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Code of Conduct - Net2Phone Inc.

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                                 Net2Phone, Inc.

                                 Code of Conduct



April 15, 2003

Letter from Stephen M. Greenberg
Chief Executive Officer

Dear Fellow Employees:

         Net2Phone is adopting this Code of Conduct to further demonstrate our
commitment to conducting our worldwide operations consistent with the highest
business, legal and ethical considerations. The ideals set forth in this Code of
Conduct are designed to place a premium on dealing fairly with our employees,
customers, shareholders, government regulators and the public. We want to
maintain our reputation as a responsible corporate citizen by continuing to
provide exceptional products and services to our customers, treating our
employees with dignity and respect, clearly and accurately reporting to our
shareholders and being responsible to the communities in which we live and work.

         Personal responsibility is at the core of these principals and our
corporate culture. Each employee, officer, director, consultant, or other
representative of Net2Phone is responsible for our good name. Because our
corporate integrity is so important to us, we drafted this Code of Conduct to
make clear the ethical standards we are all expected to follow, at all times, in
performing our jobs.

         We realize that no Code of Conduct can ever anticipate every ethical
question we may face in business. If the issue is covered, we will be expected
to follow the Code of Conduct. If there is any doubt about the interpretation of
an issue, the Code identifies channels and procedures that we have established
to help answer your questions.

         Violation of the Code of Conduct will be treated as a serious matter,
and, in certain circumstances, may subject you or Net2Phone to civil liability
or even criminal penalties. You can see why it is important that you read this
Code of Conduct carefully and ask questions about anything you do not
understand. Each of us must accept personal responsibility for preserving and
enhancing Net2Phone's excellent reputation for integrity. We should all take
pride in this reputation, and in always doing the right thing. On a personal
note, this topic is critically important to me. My view, simply stated, is that
I expect us to have a spotless record in this area.

Stephen M. Greenberg
Chief Executive Officer


                                Table of Contents

Basic Principles
Accuracy of Records
Conflicts of Interests
Compliance with Laws
Business Gifts
Conducting International Business
Government Investigations
Public Statements
Confidential Information
Antitrust Compliance
Political Activities
Duty to Come Forward


Basic Principles

         Net2Phone created this Code of Conduct to govern the business conduct
of every director, officer, employee, consultant, agent or other representative
of Net2Phone. By adopting this Code of Conduct, Net2Phone's Board of Directors
and management team intend to demonstrate to Net2Phone's investors, customers,
suppliers and employees that we have carefully considered the requirements of
ethical dealing and have put a system in place to ensure that we become aware of
and take prompt action against any questionable behavior. Furthermore, by
adopting this Code of Conduct, we want to assure our employees that reporting
questionable behavior in good faith is protected and encouraged, and we expect
that implementation of this Code will foster an atmosphere of self-awareness and
prudent conduct.

         Before you review the specific aspects of the Code of Conduct, you
should have a sense of the basic principles underlying this Code. These
principles are:

         1) We will always be truthful.
         2) We will comply with all laws that apply to us.
         3) We will be a good corporate citizen in every country where we do
         4) We will promote and sustain a work environment that fosters mutual
            respect, openness and individual integrity.
         5) We will be fair in all aspects of our business.


Accuracy of Records

         All Net2Phone business transactions worldwide must be properly
authorized and be completely and accurately recorded on the Company's books and
records in accordance with generally accepted accounting principles and
established Net2Phone financial policies. You are expected, especially if you
have financial reporting responsibilities, to generate and provide information
that is accurate, complete, objective, relevant, timely and understandable to
ensure full, fair, accurate, timely and understandable disclosure in reports and
documents that Net2Phone files with, or submits to, the Securities and Exchange
Commission and its other public communications. Accordingly, at Net2Phone, we do
not engage in inaccurate, false or misleading record keeping. If you are ever
tempted or asked to make a representation that is other than fully accurate, do
not do it. This applies in all aspects of our business, even if you believe the
inaccuracy would be harmless. No secret or unrecorded funds or other assets will
be established for any purpose.


Conflict of Interests and Corporate Opportunities

         You are expected to make or participate in business decisions and
actions in the course of your employment or other representation of Net2Phone
based on the best interests of Net2Phone as a whole, and not based on personal
relationships or benefits. Any situation in which an individual receives
improper benefits as a result of his or her position with Net2Phone, or has
other duties, responsibilities or obligations that run counter to his or her
duty to Net2Phone, creates a conflict of interests. You are expected to apply
sound judgment to avoid conflicts of interests that could negatively affect
Net2Phone and its business.

         Some examples of potential conflicts of interest include:

         (1)  direct or indirect ownership interest in suppliers, customers or
         (2)  accepting gifts from suppliers or customers seeking to do business
              with Net2Phone;
         (3)  working independently as a consultant to a supplier or customer;
         (4)  contracting with a company owned or managed by a close friend or
              family member; and
         (5)  engaging in outside jobs or other business activities involving a
              company which is competing with, selling to, or buying from

         If you are considering under-taking an activity that may create a
conflict of interests, or even the appearance of a conflict of interests, you
must seek approval of the activity in advance from the Legal Department.

         In addition, you may not, without the prior approval of the Legal
Department, (1) take for yourself personally any opportunities that are
discovered through the use of Net2Phone property, information or position; or
(2) use corporate property, information or position for personal gain. You owe a
duty to Net2Phone to advance its legitimate interests when the opportunity to do
so arises.


Compliance with Laws

         Every employee, officer and director must comply with the laws and
regulatory requirements applicable to Net2Phone. These include the laws of the
United States and every other jurisdiction where we do business. Violations by
even one employee may cause great harm to Net2Phone's reputation, and our
ability to conduct operations, and may subject you and/or Net2Phone to heavy
penalties, fines and even jail terms.

         We expect you to be familiar with the basic legal requirements that
apply to your duties. For example, sales and marketing managers are expected to
know basic antitrust principles, such as the prohibition against price fixing in
a market. Human resources employees should be familiar with general employment
and equal employment opportunity laws. You can familiarize yourself with the
laws and regulations that apply to your work by requesting additional training,
reviewing company policies, attending seminars, or meeting with and asking
questions of your supervisors or the Net2Phone Legal Department.

         Perceived pressures from supervisors or demands due to business
conditions are not excuses for violating the law. When you have questions or
concerns about the legality of an action, you are responsible for checking with
your supervisor and, if necessary, the Legal Department.


Business Gifts

         In certain situations, the exchange of limited, non-cash business gifts
may be appropriate. Net2Phone does not seek, however, to influence the decisions
of our customers or suppliers by offering gifts.

         Do not accept a gift related to Net2Phone business of more than token
value. Even if the gift is less than token value, you should only accept it if
it is consistent with common business practice. Generally, we discourage the
acceptance of any business gift. If you question whether a gift is of token
value, report it to your supervisor immediately.

         Certain employees, generally in the sales and marketing areas, may make
business gifts of regular Net2Phone products or promotional items if their
respective supervisors authorize them to do so. Generally, these are gifts that
bear a Net2Phone logo or other identification suitable for the promotion of the

         With respect to meals and entertainment, you may offer or receive
infrequent, reasonable and appropriate meals or simple entertainment, such as
tickets to a sporting event (not involving extensive travel or overnight
lodging), provided that business is discussed during the meal or event. The
guideline for reasonable and appropriate is normal industry practice in your
locality, and consistent with local law.

         The U.S. government, and many foreign governments, have strict laws
regarding offering business gifts to government employees. These rules are
complex, and may change from country to country. Therefore, all gifts, meals, or
other services, even if clearly small in significance or expense, to government
employees, including members of the U.S. Congress and their staffs, should be
approved by the Legal Department before being offered. Company employees,
consultants and other representatives should carefully review the Conducting
International Business section of this Code of Conduct for further guidance in
this area.


Conducting International Business

         Net2Phone maintains offices and conducts operations around the world.
Many of the countries where we conduct business have laws and regulations that
are significantly different from those of the U.S. We are responsible for
knowing and complying with these laws. We must also take care to understand and
respect the cultures and customs of the people that we work with in these

         Our employees that work in the international arena should be aware of
the U.S. Foreign Corrupt Practices Act. The Act prohibits giving anything of
value to officials of foreign governments in order to obtain or retain business.
Net2Phone employees, agents, consultants or other representatives are not
permitted to engage in bribery, kickbacks, payoffs or other corrupt business
practices. Any questions with respect to the Foreign Corrupt Practices Act
should be addressed to the Legal Department.

         It is Net2Phone's policy to fully comply with all applicable U.S.
export, customs and trade control and regulations, licensing requirements and
other relevant U.S. and international laws. The Net2Phone Legal Department is
available to assist you as the need arises to facilitate compliance with these


Government Investigations

         Net2Phone's policy is to cooperate with any appropriate government
investigation. If you learn of an inquiry from a government agency, notify the
Legal Department immediately. You should keep a record of and report any contact
you have with an investigator, whether by telephone, mail, electronic mail or in

         In the event of an investigation, please follow these guidelines:

         (1)  Never destroy documents or e-mails or other electronic files in
              anticipation of a request for those documents from the agency or
              Net2Phone investigators.
         (2)  Never alter any historical Net2Phone document or file.
         (3)  Never make any untrue or misleading statement to a government or
              company investigator.
         (4)  If a government investigator questions you regarding your
              relationship with Net2Phone, you have a right to consult with
              Net2Phone's legal department before speaking with the
              investigator, or you may wish to obtain your own legal counsel.


Public Statements

         Employees should refrain from making public statements regarding issues
or matters relating to the company unless they are expressly authorized to do
so. If a member of the media contacts you about an issue related to Net2Phone,
please refer the person to Net2Phone's Investor Relations Department.

         Officers and directors of Net2Phone should also be aware of additional
SEC requirements relating to the restrictions on disclosures by corporate
insiders of material non-public information. Please review Net2Phone's
Information Disclosure Policy for further information.


Confidential Information

         Net2Phone considers certain types of information about its products,
processes and employees to be confidential, the disclosure of which could
significantly harm Net2Phone's interests. Unauthorized disclosure, use or theft
of Net2Phone's confidential information will be subject to disciplinary and
potential legal action. Each employee is responsible for protecting the
confidentiality of Net2Phone's records and information. Access to file rooms
must be controlled at all times. Please be sure that while your desk is
unattended it is clear of business-related paperwork and all customer-related
and other potentially sensitive documents are locked in desks or file cabinets
while not in use. Refrain from discussing matters involving Net2Phone and its
customers and business plans except as dictated by business needs.

         Employees, consultants and certain representatives and agents of
Net2Phone are required to enter into Non-Disclosure Agreements with us, and
follow the confidentiality provisions of the Net2Phone Employee Handbook. In
addition to the above general restrictions on disclosing information, if you
have signed a Non-Disclosure Agreement, you are obligated by the confidentiality
provisions of that agreement. You should carefully review the terms of such
agreement to make sure you are in compliance at all times.

         Employees, consultants and certain representatives and agents of
Net2Phone may receive confidential information from our customers, vendors and
other third parties. You should respect and protect the confidentiality of this
information in addition to protecting Net2Phone information. Third party
information may be subject to an NDA we have entered into with the third party.
This information should not be used or copied except as permitted by the third
party, and this permission is usually in the form of a written agreement.
Unsolicited third party information should be refused or, if inadvertently
received, returned unopened to the third party or transferred to the Legal
Department for appropriate disposition.

         Directors, officers, employees, consultants or other representatives of
Net2Phone may have access to information that is unavailable to the public. This
information may be considered "inside information" under applicable securities
laws. Federal securities laws prohibit the use of inside information to make
personal investment decisions regarding Net2Phone stock or the stock of
companies with whom we do business. These laws also prohibit informing, or
"tipping", anyone outside of Net2Phone about such information. This prohibition
includes discussing any inside information with family or friends. Disclosure or
use of such information is a violation of federal law, and a violation of
Net2Phone policy. You should carefully review Net2Phone's Insider Trading Policy
for specific guidelines related to this area.

         If you have any questions regarding whether or not information is
confidential or non-public, whether you are authorized to disclose information
you have access to, or with respect to any aspect of the Insider Trading Policy,
please contact a member of the Net2Phone Legal Department prior to disclosure.


Antitrust Compliance

         Net2Phone is committed to compliance with all antitrust laws. Every
employee is responsible for ensuring that our business in conducted in
accordance with these laws. What follows below is a framework for employees to
understand what they need to do to comply with these laws, but it is not a
summary of these laws. If you believe your conduct may raise antitrust issues,
the conduct should be discussed with the Net2Phone Legal Department in advance,
so that problems may be avoided.

         Violating antitrust laws may result in severe penalties to the employee
that violates the law, and to the Company. These penalties may include
imprisonment for the employee, huge fines for the employee and the Company, and
long-term harm to Net2Phone's reputation. With this much at stake, you can see
why it is critical that you understand this policy, and its implications on your
daily activities at Net2Phone.

         The antitrust laws fall into several categories:

         Agreements Among Competitors

         Antitrust laws prohibit agreements among competitors to raise, lower or
stabilize prices, to limit capacity or output, or to allocate customers. For
example, the following are specifically prohibited:

         o    Agreeing with a competitor to fix the prices or other terms of
              sale of products sold to our customers.

         o    Agreeing with a competitor to restrict the production of a certain
              product to reduce the supply of that product in order to drive up

         o    Agreeing with a competitor or potential competitor not to sell a
              particular product.

         o    Agreeing with a competitor not to solicit business from one
              another's customers or to sell only in certain territories.

         o    Agreeing with a competitor to sell only certain types of products
              in exchange for a promise that the competitor will sell only in
              certain territories.

         o    Agreeing with a competitor to sell only certain types of products
              in exchange for a promise that the competitor will sell only other
              types of products.

         o    Agreeing with a competitor not to sell products to a particular
              customer (this practice is known as a "group boycott").


         Contact with competitors poses serious and sensitive antitrust
concerns. If you feel you are or may be faced with a situation similar to those
described above, please discuss this issue with a member of the Net2Phone Legal
Department immediately. In addition, you should be extremely careful whenever
the occasion for contact with a competitor exists, such as during trade shows or
association meetings where competitors may meet. If you do run into a
competitor, do not discuss prices, costs, research and development activities,
pending bids or current or potential sales territories. Doing so could subject
you to criminal and/or civil liability for violating antitrust law, and you may
also be violating your duty of confidentiality to Net2Phone.

         Agreements with Distributors

         Antitrust laws prohibit agreeing with a distributor on the minimum
resale price the distributor will charge for products we sell to such


         It may be illegal to tie the sale of one product or service to a
customer on condition that the customer purchase a second unrelated product or
service, which the customer may not want or can buy elsewhere at a lower price.
These "tie-ins" may be illegal if they hurt competition, and may pose problems
under the antitrust laws if the products are not also available for sale on a
stand-alone basis. If you believe you are marketing products in this way, please
consult with the Legal Department.

         Pricing Issues

         In addition to restrictions on "price fixing" with a competitor
(discussed above), there are other restrictions on prices that can implicate
antitrust laws. "Predatory pricing", or the practice of pricing below cost is
problematic under the antitrust laws if the practice is likely to drive other
customers out of business and allow the remaining competitor ultimately to raise
its prices. Also, "price discrimination," (charging customers different prices
for the same product or service absent appropriate justification), may subject
the company to liability. The pricing provisions of the antitrust laws are
complicated, and any questions should be directed to the Net2Phone Legal


Political Activities

         Net2Phone's policy is to comply with all federal, state and local laws
regarding elections and campaign contributions, both in the United States and
abroad. Net2Phone encourages its employees to get involved in the political
process in an appropriate manner, and in a way that reflects their individual
beliefs. However, these political activities must take place on the employee's
own time, unless the activity is a management approved activity designed to
promote an issue important to Net2Phone.

         Some specific guidelines for the above include:

         o    Do not allow your status as a Net2Phone employee to be used in
              support of a particular candidate or issue without the specific
              authorization of Net2Phone's General Counsel.
         o    No employee may pressure another employee to make a contribution
              to or otherwise support a political party, candidate or issue.
         o    Corporate funds or assets may not be used to support a particular
              party, an elected official, or the campaign of a political
              candidate, except in strict compliance with certain legal
         o    Net2Phone's General Counsel should be notified prior to visits
              with government officials and should clear any written submissions
              or other contacts with them, such as proposed testimony before a
              legislative committee or body. It is important that the Legal
              Department and Investor Relations Department be made aware of such
              activities in order to coordinate meetings, events and agendas
              with other ongoing corporate activities in this area.


Duty to Come Forward

         As part of Net2Phone's commitment to ethical and legal behavior, all
employees, officers and directors are expected to report any actual or apparent
violations of law or company policy, including the policies outlined in this
Code of Conduct and the Employee Handbook. We expect you to come forward so that
we may appropriately investigate and deal with any allegation. This obligation
extends to any instance where you suspect, even if you are uncertain, that a
violation may occur, may be occurring or has occurred. You should understand
that there will be no retaliation against you for reporting a suspected
violation in good faith or participating in an investigation of a suspected
violation. Coming forward with a report of your own misconduct will not immunize
you from the consequences of your misconduct, but will be considered when
determining potential disciplinary action.

         The duty to come forward is an important aspect of our Code of Conduct,
because any violation of law or of our policies can have devastating
consequences on Net2Phone and its employees. None of us condones such
activities, and therefore, we owe it to each other and to Net2Phone to come
forward if we are aware of a violation. In addition, our management team wants
to address these issues directly in order to foster an environment of open
communication regarding ethical and legal issues and to make Net2Phone a secure
and enjoyable place to work.

         To that end, you should bring to management's attention any instance in
which you are aware of unlawful conduct or conduct that violates a Net2Phone
policy. You should start by reporting to your direct supervisor, but if you
wish, you may bring your issue forward by approaching:

         o    a member of the Human Resources Department
         o    a member of the Legal Department
         o    any Vice President of the Company

          If you feel that your issue is not being adequately addressed by these
parties, you should feel free to bring it directly to the General Counsel or the
Chief Executive Officer. Our Chief Executive Officer has made it clear that this
area is of such critical importance to him that any employee may approach him
directly with respect to these issues.

         If you have issues or concerns regarding Net2Phone's accounting,
internal accounting controls, or auditing matters, you should bring this issue
forward to any of the above listed parties. If you prefer, and the issues relate
only to accounting, internal accounting controls or auditing matters, you may
also submit your issue or concern in this area directly to the Audit Committee
of the Net2Phone Board of Directors. All other issues, questions or concerns,
such as those relating to Human Resources, compensation or operational matters
should be directed to the appropriate Net2Phone personnel, as directed above.
Submissions to the Audit Committee may be made under your name on a confidential
basis, or on an anonymous basis. Submissions to the Audit Committee should be
mailed to: Net2Phone Audit Committee, c/o Lowenstein Sandler PC, 65 Livingston
Avenue, Roseland, NJ 07068-1791, Attn: Jack D. Hogoboom, Esquire, or you may
e-mail JHOGOBOOM@LOWENSTEIN.COM with the subject line of "Submission to
Net2Phone Audit Committee". Note that e-mails sent from the Net2Phone company
e-mail system will not be treated as confidential or anonymous.

         You should also raise with management any concern you may have that
proper procedures are not being followed, even if you are not certain whether
legal or ethical standards are being violated. You should also let management
know if you believe adequate resources or training are not being provided so as
to enable employees to comply with legal standards or regulations. Please raise
issues promptly so that management can deal with them at an early stage.

         Every inquiry and complaint made by an employee will be taken
seriously. Each will be fully investigated on the merits, and the employee may
be provided information about the resolution of the issue to the extent
permitted to demonstrate to the employee that the complaint or issue has been



         If Net2Phone determines that a violation of law has occurred, we may be
obligated to report the violation to the appropriate law enforcement agency. If
a violation of law or of a company policy has occurred, we may take one or more
of the following actions, generally progressing as required by the severity of
the violation or the number of occurrences:

         1.   Counseling and/or coaching of the violating party;
         2.   Verbal warning;
         3.   Written warning(s);
         4.   Suspension of employment with or without pay; and/or
         5.   Termination

         Written warnings will remain in the employee's personnel file for 12
months from the date of the last warning. Thus, written occurrence warnings
given in the current calendar year will carry into the following year, and will
be considered if further disciplinary action is warranted, up to and including

         In some instances, the employee's conduct may show a complete lack of
respect for rules, requiring Net2Phone to advance the level of discipline to the
step it deems appropriate, up to and including immediate termination. Also, in
certain situations where, in the opinion of Net2Phone, an employee's misconduct
is serious, immediate termination may result. The Company reserves the right to
skip, advance or repeat any level of discipline it deems appropriate. Further,
the Company reserves the right to terminate employees at any time with or
without cause or notice and with or without prior discipline.