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                                                                  EXHIBIT 10.12
 
                             EMPLOYMENT AGREEMENT
 
  EMPLOYMENT AGREEMENT (this "Agreement"), dated as of October 28, 1996, by
and between IDT Corporation, a Delaware corporation (the "Company"), and James
Courter (the "Executive").
 
  WHEREAS, in recognition of the Executive's experience and abilities, the
Company desires to assure itself of the employment of the Executive in
accordance with the terms and conditions provided herein; and
 
  WHEREAS, the Executive wishes to perform services for the Company in
accordance with the terms and conditions provided herein.
 
  NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
 
  1. Employment. The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to perform, services for the Company, on the terms and
conditions set forth herein.
 
  2. Term. This Agreement is for the three year period (the "Term") commencing
on October 1, 1996, and terminating on the third anniversary of such date, or
upon the Executive's earlier death, disability or other termination of
employment pursuant to Section 7 hereof; provided, however, that commencing on
October 1, 1999 and each anniversary thereafter the term shall automatically
be extended for one additional year beyond its otherwise scheduled expiration
unless, not later than ninety (90) days prior to any such anniversary, either
party hereto shall have notified the other party hereto in writing that such
extension shall not take effect.
 
  3. Position. During the Term, the Executive shall serve as the President of
the Company.
 
  4. Duties and Reporting Relationship. During the Term, the Executive shall,
on a full time basis, use his skills and render services to the best of his
abilities in supervising and conducting the operations of the Company. The
Executive shall report directly to the Chairman and board of Directors of the
Company.
 
  5. Place of Performance. The Executive shall perform his duties and conduct
his business at the offices of the Company located in Hackensack, New Jersey,
except for required travel on the Company's business.
 
  6. Compensation and Related Matters.
 
    (a) Annual Base Salary. The Company shall pay to the executive an annual
  base salary (the "Base Salary") at a rate not less than $200,000, such
  salary to be paid in conformity with the Company's payroll policies
  relating to its senior executive officers. The Base Salary may, from time
  to time, be increased, however, if the Executive's Base Salary is
  increased, it shall not thereafter be decreased during the Term.
 
    (b) Employee Benefit Plans. During the Term, the Executive shall be
  entitled to participate in those incentive plans, programs, and
  arrangements which are available to other senior executives officers of the
  Company (the "Benefits Plans"). The Executive shall be provided benefits
  under the Benefit Plans substantially equivalent, in the aggregate; to the
  benefits provided to other senior executive officers of the Company and on
  substantially similar terms and conditions.
 
    (c) Pension and Welfare Benefits. During the Term, the Executive shall be
  eligible to participate in the pension and retirement plans (the "Pension
  Plains") provided to other senior executive officers of the Company, and
  participate fully in all health benefits, insurance programs and other
  similar executive welfare benefit arrangements available to other senior
  executive officer of the Company and shall be provided benefits under such
  plans and arrangements substantially equivalent, in the aggregate, to the
  benefits provided to other senior executive officers of the Company and on
  substantially similar terms and conditions. Notwithstanding the foregoing,
  during the Term, the Company shall provide the Executive with life
  insurance and disability insurance at a benefit level no less favorable to
  the Executive than the benefit level provided to him as of the date of this
  Agreement.
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    (d) Fringe Benefits and Perquisites. During the Term, the Company shall
  provide to the Executive all of the fringe benefits and perquisites that
  are provided to other senior executive officers of the Company, and the
  Executive shall be entitled to receive any other fringe benefits or
  perquisites that become available to other senior executive officers of the
  Company subsequent to the date hereof.
 
    (e) Stock Option Grant. Executive shall receive on October 29, 1996,
  options to purchase One Hundred Thousand (100,000) shares of IDT common
  stock at the IPO price of ten dollars ($10) per share. Such stock options
  shall vest as follows: (i) options to purchase twenty-five thousand
  (25,000) shares shall vest on January 1, 1997; and (ii) the balance of
  options to purchase seventy-five thousand (75,000) shares shall vest on a
  prorated monthly basis over the nine month period ending on October 1,
  1997. On or about October 1, 1997 and again on or about October 1, 1998,
  the Executive shall receive additional options to purchase options to
  purchase One Hundred Thousand (100,000 ) shares of IDT common stock at a
  price estimated to be two dollars ($2) below the market value on the
  respective grant dates, vesting in equal quarters throughout the one year
  anniversary from each respective grant date.
 
    (f) Business Expenses. The Executive will be reimbursed for all ordinary
  and necessary business expenses incurred by him in connection with his
  employment (including without limitation, expenses for travel and
  entertainment incurred in conducting or promoting business for the Company)
  upon submission by the Executive of receipts and other documentation in
  accordance with the company's normal reimbursement procedures.
 
  7. Termination. The Executive's employment hereunder may be terminated
without breach of this Agreement only under the following circumstances:
 
    (a) Death. The Executive's employment hereunder shall terminate upon his
  death.
 
    (b) Disability. If, as result of the Executive's incapacity due to
  physical or mental illness, the Executive shall have been absent form his
  duties hereunder fro the entire period of six consecutive months, and
  within thirty (30) days after written Notice of Termination (as defined in
  paragraph (e) below) is given, shall not have returned to the performance
  of his duties hereunder, the Company may terminate the Executive's
  employment hereunder for "Disability."
 
    (c) Cause. The Company may terminate the Executive's employment hereunder
  for "Cause". For purposes of this Agreement, the Company shall have "Cause"
  to terminate the Executive's employment hereunder (i) upon the Executive's
  conviction for the commission of an act or acts constituting a felony under
  the laws of the United States or any state thereof, or (ii) upon the
  Executive's willful and continued failure to substantially perform his
  duties hereunder (other than any such failure resulting form the
  Executive's incapacity due to physical or mental illness), after written
  has been delivered to the Executive by the Company, which notice
  specifically identifies the manner in which the Executive has not
  substantially performed his duties, and the Executive's failure to
  substantially perform his duties is not cured within ten (10) business days
  after notice of such failure has been given to the Executive. For purposes
  of this Section 7 (c), no act, or failure to act, on the Executive's part
  shall be deemed "willful" unless done, or omitted to be done, by the
  Executive not in good faith and without reasonable belief that the
  Executive's act, or failure to act, was in the best interest of the
  Company.
 
    (d) Termination by the Executive. The Executive may terminate his
  employment hereunder for "Good Reason." "Good Reason" for termination by
  the Executive of the Executive's employment shall mean the occurrence
  (without the Executive's express written consent) of any one of the
  following acts by the Company, or failures by the Company to act:
 
      (i) a material breach of the Agreement by the Company;
 
      (ii) the assignment to the Executive of any duties inconsistent with
    the Executive's status as a senior executive officer of the Company or
    a substantial adverse alteration in the nature or status of the
    Executive's responsibilities; or
 
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      (iii) any purported termination of the Executive's employment which
    is not effected pursuant to a Notice of Termination satisfying the
    requirement of paragraph (e) below; for purposes of this Agreement, no
    such purported termination shall be effective.
 
  The Executive's right to terminate the Executive's employment for Good
Reason shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to any act or failure to act
constituting Good Reason hereunder.
 
    (e) Notice of Termination. Any termination of the Executive's employment
  by the Company or by the Executive (other than termination under Section 7
  (a) hereof) shall be communicated by written Notice of Termination to the
  other party hereto in accordance with Section 12 hereof. For purposes of
  this Agreement, a "Notice of Termination" shall mean a notice that shall
  indicate the specific termination provision in this Agreement relied upon
  and shall set forth in reasonable detail the facts and circumstances
  claimed to provide a basis for termination of the Executive's employment
  under the provision so indicated. Further, a Notice of Termination for
  Cause is required to include a copy of a resolution duly adopted by the
  affirmative vote of not less than a majority of the entire membership of
  the Board at a meeting of the Board (after reasonable notice to the
  Executive and an opportunity for the Executive, together with the
  Executive's counsel, to be heard before the Board) finding that, in the
  good faith opinion of the Board, the Executive was guilty of conduct set
  forth in the definition of Cause herein, and specifying the particulars
  thereof.
 
    (f) Date of Termination. "Date of Termination" shall mean (i) if the
  Executive's employment is terminated by his death, the date of his death,
  (ii) if the Executive's employment is terminated pursuant to paragraph (b)
  above, thirty (30) days after Notice of Termination is given (provided that
  the Executive shall not have returned to the performance of his duties on a
  full-time basis during such thirty (30) day period), and (iii) if the
  Executive's employment is terminated pursuant to paragraph (c) or (d)
  above, the date specified in the Notice of Termination; provided, however,
  that if within thirty (30) days after any Notice of Termination is given
  the party receiving such Notice of Termination notifies the other party
  that a dispute exists concerning the termination, the Date of Termination
  shall be the date on which the dispute is finally determined. If within
  fifteen (15) days after any Notice of Termination is given, or if later,
  prior to the Date of Termination (as determined without regard to the
  Section 7 (f)), the party receiving such Notice of Termination notifies the
  other party that a dispute exists concerning the termination, the Date of
  Termination shall be the date on which the dispute is finally resolved,
  either by mutual written agreement of the parties or by a final judgment,
  order or decree of a court of competent jurisdiction (which is not
  appealable or with respect to which the time for appeal therefrom has
  expired and no appeal has been perfected); provided further that the Date
  of Termination shall be extended by a notice of dispute only if such notice
  is given in good faith and the party giving such notice pursues the
  resolution of such dispute with reasonable diligence.
 
    (g) Compensation During Dispute. If a purported termination occurs during
  the term of this Agreement, and such termination is disputed in accordance
  with Section 7 (f) hereof, the Company shall continue to pay the Executive
  the full compensation in effect when the notice giving rise to the dispute
  was given (including, but not limited to, Base Salary) and continue the
  Executive as a participant in all compensation, benefit and insurance plans
  in which the Executive was participating when the notice giving rise to the
  dispute was given, until the dispute is finally resolved. Amounts paid
  under this Section 7(g) are in addition to all other amounts due under this
  Agreement and shall not be offset against or reduce any other amounts due
  under this Agreement.
 
  8. Compensation Upon Termination or During Disability.
 
    (a) Disability or Death. During any period that the Executive fails to
  perform his duties hereunder as a result of incapacity due to physical or
  mental illness, the Executive shall continue to receive his full Base
  Salary, as well as other applicable employee benefits provided to other
  senior executives of the Company, until his employment is terminated
  pursuant to Section 7 (b) hereof. In the event the Executive's
 
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  employment is terminated pursuant to Section 7 (a) or 7 (b) hereof, then as
  soon as practicable thereafter, the Company shall pay the Executive or the
  Executive's Beneficiary (as defined in Section 11 (b) hereof), as the case
  may be, (i) all unpaid amounts, if any, to which the Executive was entitled
  as of the Date of Termination under Section 6 (a) hereof and (ii) all
  unpaid amounts to which the Executive was then entitled under the Benefit
  Plans, the Pension Plans and any other unpaid employee benefits,
  perquisites or other reimbursements (the amounts set forth in clauses (i)
  and (ii) above being hereinafter referred to as the "Accrued Obligation").
 
    (b) Termination for Cause; Voluntary Termination Without Good Reason. If
  the Executive's employment is terminated by the Company for Cause or by the
  Executive other than for Good Reason, then the Company shall pay all
  Accrued Obligations to the Executive and the Company shall have no further
  obligations to the Executive under this Agreement.
 
    (c) Termination Without Cause; Termination for Good Reason. If (i) the
  Company shall terminate the Executive's employment, other than for
  Disability or for Cause, or (ii) the Executive shall terminate his
  employment for Good Reason, then:
 
      (1) the Company shall pay to the Executive, within ten (10) days
    after the Date of Termination, the Accrued Obligations; and
 
      (2) the Company shall pay to the Executive, within ten (10) days
    after the Date of Termination, a lump sum amount in cash equal to two
    (2) multiplied by the Executive's Base Salary as in effect immediately
    prior to the circumstances giving rise to the Notice of Termination.
 
  9. Non-Disclosure. The parties hereto agree, recognize and acknowledge that
during the Term the Executive shall obtain knowledge of confidential
information regarding the business and affairs of the Company. It is therefore
agreed that the Executive will respect and protect the confidentiality of all
confidential information pertaining to the Company, and will not (i) without
the prior written consent of the Company, (ii) unless required in the course
of the Executive's employment hereunder, or (iii) unless required by
applicable law, rules, regulations or court, governmental or regulatory
authority order or decree, disclose in any fashion such confidential
information to any person (other than a person who is a director of, or who is
employed by, the Company or any subsidiary or who is engaged to render
services to the Company or any subsidiary) at any time during the Term.
 
  10. Covenant Not to Compete. (a) Executive hereby agrees that for a period
of one (1) year following the termination of this Agreement (other than a
termination of the Executive's employment (i) by the Executive for Good Reason
or (ii) by the Company other than for Cause or Disability) (the "Restricted
Period") the Executive shall not, directly or indirectly, whether acting
individually or through any person, firm, corporation, business or any other
entity:
 
      (i) engage in, or have any interest in any person, firm, corporation,
    business or other entity (as an officer, director, employee, agent,
    stockholder, or other security holder, creditor, consultant or
    otherwise) that engages in any business activity where any aspect of
    the business of the Company is conducted, or planned to be conducted,
    at any time during the Restricted Period, which business activity is
    the same as, similar to or competitive with the Company as the same may
    be conducted from time to time;
 
      (ii) interfere with any contractual relationship that may exist from
    time to time of the business of the Company, including, but not limited
    to, any contractual relationship with any director, officer, employee,
    or sales agent, or supplier of the Company; or
 
      (iii) solicit, induce or influence, or seek to induce or influence,
    any person who currently is, or from time to time may be, engaged or
    employed by the Company (as an officer, director, employee, agent, or
    independent contractor) to terminate his or her employment or
    engagement by the Company.
 
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    (b) Notwithstanding anything to the contrary contained herein, Executive,
  directly or indirectly, may own publicly traded stock constituting not more
  than five percent (5%) of the outstanding shares of such class of stock of
  any corporation if, and as long as, Executive is not an officer, director,
  employee or agent of, or consultant or advisor to, or has any other
  relationship or agreement with such corporation.
 
    (c) Executive acknowledges that the non-competition provisions contained
  in this Agreement are reasonable and necessary, in view of the nature of
  the Company and his knowledge thereof, in order to protect the legitimate
  interests of the Company.
 
  11. Successors; Binding Agreement. (a) The Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance reasonably satisfactory to the
Executive, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Executive to
compensation from the Company in the same amount and on the same terms as he
would be entitled to hereunder if he terminated his employment for Good
Reason, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid that executes and delivers the agreement provided for in this
Section 11 or that otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
 
    (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 should still be payable to him hereunder if he had continued to
  live, all such amounts, unless otherwise provided herein, shall be paid in
  accordance with the terms of this Agreement to the Executive's devisee,
  legatee, or other designee or, if there be no such designee, to the
  Executive's estate (any of which is referred to herein as a "Beneficiary").
 
  12. Notice. For purposes of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or (unless otherwise specified)
mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
 
    If to the Company: IDT Corporation
                     294 State Street
                     Hackensack, NJ 07601
                     Attn: General Counsel
 
    If to the Executive: James Courter
                     1001 Route 517
                     Hacketstown, NJ 07840
 
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
 
  13. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and such officer of the Company as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or prior or subsequent time. No agreements or representations, oral
or otherwise, express or implied, with
 
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respect to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws
of the state of Delaware without regard to its conflicts of law principles.
 
  14. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.
 
  15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
 
  16. Entire Agreement. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and
supersedes any and all other prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto, and
in prior agreement of the parties hereto in respect of the subject matter
contained herein is hereby terminated and cancelled.
 
  IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
 
                                          IDT CORPORATION
 
                                          By: _________________________________
                                          Stephen Brown
                                          Chief Financial Officer
 
                                          Executive: __________________________
                                          James Courter
 
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