Exhibit 10.1

              MEMORANDUM OF UNDERSTANDING RE: CONTINUING EMPLOYMENT
                                   ARRANGEMENT

From:   Stephen M. Greenberg

To:     Bruce D. Shoulson

Dated:  September 5, 2003

        This is to confirm our understanding that, commencing January 8, 2004,
        you will serve as Senior Legal Advisor to Net2Phone, Inc. under the
        following terms and conditions:

     1. Duties: You will provide legal advice and guidance to the Board of
        Directors and Senior Management of Net2Phone with respect to strategic
        and management matters, major transactions, significant litigation and
        other issues of material importance to the business of Net2Phone as the
        same may arise from time to time. You will also represent Net2Phone's
        interests in the resolution of conflict issues that may arise as the
        result of a merger or other unification of the activities of the legal
        departments of Net2Phone and IDT Corporation.

     2. Time and Place of Performance: It is anticipated that you will be
        available to perform your services an average of eight days each month,
        subject to vacations and holidays. You may render your services in
        person at the Net2Phone offices, or by telephone or on line (for which
        purpose you will have the use of a lap top computer), as you deem to be
        appropriate under the particular circumstances. You will continue to
        have the use of your current office and will be provided with necessary
        support and free parking as in the past.

     3. Compensation: For services rendered you will be paid at the rate of
        $120,000 per annum. Compensation shall be paid bi-weekly in arrears, in
        accordance with Net2Phone's standard payroll practices, and shall be
        subject to all required withholdings.

     4. Fringe and Other Benefits: Under the terms of your existing employment
        agreement dated January 8, 2001 with Net2Phone ("Employment
        Agreement"), Net2Phone is required to continue to provide you and your
        wife with all Welfare Benefits until at least August 12, 2005. Net2Phone
        will of course honor this obligation as well as all of its other
        obligations under the Employment Agreement, it being understood that
        nothing contained herein shall in any way diminish or adversely affect
        your rights or modify or reduce Net2Phone's obligations under the
        Employment Agreement. You will also continue to receive the standard
        monthly automobile allowance paid to Net2Phone Senior Management, shall
        be eligible to participate in the Net2Phone charitable matching gift
        program for the term of this employment arrangement and shall be
        entitled to all indemnification and insurance benefits accorded to all
        other attorneys employed by Net2Phone. It is understood




        and agreed, that the term of your continued employment shall be
        considered as a continuation of the period of your service under the
        Employment Agreement for purposes of the vesting of your stock options.
        All 401(k) payments made or to be made on your behalf by Net2Phone for
        any period ending on or before January 8, 2004 will be deemed to be
        fully vested as of such date.

     5. Termination: This continued employment arrangement shall continue in
        effect until terminated at the end of any month on or after July 31,
        2004 by either party for any reason upon no less than 30 days prior
        written notice. Any such termination shall be without prejudice to any
        rights that you may have pursuant to your existing Employment Agreement,
        as amended, and the effective date of the termination of this continued
        employment arrangement shall be deemed to be the first day of the
        four-year period following termination of employment during which your
        unexercised options may be exercised. Upon termination of this continued
        employment arrangement, all of your unvested stock options shall
        immediately become vested.

     6. Reimbursement for Expenses: Net2Phone shall reimburse you, in accordance
        with its usual practices, for all reasonable travel and other business
        expenses and disbursements that you may incur in the performance of your
        duties, including professional association dues.

                                                 Net2Phone, Inc.


                                                 By: /s/ Stephen M. Greenberg
                                                    --------------------------
                                                     Stephen M. Greenberg, CEO



Agreed to and Accepted:


/s/ Bruce D. Shoulson
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Bruce D. Shoulson