EXHIBIT  10

                              EMPLOYMENT AGREEMENT


         THIS EMPLOYMENT AGREEMENT  ("Agreement") is made and entered into as of
the  3rd  day  of  July,  1997  by  and  among  Tel-Save,  Inc.  ("Company"),  a
Pennsylvania  corporation  and a wholly-owned  subsidiary of Tel-Save  Holdings,
Inc. ("Holdings") and Holdings, having its prinicipal place of business at Route
202, New Hope,  Pennsylvania 18938) ("Principal Place of Business"),  and George
P. Farley  ("Employee").  Company and Holdings shall be collectively be referred
to herein as "Company".

                              Preliminary Statement
         WHEREAS,  Employee is currently employed as the chief financial officer
of Twin County  Grocers,  Inc.  and can not  commence  his  employment  with the
Company until after September 30, 1997;

         WHEREAS, Company desires to employ Employee, and Employee desires to be
employed by Company; and

         WHEREAS, Company and Employee desire to enter into this Agreement which
sets forth the terms and conditions of said employment.

         NOW,  THEREFORE,  in  consideration  of the mutual  covenants set forth
herein, the parties hereto agree as follows:

         1. Employment.  Company agrees to employ Employee, and Employee accepts
such  employment  and agrees to serve  Company,  on the terms and conditions set
forth  herein.  Except as otherwise  specifically  provided  herein,  Employee's
employment shall be subject to the employment  policies and practices of Company
in effect from time to time during the Term of Employee's  employment  hereunder
(including without limitation its practices as to reporting and withholding).

         2. Term of Agreement. The Term of Employee's employment hereunder shall
commence  in  October  1997 and shall  continue  in effect for a period of three
years thereafter, except as hereinafter provided ("Term").

          3.       Position and Duties.

3.1               General.  Except  as may  otherwise  be  agreed  upon  between
                  Company and Employee,  Employee  shall perform such duties and
                  responsibilities  of Chief  Financial  Officer of Holdings and
                  Company  and such  duties  as may be  reasonably  assigned  or
                  delegated  to him  from  time to time by the  Chief  Executive
                  Officer  and/or  the  majority  of  the  Board  of  Directors,
                  including  without   limitation  service  as  an,  officer  or
                  director of Company  and  affiliates  of the  Company  without
                  additional  compensation.  References  in  this  Agreement  to
                  Employee's employment

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                                       -2-

                  with  Company  shall be  deemed  to refer to  employment  with
                  Company or an affiliate. Employee shall perform his duties and
                  responsibilities  to the best of his  abilities in a diligent,
                  trustworthy, businesslike and efficient manner.

         3.2      Base Amount.  Employee shall devote at the Principal  Place of
                  Business or such  specific  place as the Chairman of the Board
                  and Chief Executive Officer shall designate at least four days
                  per week  ("Base  Amount")  to the  business  and  affairs  of
                  Company.  Employee shall devote such  additional  working time
                  and effort to the  business  and affairs of the Company as may
                  from time to time be reasonably requested by the Company.

         3.3      Directorships.  Employer  acknowledges that Employee may serve
                  as a member of the  Board of  Directors  of up to three  other
                  corporations.  Employee  will  not  serve  on  the  Boards  of
                  Directors of  corporations  in the  telecommunications  or any
                  other   related   industries  or  which  are,   directly,   or
                  indirectly,  competitive  with  Employer,  without the written
                  consent of Employer.  Employee  agrees that his  membership on
                  the Boards of  Directors  of other  corporations  and any time
                  devoted to such  membership  will not  impair  his  ability to
                  fully perform his duties and responsibilities hereunder.

         3.4      Holdings'  Board of Directors.  Employee  shall  continue as a
                  member of the Board of  Directors  of Holdings  until the next
                  annual meeting of the  shareholders  and shall be nominated to
                  stand for  election  at such  meeting  to serve as a  director
                  until the year 2000.

         4.       Compensation and Related Matters.

         4.1      Base  Salary.  During  the Term of his  employment  hereunder,
                  Company shall pay to Employee a minimum  annual base salary of
                  not  less  than  $200,000  or such  greater  amount  as may be
                  determined  from time to time by Company's Board of Directors.
                  Base salary shall be paid in accordance  with Company's  usual
                  and  customary  payroll   practices.   Base  salary  shall  be
                  increased  each  year  after  the  first  full  year  (on  the
                  anniversary   hereof)   by  the   greater  of  (i)  an  amount
                  established by the Board of Directors; and (ii) the percentage
                  increase in the CPI (as hereinafter defined) over the previous
                  year's  CPI,  with  such   increases  each  year  being  on  a
                  cumulative  basis.  "CPI"  shall  mean the U.S.  City  Average
                  Consumer Price Index for all Urban Customers.

         4.2      Benefit Plans and Arrangements.  Employee shall be entitled to
                  participate in and to receive benefits under Company's benefit
                  plans  available  to a Company  employee  with your tenure and
                  annual  compensation  level under Company's  employee  benefit
                  plans  and  arrangements  in  effect  during  the  Term of his
                  employment  hereunder,  which may be altered from time to time
                  at the discretion of Company.

         4.3      Perquisites.  During  the  Term of his  employment  hereunder,
                  Employee  shall  be



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                  entitled to receive fringe benefits ordinarily and customarily
                  provided by Company to officers of the Company,  including but
                  not limited to a credit card.

         4.4      Expenses.  Company shall promptly  reimburse  Employee for all
                  normal  out-of-pocket  expenses related to Company's  business
                  that are actually  paid or incurred by him in the  performance
                  of his services  under this  Agreement  and that are incurred,
                  reported and documented in accordance with Company's policies.
                  In  addition,  the Company  agrees  during the Term to provide
                  Employee  with  (i)  an  automobile,   as  the  Company  shall
                  determine;  and  telephones,  a computer  and a fax for use at
                  Employee's office.

         4.5      Stock Options. Holdings agrees to issue Employee non-qualified
                  and  investment  options to  purchase an  aggregate  number of
                  shares of Common Stock,  $.01 par value, of Holdings  ("Common
                  Stock") as follows:

                  (i)      Employee  shall be  granted  an  option  to  purchase
                           400,000  shares of Common  Stock (the  "Option).  The
                           form of, terms and  conditions  of the Option are set
                           forth in Exhibit A attached hereto.  The Option shall
                           have an  exercise  price  equal to  $13.25,  the fair
                           market  value of the Common  Stock on the date hereof
                           and shall vest in accordance with the schedule in the
                           Option. The fair market value of the Company's Common
                           Stock for purposes of this  Agreement  shall mean the
                           last  reported sale price of a share of the Company's
                           Common Stock on the NASDAQ National Market System.

                  (ii)     Company  agrees to register the shares  issuable upon
                           the  exercise of the options  contemplated  hereunder
                           under the  Securities  Act of 1933 and any applicable
                           state  registration  provisions as so as  practicable
                           after issuance or purchase as the case may be.

         5.       Termination.  The Term  of   Employee's  employment  hereunder
                  may be terminated under the following circumstances:

         5.1      Death. The Term  of  Employee's  employment  hereunder   shall
                  terminate upon his death.

         5.2      Disability.  Company  may  terminate  the  Term of  Employee's
                  employment  hereunder  as a result of  Employee's  physical or
                  mental  incapacity in  accordance  with  Company's  disability
                  policy.

         5.3      Cause. Company may terminate the Term of Employee's employment
                  hereunder for Cause.  For purposes of this Agreement,  Company
                  shall  have   "Cause"  to  terminate   Employee's   employment
                  hereunder upon  Employee's (i) material breach of any material
                  provision  of  this   Agreement,   (ii)  engaging  in  conduct
                  injurious to Company or in willful  misconduct  as an employee
                  of the Company in connection with  misappropriating  any funds
                  or property of Company or attempting  to willfully  obtain

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                  any personal profit from any transaction in which Employee has
                  an interest adverse to the interests of the Company,  or (iii)
                  gross  neglect or  unreasonable  refusal to perform the duties
                  assigned to Employee under or pursuant to this Agreement.

         5.4      By Employee.

                  (i)      Employee may  terminate  the Term of this  employment
                           hereunder  upon sixty days  prior  written  notice to
                           Company,  provided  that,  upon  the  giving  of such
                           notice by Employee,  Company may establish an earlier
                           date  for  the  termination  of  the  Term  and  such
                           termination   nonetheless   shall  be   considered  a
                           termination under this Section 5.4.

                  (ii)     Employee may terminate  employment hereunder for good
                           reason  immediately  and with notice to the  Company.
                           "Good  Reason"  for  termination  by  Employee  shall
                           include, but is not limited to, the following conduct
                           of Company:

                               (a)  Material  breach  of any  provision  of this
                                    Agreement  by Company,  which  breach  shall
                                    have not been cured by Company within thirty
                                    (30) days of receipt  of  written  notice of
                                    said material breach;

                               (b)  Failure to  maintain  Employee in a position
                                    commensurate   with  that   referred  to  in
                                    Section 2 of this  Agreement,  or any action
                                    by Company which  results in the  diminution
                                    of  such  position,   authority,  duties  or
                                    responsibilities.

                  (iii)    Employee may  terminate  employment  hereunder in the
                           event of a "Change in  Control" of  Holdings,  if the
                           conduct described in Section  5.4(ii)(a),  (b) or (c)
                           shall also occurred.  For purposes of this Agreement,
                           a  "Change  in  Control"  shall  be  deemed  to  have
                           occurred if (I) any "person" (as such term is used in
                           Sections 13(d) and 14(d) of the  Securities  Exchange
                           Act of 1934, as amended  ("Exchange Act"), other than
                           a trustee or other fiduciary holding securities under
                           an employee  benefit plan of Company or a corporation
                           owned directly or indirectly by the  stockholders  of
                           the Company in substantially  the same proportions as
                           their  ownership  of the Company,  becomes  after the
                           date  hereof the  "beneficial  owner" (as  defined in
                           Rule 13d-3 under said Act),  directly or  indirectly,
                           of securities of Company  representing  more than 20%
                           of  the  total  voting  power   represented   by  the
                           Company's then outstanding  voting  securities,  (ii)
                           during   any   period  of  two   consecutive   years,
                           individuals  who  at the  beginning  of  such  period
                           constitute the Board of Directors of Holdings and any
                           new director whose election by the Board of Directors
                           or nomination for election by Holding's  stockholders
                           was  approved by a vote of at least two thirds  (2/3)
                           of the directors then still in office who either were
                           directors  at the  beginning  of the  period or whose
                           election or nomination for election was

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                           previously  so  approved,  cease  for any  reason  to
                           constitute a majority thereof, (iii) the stockholders
                           of  Holdings  approve  a merger or  consolidation  of
                           Holdings or Company with any other  corporation other
                           than a merger or consolidation  which would result in
                           the  voting   securities   of  Holdings   outstanding
                           immediately  prior  thereto  continuing  to represent
                           (either  by   remaining   outstanding   or  by  being
                           converted  into voting  securities  of the  surviving
                           entity)  at  least  80% of  the  total  voting  power
                           represented  by the voting  securities of Holdings or
                           such surviving entity  outstanding  immediately after
                           such merger or consolidation,  or the stockholders of
                           Holdings  approve a plan of complete  liquidation  of
                           the  Company  or  an   agreement   for  the  sale  or
                           disposition by the Company of (in one  transaction or
                           a series of transactions) all or substantially all of
                           the assets of the  Company , (vi) a change in control
                           of a nature  that would be required to be reported in
                           response to Item 6(e) of Schedule  14A of  Regulation
                           14A  promulgated  under the  Exchange Act to Item1 of
                           Form 8-K promulgated  under the Exchange Act, or(vii)
                           Daniel  Borislow  ceases  to be the  Chief  Executive
                           Officer of Holdings and/or  Company.  Notwithstanding
                           the foregoing,  it shall not be a "Change in Control"
                           of Holdings if stock holders of Holdings who or which
                           as of the  date of this  Agreement  beneficially  own
                           more than 5% of the total  voting  power of  Holdings
                           increase its beneficial holdings to above 20%.

         5.5      Without  Cause.  Company may  terminate the Term of Employee's
                  employment other than for Cause or disability at any time upon
                  written notice to Employee.

         6.       Compensation  in the Event of  Termination.  In the event that
                  Employee's  employment  pursuant to this Agreement  terminates
                  prior to the end of the Term of this Agreement,  Company shall
                  pay the Employee compensation as set forth below:

         6.1      By Employee for Good Reason Following a Change in Control;  By
                  Company without Cause. In the event that Employee's employment
                  hereunder  is  terminated:  (i) by Employee for good reason or
                  pursuant to Section 5.4 (iii);  or (ii) by the Company without
                  cause,  then the  Company  shall  continue  to pay and provide
                  Employee  his  Compensation  as set forth in  Section 4 in the
                  same  manner as before  termination,  and for a period of time
                  ending  on the  date  when the  Term of this  Agreement  would
                  otherwise  have expired in  accordance  with Section 1 of this
                  Agreement.


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                  Employee  shall not be  required  to  mitigate  the  amount of
                  payment provided for in this Section 6.1 by seeking employment
                  or  otherwise,  nor  shall any  amounts  received  from  other
                  employment  or otherwise by Employee  offset in any manner the
                  obligations of Company hereunder.

         6.2      By  Company  for  Cause.  In  the  event  that  Company  shall
                  terminate  Employee's  employment hereunder for Cause pursuant
                  to Section 5.3 hereof, all Compensation,  as specified in this
                  Agreement heretofore payable or provided to the Employee shall
                  cease  to be  payable  or  provided,  except  for  salary  and
                  benefits  which may have been  earned and are due and  payable
                  but which have not been paid as of the date of termination and
                  reimbursements  for  expenses  which may have  been  incurred,
                  reported and documented but which have not been paid as of the
                  date of termination.

         6.3      Death; Disability By Employee Without Cause or Good Reason. In
                  the event of  Employee's  death,  disability,  or in the event
                  that Employee shall  terminate  employment  hereunder  without
                  Good Reason or Cause,  Company  shall not be  obligated to pay
                  Employee  or his  estate  or  beneficiaries  any  compensation
                  except for salary and benefits  which may have been earned and
                  are due and  payable  but  which  have not been paid as of the
                  date of termination.

         7.  Unauthorized  Disclosure.  Employee  shall not,  without  the prior
written  consent  of  Company,  disclose  or use in any way,  either  during the
Employee's  employment  with  Company or  thereafter,  except as required in the
course of such employment, any confidential business or technical information or
trade secret acquired in the course of such employment, whether or not conceived
of or prepared by him, which is related to any service or business of Company or
any Company  affiliate,  other than information  which is generally known (other
than  through a breach of this  Agreement  by Employee) in the industry in which
such business is transacted  or acquired from public  sources,  all of which are
the exclusive and valuable property of Company and its affiliates.

         8. Tangible  Items.  All files,  records,  documents,  manuals,  books,
forms,   reports,   memoranda,   studies,   data,   calculations,    recordings,
correspondence,  in whatever from they may exist, and all copies,  abstracts and
summaries of the  foregoing  and all physical  items  related to the business of
Company and its  affiliates,  other than  merely  personal  items,  whether of a
public  nature or not,  and whether  prepared by Employee or not,  are and shall
remain the  exclusive  property of Company and its  affiliates  and shall not be
removed from their  premises,  except as required in the course of employment by
Company,  without the prior  written  consent of Company,  and the same shall be
promptly  returned by Employee on the termination of Employee's  employment with
Company or at any time prior thereto upon the request of Company.

         9.  Inventions  and  Patents.  Employee  agrees  that  all  inventions,
innovations,  improvements,  developments, methods, designs, analyses, drawings,
reports,  and all  similar or related  information  which  relates to  Company's
actual or anticipated  business,  research and development or existing or future
products or services  and which are  conceived,  developed  or made




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by or at the  direction of Employee  while  employed by Company will be owned by
Company.  Employee  also  agrees to  promptly  perform  all  reasonable  actions
(whether  before,  during or after the Term)  necessary to establish and confirm
such ownership.

         10. Certain  Restrictive  Covenants.  During the Term of his employment
hereunder and for a period of six months  thereafter,  Employee  agrees that, he
will not act either  directly or  indirectly  as a partner,  officer,  director,
substantial  stockholder or employee,  or render advisory or other services for,
or in  connection  with,  or  become  interested  in,  or make  any  substantial
financial  investment  in any firm,  corporation,  business  entity or  business
enterprise  competitive  with the business of Company or its affiliates,  except
with the express written consent of the Board of Directors of Company.  Employee
further  agrees that in the event of the  termination  of his  employment  under
Section  5, for a period of two  years  thereafter,  he will  employ or offer to
employ,  call on,  solicit,  actively  interfere with Company's or any Company's
affiliates  relationship with, or attempt to divert or entice away, any employee
of Company or any Company affiliate.

         11. Employee  Representations.  Employee hereby represents and warrants
to Company that (i) the execution, delivery and performance of this Agreement by
Employee does not and will not conflict with, breach, violate or cause a default
under any contract,  agreement,  instrument,  order, judgment or decree to which
Employee is a party or by which he is bound, (ii) except as disclosed to Company
in writing prior to the execution of this Agreement,  Employee is not a party to
or bound by any employment  agreement,  noncompete  agreement or confidentiality
agreement  with any other  person or entity,  and (iii) upon the  execution  and
delivery of this  Agreement by Company,  this  Agreement  shall be the valid and
binding obligation of Employee, enforceable in accordance with its terms.

         12.  Remedies.   Employee   acknowledges   that  the  restrictions  and
agreements  contained in this  Agreement are reasonable and necessary to protect
that legitimate  interests of Company,  and that any violation of this Agreement
will cause  substantial  and  irreparable  injury to  Company  that would not be
quantifiable and for which no adequate remedy would exist at law and agrees that
injunctive  relief,  in  addition  to all  other  remedies,  shall be  available
therefor.

         13.  Severability.  It is the intent and  understanding  of the parties
hereto that if, in any action  before any court or agency  legally  empowered to
enforce this Agreement, any term, restriction,  covenant, or promise is found to
be unreasonable and for that reason unenforceable,  then such term, restriction,
covenant, or promise shall not thereby be terminated but that it shall be deemed
modified to the extent  necessary to make it enforceable by such Court or agency
and,  if it cannot be so  modified,  that it shall be deemed  amended  to delete
therefrom such provision or portion  adjudicated to be invalid or unenforceable,
such  modification  or  amendment in any event to apply only with respect to the
operation  of this  Agreement  in the  particular  jurisdiction  in  which  such
adjudication is made.


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         14. Notice.  For the purposes of this Agreement,  notices,  demands and
all other  communications  provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when  received if delivered in person or
by  overnight  courier or if mailed by United  States  registered  mail,  return
receipt requested, postage prepaid, to the following addresses:

         If to Employee:

         Mr. George P. Farley
         89 Highwood Avenue
         Tenafly NJ 07670

         If to Company:

         Tel-Save, Inc.
         6805 Route 202
         New Hope, Pennsylvania 18938
         Attn: Chief Executive Officer

Either  party may change its address for notices by written  notice to the other
party in accordance with this Section 14.

         15.  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 Employee and Company.  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 at any prior or subsequent  time. No agreements or  representations,
oral or  otherwise,  expressed or implied,  with  respect to the subject  matter
hereof  have been  made by either  party  which are not set forth  expressly  or
referred to in this Agreement.  The validity,  interpretation,  construction and
performance  of this  Agreement  shall be governed  by the laws of  Pennsylvania
relating to contracts made and to be performed entirely therein.

         16.  Headings.   The  headings  in  this  Agreement  are  inserted  for
convenience  only and shall have no significance in the  interpretation  of this
Agreement.

         17.  Successors.  This Agreement shall be binding upon and inure to the
benefit of the parties  hereto and their  heirs,  personal  representatives  and
successors,  including  without  limitation  any  affiliate to which Company may
assign this Agreement.

         18.  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.

         IN  WITNESS  WHEREOF,  each of the  parties  hereto has  executed  this
Agreement as of the


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                                       -9-


day and year first written above.

                                              Tel-Save, Inc.



                                              By:
                                                 -------------------------------



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



                                              TEL-SAVE HOLDINGS, INC.



                                              By:
                                                 -------------------------------




                                                 -------------------------------
                                                  George P. Farley