Exhibit
      10.4

    MODIFICATION
      AND AMENDMENT AGREEMENT

    


    


    This
      Modification and Amendment Agreement (“Agreement”) dated as of May 22,
      2006 is
      entered
      into by and among VoIP, Inc., a Texas corporation (the “Company”) and the
      subscribers identified on the signature page hereto (each a “Subscriber” and
      collectively “Subscribers”).

     

    WHEREAS,
      the Company and the Subscribers are parties to Subscription Agreements
      (“Subscription Agreements”) dated January 6, 2006 and February 2, 2006 relating
      to aggregate investments by Subscribers of up to $5,331,212.00 and
      $2,987,072.00, respectively, of principal amount of promissory notes of the
      Company with an original issue discount of 12.121% convertible into shares
      of
      the Company’s $.001 par value common stock and Warrants in the amounts set forth
      on Schedule A attached hereto; and

     

    WHEREAS,
      if notified by the Subscribers the Company would be in default of material
      terms
      of the Transaction Documents upon which the Subscribers may elect to exercise
      their rights to accelerate the Maturity Date of the Notes and foreclose on
      the
      Collateral under the Security Agreement; and

     

    WHEREAS,
      the Company and Subscribers desire to restructure the terms of the Transaction
      Documents to their mutual benefit.

     

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

     

    1.            
      All
      the
      capitalized terms employed herein shall have the meanings attributed to them
      in
      the Subscription Agreement and the documents and agreements delivered therewith
      (“Transaction Documents”).

     

    2.            
      (a) Section
      1.2 of the Note is amended as follows: “The first Repayment Date shall be the
      sooner of August 15, 2006, or the Actual Effective Date of the Registration
      Statement.” 

     

    (b) Section
      2.1(a) of the Note is amended as follows: “Eighty-five percent (85%) of the VWAP
      for the fifteen (15) trading days preceding such Repayment Date (“Alternate
      Price”), but not less than $0.80”.

    


    (c) Section
      3.1 of the Note is amended as follows: “Fixed Conversion Price is
      $1.00”.

    


    (d) The
      Company will pay accrued Liquidated Damages due through May 31, 2006 in the
      amount of $166,366 with shares of the Company’s Common Stock issued at a price
      per share of $1.00. 

    


    3.            
      The
      exercise prices of the Class A and Class B Common Stock Purchase Warrants are
      hereby reduced to $1.00.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.            
      Within
      three (3) business days of execution of this Agreement, Subscribers shall
      exercise their Class C and D Common Stock Purchase Warrants issued on July
      5,
      2005 and November 1, 2005, respectively, at an exercise price of $0.78, for
      an
      aggregate number of shares as more fully described on Schedule A hereto (the
      “Class C and D Warrant Shares”). The Class C and D Warrant Shares are
      effectively registered for resale and may be sold free of restriction pursuant
      to the prospectus dated October 18, 2005, which prospectus was subsequently
      supplemented, most recently on April 18, 2006.

     

    5.            
      The
      Company will issue to each Subscriber additional Class C and D Common Stock
      Purchase Warrants as more fully described on Schedule A hereto exercisable
      at
      $0.80 (“Replacement Warrants”).

     

    6.            
      The
      Company will file an amended Registration Statement to reflect the terms of
      this
      Agreement not later than thirty (30) days after the date of this Agreement
      and
      cause such amended Registration Statement to be declared effective by the
      Commission as soon as practicable thereafter, provided however that the required
      Effective Date set forth in Section 11.1(iv) of the Subscription Agreement
      remains applicable to the amended Registration Statement with respect to all
      shares other than those shares underlying the Replacement Warrants and shares
      issued as payment of Liquidated Damages described above. A prospectus supplement
      will be filed to reflect the terms of this Agreement within one business days
      after the date hereof with respect to the Class C and D Warrant Shares. Failure
      to comply with the foregoing filing and effective dates shall be a
      Non-Registration Event in connection with which Liquidated Damages shall accrue
      in the amounts set forth in Section 11.4 of the Subscription Agreement. In
      the
      event an amendment to the registration statement may not be filed to register
      securities which may be issuable pursuant to this Agreement, and such additional
      securities, including the shares issued as payment of Liquidated Damages and
      the
      shares underlying the Replacement Warrants described above, then the Company
      agrees to file a Registration Statement in relation to such securities pursuant
      to Section 11 of the Subscription Agreement and particularly Section 11.1(iv)
      of
      the Subscription Agreement, except that in relation to such securities the
      Filing Date and Effective Date shall respectively be 180 days and 270 days
      after
      the date of this Agreement; however, failure to comply with these Filing and
      Effective Dates will not cause the accrual of any Liquidated Damages. All such
      additional securities are deemed Registrable Securities.

     

    7.            
      Section
      12(a) - Right of First Refusal is amended as follows:

     

    “Until
      the Registration Statement has been effective for the public unrestricted resale
      of the Registrable Securities for 365 days, the Subscribers shall be given
      not
      less than seven (7) business days prior written notice of any proposed sale
      by
      the Company of its common stock or other securities or debt obligations, except
      in connection with (i) as a result of the exercise of options or warrants or
      conversion of convertible Notes or amounts which are granted, issued or accrue
      pursuant to this Agreement, (ii) as has been described in the Reports or Other
      Written Information filed with the Commission not later than three business
      days
      prior to the Closing Date, or delivered to the Subscribers prior to the Closing
      Date, (iii) full or partial consideration in connection with a strategic merger,
      consolidation or purchase of substantially all of the securities or assets
      of
      corporation or other entity, (iv)
      the
      Company’s issuance of securities in connection with strategic license agreements
      and other partnering arrangements so long as such issuances are not for the
      purpose of raising capital, (v) the Company’s issuance of Common Stock or the
      issuance or grants of options to purchase Common Stock pursuant to the Company’s
      stock option plans and employee stock purchase plans as they now exist, provided
      such options are granted with exercise prices at least equal to the closing
      price of the Common Stock on the grant dates, which copies of such plans have
      been delivered to the Subscribers, and (vi) Common Stock or instruments
      convertible or exchangeable for Common Stock, provided the issue price (or
      conversions, exchanges, or exercise prices, whichever is applicable) of such
      Common stock or other instrument is not less than 150% of the Conversion Price
      in effect at all times (collectively the foregoing are “Excepted
      Issuances”).
      For
      the first six months after the Actual Effective Date, the
      Subscribers who exercise their rights pursuant to this Section 12(a) shall
      have
      the right during the seven (7) business days following receipt of the notice
      to
      purchase in the aggregate up to 100% and thereafter for the second six months
      after the Actual Effective Date up to 50% of all such offered common stock,
      debt
      or other securities in accordance with the terms and conditions set forth in
      the
      notice of sale in the same proportion to each other as their purchase of Notes
      in the Offering. In the event such terms and conditions are modified during
      the
      notice period, the Subscribers shall be given prompt notice of such modification
      and shall have the right during the seven (7) business days following the notice
      of modification, whichever is longer, to exercise such right.”

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    8.            
      Section
      12(b) - Offering Restrictions is amended from “...until the Actual Effective Date”
to “...until three months after the Actual Effective Date”.

     

    9.            
      The
      undersigned waive the rights granted to them pursuant to Section 12(c) - Favored
      Nation Provision of the Subscription Agreement only to the extent such rights
      would be triggered by the reduction of the exercise price of the Class C and
      Class D Warrants and the issuance of the Replacement Warrants pursuant to this
      Agreement.

     

    10.            The
      Company undertakes to make a public announcement describing this Agreement
      not
      later than the first business day after the execution of this
      Agreement.

     

    11.           
      For
      the
      benefit of the parties hereto, the Company hereby makes all the representations,
      warranties, covenants undertakings and indemnifications contained in the
      Transaction Documents including but not limited to the representations and
      warranties contained in Section 5(f)(iii) of the Subscription Agreement, as
      if
      such representations were made by the Company as of this date. The Subscribers
      hereby make all of the representations, warranties, covenants, indemnifications
      and undertakings contained in the Transaction Documents as if such
      representations were made by the Subscribers as of this date.

     

    12.          
      Subject
      to the modifications and amendments provided herein, the Transaction
      Documents shall remain in full force and effect, including but not limited
      to
      the accrual of interest and liquidated damages, if any. Except as expressly
      set
      forth herein, this Modification and Amendment Agreement shall not be deemed
      to be a waiver, amendment or modification of any provisions of
      the Transaction Documents or of any right, power or remedy of
      the Subscribers, or constitute a waiver of any provision of
      the Transaction Documents (except to the extent herein set forth), or any
      other document, instrument and/or agreement executed or delivered in connection
      therewith, in each case whether arising before or after the date hereof or
      as a
      result of performance hereunder or thereunder. Except as set forth herein,
      the Subscribers reserve all rights, remedies, powers, or privileges
      available under the Transaction Documents, at law or otherwise.
      This Modification and Amendment Agreement shall not constitute a novation
      or satisfaction and accord of the Transaction Documents or any other
      document, instrument and/or agreement executed or delivered in connection
      therewith

     

    13.           
      Each
      of
      the undersigned states that he has read the foregoing Agreement and understands
      and agrees to it.

     

    14.          
      This
      Modification and Amendment Agreement may be executed in two or more
      counterparts, all of which when taken together shall be considered one and
      the
      same agreement and shall become effective when counterparts have been signed
      by
      each party and delivered to any other party, it being understood that all
      parties need not sign the same counterpart. In the event that any signature
      is
      delivered by facsimile transmission, such signature shall create a valid and
      binding obligation of the party executing (or on whose behalf such signature
      is
      executed) the same with the same force and effect as if such facsimile signature
      were an original thereof.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the
      undersigned have executed and delivered this Modification and Amendment
      Agreement as of the date first written above.

     

    
      	Company: 	 	Investor: 
	 	 	 	 	 
	VOIP, INC.	 	ALPHA CAPITAL
              AKTIENGESELLSCHAFT
	 	 	 	 	 
	By:	/s/ Gary
              Post	 	By:	/s/ Konrad
              Ackermann
	 	
              
Name:
              Gary Post	 	 	
              
Name:
              Konrad Ackermann
	 	Title:
              President	 	 	Title:
              Director


    

     

    
      
        
          
            	Investor:	 	 	Investor:	 
	 	 	 	 	 
	BRISTOL INVESTMENT
                    FUND,
                    LTD.	 	ELLIS INTERNATIONAL
                    LTD.
	 	 	 	 	 
	By:	/s/ Paul
                    Kessler	 	By:	 
	 	
                    
Name: Paul
                    Kessler	 	 	
                    
Name:
	 	Title: Directors	 	 	Title:


          

           

          
            
              
                
                  	Investor:	 	 	Investor:	 
	 	 	 	 	 
	PLATINUM LONG
                          TERM GROWTH II
                          INC.	 	CMS CAPITAL
	 	 	 	 	 
	By:	/s/ Mark
                          Nordlicht	 	By:	 
	 	
                          
Name: Mark
                          Nordlicht	 	 	
                          
Name:
	 	Title:	 	 	Title:


                

                 

                
                  
                    
                      
                        	Investor:	 	 	Investor:	 
	 	 	 	 	 
	
                                DKR SOUNDSHORE OASIS HOLDING

                                FUND LTD.

                              	 	OSHER
                                CAPITAL INC.
	 	 	 	 	 
	By:	/s/ Fred
                                Leif	 	By:	/s/ Y.
                                Kluger
	 	
                                
Name: Fred
                                Leif	 	 	
                                
Name:
                                Y. Kluger
	 	Title:	 	 	Title:


                      

                       

                      
                        
                          
                            
                              
                                	Investor:	 	 	Investor:	 
	 	 	 	 	 
	GRUSHKO
&
MITTMAN,
                                        P.C.	 	WHALEHAVEN
                                        CAPITAL FUND
                                        LIMITED
	 	 	 	 	 
	By:	/s/ Barbar
                                        Mittman	 	By:	/s/ Even
                                        Schemenauer
	 	
                                        
Name:
                                        Barbar Mittman	 	 	
                                        
Name:
                                        Even Schemenauer
	 	Title:
                                        Partner	 	 	Title:
                                        Director


                              

                               

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
        
          
            
              
                	Investor:	 	 	Investor:	 
	 	 	 	 	 
	CHESTNUT RIDGE
                        PARTNERS LP
                        	 	STONESTREET LIMITED
                        PARTNERSHIP
	 	 	 	 	 
	By:	/s/ Kenneth
                        Holz	 	By:	 
	 	
                        
Name: Kenneth
                        Holz	 	 	
                        
Name:

	 	Title:
                        CFO	 	 	Title:
                        


              

               

            

          

        

      

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    SCHEDULE
      A

    


    VOIP
      WARRANTS EXERCISE PROPOSAL FROM 7-5-05 AND 11-1-05
      CLOSINGS

    


    
      	
              7-5-05
                INVESTORS

            	 	
              7-5-05
                CLASS C WARRANTS 5YR @ $1.37612

            	 	
              

                

                  Proceeds

                

              

            	 	
              7-5-05
                CLASS D WARRANTS 1YR @ $1.60

            	 	

              

                Proceeds

              

            	 
	
              STONESTREET

            	 	 	
              179,688

            	 	
              $

            	
              140,156.64

            	 	 	
              179,688

            	 	
              $

            	
              140,156.64

            	 
	
              WHALEHAVEN

            	 	 	
              143,750

            	 	
              $

            	
              112,125.00

            	 	 	
              143,750

            	 	
              $

            	
              112,125.00

            	 
	
              ELLIS
                INTL

            	 	 	
              89,844

            	 	
              $

            	
              70,078.32

            	 	 	
              89,844

            	 	
              $

            	
              70,078.32

            	 
	
              BRISTOL

            	 	 	
              239,583

            	 	
              $

            	
              186,874.74

            	 	 	
              239,583

            	 	
              $

            	
              186,874.74

            	 
	
              ALPHA

            	 	 	
              239,583

            	 	
              $

            	
              186,874.74

            	 	 	
              239,583

            	 	
              $

            	
              186,874.74

            	 
	 	 	 	 	 	 	 	 	 	 	 	
              $

            	
              0.00

            	 
	
              TOTAL

            	 	 	
              892,448

            	 	
              $

            	
              696,109.44

            	 	 	
              892,448

            	 	
              $

            	
              696,109.44

            	 


    

     

    
      	
              11-1-05
                INVESTORS

            	 	
              11-1-05
                CLASS C WARRANTS 5YR @ $1.6503

            	 	

              

                Proceeds

              

            	 	
              11-1-05
                CLASS D WARRANTS 1YR @ $1.60

            	 	

              

                Proceeds

              

            	 
	
              STONESTREET

            	 	 	
              179,688

            	 	
              $

            	
              140,156.64

            	 	 	
              179,688

            	 	
              $

            	
              140,156.64

            	 
	
              WHALEHAVEN

            	 	 	
              143,750

            	 	
              $

            	
              112,125.00

            	 	 	
              143,750

            	 	
              $

            	
              112,125.00

            	 
	
              ELLIS
                INTL

            	 	 	
              89,844

            	 	
              $

            	
              70,078.32

            	 	 	
              89,844

            	 	
              $

            	
              70,078.32

            	 
	
              BRISTOL

            	 	 	
              239,583

            	 	
              $

            	
              186,874.74

            	 	 	
              239,583

            	 	
              $

            	
              186,874.74

            	 
	
              ALPHA

            	 	 	
              239,583

            	 	
              $

            	
              186,874.74

            	 	 	
              239,583

            	 	
              $

            	
              186,874.74

            	 
	
              TOTAL

            	 	 	
              892,448

            	 	
              $

            	
              696,109.44

            	 	 	
              892,448

            	 	
              $

            	
              696,109.44

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TOTAL
              NET PROCEEDS FROM ALL
              WARRANTS	 	 	 	 	 	 	 	 	 	 	
              $

            	2,784,437.76	 


    

     

    
       
 


    *
      Footnote: $20,000 in proceeds to be deducted from Alpha Capital pursuant to
      exercise of 25,000 Warrants at $0.80 per share.

    


    ALL
      WARRANTS EXERCISED WILL BE REPLACED WITH NEWLY ISSUED 5 YR. WARRANTS AT $0.80
      AND WILL BE REGISTERED ON NEXT REGISTRATION FILING.

    


    
      
        
        

      

      
        5