Document:

Exhibit
      10.3

    

    CERTIFICATE
      TO SET FORTH DESIGNATIONS, VOTING POWERS,

    PREFERENCES,
      LIMITATIONS, RESTRICTIONS, AND RELATIVE

    RIGHTS
      OF SERIES A CONVERTIBLE PREFERRED STOCK, 

    $.001
      PAR VALUE PER SHARE

     

    It
      is
      hereby certified that:

    

    I. The
      name
      of the corporation is VoIP, Inc. (the "Corporation"), a Texas
      corporation.

    

    II. Set
      forth
      hereinafter is a statement of the voting powers, preferences, limitations,
      restrictions, and relative rights of shares of Series A Convertible Preferred
      Stock hereinafter designated as contained in a resolution of the Board of
      Directors of the Corporation pursuant to a provision of the Certificate of
      Incorporation of the Corporation permitting the issuance of said Series A
      Convertible Preferred Stock by resolution of the Board of
      Directors:

    

    Series
      A
      Convertible Preferred Stock, $.001 par value.

    

    1. Designation:
      Number of Shares.
      The
      designation of said series of Preferred Stock shall be Series A Convertible
      Preferred Stock (the "Series A Preferred Stock"). The number of shares of Series
      A Preferred Stock shall be 17,537,268. Each share of Series A Preferred Stock
      shall have a stated value equal to $0.50 (as adjusted for any stock dividends,
      combinations or splits with respect to such shares) (the "Stated Value"), and
      $.001 par value. The Corporation will not issue more than 17,537,268 shares
      of
      Series A Preferred Stock (“Original Issue”) and such additional shares of Series
      A Preferred Stock as may be issued in connection with the Original
      Issue.

    

    2. Dividends.

    

    The
      holders of the Series A Preferred Stock (the “Holders”) shall receive dividends
      on a fully diluted basis if any dividend is declared for the common stock of
      the
      Corporation (the “Common Stock”). The Holders of the Series A Preferred Stock
      shall not receive any preferential dividends except as set forth in Section
      7
      herein.

    

    3. Liquidation
      and Optional Redemption Rights.

    

    (a) Upon
      the
      dissolution, liquidation or winding-up of the Corporation, whether voluntary
      or
      involuntary, the Holders of the Series A Preferred Stock shall be entitled
      to
      receive, and before any payment or distribution shall be made on the Common
      Stock and/or any other class of junior stock, out of the assets of the
      Corporation available for distribution to stockholders, the Stated Value per
      share of Series A Preferred Stock and all accrued and unpaid dividends to and
      including the date of payment thereof. Upon the payment in full of all amounts
      due to Holders of the Series A Preferred Stock, the holders of the Common Stock
      of the Corporation and any other class of junior stock shall receive all
      remaining assets of the Corporation legally available for distribution. If
      the
      assets of the Corporation available for distribution to the Holders of the
      Series A Preferred Stock shall be insufficient to permit payment in full of
      the
      amounts payable as aforesaid to the Holders of Series A Preferred Stock upon
      such liquidation, dissolution or winding-up, whether voluntary or involuntary,
      then all such assets of the Corporation shall be distributed to the exclusion
      of
      the holders of shares of Common Stock and any other class of junior stock
      ratably among the Holders of the Series A Preferred Stock.

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    (b) The
      purchase or the redemption by the Corporation of shares of any class of stock,
      the merger or consolidation of the Corporation with or into any other
      corporation or corporations, or the sale or transfer by the Corporation of
      any
      material part of its assets shall be deemed to be a liquidation, dissolution
      or
      winding-up of the Corporation for the purposes of this paragraph 3 except in
      the
      event that in such transaction the Holders of Series A Preferred Stock receive
      securities of the surviving corporation having substantially similar rights
      as
      the Series A Preferred Stock and the stockholders of the Corporation immediately
      prior to such transaction are holders of at least a majority of the voting
      securities of the successor corporation immediately thereafter. This provision
      may be waived in writing by holders of 80% of the then outstanding Series A
      Preferred Stock.

    

    (c) The
      Corporation will have the option of redeeming the Obligation Amount (defined
      below) ("Optional Redemption"), in whole or in part, by paying to the Holder
      a
      sum of money equal to one hundred twenty percent (120%) of the Obligation Amount
      to be redeemed (the "Redemption Amount"). The Corporation’s election to exercise
      its right to redeem must be by notice in writing (“Notice of Redemption”) and
      made proportionately to all Holders of Series A Preferred Stock. The Notice
      of
      Redemption shall specify the date for such Optional Redemption (the "Redemption
      Payment Date"), which date shall be not less than thirty (30) business days
      after receipt of the Notice of Redemption (the "Redemption Period"). A Notice
      of
      Redemption shall not be effective with respect to any portion of the Obligation
      Amount for which the Holder has a pending election to convert pursuant to
      Section 4 hereof, 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
      rights pursuant to Section 4, shall be paid in good funds to the Holder. In
      the
      event the Corporation fails to pay the Redemption Amount on the Redemption
      Payment Date as set forth herein, then such Notice of Redemption will be null
      and void. 

    

    4. Conversion
      into Common Stock.
      Holders
      of shares of Series A Preferred Stock shall have the following conversion rights
      and obligations:

    

    (a) Subject
      to the further provisions of this paragraph 4 each Holder of shares of Series
      A
      Preferred Stock shall have the right at any time commencing after the issuance
      to the Holder of Series A Preferred Stock to convert such shares, accrued and
      unpaid dividends on such shares, and any other sum owed by the Corporation
      arising from the Series A Preferred Stock or pursuant to a Subscription
      Agreement entered into by the Corporation and the Holder or Holder’s predecessor
      in connection with the issuance of Series A Preferred Stock (“Subscription
      Agreement”) (collectively “Obligation Amount”) into fully paid and
      non-assessable shares of Common Stock of the Corporation determined in
      accordance with the Conversion Price provided in paragraph 4(b) below (the
      "Conversion Price"). All issued or accrued but unpaid dividends may be converted
      at the election of the Holder simultaneously with the conversion of the
      principal amount of Stated Value of Series A Preferred Stock being
      converted.

    

    (b) The
      number of shares of Common Stock issuable upon conversion of the Obligation
      Amount shall equal the Stated Value per share being converted divided by (ii)
      the Conversion Price. The Conversion Price shall be the lesser of (i) $0.072
      or
      (ii) seventy percent (70%) of the three (3) lowest closing bid prices for the
      ten (10) days prior to the conversion, subject to adjustment as described herein
      and in the Subscription Agreement.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    (c) Holder
      will give notice of its decision to exercise its right to convert the Series
      A
      Preferred Stock or part thereof by telecopying an executed and completed Notice
      of Conversion (a form of which is annexed as Exhibit
      A
      to the
      Certificate of Designation) to the Corporation via confirmed telecopier
      transmission or otherwise pursuant to Section 13(a) of the Subscription
      Agreement. The Holder will not be required to surrender the Series A Preferred
      Stock certificate until the Series A Preferred Stock has been fully converted.
      Each date on which a Notice of Conversion is telecopied to the Corporation
      in
      accordance with the provisions hereof shall be deemed a Conversion Date. The
      Corporation will itself or cause the Corporation’s transfer agent to transmit
      the Corporation's Common Stock certificates representing the Common Stock
      issuable upon conversion of the Series A Preferred Stock to the Holder via
      express courier for receipt by such Holder within three (3) business days after
      receipt by the Corporation of the Notice of Conversion (the "Delivery Date").
      In
      the event the Common Stock is electronically transferable, then delivery of
      the
      Common Stock must
      be made
      by electronic transfer provided request for such electronic transfer has been
      made by the Holder. A Series A Preferred Stock certificate representing the
      balance of the Series A Preferred Stock not so converted will be provided by
      the
      Corporation to the Holder if requested by Holder, provided the Holder has
      delivered the original Series A Preferred Stock certificate to the Corporation.
      To the extent that a Holder elects not to surrender Series A Preferred Stock
      for
      reissuance upon partial payment or conversion, the Holder hereby indemnifies
      the
      Corporation against any and all loss or damage attributable to a third-party
      claim in an amount in excess of the actual amount of the Stated Value of the
      Series A Preferred Stock then owned by the Holder.

    

    In
      the
      case of the exercise of the conversion rights set forth in paragraph 4(a),
      the
      conversion privilege shall be deemed to have been exercised and the shares
      of
      Common Stock issuable upon such conversion shall be deemed to have been issued
      upon the date of receipt by the Corporation of the Notice of Conversion. The
      person or entity entitled to receive Common Stock issuable upon such conversion
      shall, on the date such conversion privilege is deemed to have been exercised
      and thereafter, be treated for all purposes as the record holder of such Common
      Stock and shall on the same date cease to be treated for any purpose as the
      record Holder of such shares of Series A Preferred Stock so
      converted.

    

    Upon
      the
      conversion of any shares of Series A Preferred Stock no adjustment or payment
      shall be made with respect to such converted shares on account of any dividend
      on the Common Stock, except that the Holder of such converted shares shall
      be
      entitled to be paid any dividends declared on shares of Common Stock after
      conversion thereof.

    

    The
      Corporation shall not be required, in connection with any conversion of Series
      A
      Preferred Stock and payment of dividends on Series A Preferred Stock to issue
      a
      fraction of a share of its Series A Preferred or Common Stock, and shall instead
      deliver a stock certificate representing the next whole number.

    

    The
      Corporation and Holder may not convert that amount of the Obligation Amount
      on a
      Conversion Date in amounts that would result in the Holder having a beneficial
      ownership 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
      such Conversion Date, and (ii) the number of shares of Common Stock issuable
      upon the conversion of the Obligation Amount with respect to which the
      determination of this proviso is being made on such 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 Corporation. For the
      purposes of the proviso 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 successive exercises which
      would result in the aggregate issuance of more than 4.99%. The Holder may revoke
      the conversion limitation described in this Paragraph, in whole or in part,
      upon
      61 days’ prior notice to the Corporation. The Holder may allocate which of the
      equity of the Corporation deemed beneficially owned by the Holder shall be
      included in the 4.99% amount described above and which shall be allocated to
      the
      excess above 4.99%. The Holder may waive the conversion limitation described
      in
      this Section 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%.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    (d) The
      Conversion Price determined pursuant to Paragraph 4(b) shall be subject to
      adjustment from time to time as follows:

    

    (i) In
      case
      the Corporation shall at any time (A) declare any dividend or distribution
      on
      its Common Stock or other securities of the Corporation other than the Series
      A
      Preferred Stock, (B) split or subdivide the outstanding Common Stock, (C)
      combine the outstanding Common Stock into a smaller number of shares, or (D)
      issue by reclassification of its Common Stock any shares or other securities
      of
      the Corporation, then in each such event the Conversion Price shall be adjusted
      proportionately so that the Holders of Series A Preferred Stock shall be
      entitled to receive the kind and number of shares or other securities of the
      Corporation which such Holders would have owned or have been entitled to receive
      after the happening of any of the events described above had such shares of
      Series A Preferred Stock been converted immediately prior to the happening
      of
      such event (or any record date with respect thereto). Such adjustment shall
      be
      made whenever any of the events listed above shall occur. An adjustment made
      to
      the Conversion Price pursuant to this paragraph 4(d)(i) shall become effective
      immediately after the effective date of the event.

    

    (ii) For
      so
      long as Series A Preferred Stock is outstanding, the Holder is granted the
      anti-dilution and price protection rights set forth in the Subscription
      Agreement and herein.

    

    (e) (i)
      In
      case of any merger of the Corporation with or into any other corporation (other
      than a merger in which the Corporation is the surviving or continuing
      corporation and which does not result in any reclassification, conversion,
      or
      change of the outstanding shares of Common Stock), then, unless the right to
      convert shares of Series A Preferred Stock shall have terminated as part of
      such
      merger, lawful provision shall be made so that Holders of Series A Preferred
      Stock shall thereafter have the right to convert each share of Series A
      Preferred Stock into the kind and amount of shares of stock and/or other
      securities or property receivable upon such merger by a Holder of the number
      of
      shares of Common Stock into which such shares of Series A Preferred Stock might
      have been converted immediately prior to such consolidation or merger. Such
      provision shall also provide for adjustments which shall be as nearly equivalent
      as may be practicable to the adjustments provided for in sub-paragraph (d)
      of
      this paragraph 4. The foregoing provisions of this paragraph 4(e) shall
      similarly apply to successive mergers.

    

    (ii) In
      case
      of any sale or conveyance to another person or entity of the property of the
      Corporation as an entirety, or substantially as an entirety, in connection
      with
      which shares or other securities or cash or other property shall be issuable,
      distributable, payable, or deliverable for outstanding shares of Common Stock,
      then, unless the right to convert such shares shall have terminated, lawful
      provision shall be made so that the Holders of Series A Preferred Stock shall
      thereafter have the right to convert each share of the Series A Preferred Stock
      into the kind and amount of shares of stock or other securities or property
      that
      shall be issuable, distributable, payable, or deliverable upon such sale or
      conveyance with respect to each share of Common Stock immediately prior to
      such
      conveyance.

    

    (f) Whenever
      the number of shares to be issued upon conversion of the Series A Preferred
      Stock is required to be adjusted as provided in this paragraph 4, the
      Corporation shall forthwith compute the adjusted number of shares to be so
      issued and prepare a certificate setting forth such adjusted conversion amount
      and the facts upon which such adjustment is based, and such certificate shall
      forthwith be filed with the Transfer Agent for the Series A Preferred Stock
      and
      the Common Stock; and the Corporation shall mail to each Holder of record of
      Series A Preferred Stock notice of such adjusted conversion price not later
      than
      the first business day after the event, giving rise to the
      adjustment.

    

    (g) In
      case
      at any time the Corporation shall propose:

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

    (i) to
      pay
      any dividend or distribution payable in shares upon its Common Stock or make
      any
      distribution (other than cash dividends) to the Holders of its Common Stock;
      or

    

    (ii) to
      offer
      for subscription to the Holders of its Common Stock any additional shares of
      any
      class or any other rights; or

    

    (iii) any
      capital reorganization or reclassification of its shares or the merger of the
      Corporation with another corporation (other than a merger in which the
      Corporation is the surviving or continuing corporation and which does not result
      in any reclassification, conversion, or change of the outstanding shares of
      Common Stock); or

    

    (iv) the
      voluntary dissolution, liquidation or winding-up of the
      Corporation;

    

    then,
      and
      in any one or more of said cases, the Corporation shall cause at least fifteen
      (15) days’ prior notice of the date on which (A) the books of the Corporation
      shall close or a record be taken for such stock dividend, distribution, or
      subscription rights, or (B) such capital reorganization, reclassification,
      merger, dissolution, liquidation or winding-up shall take place, as the case
      may
      be, to be mailed to the Transfer Agent for the Series A Preferred Stock and
      for
      the Common Stock and to the Holders of record of the Series A Preferred
      Stock.

    

    (h) So
      long
      as any shares of Series A Preferred Stock or any Obligation Amount shall remain
      outstanding and the Holders thereof shall have the right to convert the same
      in
      accordance with provisions of this paragraph 4 the Corporation shall at all
      times reserve from the authorized and unissued shares of its Common Stock 125%
      of the number of shares of Common Stock that would be necessary to allow the
      conversion of the entire Obligation Amount.

    

    (i) The
      term
“Common Stock” as used in this Certificate of Designation shall mean the $.001
      par value Common Stock of the Corporation as such stock is constituted at the
      date of issuance thereof or as it may from time to time be changed, or shares
      of
      stock of any class or other securities and/or property into which the shares
      of
      Series A Preferred Stock shall at any time become convertible pursuant to the
      provisions of this paragraph 4.

    

    (j) The
      Corporation shall pay the amount of any and all issue taxes (but not income
      taxes) which may be imposed in respect of any issue or delivery of stock upon
      the conversion of any shares of Series A Preferred Stock, but all transfer
      taxes
      and income taxes that may be payable in respect of any change of ownership
      of
      Series A Preferred Stock or any rights represented thereby or of stock
      receivable upon conversion thereof shall be paid by the person or persons
      surrendering such stock for conversion.

    

    (k) In
      the
      event a Holder shall elect to convert any shares of Series A Preferred Stock
      as
      provided herein, the Corporation may not refuse conversion based on any claim
      that such Holder or any one associated or affiliated with such Holder has been
      engaged in any violation of law, or for any other reason unless, an injunction
      from a court, on notice, restraining and or enjoining conversion of all or
      part
      of said shares of Series A Preferred Stock shall have been sought and obtained
      by the Corporation or at the Corporation’s request or with the Corporation’s
      assistance and the Corporation posts a surety bond for the benefit of such
      Holder equal to 120% of the Obligation Amount sought to be converted, which
      is
      subject to the injunction, which bond shall remain in effect until the
      completion of arbitration/litigation of the dispute and the proceeds of which
      shall be payable to such Holder in the event it obtains
      judgment.

    
      
        
        

      

      
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    (l) In
      addition to any other rights available to the Holder, if the Corporation fails
      to deliver to the Holder such certificate or certificates pursuant to Section
      4(c) by the Delivery Date and if within seven (7) business days after the
      Delivery Date the Holder purchases (in an open market transaction or otherwise)
      shares of Common Stock to deliver in satisfaction of a sale by such Holder
      of
      the Common Stock which the Holder anticipated receiving upon such conversion
      (a
      "Buy-In"), then the Corporation shall pay in cash to the Holder (in addition
      to
      any remedies available to or elected by the Holder) within five (5) business
      days after written notice from the Holder, the amount by which (A) the Holder's
      total purchase price (including brokerage commissions, if any) for the shares
      of
      Common Stock so purchased exceeds (B) the aggregate Stated Value of the shares
      of Series A Preferred Stock for which such conversion was not timely honored,
      together with interest thereon at a rate of 15% per annum, accruing until such
      amount and any accrued interest thereon is paid in full (which amount shall
      be
      paid as liquidated damages and not as a penalty). For example, if the Holder
      purchases shares of Common Stock having a total purchase price of $11,000 to
      cover a Buy-In with respect to an attempted conversion of $10,000 of Stated
      Value of Series A Preferred Stock, the Corporation shall be required to pay
      the
      Holder $1,000, plus interest. The Holder shall provide the Corporation written
      notice indicating the amounts payable to the Holder in respect of the
      Buy-In.

    

    (m) The
      Corporation understands that a delay in the delivery of Common Stock upon
      conversion of Preferred Stock in the form required pursuant to this Certificate
      and the Subscription Agreement after the Delivery Date could result in economic
      loss to the Holder. As compensation to the Holder for such loss, the Corporation
      agrees to pay (as liquidated damages and not as a penalty) to the Holder for
      such late issuance of Common Stock upon Conversion of the Series A Preferred
      Stock in the amount of $100 per business day after the Delivery Date for each
      $10,000 of Obligation Amount being converted of the corresponding Common stock
      which is not timely delivered. The Corporation shall pay any payments incurred
      under this section in immediately available funds upon demand. Furthermore,
      in
      addition to any other remedies which may be available to the Holder, in the
      event that the Corporation fails for any reason to effect delivery of the Common
      Stock by the Delivery Date, the Holder will be entitled to revoke all or part
      of
      the relevant Notice of Conversion or rescind all by delivery of a notice to
      such
      effect to the Corporation, whereupon the Corporation and the Holder shall each
      be restored to their respective positions immediately prior to the delivery
      of
      such notice, except that the liquidated damages described above shall be payable
      through the date notice of revocation is given to the Corporation.

    

    5. Voting
      Rights.
      The
      Holder of shares of Series A Preferred Stock shall not have voting rights except
      as described in Section 6 hereof.

    

    6. Restrictions
      and Limitations.

    

    (a) Amendments
      to Charter.
      The
      Corporation shall not amend its certificate of incorporation, other than to
      increase the number of shares of common or preferred stock that is authorized
      to
      issue or to effect a reverse split of its common stock, without the approval
      by
      the holders of at least 80% of the then outstanding shares of Series A Preferred
      Stock if such amendment would:

    

    (i) change
      the relative seniority rights of the holders of Series A Preferred Stock as
      to
      the payment of dividends in relation to the holders of any other capital stock
      of the Corporation, or create any other class or series of capital stock
      entitled to seniority as to the payment of dividends in relation to the holders
      of Series A Preferred Stock;

    

    (ii) reduce
      the amount payable to the holders of Series A Preferred Stock upon the voluntary
      or involuntary liquidation, dissolution or winding up of the Corporation, or
      change the relative seniority of the liquidation preferences of the holders
      of
      Series A Preferred Stock to the rights upon liquidation of the holders of other
      capital stock of the Corporation, or change the dividend rights of the holders
      of Series A Preferred Stock;

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    (iii) cancel
      or
      modify the conversion rights of the holders of Series A Preferred Stock provided
      for in Section 4 herein; or

    

    (iv) cancel
      or
      modify the rights of the holders of the Series A Preferred Stock provided for
      in
      this Section 6.

     

    7. Event
      of Default.
      

    

    Unless
      waived in writing by Holders of 80% of the then outstanding Series A Preferred
      Stock, the occurrence of any of the following events shall be an event of
      Default ("Event of Default") and shall, after the applicable period to cure
      the
      Event of Default, cause the preferential dividend rate described in paragraph
      2
      hereof to become 10% of the stated value per annum, from and after the
      occurrence of such event:

    (i) The
      Corporation fails to timely pay any dividend payment or the failure to timely
      pay any other sum of money due to the Holder from the Corporation.

    

    (ii) The
      Corporation breaches any material covenant, term or condition of the
      Subscription Agreement or in this Certificate of Designation.

    

    (iii) Any
      material representation or warranty of the Corporation made in the Subscription
      Agreement, or in any agreement, statement or certificate given in writing
      pursuant thereto shall prove to have been false or misleading at the time when
      made.

    

    (iv) The
      Corporation or any of its subsidiaries shall make an assignment of a substantial
      part of its property or business for the benefit of creditors, or apply for
      or
      consent to the appointment of a receiver or trustee for it or for a substantial
      part of its property or business, or such a receiver or trustee shall otherwise
      be appointed.

    

    (v) Any
      money
      judgment, confession of judgment, writ or similar process shall be entered
      against the Corporation, a subsidiary of the Corporation, or their property
      or
      other assets for more than $100,000, and is not vacated, satisfied, bonded
      or
      stayed within 45 days.

    

    (vi) Bankruptcy,
      insolvency, reorganization or liquidation proceedings or other proceedings
      for
      relief under any bankruptcy law or any law for the relief of debtors shall
      be
      instituted by the Corporation or if instituted against the Corporation or any
      of
      its subsidiaries, is not dismissed within 45 days.

    

    (vii) An
      order
      entered by a court of competent jurisdiction, or by the Securities and Exchange
      Commission, or by the National Association of Securities Dealers, preventing
      purchase and sale transactions in the Corporation’s Common Stock for a period of
      five or more consecutive trading days.

    

    (viii) The
      Corporation's failure to timely deliver to the Holder Common Stock or a
      replacement Preferred Stock certificate (if required) within fifteen (15)
      business days of the required delivery date.

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    (ix) Delisting
      of the Common Stock from the OTC Bulletin Board (“OTCBB”) or such other
      principal market or exchange on which the Common Stock is listed for trading,
      if
      the Common Stock is not quoted or listed on such market or exchange, or quoted
      on the automated quotation system of a national securities association or listed
      on a national securities exchange, within ten (10) trading days after such
      delisting.

    

    (x) The
      Corporation fails to reserve the amount of Common Stock required to be reserved
      pursuant to Section 4(h) hereof.

    

    (xi) A
      default
      by the Corporation of a material term, covenant, warranty or undertaking of
      any
      other agreement to which the Corporation and Holder are parties, or the
      occurrence of a material event of default under any such other agreement, in
      each case, which is not cured after any cure period.

    

    (xii) Upon
      the
      occurrence of a Change in Control. A “Change in Control” shall mean (i) the
      Corporation becoming a Subsidiary of another entity, (ii) a majority of the
      board of directors of the Corporation as of the Issue Date of Series A Preferred
      Stock or successors appointed by the board of directors having a majority
      consisting of such persons or their successors no longer serving as directors
      of
      the Corporation except due to natural causes, (iii) if any person or entity
      other
      than
      officers or directors or persons or entities beneficially owning more than
      ten
      percent (10%) or more of the voting power of outstanding capital stock of the
      Corporation as of the Issue date of Series A Preferred Stock, acquires fifty
      percent (50%) or more of the voting power of outstanding capital stock of the
      Corporation, (iv) the sale, lease or transfer of substantially all the assets
      of
      the Corporation or Subsidiaries.

    

    8. Status
      of Converted or Redeemed Stock.
      In case
      any shares of Series A Preferred Stock shall be redeemed or otherwise
      repurchased or reacquired, the shares so redeemed, converted, or reacquired
      shall resume the status of authorized but unissued shares of Preferred Stock
      and
      shall no longer be designated as Series A Preferred Stock.

    

    IN
      WITNESS WHEREOF, the Corporation has caused this Certificate be duly executed
      by
      its undersigned officer thereunto duly authorized, this 18th
      day of
      December, 2007.

    

    
      	 	
              VoIP,
                INC.

            
	 	 	 	 
	 	
              By:

            	
              /s/Robert
                Staats

            
	 	 	
              Name:
                

            	
              Robert
                Staats

            
	 	 	
              Title:

            	
              Chief
                Accounting Officer

            

    

     

    
      
        
        

      

      
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    EXHIBIT
      A

    

    NOTICE
      OF
      CONVERSION

    

    (To
      Be
      Executed By the Registered Holder in Order to Convert the Series A Convertible
      Preferred Stock of VoIP, Inc.)

    

    The
      undersigned hereby irrevocably elects to convert $______________ of the Stated
      Value of the above Series A Convertible Preferred Stock into shares of Common
      Stock of VoIP, Inc. (the "Corporation") according to the conditions hereof,
      as
      of the date written below.

    

    Date
      of
      Conversion:__________________________________________________________________________

     

    Applicable
      Conversion Price Per
      Share:_____________________________________________________

     

    Number
      of
      Common Shares Issuable Upon This
      Conversion:____________________________________

    

    Select
      one:

    

    o   
A
      Series A Convertible Preferred Stock certificate is being delivered herewith.
      The unconverted portion of such certificate should be reissued and delivered
      to
      the undersigned.

    

    o
A
      Series A Convertible Preferred Stock
      certificate is not being delivered to VoIP, Inc.

    

    Signature:____________________________________________________________________________

    

    

    Print
      Name:__________________________________________________________________________

    

    

    Address:_____________________________________________________________________________

    

    ____________________________________________________________________________________

    

    Deliveries
      Pursuant to this Notice of Conversion Should Be Made to:

    

    ____________________________________________________________________________________

    

    ____________________________________________________________________________________

    

    ____________________________________________________________________________________

    
      

        
          
            
            

          

          
            9Exhibit
      10.4

     

    LOAN
      AGREEMENT

    

    LOAN
      AGREEMENT,
      dated as
      of December 18, 2007 (this “Agreement”), between VOIP INC., a Texas corporation
      (“Borrower”), and the parties identified on Schedule A hereto (together with its
      successors and assigns, each a “Lender” and collectively,
“Lenders”)

    

    IN
      CONSIDERATION of the mutual covenants herein contained, Borrower and Lender
      agree as follows:

    

    I. DEFINITIONS.

     

    1.1 General
      Terms.
      For
      purposes of this Agreement the following terms shall have the following
      meanings:

     

    “Account
      Debtor” means the Customers or any other person or entity who is or may become
      obligated upon a Receivable;

    

    “Accounts”
      means all amounts due and to become due to Borrower from the Customers and
      other
      accounts, contract rights, chattel paper, instruments and documents, whether
      now
      owned or to be acquired by Borrower, provided that the same arise in connection
      with the sale of Inventory;

     

    “Affiliate”
      of any Person shall mean (a) any Person which, directly or indirectly, is in
      control of, is controlled by, or is under common control with such Person,
      or
      (b) any Person who is a director or officer (i) of such Person. For purposes
      of
      this definition, control of a Person shall mean the power, direct or indirect,
      (x) to vote 20% or more of the securities having ordinary voting power for
      the
      election of directors or, in the case of a Person other than a corporation,
      individuals who perform similar functions;

     

    “Agreement”
      shall mean this Loan Agreement, as amended, restated, modified and supplemented
      from time to time;

     

    “Business
      Day” shall mean any day other than a day on which commercial banks in New York
      are authorized or required by law to close;

     

    “Closing
      Date” shall mean the date hereof;

    

    “Default”
      shall mean an event which, with the giving of notice or passage of time or
      both,
      would constitute an Event of Default;

    

    “Dollar”
      and the sign “$” shall mean lawful money of the United States of
      America;

    

    “Escrow
      Agent” shall have the meaning set forth in the Lockbox Escrow
      Agreement;

    

    “Event
      of
      Default” shall mean the occurrence of any of the events set forth in Article
      IX;

    

    “Governmental
      Body” shall mean any nation or government, any state or other political
      subdivision thereof or any entity exercising the legislative, judicial,
      regulatory or administrative functions of or pertaining to a
      government;

    

    “Intercreditor
      Agreement” shall mean the intercreditor agreement between the Borrower, Lenders
      and other signatories thereto, entered into on or about the date of this
      Agreement;

    
      
        
 

        
        

      

      
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    “Lender”
      shall have the meaning ascribed to such term in the preamble to this Agreement
      and shall include each Person which becomes a transferee, successor or assign
      of
      Lender.;

    

    “Lockbox
      Account” means an escrow account to be established by Escrow Agent with
      Citibank, N.A. (Depository Bank), or such other account designated by
      Lender;

    

    “Lockbox
      Escrow Agreement” shall mean the Lockbox Escrow Agreement, as amended, restated,
      modified or supplemented from time to time, a form of which is attached hereto
      as Exhibit
      A;

    

    “Lockbox
      Notes” shall have the meaning as set forth in the Intercreditor
      Agreement;

    

    “Material
      Adverse Effect” shall mean a material adverse effect on (a) the condition,
      operations, assets, business or prospects of Borrower (b) Borrower’s ability to
      pay the Obligations in accordance with the terms thereof, (c) the value of
      the
      Accounts, or Lender’s lien on the Accounts or the priority of any such lien, (d)
      Material Adverse Effect as defined in the Transaction Documents, or (e) the
      practical realization of the benefits of Lender’s rights and remedies under this
      Agreement and the Transaction Documents;

    

    “Obligations”
      and/or “Indebtness” shall mean and include any and all of Borrower’s
      indebtedness and/or liabilities to Lender of every kind, nature and description,
      direct or indirect, secured or unsecured, joint, several, joint and several,
      absolute or contingent, due or to become due, now existing or hereafter arising,
      contractual or tortious, liquidated or unliquidated, regardless of how such
      indebtedness or liabilities arise or by what agreement or instrument they may
      be
      evidenced or whether evidenced by any agreement or instrument (including all
      interest accruing after the commencement of any bankruptcy or similar proceeding
      whether or not enforceable in such proceeding), and all obligations of Borrower
      to Lender to perform acts or refrain from taking any action;

    

    “Payment
      Office” shall mean c/o Grushko & Mittman, P.C., 551 Fifth Avenue, Suite
      1601, New York, NY 10176, or such other office of Lender, which it may designate
      by notice to Borrower to be the Payment Office;

    

    “Person”
      shall mean any individual, sole proprietorship, partnership, corporation,
      business trust, joint stock company, trust, unincorporated organization,
      association, limited liability company, institution, public benefit corporation,
      joint venture, entity or government (whether Federal, state, county, city,
      municipal or otherwise, including any instrumentality, division, agency, body
      or
      department thereof);

    

    “Receivables”
      means all rights to the payment of money now owned or hereafter acquired by
      Borrower, whether due or to become due and whether or not earned by performance
      including, but not limited to, Accounts, chattel paper, instruments, general
      intangibles, and all guaranties and security therefor and all contracts relating
      thereto and all returned and repossessed goods; provided that the same arise
      in
      connection with the extension of credit provided to Borrower by Lender pursuant
      to this Agreement;

    

    “Subscription
      Agreement” shall mean the subscription agreement between the Borrower and
      Lenders, entered into on or about the date of this Agreement;

    

    “Term”
      shall have the meaning set forth in Section 12.1;

    

    “Termination
      Date” shall have the meaning set forth in Section 12.2;

    
      
        
 

        
        

      

      
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    “Transaction
      Documents” shall mean the Subscription Agreement, Lockbox Notes, Intercreditor
      Agreement, the Security Agreement, Collateral Agent Agreement, Funds Escrow
      Agreement and Lockbox Escrow Agreement between Borrower and Lender and any
      and
      all other agreements, instruments and documents now or hereafter executed by
      Borrower delivered to Lender in respect of the transactions contemplated by
      this
      Agreement;

    

    “UCC”
      shall mean the Uniform Commercial Code as in effect in the State of New York
      from
      time
      to time.

    

    1.2 Certain
      Matters of Construction.
      The
      terms “herein”, “hereof” and “hereunder” and other words of similar import refer
      to this Agreement as a whole and not to any particular section, paragraph or
      subdivision. Each reference to a Section, an Exhibit or a Schedule shall be
      deemed to refer to a Section, an Exhibit or a Schedule, as applicable, of this
      Agreement unless otherwise specified. Any pronoun used shall be deemed to cover
      all genders. Wherever appropriate in the context, terms used herein in the
      singular also include the plural and vice versa. Unless otherwise provided,
      all
      references to any agreements to which Lender is a party, shall include any
      and
      all modifications or amendments thereto and any and all extensions or renewals
      thereof.

    

    II. RECEIVABLES.

    

    2.1 Receivables
      in Lockbox Account.
      Pursuant
      to the terms of the Subscription Agreement and Intercreditor Agreement, an
      aggregate of up to $6,020,695.20 will be or has been loaned by Lenders to
      Borrower as evidenced by the Lockbox Notes, which repayment will be made
      pro-rata to Lenders with the Receivables to be received into the Lockbox
      Account. Borrower will provide to Lender a listing of all Receivables to be
      received into the Lockbox Account (“Schedule 2.1”).

    

    2.2 Repayment.
      To
      ensure the timely repayment of the Lockbox Notes, all remittances and proceeds
      of Receivables obtained or received by the Borrower will be received in trust
      for Lender, and the Borrower will remit such remittances and proceeds within
      three (3) Banking Days from the date of receipt to Borrower pursuant to Section
      4.2 below unless Lenders instruct Borrower in writing that such proceeds of
      the
      Lockbox are to be released to Borrower.

    

    2.3 Security
      Interest.
      For the
      payment and performance of the Obligation, Borrower hereby assigns to Lender,
      the Borrower’s a continuing interest in the Receivables, together with all
      security thereof and all of the Borrower’s right, title and interest in and to
      the merchandise represented by such Receivables, including, without limitation,
      all of the Borrower’s rights to stoppage in transit, replevin and reclamation
      and as an unpaid vendor as provided in the UCC and the Bankruptcy Code. This
      Agreement represents a Security Agreement under the UCC and, together with
      all
      attendant documentation, constitutes the full agreement between Lender and
      the
      Borrower. The security interest described herein is in addition to the security
      interest granted to Lender pursuant to the Other Security
      Agreement.

    

    III. FEES
      AND OTHER MATTERS.

     

    3.1 Computation
      of Fees.
      Fees
      hereunder shall be computed on the basis of a year of 365 days and for the
      actual number of days elapsed. If any payment to be made hereunder becomes
      due
      and payable on a day other than a Business Day, the due date thereof shall
      be
      extended to the next succeeding Business Day.

     

    
      
         

        
        

      

      
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    3.2 Exculpation
      of Liability.
      Nothing
      herein contained shall be construed to constitute Lender as Borrower’s agent for
      any purpose whatsoever, nor shall Lender be responsible or liable for any
      payments with respect to the Accounts. 

     

    IV. DISTRIBUTION
      OF ACCOUNTS RECEIVABLE.

    

    4.1 Deposits.

    

    (a) Borrower
      will cause the Account Debtor's deposit of all remittances and proceeds with
      respect to the sale or transfer of the inventory, whether by wire, cash or
      check, into the Lockbox Account with the Depository Bank. Borrower and any
      Affiliates, shareholders, directors, officers, employees, agents of Borrower
      and
      all Persons acting for or in concert with Borrower shall, acting as trustee
      for
      Lender, receive, as the sole and exclusive property of Lender, any monies,
      checks, notes, drafts or any other payments relating to or proceeds of Accounts
      or Collateral which come into their possession or under their control and
      immediately upon receipt, shall remit the same or cause the same to be remitted,
      in kind, to the Lockbox Account.

    

    (b)
      Borrower agrees that all payments made to such Lockbox Account or otherwise
      received by Lender as proceeds of the Receivables, constitutes Collateral and
      will be applied on account of the Indebtedness as provided in Section 4.2
      below.

    

    (c)
      Borrower agrees to pay to Lender and Escrow Agent any and all reasonable fees,
      costs and expenses (if any) which Lender and Escrow Agent incurs in connection
      with opening and maintaining the Lockbox Account and depositing for collection
      by Lender any check or item of payment received or delivered to Depository
      Bank
      or Lender on account of the Indebtedness and Borrower further agrees to
      reimburse Lender and Escrow Agent for any claims asserted by Depository Bank
      in
      connection with the Lockbox Account or any returned or uncollected checks
      received by Depository Bank for deposit in the Lockbox Account.

    

    4.2 Application
      of Collected Receivables.
      Within
      three (3) Business Days of Lender's receipt of any Receivables in the Lockbox,
      such Receivables will be applied in the following manner and
      priority:

    (a) For
      ninety (90) days from the date of this Agreement the funds in the Lockbox
      Account shall be released for the expenses of the Borrower, other than the
      Lockbox Notes, solely as directed by the Lenders in their absolute
      discretion.

     

    (b) Commencing
      ninety one (91) days from the date of this Agreement until the sooner of the
      Obligations have been satisfied or this Agreement other terminates, the funds
      in
      the Lockbox Account shall be released for any expenses of the Borrower,
      including repayment of the Lockbox Notes, solely as directed by the Lenders
      in
      their absolute discretion.

     

    4.3 Payment
      of Borrower’s Expenses. Robert
      Staats, the Chief Accounting Officer of the Borrower (“Staats”), shall compile a
      list of the expenses and accounts payable of the Borrower (the “Expense List”)
      and submit the Expense List to the Escrow Agent for review and approval. Upon
      receipt of the Expense List the Escrow Agent will review the list and submit
      to
      Staats a list of the expenses and accounts payable that are approved. Escrow
      Agent will use its best efforts to respond to any Expense Lists submitted to
      the
      Escrow Agent by 10:30 am Eastern Time on the same day of submission. The Escrow
      Agent will then wire the funds necessary to cover the approved expenses and
      accounts payable to the Borrower’s account. Borrower will provide the Escrow
      Agent with copies of the check ledger and wire confirmations to show that the
      funds wired to the Borrower’s account were only used for approved expenses and
      accounts payable. Borrower will also provide the Escrow Agent with copies of
      all
      monthly statements it receives on its bank accounts. If at any time Staats
      is no
      longer the person who will be responsible for the Borrower’s obligations under
      this Section 4.3 the procedures for dispensing the funds necessary for the
      Borrower to pay expenses and accounts payable are subject to change at the
      sole
      discretion of the Lenders.

     

    
      
        
 

        
        

      

      
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    In
      order
      to facilitate the maintainence of proper internal controls for the Borrower,
      Escrow Agent shall notify Borrower as to any expenses or accounts payable that
      are paid directly from the Lockbox Account to Borrower’s creditors by the end of
      the business day in which such expenses or accounts payable are released. Escrow
      Agent shall also provide to Borrower a weekly report of all cash flow in the
      Lockbox Account, reconciled to beginning and ending cash balances and a copy
      of
      relevant monthly Lockbox Account bank statements. 

     

    V. REPRESENTATIONS
      AND WARRANTIES.
      Borrower hereby represents and warrants to Lender as
      follows:

     

    5.1 Organization,
      Good Standing and Qualification.
      Borrower is a corporation duly organized, validly existing and in good standing
      under the laws of Texas. Borrower has the power and authority to own and operate
      its properties and assets, to execute and deliver this Agreement and the
      Transaction Documents and to carry on its business as presently conducted.
      Borrower is duly qualified and is authorized to do business and is in good
      standing as a foreign corporation in all jurisdictions in which the nature
      of
      its activities and of its properties (both owned and leased) makes such
      qualification necessary. 

     

    5.2 Authorization;
      Binding Obligations.
      All
      corporate action on the part of Borrower (including the respective officers
      and
      directors) necessary for the authorization of this Agreement and the Transaction
      Documents, the performance of all obligations of Borrower hereunder and
      thereunder and the authorization, sale, issuance and delivery of the Lockbox
      Notes has been taken or will be taken. This Agreement and the Transaction
      Documents, when executed and delivered, will be valid and binding obligations
      of
      Borrower, enforceable against each such person in accordance with their terms,
      except:

     

    (a) as
      limited by applicable bankruptcy, insolvency, reorganization, moratorium or
      other laws of general application affecting enforcement of creditors’ rights;
      and

     

    (b) general
      principles of equity that restrict the availability of equitable or legal
      remedies.

     

    5.3 Liabilities.
      Except
      as disclosed in Borrower's Form 10-KSB for the year ended December 31, 2006
      as
      filed with the Securities and Exchange Commission (the “Commission”), together
      with all subsequently filed Forms 10-QSB, 8-K, and filings made with the
      Commission available at the EDGAR website (collectively, the “Reports”),
      Borrower does not have any contingent liabilities, except current liabilities
      incurred in the ordinary course of business.

     

    5.4 Title
      to Properties and Assets; Liens, Etc.
      Except
      as disclosed in the Reports, Borrower has good and marketable title to its
      properties and assets, and good title to its leasehold estates, in each case
      subject to no mortgage, pledge, lien, lease, encumbrance or charge. Borrower
      is
      in compliance with all material terms of each lease to which it is a party
      or is
      otherwise bound.

     

    
      
        
 

        
        

      

      
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    5.5 Compliance
      with Other Instruments.
      Except
      as disclosed in the Reports, Borrower is not in violation or default of (x)
      any
      term of its certificate of incorporation or bylaws, or (y) any provision of
      any
      agreement to which it is party or by which it is bound or of any judgment,
      decree, order or writ. The execution, delivery and performance of and compliance
      with this Agreement and the Transactions Documents will not, with or without
      the
      passage of time or giving of notice, be in conflict with or constitute a default
      under any such term or provision, or result in the creation of any mortgage,
      pledge, lien, encumbrance or charge upon any of the properties or assets of
      Borrower or the suspension, revocation, impairment, forfeiture or nonrenewal
      of
      any permit, license, authorization or approval applicable to Borrower, its
      business or operations or any of its assets or properties. 

     

    5.6 Litigation.
      Except
      as disclosed in the Reports or on Schedule 5.6 hereto, there is no action,
      suit,
      proceeding or investigation pending or, to Borrower’s knowledge, currently
      threatened against Borrower; nor is there is any basis to assert any of the
      foregoing. Borrower is not a party nor subject to the provisions of any order,
      writ, injunction, judgment or decree of any Governmental Body or
      instrumentality. Other than as disclosed on Schedule 5.6 hereto, there is no
      action, suit, proceeding or investigation by Borrower currently pending or
      which
      Borrower intends to initiate.

     

    5.7 Tax
      Returns and Payments.
      Except
      as disclosed on Schedule 5.7, Borrower has timely filed all tax returns
      (federal, state and local) required to be filed by it. All taxes shown to be
      due
      and payable on such returns, any assessments imposed, and all other taxes due
      and payable by Borrower on or before the Closing Date, have been paid or will
      be
      paid prior to the time they become delinquent. Borrower has not been
      advised:

     

    (a) that
      any
      of its returns, federal, state or other, have been or are being audited as
      of
      the date hereof; or

     

    (b) of
      any
      deficiency in assessment or proposed judgment to its federal, state or other
      taxes.

     

    There
      is
      no tax to be imposed upon its properties or assets of Borrower as of the date
      of
      this Agreement that is not adequately provided for. 

     

    5.8 Compliance
      with Laws; Permits.
      Borrower is not in violation of any applicable statute, rule, regulation, order
      or restriction of any Governmental Body in respect of the conduct of its
      business or the ownership of its properties. No governmental orders,
      permissions, consents, approvals or authorizations are required to be obtained
      and no registrations or declarations are required to be filed in connection
      with
      the execution and delivery of this Agreement or any Transaction Documents.
      Borrower has all material franchises, permits, licenses and any similar
      authority necessary for the conduct of its business as now being conducted
      by
      it.

     

    5.9 Environmental
      and Safety Laws.
      Borrower is not in violation of any applicable statute, law or regulation
      relating to the environment or occupational health and safety, and no material
      expenditures are or will be required in order to comply with any such existing
      statute, law or regulation. No hazardous materials are used or have been used,
      stored, or disposed of by Borrower or, to Borrower’s knowledge, by any other
      Person on any property owned, leased or used by Borrower. 

     

    5.10 Full
      Disclosure.
      Borrower has provided Lender with all information requested by Lender in
      connection with its decision to purchase the Lockbox Notes, including all
      information Borrower believe is reasonably necessary to make such investment
      decision. Neither this Agreement nor the Transaction Documents contain any
      untrue statement of a material fact nor omit to state a material fact necessary
      in order to make the statements contained herein or therein, in light of the
      circumstances in which they are made, not misleading. Any financial projections
      and other estimates provided to Lender by Borrower were based on Borrower’s
      experience in the industry and on assumptions of fact and opinion as to future
      events which Borrower, at the date of the issuance of such projections or
      estimates, believed to be reasonable. 

     

    
      
        
 

        
        

      

      
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    5.11 Patriot
      Act.
      Borrower certifies that, to the best of Borrower’s knowledge, Borrower has not
      been designated, and is not owned or controlled, by a “suspected terrorist” as
      defined in Executive Order 13224. Borrower hereby acknowledges that Lender
      seeks
      to comply with all applicable laws concerning money laundering and related
      activities. In furtherance of those efforts, Borrower hereby represents,
      warrants and agrees that: (i) none of the cash or property that Borrower will
      pay or will contribute to Lender has been or shall be derived from, or related
      to, any activity that is deemed criminal under United States law; and (ii)
      no
      contribution or payment by Borrower to Lender, to the extent that they are
      within Borrower’s control shall cause Lender to be in violation of the United
      States Bank Secrecy Act, the United States International Money Laundering
      Control Act of 1986 or the United States International Money Laundering
      Abatement and Anti-Terrorist Financing Act of 2001. Borrower shall promptly
      notify Lender if any of these representations ceases to be true and accurate.
      Borrower shall provide Lender any additional information regarding Borrower
      that
      Lender deem necessary or convenient to ensure compliance with all applicable
      laws concerning money laundering and similar activities. Borrower understands
      and agrees that if at any time it is discovered that any of the foregoing
      representations are incorrect, or if otherwise required by applicable law or
      regulation related to money laundering similar activities, Lender may undertake
      appropriate actions to ensure compliance with applicable law or regulation,
      including but not limited to segregation and/or redemption of Lender’ investment
      in Borrower. Borrower further understands that Lender may release confidential
      information about Borrower and, if applicable, any underlying beneficial owners,
      to proper authorities if Lender, in its sole discretion, determines that it
      is
      in the best interests of Lender in light of relevant rules and regulations
      under
      the laws set forth in subsection (ii) above. 

     

    VI. COVENANTS
      OF BORROWER.
      Borrower
      covenants with Lender as follows:

     

    6.1 Access
      to Facilities.
      Borrower will permit any representatives designated by Lender upon 24-hours
      written notice and during normal business hours, at such person’s expense and
      accompanied by a representative of Borrower, to:

     

    (a) visit
      and
      inspect any of the properties of Borrower;

     

    (b) examine
      the corporate and financial records of Borrower make copies thereof or extracts
      therefrom; and

     

    (c) discuss
      the affairs, finances and accounts of Borrower with the directors, officers
      and
      independent accountants of Borrower.

     

    6.2 Taxes.
      Borrower will promptly pay and discharge, or cause to be paid and discharged,
      when due and payable, all lawful taxes, assessments and governmental charges
      or
      levies imposed upon the income, profits, property or business of Borrower;
      provided, however, that any such tax, assessment, charge or levy need not be
      paid if the validity thereof shall currently be contested in good faith by
      appropriate proceedings and if Borrower shall have set aside on its books
      adequate reserves with respect thereto, and provided, further, that Borrower
      will pay all such taxes, assessments, charges or levies forthwith upon the
      commencement of 

     

    
      
         

        

        
        

      

      
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    6.3 Confidentiality.
      Borrower will not disclose, and will not include in any public announcement,
      the
      name of Lender, unless expressly agreed to by Lender or unless and until such
      disclosure is required by law or applicable regulation, and then only to the
      extent of such requirement. 

     

    VII. INDEMNIFICATION.

     

    7.1 
      Borrower
      shall indemnify, hold harmless, reimburse and defend Escrow Agent, Lender,
      and
      each of Escrow Agent’s and Lender’s officers, directors, agents, Affiliates,
      control persons, and shareholders, against any claim, cost, expense, liability,
      obligation, loss or damage (including reasonable legal fees) of any nature
      (collectively, “Losses”) incurred by or imposed on Lender that results, arises
      out of or is based upon, directly or indirectly, (i) breach of any
      representation by Borrower or breach of any warranty by Borrower in this
      Agreement or the Transaction Documents, (ii) breach or default in performance
      by
      Borrower of any covenant by Borrower hereunder or under the Transaction
      Documents or (iii) any action taken by any Governmental Body that has or may
      have an adverse effect on the ability of Borrower to conduct its business in
      the
      ordinary course.

     

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

     

    VIII. INFORMATION
      AS TO BORROWER.

     

    Borrower
      shall, until satisfaction in full of the Obligations and the termination of
      this
      Agreement:

     

    8.1 Litigation.
      Promptly
      notify Lender in writing of the commencement of any litigation, suit or
      administrative proceeding affecting Borrower, whether or not the claim is
      covered by insurance.

     

    8.2 Material
      Occurrences.
      Promptly
      notify Lender in writing upon the occurrence of (a) any Event of Default or
      Default; and (b) any other development in the business or affairs of Borrower
      which could reasonably be expected to have a Material Adverse Effect; in each
      case describing the nature thereof and the action Borrower proposes to take
      with
      respect thereto.

     

    8.3 Additional
      Information.
      Furnish
      Lender with such additional information as Lender shall reasonably request
      in
      order to enable Lender to determine whether the covenants and conditions of
      this
      Agreement and the Lockbox Notes have been complied with by
      Borrower.

     

    8.4 Notices
      of Adverse Events.
      Furnish
      Lender with prompt notice of (a) any lapse or other termination of any consent,
      license or permit issued to Borrower by any Governmental Body or any other
      Person that is material to the operation of Borrower’s business, (b) any refusal
      by any Governmental Body or any other Person to renew or extend any such
      consent, license or permit; and (c) copies of any periodic or special reports
      filed by Borrower with any Governmental Body or Person, if such reports indicate
      any material change in the business, operations, affairs or condition of any
      Borrower, or if copies thereof are requested by Lender or any Lender, and (d)
      copies of any notices and other communications from any Governmental Body which
      relate to Borrower.

     

    
      
         

        

        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    8.5 Additional
      Documents.
      Execute
      and deliver to Lender, upon request, such documents and agreements as Lender
      may, from time to time, reasonably request to carry out the 

     

    IX. EVENTS
      OF DEFAULT. 

     

    The
      occurrence of any one or more of the following events shall constitute an “Event
      of Default”:

     

    9.1 failure
      by Borrower to pay any principal or interest on the Obligations when due,
      whether at maturity or by reason of acceleration pursuant to the terms of this
      Agreement or by notice of intention to prepay, or by required prepayment or
      failure to pay any other liabilities or make any other payment, fee or charge
      provided for herein when due or in any Transaction Document;

     

    9.2 issuance
      of a notice of lien, levy assessment, injunction attachment or service against
      any portion of any Borrower’s property which is not stayed or lifted within
      fifteen (15) days or bonded pending appeal; 

     

    9.3 failure
      or neglect of Borrower to perform, keep or observe any term, provision,
      condition, covenant herein contained herein or in any Transaction Document
      (to
      the extent such breach is not otherwise embodied in any other provision of
      this
      Article IX for which a different grace or cure period is specified or which
      constitute an immediate Event of Default, which is not cured within five (5)
      Business Days after the occurrence of such Event of Default;

     

    9.4 any
      judgment or judgments are rendered or judgment liens filed against Borrower
      for
      an aggregate amount in excess of $10,000 which within thirty (30) days of such
      rendering or filing is not either satisfied, stayed or discharged of record;
      

     

    9.5 Borrower
      or any Affiliate of Borrower shall (a) apply for, consent to or suffer the
      appointment of, or the taking of possession by, a receiver, custodian, trustee,
      liquidator or similar fiduciary of itself or of all or a substantial part of
      its
      property, (b) make a general assignment for the benefit of creditors, (c)
      commence a voluntary case under any state or federal bankruptcy laws (as now
      or
      hereafter in effect), (d) be adjudicated a bankrupt or insolvent, (e) file
      a
      petition seeking to take advantage of any other law providing for the relief
      of
      debtors, (f) acquiesce to, or fail to have dismissed, within thirty (30) days,
      any petition filed against it in any involuntary case under such bankruptcy
      laws, or (g) take any action for the purpose of effecting any of the
      foregoing;

     

    9.6 Borrower
      shall admit in writing its inability, or be generally unable, to pay its debts
      as they become due or cease operations of its present business;

     

    9.7 any
      change in the condition or affairs of Borrower (financial or otherwise) which
      will likely have a Material Adverse Effect;

     

    9.8 any
      provision of this Agreement shall, for any reason, cease to be valid and binding
      on Borrower, or Borrower shall so claim in writing to Lender;

     

    9.9 any
      Governmental Body shall (i) revoke, terminate, suspend or adversely modify
      any
      license or permit of Borrower or (ii) commence proceedings to suspend, revoke,
      terminate or adversely modify any such license or permit and such proceedings
      shall not be dismissed or discharged within forty-five (45) days, or (iii)
      schedule a hearing on the renewal of, or the necessity to obtain, any license
      or
      permit necessary for the continuation of Borrower’s business; and

     

    
      
        
 

        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    9.10 any
      Event
      of Default as described in the Transaction Documents dated as of the date
      herein.

     

    X. LENDER’
      RIGHTS AND REMEDIES AFTER DEFAULT.

     

    10.1 Rights
      and Remedies.
      Upon the
      occurrence of any Event of Default and at any time thereafter at the option
      of
      Lender all Obligations shall be immediately due and payable and Lender shall
      have the right to terminate this Agreement. Upon the occurrence of any Event
      of
      Default, Lender shall have the right to exercise any and all other rights and
      remedies provided for herein, under the UCC and at law or equity generally.
      

     

    10.2 Application
      of Proceeds.
      The
      proceeds realized from the sale of any Accounts shall be applied as follows:
      first, to the reasonable costs, expenses and attorneys’ fees and expenses
      incurred by Lender for collection and for acquisition, completion, protection,
      removal, sale and delivery of the Accounts; second, to fees payable in
      connection with this Agreement; third, to the pro-rata principal of the Lockbox
      Notes and all other fees, costs, expenses and indemnities due under this
      Agreement , fourth, to all other Obligations and the to the Company. If any
      deficiency shall arise, Borrower shall remain liable to Lender. If it is
      determined by an authority of competent jurisdiction that a disposition by
      Lender did not occur in a commercially reasonably manner, Lender may obtain
      a
      deficiency judgment for the difference between the amount of the Obligation
      and
      the amount that a commercially reasonable sale would have yielded. Lender will
      not be considered to have offered to retain the Accounts in satisfaction of
      the
      Obligations unless Lender has entered into a written agreement with Borrower
      to
      that effect.

     

    10.3 Lender’s
      Discretion.
      Except
      as otherwise provided herein, Lender shall have the right in its sole discretion
      to determine which rights, liens, security interests or remedies Lender may
      at
      any time pursue, relinquish, subordinate, or modify or to take any other action
      with respect thereto and such determination will not in any way modify or affect
      any of Lender’s or Lender’s rights hereunder.

     

    10.4 Setoff.
      In
      addition to any other rights which Lender may have under applicable law, upon
      the occurrence of an Event of Default, Lender shall have a right to apply
      Borrower property held by such Lender to reduce the Obligations.

     

    10.5 Rights
      and Remedies not Exclusive.
      The
      enumeration of the foregoing rights and remedies is not intended to be
      exhaustive and the exercise of any right or remedy shall not preclude the
      exercise of any other right or remedy provided for herein or otherwise provided
      by law, all of which shall be cumulative and not alternative.

     

    XI. WAIVERS
      AND JUDICIAL PROCEEDINGS.

     

    11.1 Waiver
      of Notice.
      Borrower
      hereby waives notice of non-payment of any of the Accounts, demand, presentment,
      protest and notice thereof with respect to any and all instruments, notice
      of
      acceptance hereof, notice of loans or advances made, credit extended, Accounts
      received or delivered, or any other action taken in reliance hereon, and all
      other demands and notices of any description, except such as are expressly
      provided for herein.

     

    11.2 Delay.
      No delay
      or omission on Lender’s part in exercising any right, remedy or option shall
      operate as a waiver of such or any other right, remedy or option or of any
      default.

     

    
      
        
 

        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    11.3 Jury
      Waiver.
      EACH
      PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY
      OF
      ANY CLAIM OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY
      TRANSACTION, DOCUMENT OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL
      TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS
      AGREEMENT OR ANY TRANSACTION DOCUMENT OR THE TRANSACTIONS RELATED HERETO OR
      THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
      SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY TO THIS AGREEMENT
      HEREBY CONSENTS THAT ANY SUCH CLAIM, OR CAUSE OF ACTION SHALL BE DECIDED BY
      COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN
      ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
      EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT
      TO
      TRIAL BY JURY.

     

    XII. EFFECTIVE
      DATE AND TERMINATION.

     

    12.1 Term.
      This
      Agreement, which shall inure to the benefit of and shall be binding upon the
      respective successors and permitted assigns of Borrower and Lender, shall become
      effective on the date hereof and shall continue in full force and effect until
      the earliest to occur of (a) a date not less than thirty (30) days after Lender
      gives notice of such date to Borrower of termination, (b) the date on which
      this
      Agreement shall be terminated in accordance with the provisions hereof or (c)
      upon satisfaction of the Obligations; (the “Termination Date”; such period
      referred to herein as the “Term”).

     

    12.2 Termination.
      The
      termination of this Agreement shall not affect Lender’s rights, or any of the
      Obligations having their inception prior to the effective date of such
      termination, and the provisions hereof shall continue to be fully operative
      until all transactions entered into, rights or interests created or Obligations
      have been fully disposed of, concluded or liquidated. The rights granted to
      Lender hereunder shall continue in full force and effect, notwithstanding the
      termination of this Agreement or the fact that Borrower’s Account may from time
      to time be temporarily in a zero or credit position, until all of the
      Obligations of Borrower have been paid, satisfied or performed in full.
      Accordingly, Borrower waives any rights which it may have under Section 9-513
      of
      the UCC to demand the filing of termination statements with respect to the
      Accounts, and Lender shall not be required to send such termination statements
      to Borrower, or to file them with any filing office, unless and until this
      Agreement shall have been terminated in accordance with its terms and all
      Obligations paid in full in immediately available funds. All representations,
      warranties, waivers and agreements contained herein shall survive termination
      hereof until all Obligations are paid or performed in full.

     

    XIII. WAIVER
      OF SUBROGATION.

     

    13.1 Waiver
      of Subrogation.
      Borrower
      expressly waives any and all rights of subrogation, reimbursement, indemnity,
      exoneration, contribution of any other claim which Borrower may now or hereafter
      have against any Person directly or contingently liable for the Obligations
      hereunder, or against or with respect to Borrower’s property (including, without
      limitation, any property which is collateral for the Obligations), arising
      from
      the existence or performance of this Agreement, until termination of this
      Agreement and repayment in full of the Obligations.

     

    
      
         

        

        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    XIV. MISCELLANEOUS.

     

    14.1 Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York applied to contracts to be performed wholly within the State
      of New York, without giving effect to rules regarding conflicts of law. Any
      judicial proceeding by involving, directly or indirectly, any matter or claim
      in
      any way arising out of, related to or connected with this Agreement or any
      Transaction Document shall be brought only in a federal or state court located
      in the State and County of New York and in no other court. By execution and
      delivery of this Agreement, Borrower and Lender accept for itself and in
      connection with its properties, generally and unconditionally, the exclusive
      jurisdiction of such court, and irrevocably agrees to be bound by any judgment
      rendered thereby in connection with this Agreement. Borrower hereby waives
      personal service of any and all process upon it and consents that all such
      service of process may be made by registered mail (return receipt requested)
      directed to Borrower at its address set forth in Section 14.4 and service so
      made shall be deemed completed five (5) days after the same shall have been
      so
      deposited in the mails of the United States of America, or, at Lender’s option,
      by service upon Borrower. Nothing herein shall affect the right to serve process
      in any manner permitted by law. Borrower and Lender waive any objection to
      jurisdiction and venue of any action instituted hereunder and shall not assert
      any defense based on lack of jurisdiction or venue or based upon forum non
      conveniens. 

     

    14.2 Entire
      Understanding.
      This
      Agreement and the Transaction Documents contain the entire understanding between
      Borrower and Lender and supersedes all prior agreements and understandings,
      if
      any, relating to the subject matter hereof. Neither this Agreement nor any
      portion or provisions hereof may be changed, modified, amended, waived,
      supplemented, discharged, cancelled or terminated orally or by any course of
      dealing, or in any manner other than by an agreement in writing, signed by
      the
      party to be charged. Borrower acknowledges that it has been advised by counsel
      in connection with the execution of this Agreement and the Transaction Documents
      and is not relying upon oral representations or statements inconsistent with
      the
      terms and provisions of this Agreement.

     

    14.3 Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of Borrower and Lender
      and their respective successors and assigns, except that Borrower may not assign
      or transfer any of its rights or obligations under this Agreement without the
      prior written consent of Lender.

     

    14.4 Notice.
      Any
      notice or request hereunder may be given to Borrower and Lender at their
      respective addresses set forth below or at such other address as may hereafter
      be specified in a notice designated as a notice of change of address under
      this
      Section. Any notice or request hereunder shall be given by (a) hand delivery,
      (b) overnight courier, (c) registered or certified mail, return receipt
      requested, or (d) telecopy to the number set out below (or such other number
      as
      may hereafter be specified in a notice designated as a notice of change of
      address) with electronic confirmation of its receipt. Any notice or other
      communication required or permitted pursuant to this Agreement shall be deemed
      given (a) when personally delivered to any officer of the party to whom it
      is
      addressed, (b) on the earlier of actual receipt thereof or two (2) days
      following posting thereof by certified or registered mail, postage prepaid,
      or
      (c) upon actual receipt thereof when sent by a recognized overnight delivery
      service or (d) upon actual receipt thereof when sent by telecopier to the number
      set forth below with electronic confirmation of its receipt, in each case
      addressed to each party at its address set forth below or at such other address
      as has been furnished in writing by a party to the other by like
      notice:

     

    
      	
              (A)
                

            	
              If
                to Lender at:

            	
              To
                the names, addresses and facsimile

            
	 	 	
              numbers
                listed on Schedule A hereto

            
	 	 	 
	 	
              With
                a copy to:

            	
              Grushko
                & Mittman, P.C.

            
	 	 	
              551
                Fifth Avenue, Suite 1601

            
	 	 	
              New
                York, NY 10176

            
	 	 	
              Fax:
                (212) 697-3575

            
	 	 	 
	
              (B)

            	
              If
                to Borrower at:

            	
              VoIP
                Inc.

            
	 	 	
              151
                So. Wymore Road, Suite 3000

            
	 	 	
              Altamonte
                Springs, FL 32714

            
	 	 	
              Attn:
                Anthony Cataldo, CEO

            
	 	 	
              Fax:
                (407) 389-3233

            
	 	 	 
	 	
              With
                a copy to:

            	
              Sichenzia
                Ross Friedman Ference LLP

            
	 	 	
              61
                Broadway, 32nd Floor

            
	 	 	
              New
                York, NY 10006

            
	 	 	
              Attn:
                Marc Ross, Esq.

            
	 	 	
              Fax:
                (212) 930-9725

            

    

    
      
        
 

        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    

    14.5 Severability.
      If any
      part of this Agreement is contrary to, prohibited by, or deemed invalid under
      applicable laws or regulations, such provision shall be inapplicable and deemed
      omitted to the extent so contrary, prohibited or invalid, but the remainder
      hereof shall not be invalidated thereby and shall be given effect so far as
      possible.

     

    14.6 Expenses. 
      All
      costs and expenses including, without limitation, (i) reasonable attorneys’ fees
      and disbursements incurred by Lender (a) in all efforts made to enforce payment
      of any of the Obligations or effect collection of any Accounts, or (b) in
      connection with the entering into, modification, amendment, administration
      and
      enforcement of this Agreement or the Transaction Documents or any consents
      or
      waivers hereunder or thereunder, or (c) in instituting, maintaining, preserving,
      enforcing and foreclosing on Lender’s security interest in any of the Accounts,
      whether through judicial proceedings or otherwise, or (d) in defending or
      prosecuting any actions or proceedings arising out of or relating to Lender’s
      transactions with Borrower and (ii) reasonable fees and disbursements incurred
      by Lender in connection with any appraisals of the Accounts, field examinations,
      collateral analysis or monitoring or other business analysis conducted by
      outside Persons in connection with this Agreement and the Transaction Documents,
      may be charged to Borrower’s Account and shall be part of the
      Obligations.

     

    14.7 Injunctive
      Relief.
      Borrower
      recognizes that if Borrower fails to perform, observe or discharge any of its
      obligations under this Agreement, any remedy at law may prove to be inadequate
      relief to Lender; therefore, Lender, if Lender so requests, shall be entitled
      to
      temporary and permanent injunctive relief in any such case without the necessity
      of proving that actual damages are not an adequate remedy.

     

    14.8 Consequential
      Damages. 
      Lender
      shall not be liable to Borrower for consequential damages arising from any
      breach of contract, tort or other wrong relating to the establishment,
      administration or collection of the Obligations.

     

    14.9 Captions. 
      The
      captions at various places in this Agreement are intended for convenience only
      and do not constitute and shall not be interpreted as part of this
      Agreement.

     

    14.10 Counterparts;
      Telecopied Signatures.
      This
      Agreement may be executed in any number of and by different parties hereto
      on
      separate counterparts, all of which, when so executed, shall be deemed an
      original, but all such counterparts shall constitute one and the same agreement.
      Any signature delivered by a party by facsimile transmission shall be deemed
      to
      be an original signature hereto.

     

    14.11
      Construction.
      The
      parties acknowledge that each party and its counsel have reviewed this Agreement
      and that the normal rule of construction to the effect that any ambiguities
      are
      to be resolved against the drafting party shall not be employed in the
      interpretation of this Agreement or any amendments, schedules or exhibits
      thereto.

     

    
      
        
 

        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    In
      witness thereof each of the undersigned states that he has read the foregoing
      Loan Agreement and understands and agrees to it.

    

    
      	 	
              VOIP,
                INC.

            
	 	
              the
                “Borrower”

            
	 	 
	 	
              By:___________________________________

            

    

     

    “LENDERS”

     

    
      	
              ________________________________________

            	 
	
              ALPHA
                CAPITAL ANSTALT f/k/a ALPHA CAPITAL AKTIENGESELLSCHAFT

            
	 	 
	
              ________________________________________

            	
              _______________________________________

            
	
              BRIO
                CAPITAL L.P.

            	
              BRISTOL
                INVESTMENT FUND, LTD.

            
	 	 
	
              ________________________________________

            	
              _______________________________________

            
	
              CENTURION
                MICROCAP, L.P.

            	
              CHESTNUT
                RIDGE PARTNERS LP

            
	 	 
	
              ________________________________________

            	
              _______________________________________

            
	
              GRUSHKO
                & MITTMAN, P.C. .

            	
              CMS
                CAPITAL

            
	 	 
	
              ________________________________________

            	
              _______________________________________

            
	
              DOUBLE
                U MASTER FUND L.P.

            	
              ELLIS
                INTERNATIONAL LTD.

            
	 	 
	
              ________________________________________

            	
              _______________________________________

            
	
              OSHER
                CAPITAL INC.

            	
              PLATINUM
                LONG TERM GROWTH I INC.

            
	 	 
	
              _______________________________________

            	 
	
              WHALEHAVEN
                CAPITAL FUND LTD.

            	 
	 	 
	 	
              ESCROW
                AGENT:

            
	 	 
	 	
              _______________________________________

            
	 	
              GRUSHKO
                & MITTMAN, P.C.

            

    

     

    
      
        
 

        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    Schedule
      A

    

    
      	
              Alpha
                Capital Anstalt

            	
              Ellis
                International Ltd.

            
	
              Pradafant
                7

            	
              53rd
                Street Urbanizacion Obarrio

            
	
              9490
                Furstentums

            	
              Swiss
                Tower, 16th Floor, Panama

            
	
              Vaduz,
                Lichtenstein

            	
              Republic
                of Panama

            
	
              Fax:
                ***

            	
              ***

            
	 	 
	
              Brio
                Capital, L.P.

            	
              Grushko
                & Mittman, P.C.

            
	
              523
                Albermale Road

            	
              551
                Fifth Avenue, Suite 1601

            
	
              Cedarhurst,
                NY 11516

            	
              New
                York, New York 10176

            
	
              Fax:
                ***

            	
              ***

            
	 	 
	
              Bristol
                Investment Fund, Ltd.

            	
              Iroquois
                Capital

            
	
              c/o
                Bristol Capital Advisers, LLC

            	
              641
                Lexington Avenue, 26th Floor

            
	
              10990
                Wilshire Boulevard, Suite 1410

            	
              New
                York, NY 10022

            
	
              Los
                Angeles, California 90024

            	
              ***

            
	
              Fax:
                ***

            	 
	 	
              Osher
                Capital

            
	
              Centurion
                Microcap, L.P.

            	
              5
                Sansberry Lane

            
	
              3014
                Avenue L

            	
              Spring
                Valley, NY 10977

            
	
              Brooklyn,
                NY 11210

            	
              ***

            
	
              Fax:
                ***

            	 
	 	
              Platinum
                Long term Growth II, Inc.

            
	
              Chestnut
                Ridge Partners, L.P.

            	
              152
                West 57th Street

            
	
              50
                Tice Boulevard

            	
              New
                York, NY 10019

            
	
              Woodcliff
                Lake, NJ 07677

            	
              ***

            
	
              Fax:
                ***

            	 
	 	
              Whalehaven
                Capital Fund Limited

            
	
              CMS
                Capital

            	
              c/o
                FWS Capital Ltd.

            
	
              9612
                Van Nuys Boulevard, Suite 108

            	
              3rd
                Floor, 14 Par-Laville Road

            
	
              Panorama
                City, CA 91402

            	
              Hamilton,
                Bermuda HM08

            
	
              ***

            	
              Fax:
                ***

            
	 	 
	
              Double
                U Master Fund, L.P.

            	 
	
              c/o
                Navigator Management, Ltd.

            	 
	
              Harbor
                House, Waterfront Drive, P.O Box 972

            	 
	
              Road
                Town BVI

            	 
	
              ***

            	 

    

    

    EXHIBIT
      A

    

    Lockbox
      Escrow Agreement

    
      
        
 

        
        

      

      
        15

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