement, indenture or
      instrument or obligation to which such Subscriber is a party or by which its
      properties or assets are bound, or result in a violation of any law, rule,
      or
      regulation, or any order, judgment or decree of any court or governmental agency
      applicable to such Subscriber or its properties (except for such conflicts,
      defaults and violations as would not, individually or in the aggregate, have
      a
      material adverse effect on such Subscriber). Such Subscriber is not required
      to
      obtain any consent, authorization or order of, or make any filing or
      registration with, any court or governmental agency in order for it to execute,
      deliver or perform any of its obligations under this Agreement or to purchase
      the Notes or acquire the Warrants in accordance with the terms hereof, provided
      that for purposes of the representation made in this sentence, such Subscriber
      is assuming and relying upon the accuracy of the relevant representations and
      agreements of the Company herein.

    

    (d) Information
      on Company.
      The
      Subscriber has been furnished with or has had access at the EDGAR Website of
      the
      Commission to the Company's Form 10-K for the year ended December 31, 2006
      and
      all periodic reports filed with the Commission thereafter, but not later than
      five business days before the Closing Date (hereinafter referred to as the
      "Reports").
      In
      addition, the Subscriber has received in writing from the Company such other
      information concerning its operations, financial condition and other matters
      as
      the Subscriber has requested in writing (such other information is collectively,
      the "Other
      Written Information"),
      and
      considered all factors the Subscriber deems material in deciding on the
      advisability of investing in the Securities. 

     

    (e) Information
      on Subscriber.
      The
      Subscriber is, and will be at the time of the conversion of the Notes and
      exercise of the Warrants, an "accredited investor," as such term is defined
      in
      Regulation D promulgated by the Commission under the 1933 Act, is experienced
      in
      investments and business matters, has made investments of a speculative nature
      and has purchased securities of United States publicly-owned companies in
      private placements in the past and, with its representatives, has such knowledge
      and experience in financial, tax and other business matters as to enable the
      Subscriber to utilize the information made available by the Company to evaluate
      the merits and risks of and to make an informed investment decision with respect
      to the proposed purchase, which represents a speculative investment. The
      Subscriber is able to bear the risk of such investment for an indefinite period
      and to afford a complete loss thereof. The information set forth on the
      signature page hereto regarding the Subscriber is accurate.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (f) Purchase
      of Securities.
      On the
      Closing Date, the Subscriber will purchase the Securities as principal for
      its
      own account for investment only and not with a view toward, or for resale in
      connection with, the public sale or any distribution thereof, but Subscriber
      does not agree to hold the Securities for any minimum amount of
      time.

     

    (g) Compliance
      with Securities Act.
      The
      Subscriber understands and agrees that the Securities have not been registered
      under the 1933 Act or any applicable state securities laws, by reason of their
      issuance in a transaction that does not require registration under the 1933
      Act
      (based in part on the accuracy of the representations and warranties of
      Subscriber contained herein), and that such Securities must be held indefinitely
      unless a subsequent disposition is registered under the 1933 Act or any
      applicable state securities laws or is exempt from such registration. For so
      long as Subscriber holds Notes, the Subscriber will not maintain a net short
      position in the Common Stock contrary to applicable rules and regulations.
      Notwithstanding anything to the contrary contained in this Agreement, such
      Subscriber may transfer (without restriction and without the need for an opinion
      of counsel) the Securities to its Affiliates (as defined below) provided that
      each such Affiliate is an “accredited investor” under Regulation D and such
      Affiliate agrees to be bound by the terms and conditions of this Agreement.
      For
      the purposes of this Agreement, an “Affiliate”
of
      any
      person or entity means any other person or entity directly or indirectly
      controlling, controlled by or under direct or indirect common control with
      such
      person or entity. For purposes of this definition, “control”
means
      the power to direct the management and policies of such person or firm, directly
      or indirectly, whether through the ownership of voting securities, by contract
      or otherwise.

     

    (h) Shares
      Legend.
      The
      Shares and the Warrant Shares shall bear the following or similar
      legend:

     

    "THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED. THESE SHARES MAY NOT BE SOLD, OFFERED FOR
      SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
      STATEMENT UNDER SUCH SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAW
      OR
      AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO VOIP, INC. THAT SUCH
      REGISTRATION IS NOT REQUIRED."

     

    (i) Warrants
      Legend.
      The
      Warrants shall bear the following or
      similar legend:

     

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

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (j) Note
      Legend.
      The
      Note shall bear the following legend:

    "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 AND ANY APPLICABLE STATE SECURITIES
      LAW
      OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO VOIP, INC. THAT SUCH
      REGISTRATION IS NOT REQUIRED."

     

    (k) Communication
      of Offer.
      The
      offer to sell the Securities was directly communicated to the Subscriber by
      the
      Company. At no time was the Subscriber presented with or solicited by any
      leaflet, newspaper or magazine article, radio or television advertisement,
      or
      any other form of general advertising or solicited or invited to attend a
      promotional meeting otherwise than in connection and concurrently with such
      communicated offer.

     

    (l) Authority;
      Enforceability.
      This
      Agreement and other agreements delivered together with this Agreement or in
      connection herewith have been duly authorized, executed and delivered by the
      Subscriber and are valid and binding agreements enforceable in accordance with
      their terms, subject to bankruptcy, insolvency, fraudulent transfer,
      reorganization, moratorium and similar laws of general applicability relating
      to
      or affecting creditors’ rights generally and to general principles of equity;
      and Subscriber has full corporate power and authority necessary to enter into
      this Agreement and such other agreements and to perform its obligations
      hereunder and under all other agreements entered into by the Subscriber relating
      hereto.

    

    (m) No
      Governmental Review.
      Each
      Subscriber understands that no United States federal or state agency or any
      other governmental or state agency has passed on or made recommendations or
      endorsement of the Securities or the suitability of the investment in the
      Securities nor have such authorities passed upon or endorsed the merits of
      the
      offering of the Securities.

    

    (n) Correctness
      of Representations.
      Each
      Subscriber represents as to such Subscriber that the foregoing representations
      and warranties are true and correct as of the date hereof and, unless a
      Subscriber otherwise notifies the Company prior to the Closing Date, shall
      be
      true and correct as of the Closing Date.

    

    (o) Survival.
      The
      foregoing representations and warranties shall survive the Closing Date until
      three years after the Closing Date.

     

    7. Company
      Representations and Warranties.
      The
      Company represents and warrants to and agrees with each Subscriber that except
      as set forth in the Reports and as otherwise qualified in the Transaction
      Documents:

     

    (a) Due
      Incorporation.
      The
      Company is a corporation duly organized, validly existing and in good standing
      under the laws of the jurisdiction of its incorporation and has the requisite
      corporate power to own its properties and to carry on its business is disclosed
      in the Reports.
      

     

    (b) Outstanding
      Stock.
      All
      issued and outstanding shares of capital stock of the Company have been duly
      authorized and validly issued and are fully paid and nonassessable.

     

    (c) Authority;
      Enforceability.
      This
      Agreement, the Notes, the Coupon Notes, the Warrants, and any other agreements
      delivered together with this Agreement or in connection herewith (collectively
      “Transaction
      Documents”)
      have
      been duly authorized, executed and delivered by the Company and Subsidiaries
      (as
      the case may be) and are valid and binding agreements enforceable in accordance
      with their terms, subject to bankruptcy, insolvency, fraudulent transfer,
      reorganization, moratorium and similar laws of general applicability relating
      to
      or affecting creditors’ rights generally and to general principles of equity.
      The Company and Subsidiaries have
      full
      corporate power and authority necessary to enter into and deliver the
      Transaction Documents and to perform their obligations
      thereunder.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    8.1. Conversion
      of Note.

    

    (a) Upon
      the
      conversion of a Note, interest, any sum due to the Subscriber under the
      Transaction Documents including Liquidated Damages, or part thereof, the Company
      shall take all necessary action to assure that the Company's transfer agent
      shall issue stock certificates in the name of Subscriber (or its permitted
      nominee) or such other persons as designated by Subscriber and in such
      denominations to be specified at conversion representing the number of shares
      of
      Common Stock issuable upon such conversion.

    

    (b) Subscriber
      will give notice of its decision to exercise its right to convert the Note,
      interest, any sum due to the Subscriber under the Transaction Documents
      including Liquidated Damages, or part thereof by telecopying an executed and
      completed Notice of Conversion (a form of which is annexed as Exhibit A to
      the
      Note) to the Company via confirmed telecopier transmission or otherwise pursuant
      to Section 15(a) of this Agreement. Each date on which a Notice of Conversion
      is
      telecopied to the Company in accordance with the provisions hereof shall be
      deemed a Conversion Date.

    

    c) Nothing
      contained herein or in any document referred to herein or delivered in
      connection herewith shall be deemed to establish or require the payment of
      a
      rate of interest or other charges in excess of the maximum permitted by
      applicable law. In the event that the rate of interest or dividends required
      to
      be paid or other charges hereunder exceed the maximum permitted by such law,
      any
      payments in excess of such maximum shall be credited against amounts owed by
      the
      Company to the Subscriber and thus refunded to the Company.

    

    8.2. Change
      of Control.
      In the
      event of a change of control transaction, defined as a third party acquiring
      greater than 50% in voting rights in one or a series of related transactions),
      the Subscriber may elect to have a Note redeemed by the Company at its face
      value plus all accrued interest. The Company shall satisfy the redemption
      request in cash or registered common shares at the Company’s
      option.

    

    8.3. Maximum
      Conversion.
      The
      Subscriber 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 Subscriber and its Affiliates on a Conversion Date, and (ii) 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 Subscriber
      and its Affiliates of more than 4.99% of the outstanding shares of common stock
      of the Company on such Conversion Date. 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
      Subscriber shall not be limited to aggregate conversions of only 4.99% and
      aggregate conversions by the Subscriber may exceed 4.99%. The Subscriber may
      waive the conversion limitation described in this Section 8.3, in whole or
      in
      part, upon and effective after 61 days prior written notice to the Company
      to
      increase such percentage to up to 9.99%. The Subscriber may decide whether
      to
      convert a Note or exercise Warrants to achieve an actual 4.99% or up to 9.99%
      ownership position as described above.

     

    8.4. Adjustments.
      The
      Conversion Price, Warrant exercise price and amount of Shares issuable upon
      conversion of the Notes and exercise of the Warrants shall be adjusted as
      described in this Agreement, the Notes and Warrants.

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    
      9. Finder’s
        Fee / Loan Fees.

       

    

    (a) Finder’s
      Fee.
      The
      Company on the one hand, and each Subscriber (for himself only) on the other
      hand, agree to indemnify the other against and hold the other harmless from
      any
      and all liabilities to any persons claiming brokerage commissions or finder’s
      fees on account of services purported to have been rendered on behalf of the
      indemnifying party in connection with this Agreement or the transactions
      contemplated hereby and arising out of such party’s actions. The Company
      represents that there are no parties entitled to receive fees, commissions,
      or
      similar payments in connection with the Offering except as described in Section
      9(b) below.

     

    (b) Placement
      Agent Fees.
      The
      Company shall pay placement agent fees consisting of a cash fee of 10% of the
      Aggregate Purchase Price, plus warrants to purchase up to 10% of the Warrant
      Shares that may be purchased under this Subscription Agreement (see the
      Placement Agent Agreement attached hereto as Exhibit
      D).

     

    10. Covenants
      of the Company.
      The
      Company covenants and agrees with the Subscribers as follows:

     

     (a) Use
      of
      Proceeds.
      The
      proceeds of the Offering will be employed by the Company for general corporate
      purposes, including growth and capital initiatives and research and
      development.

     

     (b) Confidentiality/Public
      Announcement.
      The
      terms of the Offering are confidential, and none of the terms shall be disclosed
      to anyone who is not a prospective purchaser of the securities contemplated
      herein, an officer or director of the Company or their agent, adviser or legal
      counsel, unless required by law. (It is acknowledged that a Form 8-K disclosure
      will likely be required.)

     

    11. Covenants
      of the Company and Subscriber Regarding Indemnification.

     

    (a) The
      Company agrees to indemnify, hold harmless, reimburse and defend the
      Subscribers, the Subscribers’ officers, directors, agents, Affiliates, control
      persons, and principal shareholders, against any claim, cost, expense,
      liability, obligation, loss or damage (including reasonable legal fees) of
      any
      nature, incurred by or imposed upon the Subscriber or any such person which
      results, arises out of or is based upon (i) any material misrepresentation
      by
      Company or material breach of any warranty by Company in this Agreement or
      in
      any Exhibits or Schedules attached hereto, or other agreement delivered pursuant
      hereto; or (ii) after any applicable notice and/or cure periods, any material
      breach or default in performance by the Company of any covenant or undertaking
      to be performed by the Company hereunder, or any other agreement entered into
      by
      the Company and Subscriber relating hereto.

     

    (b) Each
      Subscriber agrees to indemnify, hold harmless, reimburse and defend the Company
      and each of the Company’s officers, directors, agents, Affiliates, control
      persons and principal shareholders against any claim, cost, expense, liability,
      obligation, loss or damage (including reasonable legal fees) of any nature,
      incurred by or imposed upon the Company or any such person which results, arises
      out of or is based upon (i) any material misrepresentation by such Subscriber
      in
      this Agreement or in any Exhibits or Schedules attached hereto, or other
      agreement delivered pursuant hereto; or (ii) after any applicable notice and/or
      cure periods, any material breach or default in performance by such Subscriber
      of any covenant or undertaking to be performed by such Subscriber hereunder,
      or
      any other agreement entered into by the Company and Subscribers, relating
      hereto.

     

    (c) In
      no
      event shall the liability of any Subscriber or permitted successor hereunder
      or
      under any Transaction Document or other agreement delivered in connection
      herewith be greater in amount than the dollar amount of the net proceeds
      actually received by such Subscriber upon the sale of the Shares.

     

    12.1. Registration
      Rights.
      The
      Company shall use its best efforts to file a Registration Statement
      (“Registration
      Statement”)
      on
      Form S-3 (or an alternative available form if the Company is not eligible to
      file a Form S-3) covering the Shares, the Warrant Shares, the Closing Shares,
      and the Placement Agent Warrant Shares (“Registrable
      Securities”)
      no
      later than ninety (90) days after the closing of financing in the amount of
      $20.0 million or more (“Closing”),
      and
      use its best efforts to have the Registration Statement declared effective
      within one hundred and eighty (180) days after the Closing (or within two
      hundred (200) days after the Closing if the Registration Statement receives
      a
“full review” from the Securities and Exchange
      Commission).

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    12.2 Piggyback
      Registration.
      Whenever the Company proposes to register any of its securities under the
      Securities Act (other than pursuant to any of the registration rights listed
      above, or a registration on Form S-4 or S-8 or any successor or similar forms),
      and the registration form to be used may be used for the registration of
      Registrable Securities, whether or not for sale for its own account, the Company
      will include in such registration all Registrable Securities, subject only
      to
      earlier existing registration commitments unless waivers are
      obtained.

     

    12.3. Non-Registration
      Liquidated Damages.
      In the
      event the Registration Statement has not been filed within one hundred and
      twenty (120) days of the Closing or declared effective within one hundred and
      eighty (180) days of the Closing (or within two hundred (200) days of the
      Closing if the Registration Statement receives a “full review” from the
      Securities and Exchange Commission), the Company shall pay to the Subscribers
      liquidated damages equal to 1.5% of the Aggregate Purchase Price for each
      subsequent 30-day period, up to a maximum of 18.0% of the Aggregate Purchase
      Price.

    

    13. Additional
      Agreements.

    

    (a) Right
      of First Offer.
      For any
      equity or equity linked private financing consummated within twelve (12) months
      after the Closing Date, the Subscribers shall have a pro-rata right to purchase
      all or part of the private financing. The Subscribers shall have five (5)
      trading days to respond to a signed and accepted term sheet by the Company.
      This
      Right of First Offer will not apply in connection with (i) as a result of
      the exercise of options or warrants or conversion of convertible notes or
      amounts which are granted, issued or accrue pursuant to this Agreement; (ii)
      as
      has been described in the reports or other written information filed with the
      Securities and Exchange Commission or delivered to the Subscribers prior to
      the
      Closing Date; (iii) full or partial consideration in connection with a strategic
      merger, consolidation, or purchase of substantially all of the securities or
      assets of a corporation or other entity; (iv) the Company’s issuance of
      securities in connection with strategic license agreements and other partnering
      arrangements so long as such issuances are not for the purpose of raising
      capital; (v) the Company’s issuance of Common Stock or the issuance or grants of
      options to purchase Common Stock pursuant to the Company’s stock option plans
      and employee stock purchase plans as they now exist, provided such options
      are
      granted with exercise prices at least equal to the closing price of the Common
      Stock on the grant dates; and (vi) the Company’s public offering of securities
      (collectively the foregoing are “Excepted
      Issuances”).

     

    (b) Favored
      Nations Provision.
      Other
      than in connection with the Excepted Issuances, if at any time Notes are
      outstanding and, in the case of the Warrants, for as long as both Notes and
      Warrants are outstanding, the Company shall issue or agree to issue any common
      stock or securities convertible into or exercisable for shares of common stock
      (or modify any of the foregoing which may be outstanding) to any person or
      entity at a price per share or conversion or exercise price per share which
      shall be less than the Conversion Price in respect of the Shares, or if less
      than the Warrant exercise price in respect of the Warrant Shares, without the
      consent of each Subscriber holding Notes, Shares, Warrants, or Warrant Shares,
      then the Conversion Price on outstanding principal and the Warrant exercise
      price on outstanding warrants shall be reduced to such other lower issue price.
      The Subscriber is granted the registration rights described in Section 12 hereof
      in relation to the additional shares of Common Stock which may be issuable
      as
      the result of the adjusted Conversion Price except that the Filing Date and
      Effective Date vis-à-vis such additional common shares shall be, respectively,
      the 90th
      and
      180th
      day
      after the closing date giving rise to the requirement to adjust the Conversion
      Price.

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      (c) Maximum
        Exercise of Rights.
        In the
        event the exercise of the rights described in Section 13(a) or
        13(b)
        would or could result in the issuance of an amount of common stock of the
        Company that would
        exceed the maximum amount that may be issued to a Subscriber calculated in
        the
        manner described in Section 8.3 of this Agreement, then the issuance of such
        additional shares of common stock of the Company to such Subscriber will
        be
        deferred in whole or in part until such time as such Subscriber is able to
        beneficially own such common stock without exceeding the applicable maximum
        amount set forth calculated in the manner described in Section 8.3 of this
        Agreement. The determination of when such common stock may be issued shall
        be
        made by each Subscriber as to only such Subscriber.

       

    

    14. Security
      Interest.
      The
      Subscribers will be granted a security interest in all the assets of the Company
      pursuant to a “Security Agreement,” a form of which is annexed here to as
Exhibit
      E.

    

    15. Miscellaneous.

     

    (a) Notices.
      All
      notices, demands, requests, consents, approvals, and other communications
      required or permitted hereunder shall be in writing and, unless otherwise
      specified herein, shall be (i) personally served, (ii) deposited in the mail,
      registered or certified, return receipt requested, postage prepaid, (iii)
      delivered by reputable air courier service with charges prepaid, or (iv)
      transmitted by hand delivery, telegram, or facsimile, addressed as set forth
      below or to such other address as such party shall have specified most recently
      by written notice. Any notice or other communication required or permitted
      to be
      given hereunder shall be deemed effective (a) upon hand delivery or delivery
      by
      facsimile, with accurate confirmation generated by the transmitting facsimile
      machine, at the address or number designated below (if delivered on a business
      day during normal business hours where such notice is to be received), or the
      first business day following such delivery (if delivered other than on a
      business day during normal business hours where such notice is to be received)
      or (b) on the second business day following the date of mailing by express
      courier service, fully prepaid, addressed to such address, or upon actual
      receipt of such mailing, whichever shall first occur. The addresses for such
      communications shall be: (i) if to the Company, to: VoIP,
      Inc., 151 So. Wymore Road, Suite 3000, Altamonte Springs, FL 32714, Attn:
      Anthony Cataldo, CEO, telecopier: (407) 389-3233, with a copy by telecopier
      only
      to: Baratta, Baratta & Aidala LLP, 597 Fifth Avenue, New York, NY 10017,
      Attn: Joseph A. Baratta, Esq., telecopier: (212) 750-8297, and (ii) if to the
      Subscriber, to: the one or more addresses and telecopier numbers indicated
      on
      the signature pages hereto.

     

    (b) Entire
      Agreement; Assignment.
      This
      Agreement and other documents delivered in connection herewith represent the
      entire agreement between the parties hereto with respect to the subject matter
      hereof and may be amended only by a writing executed by both parties. Neither
      the Company nor the Subscribers have relied on any representations not contained
      or referred to in this Agreement and the documents delivered herewith. No right
      or obligation of the Company shall be assigned without prior notice to and
      the
      written consent of the Subscribers. 

     

    (c) Counterparts/Execution.
      This
      Agreement may be executed in any number of counterparts and by the different
      signatories hereto on separate counterparts, each of which, when so executed,
      shall be deemed an original, but all such counterparts shall constitute but
      one
      and the same instrument. This Agreement may be executed by facsimile signature
      and delivered by facsimile transmission.

     

    (d) Law
      Governing this Agreement.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Florida without regard to conflicts
      of laws
      principles that would result in the application of the substantive laws of
      another jurisdiction. Any action brought by either party against the other
      concerning the transactions contemplated by this Agreement shall be brought
      only
      in the civil or state courts of Florida or in the federal courts located in
      Seminole County. The
      parties and the individuals executing this Agreement and other agreements
      referred to herein or delivered in connection herewith on behalf of the Company
      agree to submit to the jurisdiction of such courts and waive trial by
      jury.
      The
      prevailing party shall be entitled to recover from the other party its
      reasonable attorney’s fees and costs. In the event that any provision of this
      Agreement or any other agreement delivered in connection herewith is invalid
      or
      unenforceable under any applicable statute or rule of law, then such provision
      shall be deemed inoperative to the extent that it may conflict therewith and
      shall be deemed modified to conform to such statute or rule of law. Any such
      provision which may prove invalid or unenforceable under any law shall not
      affect the validity or enforceability of any other provision of any agreement.
      

     

    [THIS
      SPACE INTENTIONALLY LEFT BLANK]

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    SIGNATURE
      PAGE TO SUBSCRIPTION AGREEMENT (A)

     

    

    Please
      acknowledge your acceptance of the foregoing Subscription Agreement by signing
      and returning a copy to the undersigned whereupon it shall become a binding
      agreement between us.

    

    
      	
              VOIP,
                INC.

            
	
              a
                Texas corporation

            
	 	 
	 	 
	
              By:
                

            	
                  
                /s/ Robert Staats

            
	 	
                 
                Name: Robert Staats

            
	 	
                 
                Title:   Chief Accounting Officer

            
	 	 
	 	
                 
                Dated: July 31, 2007

            

    

     

     

    
      	
              SUBSCRIBER

            	 	
              AGGREGATE
                

              PURCHASE PRICE

            	 	
              AGGREGATE
                

              PRINCIPAL
                

              AMOUNT

            	 
	
              NATHAN
                ZACK

              411
                South Old Woodward Avenue, #928

              Birmingham
                MI 48009

            	 	
              $

            	
              100,000.00

            	 	
              $

            	
              100,000.00

            	 

    

     

    
      	
               
                /s/ Nathan Zack 

            
	
              (Signature)

              By:
                Nathan Zack

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    SIGNATURE
      PAGE TO SUBSCRIPTION AGREEMENT (B)

    

    Please
      acknowledge your acceptance of the foregoing Subscription Agreement by signing
      and returning a copy to the undersigned whereupon it shall become a binding
      agreement between us.

    

    
      	
              VOIP,
                INC.

            
	
              a
                Texas corporation

            
	 	 
	 	 
	
              By:

            	
              /s/
                Robert Staats

            
	 	
                
                Name: Robert Staats

            
	 	
                
                Title:   Chief Accounting Officer

            
	 	 
	 	
                
                Dated: July 31, 2007

            

    

    

     

    
      	
              SUBSCRIBER

            	 	
              AGGREGATE
                

              PURCHASE PRICE

            	 	
              AGGREGATE
                

              PRINCIPAL
                

              AMOUNT

            	 
	
              GHT
                ASSOCIATES LLC

              500
                Griswold Street, 10th Floor

              Detroit
                MI 48226

            	 	
              $

            	
              100,000.00

            	 	
              $

            	
              100,000.00

            	 

    

     

    
      	 
              /s/ Gary Torgow
	
              (Signature)
By:
              Gary Torgow, Manager

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    LIST
      OF EXHIBITS AND SCHEDULES

     

    
      	 	
              Exhibit
                A

            	
              Form
                of Note

            
	 	 	 
	 	
              Exhibit
                B

            	
              Form
                of Warrant

            
	 	 	 
	 	
              Exhibit
                C

            	
              Form
                of Coupon Note

            
	 	 	 
	 	
              Exhibit
                D

            	
              Form
                of Placement Agent Agreement

            
	 	 	 
	 	
              Exhibit
                E

            	
              Form
                of Security Agreement

            

    

     

    
      
        
        

      

      
        11Exhibit
      10.9

    

    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 COUNEL REASONABLE
      SATISFACTORY TO VOIP, INC. THAT SUCH REGISTRATION IS NOT
      REQUIRED.

    

    

    
      	
              Principal
                Amount: $100,000.00

            	
              Issue
                Date: July 31, 2007

            

    

    

    CONVERTIBLE
      NOTE

    

    FOR
      VALUE
      RECEIVED, VoIP, INC., a Texas corporation (hereinafter called "Borrower"),
      hereby promises to pay to NATHAN ZACK, 411 South Old Woodward Avenue, #928,
      Birmingham, Michigan 48009 (the "Holder"), on order, without demand, the sum
      of
      One Hundred Thousand Dollars ($100,000.00), with interest at the rate of ten
      percent (10%) per annum, on the earlier of 1) January 31, 2008;
      or 2) upon the closing of a financing of Twenty Million Dollars
      ($20,000,000.00) or more, if not retired sooner.

    

    This
      note
      (the “Note”) has been entered into pursuant to the terms of a subscription
      agreement between the Borrower and the Holder, dated of even date herewith
      (the
“Subscription Agreement”), and shall be governed by the terms of such
      Subscription Agreement. Unless otherwise separately defined herein, all
      capitalized terms used in this Note shall have the same meaning as is set forth
      in the Subscription Agreement. The following terms shall apply to this
      Note:

    

    ARTICLE
      I

    

    GENERAL
      PROVISIONS

    

    1.1 Payment
      Grace Period.
      The
      Borrower shall have a ten (10) day grace period to pay any monetary amounts
      due
      under this Note, after which grace period and during the pendency of any other
      Event of Default (as defined below) a default interest rate of fifteen percent
      (13%) per annum shall apply to the amounts owed hereunder.

    

    1.2 Conversion
      Privileges.
      The
      Conversion Privileges set forth in Article II shall remain in full force and
      effect immediately from the date hereof and until the Note is paid in full
      regardless of the occurrence of an Event of Default. The Note shall be payable
      in full on the Maturity Date, unless previously converted into Common Stock
      in
      accordance with Article II hereof; provided, that if an Event of Default has
      occurred, the Holder may extend the Maturity Date up to an amount of time equal
      to the pendency of the Event of Default. Such extension must be on notice in
      writing.

    

    1.3 Securities
      Purchase Credit.
      The
      Holder may present this Note or any sum payable hereunder to the Borrower for
      securities subscriptions in the aggregate of a minimum of $20,000,000. The
      Holder shall receive a credit of one hundred and twenty-five percent (125%)
      of
      the amount payable underunder against the purchase price for such securities
      subscriptions.

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

        
        

      

    

    

    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 COUNEL REASONABLE
      SATISFACTORY TO VOIP, INC. THAT SUCH REGISTRATION IS NOT
      REQUIRED.

     

    
      	Principal
              Amount: $100,000.00	
              Issue
                Date: July 31, 2007

            

    

    

    CONVERTIBLE
      NOTE

    

    FOR
      VALUE
      RECEIVED, VoIP, INC., a Texas corporation (hereinafter called "Borrower"),
      hereby promises to pay to GHT ASSOCIATES LLC, 500 Griswold Street,
      10th
      Floor,
      Detroit, Michigan 48226 (the "Holder"), on order, without demand, the sum of
      One
      Hundred Thousand Dollars ($100,000.00), with interest at the rate of ten percent
      (10%) per annum, on the earlier of 1) January 31, 2008; or
      2) upon the closing of a financing of Twenty Million Dollars
      ($20,000,000.00) or more, if not retired sooner.

    

    This
      note
      (the “Note”) has been entered into pursuant to the terms of a subscription
      agreement between the Borrower and the Holder, dated of even date herewith
      (the
“Subscription Agreement”), and shall be governed by the terms of such
      Subscription Agreement. Unless otherwise separately defined herein, all
      capitalized terms used in this Note shall have the same meaning as is set forth
      in the Subscription Agreement. The following terms shall apply to this
      Note:

    

    ARTICLE
      I

    

    GENERAL
      PROVISIONS

    

    1.1 Payment
      Grace Period.
      The
      Borrower shall have a ten (10) day grace period to pay any monetary amounts
      due
      under this Note, after which grace period and during the pendency of any other
      Event of Default (as defined below) a default interest rate of fifteen percent
      (13%) per annum shall apply to the amounts owed hereunder.

    

    1.3 Conversion
      Privileges.
      The
      Conversion Privileges set forth in Article II shall remain in full force and
      effect immediately from the date hereof and until the Note is paid in full
      regardless of the occurrence of an Event of Default. The Note shall be payable
      in full on the Maturity Date, unless previously converted into Common Stock
      in
      accordance with Article II hereof; provided, that if an Event of Default has
      occurred, the Holder may extend the Maturity Date up to an amount of time equal
      to the pendency of the Event of Default. Such extension must be on notice in
      writing.

    

    1.3 Securities
      Purchase Credit.
      The
      Holder may present this Note or any sum payable hereunder to the Borrower for
      securities subscriptions in the aggregate of a minimum of $20,000,000. The
      Holder shall receive a credit of one hundred and twenty-five percent (125%)
      of
      the amount payable underunder against the purchase price for such securities
      subscriptions.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    ARTICLE
      II

    

    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.

    

    2.1. 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, together with accrued but unpaid
      interest thereon, 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 as defined in Section 2.1(b) hereof (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 2.1(c) hereof, the Conversion Price per
      share shall be $0.08, 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 2.1(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.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    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) 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.

    

    2.2. Optional
      Redemption of Principal Amount.
      Provided an Event of Default or an event which with the passage of time or
      the
      giving of notice could become an Event of Default has not occurred, whether
      or
      not such Event of Default has been cured, the Borrower will have the option
      of
      prepaying the outstanding Principal amount of this Note ("Optional Redemption"),
      in whole or in part, by paying to the Holder a sum of money equal
      to
      one hundred percent (100%) of the Principal amount to be redeemed, together
      with
      accrued but unpaid interest thereon and any and all other sums
      due,
      accrued or payable to the Holder arising under this Note or any Transaction
      Document through and as of the Redemption Payment Date as defined below (the
      "Redemption Amount"). Borrower’s election to exercise its right to prepay must
      be by notice in writing (“Notice of Redemption”). The Notice of Redemption shall
      specify the date for such Optional Redemption (the "Redemption Payment Date"),
      which date shall be thirty (30) business days after the date of the Notice
      of
      Redemption (the "Redemption Period"). A Notice of Redemption shall not be
      effective with respect to any portion of the Principal Amount for which the
      Holder has a pending election to convert, or for conversions initiated or made
      by the Holder during the Redemption Period. On the Redemption Payment Date,
      the
      Redemption Amount, less any portion of the Redemption Amount against which
      the
      Holder has exercised its conversion rights, shall be paid in good funds to
      the
      Holder. In the event the Borrower fails to pay the Redemption Amount on the
      Redemption Payment Date as set forth herein, then (i) such Notice of Redemption
      will be null and void, (ii) Borrower will have no right to deliver another
      Notice of Redemption, and (iii) Borrower’s failure may be deemed by Holder to be
      a non-curable Event of Default. A Redemption Notice may be given only at a
      time
      a registration statement covering all of the shares issuable upon conversion
      of
      all amounts convertible under this Note (“Registration Statement”) is effective.
      A Notice of Redemption may not be given nor may the Borrower effectuate a
      Redemption without the consent of the Holder, if at any time during the
      Redemption Period an Event of Default
      or an Event which with the passage of time or giving of notice could become
      an
      Event of Default (whether or not such Event of Default has been cured), has
      occurred or the Registration Statement is not effective each day during the
      Redemption Period.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

    2.3. Method
      of Conversion.
      This
      Note may be converted by the Holder in whole or in part as described in Section
      2.1(a) hereof and the Subscription Agreement. 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.

    

    2.4. 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
      2.4 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 2.4, 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.

    

    ARTICLE
      III

    

    EVENT
      OF DEFAULT

    

    The
      occurrence of any of the following events of default ("Event of Default") shall,
      at the option of the Holder hereof, make all sums of principal and interest
      then
      remaining unpaid hereon and all other amounts payable hereunder immediately
      due
      and payable, upon demand, without presentment, or grace period, all of which
      hereby are expressly waived, except as set forth below:

    

    3.1 Failure
      to Pay Principal or Interest.
      The
      Borrower fails to pay any installment of Principal Amount, interest or other
      sum
      due under this Note or any Transaction Document when due and such failure
      continues for a period of ten (10) business days after the due
      date.

    

    3.2 Breach
      of Covenant.
      The
      Borrower breaches any material covenant or other term or condition of the
      Subscription Agreement, this Note or Transaction Document in any material
      respect and such breach, if subject to cure, continues for a period of ten
      (10)
      business days after written notice to the Borrower from the Holder.

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    3.3 Breach
      of Representations and Warranties.
      Any
      material representation or warranty of the Borrower made herein, in the
      Subscription Agreement, Transaction Document or in any agreement,
      statement or
      certificate given in writing pursuant hereto or in connection herewith or
      therewith shall be false or misleading in any material respect as of the date
      made and as of each Closing Date.

    

    3.4 Non-Payment.
      The
      Borrower shall have received a notice of default, which remains uncured for
      a
      period of more than twenty (20) days beyond any applicable grace period, on
      the
      payment of any one or more debts or obligations aggregating in excess of One
      Hundred Thousand Dollars ($100,000.00).

    

    3.5 Bankruptcy.
      Bankruptcy, insolvency, reorganization or liquidation proceedings or other
      proceedings or relief under any bankruptcy law or any law, or the issuance
      of
      any notice in relation to such event, for the relief of debtors shall be
      instituted by or against the Borrower and if instituted against them are not
      dismissed within forty-five (45) days of initiation.

    

    3.6 Delisting.
      Delisting of the Common Stock from any Principal Market; failure to comply
      with
      the requirements for continued listing on a Principal Market for a period of
      seven consecutive trading days; or notification from a Principal Market that
      the
      Borrower is not in compliance with the conditions for such continued listing
      on
      such Principal Market.

     

    ARTICLE
      IV

    

    SECURITY
      INTEREST

    

    4. Security
      Interest.
      This
      Note is secured by a security interest granted to the Holder pursuant to a
      Security Agreement, as delivered by Borrower to Holder.

    

    ARTICLE
      V

    

    MISCELLANEOUS

    

    5.1 Failure
      or Indulgence Not Waiver.
      No
      failure or delay on the part of Holder hereof in the exercise of any power,
      right or privilege hereunder shall operate as a waiver thereof, nor shall any
      single or partial exercise of any such power, right or privilege preclude other
      or further exercise thereof or of any other right, power or privilege. All
      rights and remedies existing hereunder are cumulative to, and not exclusive
      of,
      any rights or remedies otherwise available.

    

    5.2 Notices.
      All
      notices, demands, requests, consents, approvals, and other communications
      required or permitted hereunder shall be in writing and, unless otherwise
      specified herein, shall be (i) personally served, (ii) deposited in the mail,
      registered or certified, return receipt requested, postage prepaid, (iii)
      delivered by reputable air courier service with charges prepaid, or (iv)
      transmitted by hand delivery, telegram, or facsimile, addressed as set forth
      below or to such other address as such party shall have specified most recently
      by written notice. Any notice or other communication required or permitted
      to be
      given hereunder shall be deemed effective (a) upon hand delivery or delivery
      by
      facsimile, with accurate confirmation generated by the transmitting facsimile
      machine, at the address or number designated below (if delivered on a business
      day during normal business hours where such notice is to be received), or the
      first business day following such delivery (if delivered other than on a
      business day during normal business hours where such notice is to be received)
      or (b) on the second business day following the date of mailing by express
      courier service, fully prepaid, addressed to such address, or upon actual
      receipt of such mailing, whichever shall first occur. The addresses for such
      communications shall be: (i) if to the Borrower to: VoIP, Inc., 151 So. Wymore
      Road, Suite 3000, Altamonte Springs, FL 32714, Attn: Anthony Cataldo, CEO,
      telecopier: (407) 389-3233, with a copy by telecopier only to: Baratta, Baratta
      & Aidala LLP, 597 Fifth Avenue,
      New York, NY 10017, Attn: Joseph A. Baratta, Esq., telecopier: (212) 750-8297,
      and (ii) if to the Holder, to the name, address and telecopy number set forth
      on
      the front page of this Note.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    5.3 Amendment
      Provision.
      The
      term "Note" and all reference thereto, as used throughout this instrument,
      shall
      mean this instrument as originally executed, or if later amended or
      supplemented, then as so amended or supplemented.

    

    5.4 Assignability.
      This
      Note shall be binding upon the Borrower and its successors and assigns, and
      shall inure to the benefit of the Holder and its successors and assigns. The
      Borrower may not assign any of its obligations under this Note without the
      consent of the Holder.

    

    5.5 Cost
      of Collection.
      If
      default is made in the payment of this Note, Borrower shall pay the Holder
      hereof reasonable costs of collection, including reasonable attorneys'
      fees.

    

    5.6 Governing
      Law.
      This
      Note shall be governed by and construed in accordance with the laws of the
      State
      of Florida. Any action brought by either party against the other concerning
      the
      transactions contemplated by this Agreement shall be brought only in the state
      courts of Florida or in the federal courts located in the state of Florida.
      Both
      parties and the individual signing this Agreement on behalf of the Borrower
      agree to submit to the jurisdiction of such courts. The prevailing party shall
      be entitled to recover from the other party its reasonable attorney's fees
      and
      costs.

    

    5.7 Maximum
      Payments.
      Nothing
      contained herein shall be deemed to establish or require the payment of a rate
      of interest or other charges in excess of the maximum permitted by applicable
      law. In the event that the rate of interest required to be paid or other charges
      hereunder exceed the maximum permitted by such law, any payments in excess
      of
      such maximum shall be credited against amounts owed by the Borrower to the
      Holder and thus refunded to the Borrower.

    

    5.8 Shareholder
      Status.
      The
      Holder shall not have rights as a shareholder of the Borrower with respect
      to
      unconverted portions of this Note. However, the Holder will have all the rights
      of a shareholder of the Borrower with respect to the shares of Common Stock
      to
      be received by Holder after delivery by the Holder of a Conversion Notice to
      the
      Borrower.

    

    IN
      WITNESS WHEREOF,
      Borrower has caused this Note to be signed in its name by an authorized officer
      as of the 31st
      day of
      July, 2007.

    

    
      	
              VOIP
                INC.

            
	 	 
	 	 
	
              By:

            	
                  
                /s/ Robert Staats

            
	 	
                 
                Name: Robert Staats

            
	 	
                  Title:
                Chief Accounting Officer

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    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 July 31, 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:_____________________________________________________________________________

     

    ____________________________________________________________________________

     

    
      
        
        

      

      
        1

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