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                                                                   Exhibit 10.12

                                AMENDMENT TO THE
                              AMENDED AND RESTATED
                                ECONOPHONE, INC.
                          1996 FLEXIBLE INCENTIVE PLAN

         1. The first sentence of Section 1.2 of the Amended and Restated
Econophone, Inc. 1996 Flexible Incentive Plan (the "Plan") is amended to read as
follows:

         The purpose of the Plan is to encourage and enable key employees and
         consultants (subject to such requirements as may be prescribed by the
         Committee) of the Corporation and its subsidiaries to acquire a
         proprietary interest in the Corporation through the ownership of the
         Corporation's voting common stock ("Voting Stock") and non-voting
         common stock ("Non-voting Stock" and together with Voting Stock,
         "Common Stock"), and other rights with respect to the Common Stock.

         2. The first sentence of Section 2.2 of the Plan is amended to read as
follows:

         The maximum aggregate number of shares Common Stock available for award
         under the Plan is 4,600,000, subject to adjustment pursuant to Article
         12 hereof, of which 4,350,000 may be in the form of Voting Stock and
         250,000 may be in the form of Non-voting Stock.

         3. The first sentence of Section 3.2 of the Plan is amended to read as
follows:

         Subject to the express provisions of the Plan, the Committee at any
         time or prior to the designation of the Committee, the Board, shall
         have the power and authority (i) to grant Options and to determine the
         purchase price of the Common Stock covered by each Option, the term of
         each Option, the number of shares of Common Stock to be covered by each
         Option, the time or times at which each Option shall become exercisable
         and the duration of the exercise period applicable to each Option; (ii)
         to designate Options as Incentive Stock Options or Non-qualified Stock
         Options and to determine which Options, if any, shall be accompanied by
         Tandem Stock Appreciation Rights; (iii) to grant Tandem Stock
         Appreciation Rights and Nontandem Stock Appreciation Rights and to
         determine the terms and conditions of such rights; (iv) to grant or
         cause to be sold Restricted Shares and to determine the purchase price,
         if any, of such shares and the vesting period and other conditions and
         restrictions applicable to such shares; (v) to grant or cause to be
         sold Unrestricted Shares and to determine the purchase price, if any,
         of such shares; (vi) to determine the amount of, and to make, Tax
         Offset Payments; (vii) to determine the directors, the employees and
         the consultants to whom, and the time or times at which, Options, Stock
         Appreciation Rights, Restricted Shares, Unrestricted Shares and Tax
         Offset Payments shall be granted or made; (viii) to designate awards in
         the form of shares of Voting Stock or Non-voting Stock, provided,
         however, that, to the extent the form is not designated in the written
         agreement relating to such award, the award shall be in the form of
         Voting Stock; and (ix) to take all other actions contemplated to be
         taken by the 


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         Board or the Committee under the Plan, including, but not limited to,
         authorizing the amendment of any written agreement relating to any
         award made thereunder.

         4. The first sentence of Section 9.4 of the Plan is amended to read as
follows:

         To the extent Restricted Shares are in the form of Voting Stock,
         holders of such Restricted Shares shall have the right to receive any
         cash dividends with respect to such shares and the right to vote such
         shares and holders of Restricted Shares in the form of Non-voting Stock
         shall not have any rights to receive cash dividends or to vote such
         shares.

         5. The first sentence of Section 9.5 of the Plan is amended to read as
follows:

         Except as expressly provided in the written agreement relating to
         Restricted Shares or as otherwise expressly determined by the Board in
         its sole discretion, any Restricted Shares held by a director, employee
         or consultant pursuant to the Plan shall be forfeited or subject to
         repurchase by the Corporation at a price equal to the original price
         paid therefor, if any, by the director, employee or consultant upon the
         termination of his or her employment or consulting agreement with the
         Corporation or its subsidiaries, as the case may be, prior to the
         expiration or termination of the Restricted Period and the satisfaction
         of any other conditions applicable to such Restricted Shares.

         6. Article 12 of the Plan is amended to read as follows:

         In the event of any change in the Common Stock by reason of any stock
         dividend, stock split, recapitalization, merger, consolidation,
         combination or exchange of shares, separation, spin-off,
         reorganization, liquidation or the like, the number and kind of shares
         represented by any awards and the purchase price per share thereof, if
         any, shall be appropriately adjusted consistent with such change in
         such manner as the Board may deem equitable to prevent dilution or
         enlargement of the rights granted under any awards.

         7. A new Section 15.9 is added to the Plan to read as follows:

         15.9 PUBLIC OFFERING. Effective as of the consummation of an initial
         public offering of the Common Stock, subject to the terms of the
         written agreement relating to Restricted Shares or as otherwise
         expressly determined by the Board in its sole discretion, any awards
         made or granted in the form of shares of Non-voting Stock shall be
         converted into awards for Voting Stock having the same terms and
         conditions as the award for Non-voting Stock and, to the extent awards
         for Non-voting Stock have been exercised prior to the consummation of
         the initial public offering, the shares of Non-voting Stock shall be
         exchangeable for an equivalent number of shares of Voting Stock.


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