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                                                                   EXHIBIT 10.33

                              EMPLOYMENT AGREEMENT


                  This EMPLOYMENT AGREEMENT, (this "Agreement") is dated as of
July 31, 2000, between Net2Phone, Inc., a Delaware corporation (the "Company")
and Clifford M. Sobel (the "Executive").



                              W I T N E S S E T H:
                              - - - - - - - - - -

                  WHEREAS, the Executive is the Chairman of the Board of the
Company;

                  WHEREAS, the Company wishes to assure itself of the continued
services of the Executive and the Executive is willing to enter into an
agreement to that end, upon the terms and conditions hereinafter set forth.

                  NOW, THEREFORE, in consideration of good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties hereby covenant and agree as follows:



                  1. EMPLOYMENT

                  The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to remain in the employ of the Company, on and subject
to the terms and conditions of this Agreement.

                  2. TERM

                  Unless earlier terminated pursuant to Section 5 hereof, the
period of this Agreement and the Executive's employment hereunder (the
"Agreement Term") shall commence as of the date hereof (the "Effective Date"),
and shall expire on the third anniversary of the Effective Date; provided,
however, that the Agreement Term shall be automatically extended for an
additional year on the third anniversary of the Effective Date and on each
anniversary of the Effective Date thereafter (each an "Extension Date"), unless
written notice of non-extension is provided by either party to the other party
at least 90 days prior to such anniversary.

                  3. POSITION, AUTHORITY AND RESPONSIBILITIES

                  (a) The Executive shall serve as, and with the title, office
and authority of, Chairman of the Board of the Company, and shall report
directly to the Board of Directors of the Company (the "Board").
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                  (b) The Executive shall have all of the other powers,
authority, duties and responsibilities usually incident to the position and
office of Chairman of the Board and such duties consistent with such position as
may be assigned from time to time by the Board.

                  (c) The Executive agrees to devote substantially all of his
business time, efforts and skills to the performance of his duties and
responsibilities under this Agreement; provided, however, that nothing in this
Agreement shall preclude the Executive from devoting reasonable periods required
for (i) serving on corporate, civic or charitable boards or committees, (ii)
delivering lectures, fulfilling speaking engagements or teaching at educational
institutions and or (iii) managing his personal investments, provided that in
any such case that such activities do not materially interfere with the
Executive's performance of his duties and responsibilities hereunder and do not
violate the provisions of Section 11 hereof.

                  (d) The Executive shall perform his duties at the principal
offices of the Company located in Newark, New Jersey, but from time to time the
Executive may be required to travel to other locations in the proper conduct of
his responsibilities under this Agreement.

                  4. COMPENSATION AND BENEFITS

                  In consideration of the services rendered by the Executive
during the Agreement Term, the Company shall pay or provide the Executive the
amounts and benefits set forth below.



                  (a) Salary. The Company shall pay the Executive an initial
annual base salary (the "Base Salary") of at least $300,000. The Executive's
Base Salary shall be paid in arrears in substantially equal installments at
monthly or more frequent intervals, in accordance with the normal payroll
practices of the Company. The Executive's Base Salary shall be reviewed at least
annually by the Board for consideration of appropriate merit increases and, once
established, the Base Salary shall not be decreased during the Agreement Term.

                  (b) Annual Bonus. The Company shall provide the Executive with
an opportunity to earn an annual bonus (the "Annual Bonus") equal to at least
25% of the Base Salary for each calendar year during the Agreement Term
beginning with the 2000 calendar year pursuant to a bonus plan to be established
by the Company.

                  (c) Equity Incentives. Except as provided in this Agreement,
the treatment of options to purchase shares of the Common Stock of the Company
("Common Stock") granted to the Executive prior to the Effective Date under the
Company's stock incentive plans shall be governed by the applicable stock option
agreements. On the date hereof, the Executive shall be granted an option (the
"Option") to purchase 500,000 shares of the Company's common stock, par value
$.01 per share, pursuant to the Stock Option Agreement attached hereto as
Exhibit A. The Option shall

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be granted with an exercise price equal to the current fair market value on the
Effective Date. The Executive shall be eligible, from time to time, to receive
awards of stock options or other equity incentives, as determined by the Board.
Except as otherwise provided herein, the Executive's right to exercise the
Option shall become vested as follows, if as of each such date set forth below
the Executive is employed by the Company or any of its subsidiaries:

                  (i) 33-1/3% on the first anniversary of the Effective Date,
         and

                  (ii) the remaining 66-2/3% shall vest equally on the last day
         of each month for the twenty-four months following the first
         anniversary of the Effective Date.

                  (d) Employee Benefits. The Executive shall be entitled to
participate in all employee benefit plans, programs, practices or other
arrangements of the Company in which other senior executives of the Company are
generally eligible to participate from time to time, including, without
limitation, any qualified or non-qualified pension, profit sharing and savings
plans, any death benefit and disability benefit plans, and any medical, dental,
health and welfare plans, except to the extent that a separate arrangement is
implemented for the Executive on terms no less favorable than as provided to the
other senior executives agreed to by the Executive that is intended to replace
any such general arrangement. Without limiting the generality of the foregoing,
(i) the Company shall continue to provide the Executive with life insurance
coverage with a death benefit that is not less than the amount as is in effect
as of the Effective Date and (ii) the Company shall provide the executive with
disability insurance coverage consistent with the disability insurance coverage
provided to senior executives of other companies in the same industry as the
Company.

                  (e) Fringe Benefits and Perquisites. The Executive shall be
entitled to all fringe benefits and perquisites that are generally made
available to senior executives of the Company from time to time on the same
basis as is made available to such other executives. Without limiting the
generality of the foregoing, the Company shall provide the Executive with the
following:

                            (i) executive offices and support staff appropriate
              to the Executive's position;

                            (ii) prompt reimbursement of all reasonable travel
              and other business expenses and disbursements incurred by the
              Executive in the performance of his duties under this Agreement in
              accordance with the Company's normal practices and procedures,
              including professional association dues upon proper accounting
              therefor;

                            (iii) six weeks paid vacation during each calendar
              year, to be taken in accordance with the Company's vacation policy
              for senior executives;

                            (iv) an automobile allowance no less favorable than
              the automobile allowance in effect as of the Effective Date; and

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                            (v) such other fringe benefits as the Executive and
              the Board may mutually agree from time to time.

                  5. TERMINATION OF EMPLOYMENT

                  The Agreement Term and the Executive's employment hereunder
shall be terminated upon the happening of any of the following events:

                  (a) Termination for Cause. The Company may terminate the
Agreement Term and the Executive's employment hereunder for Cause. For purposes
of this Agreement, "Cause" shall mean:

                  (i) conviction of the Executive, by a court of competent
jurisdiction, of, or Executive's plea of guilty or nolo contendere to, a felony
under the laws of the United States or any state thereof;

                  (ii) misappropriation by the Executive of the Company's funds;
         or

                  (iii) the commission by the Executive of an act of proven
         fraud with respect to the Company.

                  Notwithstanding the foregoing, in no event shall the Company
be considered to have terminated the Executive's employment for "Cause" unless
and until (i) the Executive receives written notice from the Board identifying
in reasonable detail the acts or omissions constituting such "Cause" and the
provision of this Agreement relied upon by the Company for such termination and
(ii) such acts or omissions are not cured by the Executive within 30 days of the
Executive's receipt of such notice.

                  (b) Termination other than for Cause. The Board shall have the
right to terminate the Agreement Term and the Executive's employment hereunder
for any reason at any time, including for any reason that does not constitute
Cause, subject to the consequences of such termination as set forth in this
Agreement.

                  (c) Resignation for Good Reason. The Executive may voluntarily
terminate the Agreement Term and his employment hereunder for Good Reason. For
purposes of this Agreement, "Good Reason" shall mean:

                            (i) any action by the Company that results in a
              diminution of the Executive's authority or responsibilities;

                            (ii) any adverse modification of the Executive's
              positions, titles or reporting relationships;

                            (iii) any failure by the Company to comply with the
              compensation and benefits provisions of Section 4 hereof or any
              other material breach of this Agreement by the Company;

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                            (iv) any notice of non-extension of the Agreement
              Term given by the Company to the Executive as set forth in Section
              2 hereof;

                            (v) the relocation, without the Executive's written
              consent, of the Executive's principal office from Newark, New
              Jersey; or

                            (vi) any failure by the Company to obtain an
              assumption of this Agreement by a successor corporation as
              required under Section 13(a) hereof.

                  In no event shall the Executive be considered to have
terminated his employment for "Good Reason" unless and until (i) the Company
receives written notice from the Executive identifying in reasonable detail the
acts or omissions constituting such "Good Reason" and the provision of this
Agreement relied upon by the Executive for such termination, and (ii) such acts
or omissions are not cured by the Company within 30 days of the Company's
receipt of such notice.

                  (d) Resignation other than for Good Reason. The Executive may
voluntarily terminate the Agreement Term and his employment hereunder at any
time for any reason, including for any reason that does not constitute Good
Reason by giving the Company 30-days advance written notice of such termination.

                  (e) Disability. The Company may terminate the Agreement Term
and the Executive's employment hereunder upon the Executive's Disability. For
purposes of this Agreement, "Disability" shall mean the inability of the
Executive to perform his duties to the Company on account of physical or mental
illness for a period of six consecutive full months, or for a period of nine
full months during any 18-month period. The Executive's employment shall
terminate in such case on the last day of the applicable period following
written notice by the Company of the election to terminate the Executive's
employment due to the Executive's Disability. Notwithstanding the foregoing, in
no event shall the Executive be terminated by reason of Disability unless the
Executive is eligible to begin receiving long-term disability benefits from a
Company-sponsored long-term disability plan.

                  (f) Death. The Agreement Term and the Executive's employment
hereunder shall terminate upon his death.

                  6. COMPENSATION UPON TERMINATION OF EMPLOYMENT

                  Notwithstanding any provision of this Agreement to the
contrary, in the event the Agreement Term and the Executive's employment by the
Company is terminated, the Executive shall be entitled to the compensation and
severance benefits set forth below:

                  (a) Resignation for Good Reason; Termination without Cause. In
the event the Agreement Term and the Executive's employment hereunder is
terminated by the Executive for Good Reason or by the Company for any reason
other than for Cause, Disability or death, the Company shall pay to the
Executive and provide him with the following:

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                            (i) Severance Payment. The Company shall pay the
              Executive, within 10 business days of the date of termination, a
              lump-sum cash amount equal to two times the sum of (A) the
              Executive's then-current Base Salary under Section 4(a) hereof and
              (B) the Executive's then-current Annual Bonus percentage under
              Section 4(b) hereof, multiplied by his then-current Base Salary.

                            (ii) Accrued Rights. The Company shall pay the
              Executive a lump-sum cash amount, within 10 days of the date of
              termination, equal to the sum of (A) his earned but unpaid Base
              Salary through the date of termination, (B) any earned but unpaid
              Annual Bonus for any completed calendar year, and (C) any
              unreimbursed business expenses or other amounts due to the
              Executive from the Company as of the date of termination. In
              addition, the Company shall provide to the Executive all payments,
              rights and benefits due as of the date of termination under the
              terms of the Company's compensation or benefit plans, programs or
              awards (together with the lump-sum payment, the "Accrued Rights").

                            (iii) Bonus Rights. The Company shall pay the
              Executive, within 10 days of the date of termination, a lump-sum
              cash amount equal to a pro rata portion of the Annual Bonus for
              any partial calendar year of service through the date of
              termination (the "Bonus Rights").

                            (iv) Continued Benefits. Subject to Section 8
              hereof, for a two-year period following the date of termination,
              the Company shall continue to provide the Executive and his
              eligible dependents, at its sole cost, with the medical, dental,
              disability and life insurance coverages ("Welfare Benefits") that
              were provided to the Executive immediately prior to termination of
              employment.

                            (v) Stock Options. Notwithstanding the provisions of
              any stock incentive plan or award agreement between the Company
              and the Executive to the contrary, (i) 66-2/3% of the options to
              purchase Common Stock which are not fully vested and exercisable
              as of the date of termination shall become fully vested and
              exercisable and (ii) the period during which options shall remain
              exercisable shall be extended until the second anniversary of the
              date of termination. All such award agreements shall be amended by
              the Company and the Executive to reflect the foregoing provision.

                            (vi) Life and Disability Insurance. The Company
              shall fully fund the life insurance and disability policies
              described in Section 4(d) hereof.

                            (vii) Car Allowance. Until the second anniversary of
              the date of termination, the Company shall continue to provide the
              Executive with the automobile allowance described in Section
              4(e)(iv) hereof.

                  (b) Resignation without Good Reason; Termination for Cause. In
the event the Executive voluntarily terminates the Agreement Term and his
employment hereunder other than for Good Reason, or in the event the Agreement
Term and the

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Executive's employment hereunder is terminated by the Company for Cause, the
Company shall pay and provide to the Executive all Accrued Rights and Bonus
Rights and the Executive shall retain any rights that he has pursuant to any
stock option agreement with the Company in accordance with the terms thereof.

                  (c) Disability; Death. In the event the Agreement Term and the
Executive's employment hereunder is terminated by reason of the Executive's
Disability or death, the Company shall pay the Executive (or his legal
representative) and provide him with the following:

                            (i) Severance Payment. The Company shall pay the
              Executive, within 10 business days of the date of termination, a
              lump-sum cash amount equal to one times the sum of (A) the
              Executive's then-current Base Salary under Section 4(a) hereof and
              (B) the Executive's then-current Annual Bonus percentage under
              Section 4(b) hereof, multiplied by his then-current Base Salary.

                            (ii) Accrued Rights. The Company shall pay the
              Executive a lump-sum cash amount, within 10 days of the date of
              termination, equal to the Accrued Rights.

                            (iii) Bonus Rights. The Company shall pay the
              Executive, within 10 days of the date of termination, a lump-sum
              cash amount equal to the Bonus Rights.

                            (iv) Continued Benefits. Subject to Section 9
              hereof, for a one-year period following the date of termination,
              the Company shall continue to provide the Executive and his
              eligible dependents, at its sole cost, with the Welfare Benefits
              that were provided to the Executive immediately prior to
              termination of employment.

                            (v) Stock Options. Notwithstanding the provisions of
              any stock incentive plan or award agreement between the Company
              and the Executive to the contrary, (i) all options to purchase
              Common Stock which are not fully vested and exercisable as of the
              date of termination shall become fully vested and exercisable and
              (ii) the period during which such options shall be exercisable
              shall be extended until the first anniversary of the date of
              termination. All such award agreements shall be amended by the
              Company and the Executive to reflect the foregoing provision.

                  7. INDEMNIFICATION

                  The Company agrees to provide to the Executive all rights of
indemnification and all director's and officer's insurance coverage to the
fullest extent permitted by law and by its Certificate of Incorporation and
By-laws.

                  8. NO MITIGATION OR OFFSET

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                  The Executive shall not be required to seek other employment
or to reduce any severance benefit payable to him under Section 6 hereof, and no
such severance benefit shall be reduced on account of any compensation received
by the Executive from other employment; provided, however, to the extent that
the Executive becomes eligible to receive welfare benefits pursuant to employee
benefit plans of a new employer that are comparable to the Welfare Benefits that
the Company is obligated to provide to the Executive pursuant to Section
6(a)(iv), the Company's obligation to provide such Welfare Benefits shall cease.
The Company's obligations to the Executive under this Agreement, including,
without limitation, any obligation to provide severance benefits, shall not be
subject to set-off or counterclaim in respect of any debts or liabilities of the
Executive to the Company.

                  9. TAX WITHHOLDING; METHOD OF PAYMENT

                  All compensation payable pursuant to this Agreement shall be
subject to reduction by all applicable withholding, social security and other
federal, state and local taxes and deductions for income, employment, excise and
other taxes. Any lump-sum payments provided for in Section 6 hereof shall be
made in a cash payment, net of any required tax withholding, no later than 10
business days following the Executive's date of termination. Any payment
required to be made to the Executive under this Agreement that is not made in a
timely manner shall bear interest at an interest rate equal to 120% of the
monthly compounded applicable federal rate as in effect under Section 1274(d) of
the Code.

                  10. REGISTRATION RIGHTS

                                  As of the Effective Date, the Executive shall
be granted the registration rights set forth in Exhibit A to this Agreement.

                  11. RESTRICTIVE COVENANTS

                  (a) Confidential Information. During the Agreement Term and at
all times thereafter, the Executive agrees that he will not divulge to anyone
(other than the Company or any persons employed or designated by the Company)
any knowledge or information of a confidential or proprietary nature relating to
the business of the Company or any of its subsidiaries or affiliates, including,
without limitation, all trade secrets (unless readily ascertainable from public
or published information or trade sources) and confidential commercial
information, and the Executive further agrees not to disclose, publish or make
use of any such knowledge or information without the consent of the Company.

                  (b) Noncompetition. The Executive acknowledges that (i) the
Company is currently engaged in the business of providing high quality, low-cost
telephone calls over the Internet ("Internet Telephony"), (ii) his work for the
company will give him access to trade secrets of and confidential information
concerning the Company, and (iii) the agreements and covenants contained in this
Agreement are essential to protect the business and goodwill of the Company.
Accordingly, the

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Executive covenants and agrees that during the Restricted Period (defined
below), the Executive shall not, without the prior written consent of the
Company, (1) engage or participate in the business of developing, managing or
operating any Internet Telephony business (a "Competitive Business") on his own
behalf or on behalf of any person or entity, and the Executive shall not acquire
a financial interest in any Competitive Business (except for publicly traded
equity interests that do not exceed five percent (5%) of such class of equity)
or (2) directly or indirectly solicit or encourage any employee of the Company
or any of its affiliates to leave the employment of the Company or any of its
affiliates. For purposes hereof, the "Restricted Period" shall be the Agreement
Term (as may be terminated pursuant to Section 6 hereof) and, except in the
event of a termination described in Section 6(a) hereof, the 12-month period
following any termination of the Executive's employment hereunder.

                  (c) Enforcement. The Executive acknowledges and agrees that
the Company will have no adequate remedy at law, and could be irreparably
harmed, if the Executive breaches or threatens to breach any of the provisions
of Section 11 of this Agreement. The Executive agrees that the Company shall be
entitled to equitable and/or injunctive relief to prevent any breach or
threatened breach of this Section 11, and to specific performance of each of the
terms of this Section in addition to any other legal or equitable remedies that
the Company may have. The Executive further agrees that he shall not, in any
equity proceeding relating to the enforcement of the terms of this Section 11,
raise the defense that the Company has an adequate remedy at law.

                  12. SUCCESSORS AND ASSIGNS

                  (a) This Agreement shall be binding upon and shall inure to
the benefit of the Company, its successors and any person or other entity that
succeeds to all or substantially all of the business, assets or property of the
Company. To the extent not otherwise provided by application of law, the Company
will require any successor (whether direct or indirect, by purchase, merger,
consolidation, transfer or otherwise) to all or substantially all of the
business, assets or property of the Company, to expressly assume and agree to
perform the obligations of the Company under this Agreement in the same manner
and to the same extent that the Company is required to perform hereunder. As
used in this Agreement, the "Company" shall mean the Company as hereinbefore
defined and any successor to its business, assets or property as aforesaid which
executes and delivers an agreement provided for in this Section 12(a) or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law. Except as provided by the foregoing provisions of this Section
12(a), this Agreement shall not be assignable by the Company without the prior
written consent of the Executive. In the event that this Agreement is assigned
to any person or entity as may be permitted hereunder, the Company shall be
secondarily liable in the event that any such person or entity shall fail to
satisfy its obligations under Section 6 or 7 hereof.

                  (b) This Agreement and all rights of the Executive hereunder
shall inure to the benefit of and be enforceable by the Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amounts are due and payable to the

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Executive hereunder, all such amounts, unless otherwise provided herein, shall
be paid to the Executive's designated beneficiary or, if there is no such
designated beneficiary, to the legal representatives of the Executive's estate.
This Agreement is personal in nature and the obligations of the Executive
hereunder are not be assignable to any person.

                  13. ENTIRE AGREEMENT/AMENDMENT

                  This Agreement contains the entire understanding of the
parties with respect to the subject matter hereof and, except as specifically
provided herein, cancels and supersedes any and all other agreements between the
parties with respect to the subject matter hereof. Any amendment or modification
of this Agreement shall not be binding unless in writing and signed by the
parties hereto.

                  14. SEVERABILITY/NO WAIVER

                  (a) In the event that any provision of this Agreement is
determined to be invalid or unenforceable, the remaining terms and conditions of
this Agreement shall be unaffected and shall remain in full force and effect,
and any such determination of invalidity or unenforceability shall not affect
the validity or enforceability of any other provision of this Agreement.

                  (b) The failure of a party to insist upon strict adherence to
any term of this Agreement or any occasion shall not be considered a waiver of
such party's rights or deprive such party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.

                  15. NOTICES

                  All notices which may be necessary or proper for either the
Company or the Executive to give to the other shall be in writing and shall be
delivered by hand or sent by registered or certified mail, return receipt
requested, or by air courier, to the Executive at:



                                    Clifford M. Sobel

                                    40 Dorison Drive

                                    Short Hills, New Jersey 07078



                  with a copy to:


                                    --------------

                                    --------------


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                                    --------------

                                    --------------


                  ; and shall be sent in the manner described above to the
Secretary of the Company at the Company's principal executives offices at:

                                    Net2Phone, Inc.

                                    171 Main Street

                                    Hackensack, New Jersey  07601

                                    Attn:  General Counsel

                  with a copy to:

                                    Kirkland & Ellis

                                    200 East Randolph Drive

                                    Chicago, Illinois 60601

                                    Attn:  Richard W. Porter, Esq.



                  and shall be deemed given when dispatched, provided that any
notice required under Section 5 hereof or notice given pursuant to Section 2
hereof shall be deemed given only when received. Any party may by like notice to
the other party change the address at which he or they are to receive notices
hereunder.

                  16. GOVERNING LAW

                  This Agreement shall be governed by and enforceable in
accordance with the laws of the State of New Jersey, without giving effect to
the principles of conflict of laws thereof.



                  17. ARBITRATION

                  Except for any action brought under Section 11 which may be
brought by the Company directly in any court of competent jurisdiction, any
controversy or claim arising out of, or related to, this Agreement, or the
breach thereof, shall be settled by binding arbitration in the City of Newark,
New Jersey in accordance with the rules then obtaining of the American
Arbitration Association, and the arbitrator's decision shall be binding and
final, and judgment upon the award rendered may be entered in any court having
jurisdiction thereof.



                  18. LEGAL FEES AND EXPENSES

                  The Company shall pay the legal fees and expenses incurred by
the Executive in connection with the negotiation of this Agreement. To provide
the


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Executive with reasonable assurance that the purposes of this Agreement will not
be frustrated by the cost of its enforcement, the Company shall pay and be
solely responsible for any attorneys' fees and expenses and any court or
arbitration costs incurred by the Executive as a result of a claim that the
Company has breached or otherwise failed to perform this Agreement or any
provision hereof regardless of which party, if any, prevails in the contest.

                  19. COUNTERPARTS

                  This Agreement may be signed in counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.

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                  IN WITNESS WHEREOF, the Company and the Executive have
executed this Agreement as of the date first written above.



                                            EXECUTIVE





                                            /s/Clifford M. Sobel
                                            --------------------
                                            Clifford M. Sobel






                                            NET2PHONE, INC.






                                            By: /s/  Howard Balter
                                               -------------------
                                                Name: Howard Balter

                                                Title:Chief Executive Officer


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                                    EXHIBIT A

                               REGISTRATION RIGHTS



                  SECTION  1.1  Piggyback Registrations.

                  (a) Right to Piggyback Registration. Whenever the Company
proposes to register any of its Common Stock (or securities convertible into or
exchangeable or exercisable for Common Stock) under the Securities Act of 1933,
as amended (the "Securities Act") for its own account or the account of any
stockholder of the Company (other than offerings pursuant to employee benefit
plans, or noncash offerings in connection with a proposed acquisition, exchange
offer, recapitalization or similar transaction) (a "Piggyback Registration"),
the Company will give written notice as promptly as practicable to the Executive
and to all other holders of Common Stock having similar registration rights, of
its intention to effect such a registration and shall include in such
registration all Registrable Shares with respect to which the Company has
received written request for inclusion therein and which have not been reduced
pursuant to Section 1.1(b) or 1.1(c) below within 15 days after receipt of the
Company's notice. Capitalized terms used but not defined in this Exhibit A shall
have the meanings ascribed to such terms in Section 1.11.

                  (b) Priority on Primary Registrations. If a Piggyback
Registration is an underwritten primary registration on behalf of the Company,
and the managing underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in such registration
exceeds the number which can be sold in an orderly manner in such offering
within a price range acceptable to the Company, the Company shall include in
such registration (i) first, the securities the Company proposes to sell, (ii)
second, the securities requested to be included in such registration basis held
by any holder exercising piggyback registration rights (other than holders of
Registrable Shares) and (iii) third, the Registrable Shares requested to be
included in such registration, pro rata among the holders of such securities on
the basis of the number of shares requested to be included in such registration
by such holder.



                  (c) Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders of
the Company's securities, and the managing underwriters advise the Company in
writing that in their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in an orderly manner
in such offering within a price range acceptable to the holders of a majority of
the securities who are demanding the registration in question, the Company shall
include in such registration (i) first, the securities requested to be included
therein by the holders requesting such registration, and the securities
requested to be included in such registration held by any holder exercising
piggyback registration rights (other than holders of Registrable Shares), and
(ii) second, the

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Registrable Shares requested to be included in such registration, pro rata among
the holders of such securities on the basis of the number of shares requested to
be included in such registration by such holder.



                  SECTION 1.2  Registration Procedures. If and whenever the
Company is required to effect or cause the registration of any Registrable
Shares under the Securities Act as provided in this Agreement, the Company
shall:

                  (a) notify the Executive of any stop order issued or
threatened by the Securities and Exchange Commission ("SEC") and take all
reasonable actions required to prevent the entry of such stop order or to remove
it if entered;

                  (b) furnish, without charge, to the Executive and each
underwriter, if any, such number of copies of the applicable Registration
Statement, each amendment and supplement thereto (including one signed copy to
the Executive and one signed copy to each managing underwriter and in each case
including all exhibits thereto), and the Prospectus included in such
Registration Statement (including each preliminary prospectus), in conformity
with the requirements of the Securities Act, and such other documents as the
Executive may reasonably request in order to facilitate the disposition of the
Registrable Shares registered thereunder;

                  (c) use commercially reasonable efforts to register or qualify
such Registrable Shares covered by such Registration Statement under such other
securities or blue sky laws of such jurisdictions within the United States of
America as the selling holders, and the managing underwriter, if any, reasonably
request and do any and all other acts and things which may be reasonably
necessary or advisable to enable the selling holders and each underwriter, if
any, to consummate the disposition in such jurisdictions of the Registrable
Shares registered thereunder; provided, however, that the Company shall not be
required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this paragraph (c), (ii)
subject itself to taxation in any such jurisdiction or (iii) consent to general
service of process in any such jurisdiction;

                  (d) as promptly as practicable notify the managing
underwriter, if any, the Executive and the other selling holders, if any, at any
time when a Prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event if, as a result of such event, the
Prospectus included in such Registration Statement contains an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Company shall as promptly as practicable prepare and furnish to the selling
holders a supplement or amendment to such Prospectus so that, as thereafter
delivered, such Prospectus shall not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading;

                                       2

<PAGE>   16
                  (e) use commercially reasonable efforts to cause all such
securities being registered to be listed on each securities exchange, market
system or interdealer quotation system on which similar securities issued by the
Company are then listed, and enter into such customary agreements including a
listing application and indemnification agreement in customary form, and to
provide a transfer agent and registrar for such Registrable Shares covered by
such Registration Statement no later than the effective date of such
Registration Statement;

                  (f) make available for inspection by the Executive or any
holder of securities covered by such Registration Statement, any underwriter
participating in any distribution pursuant to such Registration Statement, and
any attorney, accountant or other agent retained by such persons (collectively,
the "Inspectors"), all financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries (collectively,
"Records"), as shall be reasonably necessary to enable them to exercise their
due diligence responsibilities, and cause the Company's and its subsidiaries'
officers, directors and employees to supply all information and respond to all
inquiries reasonably requested by any such Inspector in connection with such
Registration Statement; and

                  (g) otherwise use commercially reasonable efforts to comply
with all applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering a period of at least 12 months, beginning with the first month after
the effective date of the Registration Statement (as the term "effective date"
is defined in Rule 158(c) under the Securities Act), which earnings statement
shall satisfy the provisions of Section 1(a) of the Securities Act and Rule 158
thereunder.

                  SECTION 1.3  Registration Expenses. The Company shall pay for
all costs and expenses with respect to its compliance with its obligations in
connection with a registration hereunder, including, but not limited to: (i) all
registration and filing fees; (ii) fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications of the Registrable Shares);
(iii) printing expenses; (iv) internal expenses (including without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties); (v) the fees and expenses incurred in connection with the
listing of the Registrable Shares on any national securities exchange, market
system or interdealer quotation system; (vi) the fees and disbursements of
counsel for the Company, and the Company's auditors (including the expenses of
any comfort letters or costs associated with the delivery by the Company's
auditors of a comfort letter or comfort letters); (vii) the fees and
disbursements of one legal counsel for all the selling stockholders
participating in such registration; (viii) the fees and expenses of any
registrar and transfer agent or any depository; (ix) the underwriting fees,
discounts and commissions applicable to any Common Stock sold for the account of
the Company; and (x) the cost of preparing all documentation in connection
therewith.

                  SECTION 1.4  Conversion of Other Securities. If the Executive
holds any options, rights, warrants or other securities that are offered with,
convertible

                                       3

<PAGE>   17
into or exercisable or exchangeable for any Registrable Shares, the Registrable
Shares underlying such options, rights, warrants or other securities shall be
eligible for registration pursuant to Section 1.1.

                  SECTION 1.5  Rule 144. If and for so long as the Company is
subject to the reporting requirements of the Securities Exchange Act of 1934, as
amended, (the "Exchange Act"), the Company shall take such measures and file
such information, documents and reports as shall be required by the SEC as a
condition to the availability of Rule 144 (or any successor provision) under the
Securities Act.

                  SECTION 1.6  Registration Statement Indemnification. (a) The
Company agrees to indemnify and hold harmless the Executive, each Transferee and
each person, if any, who controls any of the foregoing within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act
(collectively, the "Registration Indemnitee") from and against any and all
Losses arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus, or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such Losses arise out
of or are based upon any untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with information relating to a Registration
Indemnitee furnished in writing to the Company by or on behalf of such
Registration Indemnitee expressly for use in the Registration Statement or
Prospectus.

                  (b) Each Registration Indemnitee agrees, severally and not
jointly, to indemnify and hold harmless the Company, its directors, its officers
who sign any Registration Statement, and any person who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, to the same extent as the indemnity from the Company to each
Registration Indemnitee provided in Section 1.6(a), but only with respect to
information relating to such Registration Indemnitee furnishing in writing to
the Company by or on behalf of such Registration Indemnitee expressly for use in
the Registration Statement or Prospectus. If any Action shall be brought against
the Company, any of its directors, any such officer, or any such controlling
person based on any Registration Statement or Prospectus and in respect of which
indemnity may be sought against a Registration Indemnitee pursuant to this
Section 1.6(b), such Registration Indemnitee shall have the rights and duties
given to the Company by Sections 1.6 through 1.9 (except that if the Company
shall have assumed the defense thereof such Registration Indemnitee shall not be
required to do so, but may employ separate counsel therein and participate in
the defense thereof, but the fees and expenses of such counsel shall be at such
Registration Indemnitee's expense), and the Company, its directors, any such
officer, and any such controlling person shall have the rights and duties given
to the Registration Indemnitee by Sections 1.6 through 1.9.

                  SECTION 1.7  Contribution. (a) If the indemnification provided
for in this Exhibit A is unavailable to an indemnified party hereunder with
respect to any Losses referred to herein, then an indemnifying party, in lieu of
indemnifying such

                                       4
<PAGE>   18
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such Losses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, on the one
hand, and the applicable Registration Indemnitee, on the other hand, from the
offering of the securities covered by such Registration Statement and
Prospectus, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company, on the one hand, and the applicable Registration
Indemnitee, on the other hand, in connection with the statements or omissions
that result in such Losses, as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the one hand,
and the applicable Registration Indemnitee, on the other hand, shall be deemed
to be in the same proportion as the total net proceeds from the applicable
securities offering (before deducting expenses) received by the Company bear to
the total net proceeds from such offering (before deducting expenses) received
by such Registration Indemnitee. The relative fault of the Company, on the one
hand, and the applicable Registration Indemnitee, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, on the one hand,
or by such Registration Indemnitee, on the other hand, and the parties relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

                  (b) The Company and each Registration Indemnitee agree that it
would not be just and equitable if contribution pursuant to this Section 1.7
were determined by pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in Section
1.7(a). The amount paid or payable by an indemnified party as a result of the
Losses referred to in Section 1.7(a) shall be deemed to include, subject to the
limitations set forth herein, any legal or other expenses reasonably incurred by
such party in connection with investigating any claim or defending any such
Action. Notwithstanding the provisions of this Section 1.7(b), a Registration
Indemnitee shall not be required to contribute any amount in excess of the
amount by which the proceeds to such Registration Indemnitee exceed the amount
of any damages that such Registration Indemnitee has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation, within the meaning
of Section 1(f) of the Securities Act, shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.

                  SECTION 1.8  Procedure. If any Action shall be brought against
a Registration Indemnitee or any other person entitled to indemnification
(collectively with the Registration Indemnitee, the "Indemnitee") in respect of
which indemnity may be sought against the Company, such Indemnitee shall
promptly notify the Company, and the Company shall assume the defense thereof,
including the employment of counsel and payment of all fees and expenses. Such
Indemnitee shall have the right to employ separate counsel in any such action,
suit or proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such person unless (i) the
Company has agreed in writing to pay such fees and expenses, (ii) the

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<PAGE>   19
Company has failed to assume the defense and employ counsel, or (iii) the named
parties to an Action (including the impleaded parties) include both an
Indemnitee and the Company and such Indemnitee shall have been advised by its
counsel that representation of such indemnified party and the Company by the
same counsel would be inappropriate under applicable standards of professional
conduct (whether or not such representation by the same counsel has been
proposed) due to actual or potential differing interests between them (in which
case the Company shall not have the right to assume the defense of such Action
on behalf of such Indemnitee). The Company shall not be liable for any
settlement of any such Action affected without its written consent, which shall
not be unreasonably withheld or delayed, but if settled with such written
consent, or if there be a final judgment for the plaintiff in any such Action,
the Company agrees to indemnify and hold harmless each Indemnitee, to the extent
provided herein from and against any Losses by reason of such settlement or
judgment.

                  SECTION 1.9  Other Matters. (a) No indemnifying party shall
without the prior written consent of the indemnified party effect any settlement
of any pending or threatened Action in respect of which any indemnified party is
or could have been a party and indemnity could have been sought hereunder by
such indemnified party unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such Action, and does not include an admission of fault or culpability
on the part of any Registration Indemnitee.

                  (b) Any Losses for which an indemnified party is entitled to
indemnification or contribution hereunder shall be paid by the indemnifying
party to the indemnified party as such Losses are incurred. The indemnity and
contribution agreements contained in this Exhibit A shall remain operative and
in full force and effect regardless of (i) any investigation made by or on
behalf of any Indemnitee, the Company, its directors or officers, or any person
controlling such Indemnitee and (ii) any termination of this Agreement.

                  SECTION 1.10  Transfer of Registration Rights. The Executive
may transfer all or any portion of his rights under this Exhibit A to any
transferee (each, a "Transferee") of Registrable Shares. Any transfer of
registration rights pursuant to this Section 1.10 shall be effective upon
receipt by the Company of written notice from the Executive stating the name and
address of the Transferee and identifying the amount of Registrable Shares with
respect to which the rights under this Section 1 are being transferred and the
nature of the rights so transferred. In connection with any such transfer, the
term "the Executive" as used in this Agreement shall, where appropriate to
assign each right and obligation to such Transferee, be deemed to refer to the
transferee holder of such Registrable Shares.

                  SECTION  1.11.  Definitions. As used in this Exhibit A:

                  "Action" means any claim, action, cause of action, suit,
proceeding or investigation, whether civil, criminal, administrative,
investigative or other.

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<PAGE>   20
                  "Common Stock" means the common stock, par value $0.01 per
share, of the Company.

                  "Losses" means costs and expenses (including without
limitation attorneys' fees, interest, penalties and costs of investigation or
preparation for defense), judgments, fines, losses, claims, damages,
liabilities, demands, assessments and amounts paid in settlement.

                  "Prospectus" means the prospectus or prospectuses included in
any Registration Statement, as amended or supplemented by any prospectus
supplement and by all other amendments and supplements to such prospectus,
including post-effective amendments and all material incorporated by reference
in such prospectus or prospectuses.

                  "Registrable Shares" means any shares of Common Stock held by
Clifford M. Sobel or Howard Balter or by any Transferee thereof.

                  "Registration Statement" means any registration statement of
the Company filed with the SEC under the Securities Act, including in each such
case the Prospectus relating thereto, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all materials incorporated by reference in such Registration Statement and
Prospectus.

                                       7