[" * * * " indicates  that material has been deleted  pursuant to a confidential
treatment request and filed separately with the Commission]

                                                                    CONFIDENTIAL










                     TELECOMMUNICATIONS MARKETING AGREEMENT

                                  by and among

                                 TEL-SAVE, INC.

                             TEL-SAVE HOLDINGS, INC.

                                       and

                              AMERICA ONLINE, INC.

                                February 22, 1997





<PAGE>


                                                                    CONFIDENTIAL





                     TELECOMMUNICATIONS MARKETING AGREEMENT


         This TELECOMMUNICATIONS  MARKETING AGREEMENT,  dated as of February 22,
1997, is made by and among:  (i) America  Online,  Inc., a Delaware  corporation
("AOL"),  on the one hand, and (ii) Tel-Save,  Inc., a Pennsylvania  corporation
("TS"), and Tel-Save Holdings, Inc., a Delaware corporation ("Holdings"), on the
other hand (each, a "party" and, collectively,  the "parties"),  with respect to
the following:

         WHEREAS,  AOL  is in the  business  of  providing  online  services  to
consumers in the United States;

         WHEREAS, TS is in the business of providing telecommunications services
and is a wholly owned subsidiary of Holdings;

         WHEREAS,  AOL and TS wish to enter into this Agreement whereby AOL will
market  telecommunications  services to customers of AOL's online  service under
one or more brand names to be owned by it and TS will provide  such  services on
the terms and subject to the conditions herein set forth; and

         WHEREAS,  Holdings has agreed to guarantee all of the obligations of TS
hereunder.

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


                                    ARTICLE I

                                   DEFINITIONS

         A.       Definitions.

         For  purposes of this  Agreement  and in addition to the terms  defined
elsewhere in this  Agreement,  the  following  terms shall have the meanings set
forth below:

                  1. "Actual  Services Costs" for any calendar quarter means the
aggregate of the  respective  costs set forth in, and  calculated  in accordance
with,  Schedule A hereto in respect of the  provision  of  Services  during such
calendar quarter.

<PAGE>



         2.  "Additional  Warrant"  shall have the  meaning set forth in Section
X.B.2 hereof.

                  3.       "Ad Values" at any time shall mean * * * .

                  4. "affiliate"  means, with respect to a specified person, any
other person that  directly or  indirectly  through one or more  intermediaries,
controls,  or is controlled by, or is under common control with,  such specified
person,  provided that, for purposes of this  Agreement,  "affiliate"  shall not
include natural persons.

                 5.   "Agreement"   means  this   Telecommunications   Marketing
Agreement.

                 6.  "AOL" has the  meaning  set forth in the  preamble  to this
Agreement.

                  7.  "AOL  Marks"  means the  service  marks to be owned by AOL
under which the Services will be marketed,  which are presently  contemplated by
the parties to include a reference to AOL's name and shall be as mutually agreed
to in writing by the parties hereto.

                 8. "AOL Performance  List" has the meaning set forth in Section
II.B.1.

                  9. "AOL  Service"  means  AOL's  online  service  provided  to
subscribers (including,  without limitation,  individuals and businesses) in the
United  States  under the  America  Online(R)  brand  name,  including,  without
limitation,  electronic  mail,  conferencing,  news,  sports,  weather and stock
quotes,   accessed  by  consumers  through  computers  using  AOL's  proprietary
software, as it exists on the date hereof and any online service provided by AOL
or any of its affiliates that is a successor thereto or substitute therefor.

                 10.  "Applicable  Profit  Percentage" for any calendar  quarter
means the percentage of Pre-Tax Profit for such calendar quarter equal to:

                         (a) for each  quarter  in  which  the  average  monthly
                    Marginable Revenues  (Marginable  Revenues for such quarter,
                    divided by 3) are less than * * * , 50%; and

                         (b) for each  quarter  in  which  the  average  monthly
                    Marginable Revenues  (Marginable  Revenues for each quarter,
                    divided by 3) are * * * , 50% plus an additional 2% for each
                    * * * by which  such  average  monthly  Marginable  Revenues
                    exceed * * * (without proration for any portion thereof);

<PAGE>



provided that in no event will the Applicable Profit Percentage exceed 70%.

                  11.      "AT&T" means AT&T Corporation.

                 12.  "Checklist  Items"  are the  items  set  forth in the list
attached as Schedule B hereto.

                  13.  "Commercial  Launch  Date"  means the date upon which AOL
makes the Services generally  available to subscribers of the AOL Service (i.e.,
to at least * * * % of the subscribers to the AOL Service).

                 14.  "Commercial  Mobile  Radio  Services"  means the  services
defined as such,  from time to time, by the Federal  Communications  Commission,
including related features, functions and services.

                 15. "Dedicated CIC" means the carrier identification code (CIC)
to be made  available  by TS for use in  respect  of the  Services  as  provided
herein.

                 16.  "Effective  Date" has the  meaning  set  forth in  Section
IX.A.1. hereof.

                  17. "End User"  means,  during the Term,  any  customer of the
Services or any part thereof and,  after the Term,  any such  customer as of the
last day of the Term so long as such  customer  continues  as a customer of such
Services.

                 18.  "Extension  Period"  shall have the  meaning  set forth in
Section X.B.1 hereof.

                 19. "Gross  Revenues"  for any calendar  quarter shall mean the
total  billings by TS to End Users for the  provision  of  Services  during such
quarter, less * * * .

                 20. "Holdings" has the meaning set forth in the first paragraph
of this Agreement.

                 21. "Initial  Launch Period" means the period  beginning at the
end of the Test Launch Period and ending on the Commercial Launch Date.

                 22.  "Initial  Payment"  has the  meaning  set forth in Section
V.A.1.

                  23.  "Internet  Telephony"  means  voice  service  provided or
initiated  over one or more data networks  where the end user  initiates a voice
call to, or  receives  a voice call  from,  another  party over one or more data
networks  using a modem  or CODEC or over a data  network  interfacing  with the
public switched telephone network using a modem or CODEC.

<PAGE>



                  24.  "Introductory  Period" means the * * * period  starting a
mutually agreed number of days prior to the anticipated  Commercial Launch Date.
The parties  currently  anticipate  that the  Commercial  Launch Date will be no
later  than * * * ,  subject  to  adjustment  from time to time upon the  mutual
consent of the parties or as otherwise provided herein.

                 25. "Local Telecommunications  Services" means the provision of
telephone  exchange  service or exchange  access,  including  related  features,
functions and services.

                  26.  "Long   Distance   Telecommunications   Services"   means
intrastate   telephone   toll   service,   interstate   telephone   service  and
international  telephone service,  including private line service, and including
related features, functions and services, as well as:

         Calling Card calls,  meaning those calls billed to the customer account
         which has been  established  to allow  for the use of an  authorization
         code for direct dialed calls using any toll free number,  0+ access, or
         operator  assisted  calls  using  a  service  provider's  calling  card
         authorization  platform for billing to the customer  account at a later
         date.

         Operator  Handled  calls,  meaning  all  calls  where  an  operator  or
         automated  mechanized  system provides the end user with the ability to
         place collect calls,  calls billed to a third party,  person to person,
         conference calling and operator assisted directory assistance,  but not
         including party lines and off-line chat.

         Toll Free services,  meaning inbound  residential or business telephone
         services  where the  subscriber/recipient  pays for all calls placed by
         callers dialing their subscribed  number,  and such calls are billed to
         the subscribing customer.

         Directory  Assistance  calls,  meaning  calls made by the  customer  to
         obtain names, addresses or phone numbers from a long distance directory
         assistance service.

                 27. "Marginable Revenues" means Gross Revenues, less * * * .

                 28.  "Multiplier  Adjustment Date" has the meaning set forth in
Section IV.E.1.

                 29.  "OBN"  means One  Better  Net or OBN,  TS's long  distance
telecommunications network based on telecommunications  switches owned or leased
by TS or its affiliates.

                 30.  "Performance  Lists" has the  meaning set forth in Section
II.B.I.

<PAGE>



                  31.  "Pop-Up Ads" means online  advertisements  or  promotions
that (a) appear  onscreen  at log-on to users of the AOL  Service,  (b) are made
available  onscreen for at least * * * , and (c) contain buttons  allowing users
either to place an order for or obtain further  information about the product(s)
advertised  or to  decline  such  product(s)  and  proceed  with  use of the AOL
Service.

                 32.  "Pre-Launch  Period"  means the  period  beginning  on the
Effective Date and ending on the date AOL and TS begin testing the Services with
approximately * * * testers.

                 33. "Pre-Tax Profit" for any calendar quarter means * * * .

                 34. "Quarterly Payment Amount" as to any calendar quarter means
the Applicable Profit Percentage of the Pre-Tax Profit for such quarter.

                 35.  "Quarterly  Shortfall Amount" has the meaning set forth in
Section V.B.1(b).

                 36.  "Restricted  Services"  means,   collectively,   (a)  Long
Distance Telecommunications  Services, (b) Local Telecommunications Services and
(c) Commercial Mobile Radio Services, and, each, a "Restricted Service".

                 37. "RMG" means the remote managed  gateway  between TS and AOL
and related systems (or any similar system agreed to by the parties),  including
a high  speed  dedicated  telecommunications  line,  developed  by  the  parties
pursuant to Section  II.B  hereof,  for the purpose of  providing  End Users the
ability,  through  screens  and/or other  functionality  on the AOL Service,  to
access  monthly  and  historical  billing  information  and  to  transmit  order
information to TS.

                 38. * * * .

                 39. "Services" means the telecommunications services, including
the Restricted Services, provided, from time to time, pursuant to this Agreement
by TS, as the  carrier,  and  marketed by AOL as herein  provided  under the AOL
Marks;  provided,  however,  that  "Services"  shall not  include  (a)  Internet
Telephony (except for the communications  components of such telephony which are
other  Services;  e.g.,  a private  line) or (b) paging  services not offered in
conjunction with another Commercial Mobile Radio Service.

                 40. "Supplemental Warrant" has the meaning set forth in Section
VI.A. hereof.

                 41.  "Term" means the period  commencing on the date hereof and
ending on June 30, 2000, unless such period is extended

<PAGE>


 or sooner  terminated  pursuant to Article X, in which event such period  shall
end at the termination date or the last day of the final extension,  as the case
may be.

                 42. "Test Launch Period" means the period  beginning at the end
of the  Pre-Launch  Period  and  ending  on the date AOL  begins  marketing  the
Services to approximately * * * of its subscribers.

                 43.  "TS" has the  meaning  set forth in the  preamble  of this
Agreement.

                 44. "TS Performance  List" has the meaning set forth in Section
II.B.1.

                 45. "Unamortized Amount" as of any date means (a) * * * through
January 31, 1998,  and (b) after January 31, 1998, the result of (x) * * * minus
(y) the  amount  equal  to (i) the  product  of * * * times  the  number  of the
calendar  months  subsequent  to  December  31, 1997 that have passed as of such
date, divided by (ii) * * * , but not less than $0.

                 46.  "Warrants"  has the  meaning  set forth in  Section  VI.A.
hereof.


                                   ARTICLE II

                       ROLLOUT SCHEDULE; PERFORMANCE LISTS

         A.       Description of Rollout.

         This Article II sets out the process by which the parties will roll out
the Long  Distance  Telecommunications  Services  described  on Schedule C. With
respect to such Long  Distance  Telecommunications  Services,  the parties  will
proceed  through the following  sequence of periods,  leading to an  anticipated
Commercial Launch Date of * * * :

                 1.  Pre-Launch  Period -- completion of initial  Checklist Item
tasks and initial  development of the  Performance  Lists (as further  described
below).

                 2.  Test  Launch   Period  --  testing  of  the  Long  Distance
Telecommunications Services with approximately * * * testers.

                  3. Initial  Launch  Period --  marketing of the Long  Distance
Telecommunications  Services to  approximately * * * of AOL Service  subscribers
(with incremental ramp-up to * * * of AOL Service subscribers).

                 4. Commercial  Launch Date -- general  availability of the Long
Distance Telecommunications Services to AOL Service

<PAGE>


subscribers (i.e., to at least * * * of the subscribers to the AOL Service).

         In addition,  prior to the  Commercial  Launch  Date,  the parties will
mutually  establish the date for  commencement of AOL's  marketing  obligations,
(i.e., the beginning of the Introductory Period), which are further described in
Article III.

         B.       Pre-Launch Period.

                  1. During the  Pre-Launch  Period,  each of the parties  shall
perform all of the  Checklist  Item tasks  designated on Schedule B as being its
responsibility  during the  Pre-Launch  Period with respect to the Long Distance
Telecommunications  Services  described in Schedule C. With respect to each task
involving  the  development  of  a  definition,   procedure  or  standard,   the
responsible  party  shall  generate a detailed  written  guideline  that will be
applicable  to the  appropriate  party  and  will  be  set  forth  in a list  of
standards,  procedures and/or obligations to be observed by such party (the "AOL
Performance List" and the "TS Performance List", respectively, and together, the
"Performance  Lists").  Each such guideline set forth in the  Performance  Lists
shall be subject to the mutual agreement of the parties,  not to be unreasonably
withheld. With respect to Checklist Item tasks that are designated on Schedule B
as the joint  responsibility of TS and AOL during the Pre-Launch  Period, TS and
AOL shall work jointly in good faith to develop the  appropriate  guidelines and
to allocate responsibilities thereunder to the appropriate Performance List.

                  2. The Pre-Launch Period shall commence promptly following the
Effective  Date and shall not end until  completion of all of the Checklist Item
tasks designated for completion  during the Pre-Launch  Period on Schedule B. If
any such  Checklist  Item task remains  uncompleted  or if any guideline has not
been agreed to as of * * * , the anticipated date therefor,  the period for such
completion may be extended by up to * * * at the request of either party.

         C.       Test Launch Period.

                  1. During the Test Launch  Period,  each of the parties  shall
perform all of the  Checklist  Item tasks  designated on Schedule B as being its
responsibility  during the Test Launch  Period with respect to the Long Distance
Telecommunications  Services  described in Schedule C. With respect to each task
involving  the  development  of  a  definition,   procedure  or  standard,   the
responsible  party  shall  generate a detailed  written  guideline  that will be
applicable  to the  appropriate  party  and  will  be  added  to its  respective
Performance  List. Each such guideline shall be subject to the mutual  agreement
of the parties, not to be unreasonably withheld.  With respect to Checklist Item
tasks that are  designated on Schedule B as the joint  responsibility  of TS and
AOL during the Test Launch Period, TS and AOL shall work jointly

<PAGE>


in  good  faith  to  develop  the   appropriate   guidelines   and  to  allocate
responsibilities thereunder to the appropriate Performance List.

                  2. The Test Launch Period shall  commence  upon  completion of
the Pre-Launch Period and shall not end until completion of all of the Checklist
Item tasks  designated for completion  during the Test Launch Period on Schedule
B. If any such Checklist Item tasks remain  uncompleted as of the date that is *
* * after the  commencement  of the Test  Launch  Period,  the  period  for such
completion may be extended by up to * * * at the request of either party.

         D.       Initial Launch Period.

                  1. During the Initial Launch Period, the parties will commence
marketing  and make the  Services  available to  approximately  * * * of the AOL
Service subscribers (or such higher number as AOL may determine, subject to TS's
reasonable  capacity  limitations)  during * * * of the Initial  Launch  Period;
approximately * * * of the AOL Service subscribers (or such higher number as AOL
may determine subject to TS's reasonable  capacity  limitations) during * * * of
the  Initial  Launch  Period;  and  approximately  *  * *  of  the  AOL  Service
subscribers  (or  such  higher  number  as AOL  may  determine  subject  to TS's
reasonable  capacity  limitations)  during the  remainder of the Initial  Launch
Period.  AOL shall  determine the specific  roll-out plan for the Initial Launch
Period in consultation  with TS in order to efficiently and effectively  perform
the  Initial   Launch  Period   Checklist  Item  tasks  listed  on  Schedule  B.
Notwithstanding the anticipated * * * periods above, AOL may, in each such case,
delay marketing to a larger portion of the AOL Service subscriber base until AOL
is satisfied, in its reasonable discretion,  that the guidelines included in the
parties' respective Performance Lists are met or are likely to be met during any
such period.

                  2. During the Initial Launch Period, each of the parties shall
perform all of the  Checklist  Item tasks  designated on Schedule B as being its
responsibility  during  the  Initial  Launch  Period  with  respect  to the Long
Distance  Telecommunications  Services  described in Schedule C. With respect to
tasks  involving the  development  of a definition,  procedure or standard,  the
responsible  party  shall  generate a detailed  written  guideline  that will be
applicable  to the  appropriate  party  and  will  be  added  to its  respective
Performance  List. Each such guideline shall be subject to the mutual  agreement
of the parties, not to be unreasonably withheld.  With respect to Checklist Item
tasks that are  designated on Schedule B as the joint  responsibility  of TS and
AOL,  TS and AOL shall work  jointly in good  faith to develop  the  appropriate
guidelines  and to  allocate  responsibilities  thereunder  to  the  appropriate
Performance List.

<PAGE>



                  3. The Initial Launch Period shall commence upon completion of
the Test Launch Period. The Initial Launch Period shall not end until completion
of all of the Checklist Item tasks designated for completion  during the Initial
Launch Period on Schedule B. If any such Checklist Item task remains uncompleted
or if any  guideline  has not been  agreed to as of the date that is * * * after
the  commencement  of the Initial Launch Period,  the period for such completion
may be extended by up to * * * at the request of either party.

         E.       Performance Lists.

                 1. The Performance Lists may be modified at any time during the
Term as mutually agreed by the parties.

                  2. The parties shall reasonably  cooperate with one another in
facilitating  the  preparation  of the  Performance  Lists  and  the  guidelines
included therein and the completion of the Checklist Item tasks.

                 3. Each party shall be responsible for performing substantially
in accordance with the guidelines  contained in its respective  Performance List
from time to time.

         F.       New Services.  As new Services are added under this Agreement,
the procedures set forth in this Article II, as may be reasonably  applicable to
such new Services, shall be followed with respect to such Services.

         G.       Failure to Agree on Guidelines.   If the parties are unable to
reach  agreement  with  respect to any  guideline  to be  included  in a party's
Performance List, the matter shall be submitted for resolution pursuant to XI.D.



                                   ARTICLE III

                                  AOL MARKETING

         A.       Services Marketing.

         On and after the first day of the Introductory  Period,  AOL shall have
the sole right to,  and shall,  market  the  Services  generally  across the AOL
Service in the United States,  through online  advertising  and marketing on the
AOL Service and  otherwise  as the  parties  may agree,  through  mass media and
direct marketing media, as follows:

                 1. During each of the months  during the  Introductory  Period,
AOL shall include for  subscribers to the AOL Service  on-screen  promotions and
advertisements  for the Long  Distance  Telecommunications  Services,  including
Pop-Up Ads, (a) in

<PAGE>


substance (the specific Long Distance  Telecommunications Services to be offered
and the terms  thereof and the terms on which they are  offered)  developed  and
prepared  by TS in  consultation  with  AOL,  and (b) in form  (how the  offered
Services  are  packaged  and  presented)   developed  and  prepared  by  AOL  in
consultation with TS and subject to the mutual agreement of the parties, with an
Ad Value of at least $ * * * . Such promotions and advertisements  shall include
(a) at least * * * Pop-Up  Ads per month  during at least * * * of the months in
the Introductory  Period, such months to be chosen at AOL's discretion,  and (b)
either  * * * or * * *  Pop-Up  Ads  per  month  during  the  other * * * of the
Introductory  Period,  * * * .  Any  Pop-Up  Ads  included  by  AOL  during  the
Introductory  Period in excess of * * * per month  shall not be  counted  toward
such $ * * * requirement.  Such promotions and advertisements shall be spaced as
evenly  as  practicable  over each such  month,  provided  that TS and AOL shall
consult as to the manner in which such  online  advertising  will be included in
such advertising opportunities. The parties recognize that in some months, a $ *
* * promotion and advertising  campaign may not represent the best allocation of
promotion and advertising resources. Accordingly, the foregoing notwithstanding,
subject to the mutual  agreement of the  parties,  some of the  promotional  and
advertising resources,  and Pop-Up Ads, allocated to the Introductory Period may
be reallocated  among the months occurring  during the  Introductory  Period and
among  the * * *  months  following  the  Introductory  Period  and  shall be in
addition to the resources required otherwise to be provided in such months.

                  2. During each of the months  subsequent  to the  Introductory
Period and during the Term, AOL shall include for subscribers to the AOL Service
on-screen promotions and advertisements for the Long Distance Telecommunications
Services,  including,  at AOL's option  (subject to the  requirements of Section
III.A.4  hereof),  Pop-Up Ads,  (a) in substance  (the  specific  Long  Distance
Telecommunications Services to be offered and the terms thereof and the terms on
which they are offered)  developed and prepared by TS in consultation  with AOL,
and (b) in form (how the offered Services are packaged and presented)  developed
and prepared by AOL in consultation  with TS and subject to the mutual agreement
of the  parties,  with an Ad Value of at least $ * * * . Any Pop-Up Ads included
by AOL subsequent to the Introductory  Period and during the Term in excess of *
* * per month shall not be counted toward meeting this $ * * * requirement.  AOL
will work  cooperatively  with TS during this period to develop  strategies  for
targeting the Services to new  subscribers to the AOL Service most  effectively.
Such promotions and advertisements shall be spaced as evenly as practicable over
each such  month,  provided  that TS and AOL shall  consult  as to the manner in
which  such  online   advertising   will  be   included   in  such   advertising
opportunities.

                 3. During the Term,  AOL may also  include  advertisements  and
promotions for the Long Distance

<PAGE>


Telecommunications   Services,   in  substance   (the   specific  Long  Distance
Telecommunications Services to be offered and the terms thereof and the terms on
which they are offered)  developed and prepared by TS in consultation  with AOL,
and form (how the offered  Services are packaged and  presented)  developed  and
prepared by AOL in consultation  with TS and subject to the mutual  agreement of
the  parties,  in or with  any of AOL's  mass  media  advertising  of any of its
services  or with any of AOL's  direct  marketing  efforts,  including,  without
limitation,  mail  solicitations  of  customers  for any of its services and any
joint  advertising  or marketing  programs  with other  companies  and any other
advertisements  and  solicitations  done in  conjunction  with other  companies;
provided  that,  unless  TS shall  have  specifically  agreed  with AOL to share
responsibility  for any  such  advertising  and  promotions,  TS  shall  have no
responsibility for any part of the costs thereof.

                 4. With respect to Pop-Up Ads:

                         (a) Any  Pop-Up Ad  required,  by the terms of  Section
                    III.A.1 or  III.A.2.  hereof,  to be included or provided by
                    AOL shall contain * * * .

                         (b) If, at any time  during the Term,  AOL, as a matter
                    of general practice,  * * * , AOL shall * * * to subscribers
                    to the AOL Service.

                         (c) If, at any time  during the Term,  AOL, as a matter
                    of  general  practice,  * * * , AOL shall * * * ;  provided,
                    however, in the event * * * , then AOL shall * * * .

                  5. During the Term,  the parties shall also,  in  consultation
with each other,  explore  additional  marketing and  promotional  opportunities
related to the Services,  including  utilizing new  advertising  techniques  and
mechanisms,  as they are developed by AOL and utilizing TS's existing  marketing
channels. The parties also will, in good faith, explore the following additional
marketing  opportunities  (the more specific terms and conditions of which to be
as set forth in writing between the parties):

                           (a)      Online marketing of bundled offerings of the
                  Services and the AOL Service by AOL, with mutually
                  agreed revenue sharing;

                           (b)      Telemarketing and direct marketing by TS of
                  the AOL Service to TS's business customers, with a
                  mutually agreed bounty paid to TS; and

                           (c)  Telemarketing  and  direct  marketing  by  TS of
                  bundled  offerings of the  Services and the AOL Service,  with
                  generally mutually agreed revenue sharing.

<PAGE>



                  6. AOL shall make  available to End Users who obtain  services
from TS other than the Services in accordance with this Agreement,  a hyper-text
internet link in the Dedicated  Area (as defined below) solely to a billing area
on a TS-hosted web site for billing of such services other than Services,  which
such site shall not include any links or other  traffic out to other areas other
than a return link to the AOL Service.

                  7. AOL commits to provide,  in connection  with its activities
described  in  Sections  III.A.1,  2, 4, 5 and 6,  III.C  and III.D  hereof,  in
addition  to AOL key words on the AOL Service  and E-mail  (including  a monthly
reminder  sent to End-Users  concerning  their  statement and a hyperlink to the
Dedicated Area described below), links throughout the AOL Service, including the
possibility of a small telephone icon that pervasively  appears on the tool bar,
welcome screen,  channel page or similarly-viewed  pages, to a dedicated area on
the AOL Service (the  "Dedicated  Area") in order to facilitate ease of location
and access to this area for End Users and prospective customers.

         B.       AOL Reports.

                  1. During the Term, AOL shall provide  summary monthly reports
to TS  evidencing  compliance  with  the  foregoing  advertising  and  marketing
requirements,   including   information   concerning  the  type  and  volume  of
advertising  and marketing on the AOL Service,  and concerning  AOL's mass media
and direct marketing activities, if any, during such month.

                  2.  AOL  shall  keep for two (2)  years  from the date of each
advertising and marketing  expenditure  made pursuant to Sections  III.A.1 and 2
above  complete  and  accurate  records  in  sufficient  detail  to  allow TS to
determine if AOL has made the expenditures  required  thereunder.  TS shall have
the right for a period of two (2) years  after  receiving  any  report  provided
pursuant to Section  III.B.1 above to inspect such records.  AOL shall make such
records  available for inspection during regular business hours at its principal
place of business,  upon reasonable  notice from TS. Such inspection right shall
not be exercised  more than once in any calendar year and shall not be exercised
more than once with respect to any particular records furnished by AOL to TS. TS
agrees to hold in strict confidence all information learned in the course of any
such  inspection,  except  to  the  extent  necessary  for  TS  to  reveal  such
information in order to enforce its rights under this Agreement or if disclosure
is required by law. TS shall pay for such inspections,  except that in the event
any such  inspection  reveals  that AOL  expended  less  than 98% of what it was
required to expend in any quarter,  AOL shall pay the  reasonable  costs of such
inspection.  If AOL and TS are unable to agree on the amount AOL expended,  then
the dispute  shall be resolved by  arbitration  pursuant to Section XI.D hereof.
This Section shall survive expiration or termination of this Agreement.

<PAGE>



                  3. Within one quarter after it has been determined as a result
of an inspection  pursuant to Section III.B.2 above or otherwise that AOL failed
to expend the minimum commitment for advertising and marketing in a given month,
and such failure is not  attributable to TS's  unreasonable  failure to agree to
the  marketing  program  proposed  by AOL,  AOL shall,  in addition to any other
advertising and marketing  expenditure  commitments it has under this Agreement,
expend an additional  amount for  advertising and marketing equal to 125% of the
shortfall from such commitment.

                  4. AOL shall  advise TS in writing or by  electronic  means of
any End User that  ceases to be a  subscriber  of the AOL Service as promptly as
reasonably  practicable  after  receiving  notice  thereof.  TS  shall  continue
servicing  each  such  End  User  according  to a  service  plan  that TS  deems
appropriate,  subject to such End User's  continued  credit-worthiness,  in TS's
sole discretion.  To the extent that TS incurs incremental costs associated with
the billing of such End Users, TS shall, at its sole discretion, either (i) pass
such  costs  through  to such End  Users or (ii)  adjust  payments  to AOL under
Section  V.B or  X.D.2,  as the  case may be,  to put AOL in the  same  economic
position as if such incremental costs had not been incurred.

         C.       Offering of Services.

                  1. AOL shall  include on the AOL Service  such  materials  and
opportunities as TS shall reasonably  request to permit users of the AOL Service
who wish to become End Users to elect so to become End Users, including, without
limitation,  any  agreements by any such user to (i) switch from their  existing
telecommunications  carrier,  (ii) charge  their  payments  for the  Services to
credit, charge or debit cards and/or (iii) verify such arrangements.

         D.       Services Billings; Credit Card Agreements.

                  1.  For so  long  as any End  User  is a  customer  of the AOL
Service  (and  notwithstanding  the  termination  of this  Agreement,  it  being
understood  that  this  obligation  shall  survive  such  termination  if AOL is
receiving  payments  pursuant  to  Section  X.D.2),  AOL shall  provide  for the
inclusion  online in the AOL Service to such End User of such End User's billing
information  provided by TS and any necessary  opportunity  for such End User to
authorize  any payment and to dispute any charges for  Services  with TS (all as
mutually  agreed to with respect to the RMG developed by TS and AOL  hereunder);
provided  that  AOL  shall  not  be  required  to  incur  material  costs  after
termination to alter its inclusion of such  information due to material  changes
made to the RMG by TS.

                  2. AOL shall use all  reasonable  efforts to cause the credit,
charge and debit card  companies  through  which AOL bills its customers for the
AOL  Service to charge the same rates for  Services  billings as they charge for
billings for the AOL Service.

<PAGE>



                  3. AOL shall use all  reasonable  efforts to cause the credit,
charge and debit card  companies  through  which AOL bills its customers for the
AOL  Service  to enter  into  direct  arrangements  with TS with  respect to the
billing for the  Services,  including  provision for  continuation  thereof with
respect to any End Users that cease to be  subscribers of the AOL Service or any
other services billed to such End User by AOL.

                  4. With  respect  to any End Users who do not pay their  bills
for the AOL Service through a credit,  charge or debit card, AOL shall,  subject
to applicable law and AOL's terms of service with its subscribers, provide to TS
all  information  available  to AOL with  respect  to such  End  Users as TS may
reasonably request to permit TS to bill such End Users for the Services.

         E.       Use of AOL Marks.

                  1. AOL hereby  grants to TS an exclusive  license  (subject to
the right of AOL and its affiliates to use the AOL Marks in connection  with the
Services) for TS to use the AOL Marks solely in connection with its operation of
the Services for which TS is then the exclusive  provider under this  Agreement;
and AOL hereby  grants to TS an exclusive  license  (subject to the right of AOL
and its affiliates to use the AOL Marks in connection  with the Services) for TS
to use the AOL Marks solely in connection with its operation of the Services for
which TS is then the provider  under this  Agreement on a  non-exclusive  basis,
unless  the  parties  mutually  agree  (such  agreement  not to be  unreasonably
withheld) that the license with respect to those  non-exclusive  Services should
itself be  non-exclusive;  provided  that in both cases TS (i) does not create a
unitary  composite  mark  involving  the AOL Marks  without  the  prior  written
approval of AOL and (ii) displays  symbols and notices clearly and  sufficiently
indicating  the  trademark  status and  ownership of the AOL Marks in accordance
with  applicable  trademark  law and  practice;  and  provided  further that AOL
retains the right to use the AOL Marks in connection with the services  provided
as part of the core business of ANS CO+RE  Systems,  Inc. as of the date hereof.
The foregoing license is personal to TS and may not be sublicensed,  assigned or
otherwise transferred except as provided by Section XII.F. TS acknowledges that:
(i) the AOL Marks are and shall remain the sole property of AOL; (ii) nothing in
this  Agreement  shall confer in TS, and TS shall not represent that it has, any
right of ownership in the AOL Marks; and (iii) TS shall not now or in the future
contest the validity of the AOL Marks.

                  2. TS further  acknowledges  and agrees that no use of the AOL
Marks by TS shall  impair  the  rights  of AOL in the AOL  Marks.  TS  agrees to
reasonably  assist  AOL,  at  AOL's  expense,  to the  extent  necessary  in the
enforcement  and  protection  of  AOL's  rights  in the AOL  Marks.  If a senior
executive  officer of TS learns of any infringements or uses of marks similar to
the AOL

<PAGE>


Marks,  such officer shall inform AOL as soon as reasonably  practicable  and TS
shall  cooperate  with AOL as AOL  reasonably  requests,  at AOL's  expense,  to
protect AOL's rights in the AOL Marks.

                 3.  AOL  agrees  to take  all  reasonable  steps  necessary  to
register and protect the AOL Marks.

                  4.  Use by TS of the  AOL  Marks  with  respect  to  form  and
appearance  shall be subject to the prior  written  approval  of AOL,  not to be
unreasonably withheld.

                  5. TS acknowledges  that, except as provided herein, it is not
authorized hereunder to use the AOL name or logo. Any such use shall require the
prior  written  consent  of AOL and  shall be  subject  to such  conditions  and
restrictions as AOL deems appropriate.

         F.       TS Trademarks and Service Marks.

         This Agreement shall not convey a license to AOL to use any trademarks,
service  marks,  trade names or logos  owned or  otherwise  used by TS.  Nothing
herein  shall  give  AOL  any  right,  title  and  interest  in and to any  such
trademarks,  service marks,  trade names or logos owned or otherwise used by TS,
other than the right to display such trademarks,  service marks,  trade names or
logos in connection with the marketing of the Services.

         G.       Expenses.

                  Except as otherwise  provided  herein or agreed by the parties
in writing,  all costs and expenses of providing the  marketing and  advertising
services referred to in Section III.A.
shall be borne exclusively by AOL.

         H.  Representatives.  AOL shall appoint a technical  representative,  a
marketing  representative,  a billing and customer service  representative and a
project  manager to interface with their  respective TS  counterparts.  If TS is
dissatisfied with any of the foregoing  representatives or manager,  it shall so
inform  AOL and AOL shall  replace  him/her as soon as  reasonably  practicable,
consistent with a smooth transition and AOL's staffing commitments. TS shall not
be  entitled  to have more than one  representative  or manager  replaced in any
six-month  period.  Except as may be the case pursuant to Section XII.H,  no AOL
manager or  representative  appointed  hereunder shall have any right,  power or
authority  to  enter  into any  agreement  for or on  behalf  of,  or incur  any
obligation or liability of, or to otherwise bind, AOL.

         I.      Limitation on AOL Authority. AOL shall have no right, authority
or power, and shall not hold itself out as having the right, power or authority,
to create any contract or obligation,

<PAGE>


express or implied,  binding upon TS,  including,  but not limited to, accepting
orders for Services or agreeing to or offering  prices,  terms or  conditions of
sale that are not in compliance  with the prices and terms and  conditions  that
TS, or TS and AOL, as the case may be, have  developed  and prepared as provided
elsewhere herein.

         J.      Insurance.  So long as AOL  shall  have  executory  obligations
under  this  Agreement,  AOL  shall  maintain  insurance  in  amounts  and types
customary within its industry for companies of comparable size.


                                   ARTICLE IV

                                   TS SERVICES

         A.       Services.

                  1.  The  telecommunications  services  to  be  provided  by TS
hereunder initially shall be the Long Distance Telecommunications Services. Such
Long Distance  Telecommunications  Services  initially will include the services
described  in Schedule C. Subject to Article VII, the Services to be provided by
TS hereunder will be expanded to include Local  Telecommunications  Services and
Commercial Mobile Radio Services as and to the extent offered by TS.

         B.       Provision of Services.

                  1. TS shall provide the Services to all subscribers to the AOL
Service that elect to become End Users,  provided that the initial and continued
provisioning of any such customer will be subject to such credit approvals as TS
may, in its sole discretion, apply.

         C.       Terms of Services.

                  1. The Services  will be offered by TS, as the carrier,  under
the AOL Marks.

                  2. Notwithstanding  anything to the contrary set forth in this
Agreement, the quality, timeliness and efficiency of Services provided hereunder
and  the  performance  by TS of its  other  obligations  hereunder  shall,  at a
minimum,   be  consistent  with   telecommunications   common  carrier  industry
standards,  government regulations and sound business practices and generally of
no lesser  quality  than the best  comparable  services  provided by TS to other
customers.

                  3. The  specific  types of Services  other than Long  Distance
Telecommunications Services, Local Telecommunications

<PAGE>


Services and Commercial  Mobile Radio Services shall be determined  from time to
time by mutual agreement of the parties.

                  4. The  rates to be  charged  by TS for  Services  subject  to
telecommunications  regulation  shall be determined  from time to time by TS, in
its sole  discretion.  TS shall give AOL reasonable  prior notice of prospective
rate  changes  and a  reasonable  opportunity  to consult  with  respect to such
prospective rate changes.  TS's current  intention is that its initial rates for
Long  Distance  Telecommunications  Services  will be as set forth in Schedule D
hereto.  To  the  extent  the  parties  reasonably  agree  that  it  is  legally
permissible to do so with respect to any specific Services,  the rates for those
Services  shall be  determined  from  time to time by  mutual  agreement  of the
parties.

                  5.       Customer Service.

                           a.       TS shall provide  customer  service 24 hours
                                    per day, 7 days per week.

                           b.       TS shall comply with the applicable customer
                                    service  provisions  of the  TS  Performance
                                    List developed pursuant to Article II.

                           c.       If TS  fails  to  conform  to  the  customer
                                    service  standards set forth in this Section
                                    IV.C.5.   above  within   thirty  (30)  days
                                    following  notice  of  such  non-conformance
                                    from AOL,  AOL shall have the right,  at its
                                    discretion  and  as  one  of  its  available
                                    remedies,  either  to  assume  the  customer
                                    service  function  itself or to outsource it
                                    to a third  party  provider.  In that event,
                                    (a) TS shall, at TS's expense, assist AOL in
                                    the  transition  of  the  customer   service
                                    function as AOL may reasonably request,  and
                                    (b)  TS  shall   reimburse   AOL  for  AOL's
                                    reasonable  costs  and  expenses  associated
                                    with   providing   the   customer    service
                                    function. Notwithstanding the foregoing, if,
                                    at any time,  AOL  shall  have  assumed  the
                                    customer  service  function or outsourced it
                                    to a  third  party  provider  and  TS  shall
                                    thereafter  demonstrate to AOL's  reasonable
                                    satisfaction  that  it  can  conform  to the
                                    applicable  customer service  standards,  TS
                                    shall have the right to resume the provision
                                    of the  customer  service  function  and AOL
                                    shall cause the  transition  of the customer
                                    service function back to TS.

                  6. AT&T Reseller  Services.  It is  anticipated by the parties
that the Services will include initially, and TS initially shall provide as part
thereof,  AT&T-based  operator  services,  directory  assistance,  calling  card
services and international. In

<PAGE>


the  event TS  replaces  such  AT&T-based  services,  TS shall  ensure  that the
replacement  services  are of  substantially  equivalent  or better  quality and
price.

                  7.  Network  Integrity.  TS shall  comply with the  applicable
network  integrity  provisions of the TS Performance List developed  pursuant to
Article II.

                  8.       Billing.

                           a.     TS  shall comply with  the applicable  billing
provisions of the TS Performance List developed pursuant to Article II.

                           b.     If TS fails to conform to the billing services
guidelines  developed as part of the  applicable  Performance  List  pursuant to
Article II within thirty (30) days following notice of such non-conformance from
AOL, AOL shall have the right,  at its  discretion  and as one of its  available
remedies,  either to assume the billing services function itself or to outsource
it to a third provider. In that event, (a) TS shall, at TS's expense, assist AOL
in the transition of the billing service function as AOL may reasonably request,
and  (b) TS  shall  reimburse  AOL  for  AOL's  reasonable  costs  and  expenses
associated  with providing the billing  service  function.  Notwithstanding  the
foregoing, if, at any time, AOL shall have assumed the billing services function
or outsourced it to a third party provider and TS shall  thereafter  demonstrate
to AOL's reasonable  satisfaction that it can conform to the applicable  billing
services  standards,  TS shall  have the right to resume  the  provision  of the
billing  services  function  and AOL shall cause the  transition  of the billing
services function back to TS.

                  9.  TS  shall   provide  to  AOL  as  promptly  as  reasonably
practicable  after the end of each month an updated  roster of End Users at such
month-end in order to facilitate  performance  by AOL of its  obligations  under
Section III.B.4.

                  10. TS shall, where possible, make available the Dedicated CIC
and shall  route all  Services to End Users  thereunder  and shall not route any
other  customers of its  telecommunications  services  based thereon  (excluding
customers (i) in Alaska,  Hawaii,  Puerto Rico and the Virgin  Islands,  (ii) in
other areas in the 48  contiguous  states of the United  States where OBN is not
loaded and (iii) in overflow situations where required to manage capacity).  All
non-OBN  traffic  shall be  carried on the AT&T  network.  TS shall use its best
efforts to at all times have the  capability  to route the  Dedicated CIC over a
redundant network.

         D.       Regulatory.

                  1. TS shall be responsible  for obtaining and  maintaining all
federal, state and local consents, approvals and

<PAGE>


licenses  required to be obtained or maintained by TS for TS's  provision of the
Services hereunder other than any consents and approvals or licenses required by
applicable law to be obtained or maintained by AOL by reason of its  performance
of its  obligations  hereunder  or  otherwise,  for all of  which  AOL  shall be
responsible,  and all expenses of obtaining and maintaining such,  including all
tariffs,   taxes,  filings  and  fees  with  respect  thereto,  shall  be  borne
exclusively by the party so responsible for obtaining or maintaining such.

                  2. TS shall file any  required  state and  federal  tariffs in
accordance with applicable law and regulations.

                  3. TS shall pay all federal, state and local taxes required by
applicable law or tariff.

         E.       AT&T.

                  1. Not later than 5:00 p.m. EST on Tuesday, February 25, 1997,
TS shall provide  written  evidence to AOL that a statement  that * * * . During
the Term, TS will use commercially reasonable efforts to maintain the ability so
to * * * . If,  notwithstanding  such efforts,  such statements can no longer be
used in the advertising,  promotion and provision of the Services,  the "Vesting
Multiplier"  applicable to the  Supplemental  Warrant shall,  from and after the
date such statement can no longer so be used (the "Multiplier Adjustment Date"),
be doubled.

                  2. TS shall notify AOL as promptly as  reasonably  practicable
of any changes in its relationship  with AT&T that could have a material adverse
effect on the  performance  of the  parties'  obligations  under this  Agreement
and/or the provision of the Services to End Users.

         F.       LOAs.

                  1. TS shall be the contracting party to the  telecommunication
letters of agency (and any other contracts and agreements with the customers for
the  provision of  telecommunications  services to the End Users,  collectively,
"LOAs")  and thereby be entitled  to all rights  deriving  therefrom.  Except in
connection  with an assignment of this Agreement  permitted by Section XII.F, TS
shall not assign any of the LOAs, i.e., not sell any of the End Users.

         G.       Representatives.

                  1. TS shall  appoint a technical  representative,  a marketing
representative,  a billing and  customer  service  representative  and a project
manager  to  interface  with  their  respective  AOL  counterparts.  If  AOL  is
dissatisfied with any of the foregoing  representatives or manager,  it shall so
inform TS and TS shall replace him/her as soon as reasonably practicable,

<PAGE>


consistent with a smooth transition and TS's staffing commitments. AOL shall not
be entitled to have more than one  representative or manager replaced in any six
month period. Except as may be the case pursuant to Section XII.H, no TS manager
or representative  appointed  hereunder shall have any right, power or authority
to enter  into any  agreement  for or on behalf of, or incur any  obligation  or
liability of, or to otherwise bind, TS.

         H.      Limitation on TS  Authority.  TS shall have no right, authority
or power, and shall not hold itself out as having the right, power or authority,
to create any contract or obligation, express or implied, binding upon AOL.

         I.       Insurance.  So long as TS  shall  have  executory  obligations
under this Agreement, TS shall maintain insurance in amounts and types customary
within its industry for companies of comparable size.


                                    ARTICLE V

                                 PAYMENTS TO AOL

         A.       Initial Payment to AOL.

                  1. On the date hereof,  TS shall pay to AOL an initial payment
in the amount of $100,000,000 (the "Initial Payment").  Up to $57,000,000 of the
Initial  Payment  shall be earned by AOL over time in  increments  in accordance
with the performance milestones set forth in Schedule E.

         B.       Marketing Payments to AOL.

                  1.  In  partial   consideration  of  AOL  providing  marketing
services and  exclusivity  commitments  hereunder,  TS shall make the  following
payments in immediately  available funds wired to AOL's account  pursuant to the
wiring  instructions  attached as Schedule F (which instructions may be modified
in writing by AOL on five (5) days notice):

                           a.      For each calendar quarter ending on March 31,
June 30, September 30 and December 31, commencing with the Effective Date and so
long as this Agreement  shall not have terminated or been  terminated,  TS shall
pay to AOL, in accordance  with the procedures  set forth in Section V.B.3,  the
Quarterly Payment Amount for such quarter.

                           b.      Against the amount of each such payment to be
made to AOL for any calendar  quarter  after  December 31, 1997 and through (and
including) the calendar quarter ending June 30, 2000, there shall be credited to
TS, as of the last day of such quarter,  a portion of the Initial  Payment equal
to the  lesser  of (a)  the  Quarterly  Payment  Amount  for  such  quarter  and
(b)$4,300,000, and such

<PAGE>


amount so credited shall, for all purposes, be deemed to have been paid by TS to
AOL and to have satisfied TS's obligation to AOL in such amount.  The amount, if
any,  by which  $4,300,000  exceeds  the  Quarterly  Payment  Amount in any such
calendar quarter is called a "Quarterly Shortfall Amount".

                  2. If this Agreement shall be terminated by either party prior
to the end of the Term, TS' only  obligation to pay AOL hereunder  (exclusive of
any damages to which AOL may be entitled as a result of such termination)  shall
be as set forth in Articles X and XI hereof.

                  3.  Within  thirty  (30) days  after the end of any period for
which payment is to be made pursuant to Section V.B.1 or V.B.2 hereof,  TS shall
deliver to AOL a statement  of the  Applicable  Profit  Percentage  (for periods
prior to any  termination  hereof)  and  Pre-Tax  Profit for such period and the
amount,  if any, payable to AOL with respect to such period,  showing the manner
in which it was  determined  and  certified  as correct  by the Chief  Financial
Officer of TS.  Such  statement  shall be  accompanied  by a payment of any such
amount.  This Section V.B.3 shall survive the  termination or expiration of this
Agreement.

                  4. TS  shall  keep  for two (2)  years  from  the date of each
payment to AOL  pursuant  to Section  V.B.1  complete  and  accurate  records in
sufficient  detail to allow AOL to determine if TS has computed Gross  Revenues,
Actual  Services Costs and Pre-Tax Profit  accurately.  AOL shall have the right
for a period of two (2) years  after  receiving  any  report or  statement  with
respect  to payment  due to inspect  such  records.  TS shall make such  records
available for inspection during regular business hours at its principal place of
business,  upon reasonable  notice from AOL. Such inspection  right shall not be
exercised  more than once in any calendar  year and shall not be exercised  more
than once with  respect to any  particular  records  furnished by TS to AOL. AOL
agrees to hold in strict confidence all information learned in the course of any
such  inspection,  except  to  the  extent  necessary  for  AOL to  reveal  such
information in order to enforce its rights under this Agreement or if disclosure
is required by law. AOL shall pay for such inspections, except that in the event
there is any upward  adjustment  in payments  owed for any quarter shown by such
inspection  of more than two percent (2%) of the amount  paid,  TS shall pay the
reasonable  costs of such  inspection.  If AOL and TS are unable to agree on the
amount  owed,  then the dispute  shall be resolved  by  arbitration  pursuant to
Section  XI.D  hereof.  Payments  not made  within the time  period set forth in
Section V.B.3 hereof shall bear interest at a rate of one percent (1%) per month
or the highest  rate  permitted by law,  whichever  is lower,  from the due date
until  paid in full.  This  Section  V.B.4  shall  survive  the  termination  or
expiration of this Agreement.

                  5. It is  understood  and agreed  that the  foregoing  payment
terms and conditions in this Section V.B. are in respect

<PAGE>


of the provision of Long Distance  Telecommunications Services only and that the
parties are to mutually  agree as to payment terms and  conditions in respect of
the  provision of Services of any other  nature at the time such other  Services
are to be offered hereunder.


                                   ARTICLE VI

                  WARRANTS; WARRANT HOLDER AND STOCKHOLDERS AGREEMENT

         A.       Warrants.  On the date  hereof and to induce AOL to enter into
the ongoing business  relationship  represented by this Agreement and as partial
consideration therefor,  Holdings is entering into two Warrant Agreements,  each
dated as of the date hereof (collectively,  the "Warrants"),  one giving AOL the
right to acquire 5,000,000 shares of Holdings Common Stock (the "Holdings Common
Stock") on the terms and subject to the conditions  thereof,  and the other (the
"Supplemental  Warrant")  giving AOL the right to acquire up to 7,000,000 shares
of Holdings Common Stock on the terms and subject to the conditions thereof.

         B.       Warrantholder and Stockholders  Agreement. On the date hereof,
AOL, TS and  Holdings  are  entering  into the  Warrantholder  and  Stockholders
Agreement,  dated as of the date hereof (the  "Warrantholders  and  Stockholders
Agreement").


                                   ARTICLE VII

                          EXCLUSIVITY; NON-COMPETITION

         A.       Exclusive Arrangement.

                  1. Except as  specifically  provided in this  Section  VII.A.,
during  the  Term,  TS  shall  be  the  exclusive   provider  of  Long  Distance
Telecommunications  Services, Local  Telecommunications  Services and Commercial
Mobile Radio Services  marketed by AOL (or its affiliates) on the AOL Service to
the AOL Service subscribers; * * * .

                  2. At  such  time,  if any,  that TS  elects  to  offer  Local
Telecommunications  Services and/or  Commercial Mobile Radio Services during the
Term, AOL (or its affiliates)  shall utilize TS as the provider of such Services
marketed as provided herein by AOL (or its affiliates) on the AOL Service to the
AOL Service  subscibers  unless (a) the TS offering of any such  Services to End
Users is not  competitive  (as to End  Users)  with  other  generally  available
offerings of such Services to End Users by other  providers or (b) the inclusion
of  such  offering  in the  Services  would,  in and of  itself,  be  materially
detrimental  to  AOL's  business.  In the  event  of any  such  offering  of new
Services, TS and AOL shall negotiate in good faith an amendment to this

<PAGE>


Agreement  describing  the rollout,  the  marketing  and the  performance  lists
applicable to such offering and setting forth the economic  arrangements between
the  parties in respect  of such  offering,  which  economic  arrangements  will
generally reflect, in respect of such new offering,  the economic  arrangements,
in terms of services  to be  provided  by AOL and  payments to be made by TS, in
respect of Long Distance  Telecommunications  Services provided herein (without,
in any event, giving any effect to the Initial Payment or the Warrants).  If the
parties  are  unable  to reach  agreement  on the terms of such  amendment,  the
amendment  terms will be  submitted  for  resolution  pursuant to Section  XI.D.
hereof and the resolution pursuant thereto shall be, in all respects, binding on
the parties.

                  3.  Notwithstanding  anything in Section VII.A.1 or VII.A.2 to
the  contrary,  if, prior to the date,  if any,  that TS becomes the provider of
Local  Telecommunications  Services or Commercial Mobile Radio Services,  as the
case may be, under this Agreement,  * * * . Notwithstanding  the foregoing,  (a)
AOL shall not, on or before  December 31, 1997,  accept any other Offer from, or
contract with, any party for provision of local  telecommunications  services or
commercial  mobile  radio  services,  and (b) AOL shall not provide  online call
detail for any Restricted  Service as to which TS is then the exclusive provider
hereunder as part of the AOL Service. * * * .

                  4.  Nothing  contained  in this  Agreement  shall  prohibit or
restrict AOL in any manner from selling online advertising to telecommunications
service providers other than TS * * * .

                  5. Except as otherwise  specifically  provided herein,  during
and after the Term, AOL shall have the exclusive right to target market products
and services,  including the Services,  to subscribers to the AOL Service and to
End  Users and TS shall  not,  directly  or  indirectly  (through  subsidiaries,
affiliates or otherwise), knowingly target market subscribers to the AOL Service
or the End Users.  Notwithstanding the foregoing, TS may, directly or indirectly
through a third  party on its  behalf,  telemarket  the  Services to AOL Service
subscribers during periods proximate to the deployment of Pop-Up Ads, so long as
(i) the costs of all such telemarketing are borne solely by TS and excluded from
Actual Services Costs;  (ii) any subscriber  identity  information  necessary to
perform  such  telemarketing  information  is passed  through  a third  party or
otherwise  handled in a manner that is designed  to prevent  disclosure  of such
information  to TS  (other  than  by  virtue  of  TS's  contact  with  any  such
subscribers when and after such subscriber is called);  and (iii) AOL shall have
approved in advance all  procedures,  scripts and other  materials  used in such
telemarketing,  such approval not to be unreasonably withheld; and provided that
AOL shall be  entitled  to limit the  amount,  frequency  and  duration  of such
telemarketing efforts in the event AOL determines, in its reasonable discretion,
that such telemarketing

<PAGE>


efforts  are  resulting  in  significant   subscriber  complaints  or  otherwise
disrupting AOL's relations with its subscribers.

                  6.  Prior  to the  first  anniversary  of  the  date  of  this
Agreement,  without regard to whether or not this Agreement has terminated prior
to such  first  anniversary,  TS shall  not,  directly  or  indirectly  (through
affiliates or  otherwise),  contract with any AOL competitor  (including  online
services,  ISPs, or online content aggregators),  for the marketing or provision
online to their customers of the long distance, local or commercial mobile radio
services then provided by TS or provide any such entity the ability to do online
billing of such services. After such first anniversary date and during the Term,
TS may only so contract subject to payment by TS to AOL of a mutually acceptable
override. Anything to the contrary notwithstanding,  TS may market and provision
for its own account any telecommunications services over the Internet, including
the World Wide Web,  including,  without  limitation,  the  provision  of online
billing for such services.

                  7. During the Term, neither TS nor AOL shall sell or otherwise
transfer any list that specifically  identifies End Users as such. AOL shall not
sell or  otherwise  transfer any list of  subscribers  to the AOL Service to any
provider of a  telecommunications  service in the nature of a Restricted Service
as to which TS is then eligible to be the exclusive  provider  hereunder for the
purpose of, or with the reasonable expectation of, facilitating target marketing
by any party.  TS shall not sell or otherwise  transfer any list of customers of
TS's  telecommunications  services to any  provider of an online  service in the
nature of the AOL Service for the purpose of, or with the reasonable expectation
of, facilitating target marketing by any party.

                  8. The  exclusive  arrangement  set forth in  Section  VII.A.1
hereof does not include  paging  service  offered in  conjunction  with  another
Commercial  Mobile  Radio  Service,  conference  calling  service,   information
services (as defined in the  Communications  Act of 1934,  as amended),  private
line service, the communications  components of Internet Telephony as identified
in the  definition of "Services"  above,  Commercial  Mobile Radio Services used
exclusively  for data services or for data services with ancillary  voice usage,
in either case using a modem or CODEC and,  subject to payment by AOL to TS of a
mutually  acceptable  override  intended to compensate for diverted  traffic and
revenues  (if TS  offers  prepaid  calling  cards,  which it does as of the date
hereof), prepaid calling cards.

                  9. AOL may  elect to  eliminate  its  exclusivity  obligations
and/or cease its marketing  obligations under this Agreement with respect to (a)
Long Distance Telecommunications Services; (b) Local Telecommunication Services;
or (c)  Commercial  Mobile  Radio  Services  if TS's  overall  pricing  for such
category of services exceeds overall prices for such services which are

<PAGE>


generally  available from major carriers so as to be non-competitive  with those
carriers'  offerings.  If an arbitration  concludes,  or the parties agree, that
TS's overall  pricing for such category of Services  exceeds  overall prices for
such services  which are  generally  available  from major  carriers so as to be
non-competitive with those carriers' offerings,  and AOL then separately markets
such services without TS, AOL may sell Pop-Up Ads for those services.

         B.       Confidentiality.

                  1.  Each  party  hereto  shall  treat,  and  shall  cause  its
respective  directors,   officers,   employees,   agents,   representatives  and
consultants to treat, as the other party's confidential  property and not use or
disclose  to  others or  permit  its  directors,  officers,  employees,  agents,
representatives and consultants to use or disclose to others,  without the prior
written consent of such other party, any non-publicly  available  information or
data of such other party  (including,  but not  limited to, the  identity of End
Users or  subscribers  to the AOL  Service  from time to time  hereunder  or any
information  with respect thereto or any technical  information or data provided
by such other  party) that may have  heretofore  or hereafter  been  provided or
disclosed  by  such  other  party  in  connection  with  this   Agreement,   any
negotiations  pertaining  thereto  or to any of  the  transactions  contemplated
hereby.

                  2. The foregoing  Section  VII.B.1 shall not prevent any party
hereto from using or disclosing to others information:  (i) which such party can
show has become part of the public  domain  other than by acts or  omissions  of
such party, its directors,  officers,  employees,  agents,  representatives  and
consultants;  (ii) which has been  furnished to such party by third parties as a
matter of right,  without  restriction on disclosure or use known to such party;
(iii) which was lawfully in such party's possession prior to the time AOL and TS
first entered into discussions  relating to the subject matter of this Agreement
and that was not acquired by such party,  its  directors,  officers,  employees,
agents,  representatives  and consultants  directly or indirectly from the other
party, its employees or agents; (iv) which a party can prove was developed by it
independently of any information  received from such other party, its directors,
officers, employees, agents, representatives and consultants, either directly or
indirectly;  (v) that such party is required to  disclose by  applicable  law or
regulation, in which case the party so required to disclose shall give the other
party prompt notice of such  requirement in all cases with  sufficient  time for
such other party to seek a protective order or other limit on disclosure (unless
the party  subject to the  disclosure  requirement  would  suffer  penalties  or
sanctions for failure to immediately  disclose such information).  It is further
understood and agreed that specific information shall not be deemed available to
the public or in any party's prior possession merely because it is

<PAGE>


embraced by more general information  available to the public or in such party's
prior possession; or (vi) as necessary for the enforcement of this Agreement. In
addition,  (1) either  party may  disclose  the terms of this  Agreement  to the
extent it deems such disclosure  reasonably  necessary under applicable  federal
and state securities  laws,  regulations and policies in connection with its (or
Holdings')  status  as a public  company  and with  transactions  involving  the
offering of its (or Holdings')  securities and (2) either party may disclose the
terms of this  Agreement to third parties as necessary in connection  with other
financing or merger and  acquisition  activities,  provided that, in the case of
clauses  (1) and (2)  above it  seeks to  protect  the  confidentiality  of such
confidential  information  in the same  manner and to the same degree as its own
confidential information, to the full extent that such confidential treatment is
consistent with the purpose of the disclosure.  If either party becomes aware of
any motion or other  regulatory  or court  proceeding  that might  require it to
disclose  any of the terms of this  Agreement,  that party  will give  immediate
written  notice of such motion or proceeding to the other and both parties shall
act  cooperatively  to  retain  the  confidentiality  of the terms  hereof.  For
purposes of this paragraph, "third party", does not include a person (other than
a direct  competitor of AOL or TS or their  respective  affiliates)  retained by
either party to provide  advice,  consultation,  analysis,  legal counsel or any
other services in connection  with this  Agreement,  if such person agrees to be
bound by the confidentiality obligations of this Agreement.

                  3. In the event that this Agreement is terminated, any and all
notes, memoranda, records, drawings, tracings, specifications, sketches, reports
or other documents,  including, without implied limitation, all copies, excerpts
or  reproductions  thereof,  furnished or made available by TS to AOL, or AOL to
TS, as the case may be, their respective directors, officers, employees, agents,
representatives  and consultants or developed thereby (except,  in any case, for
information  necessary to complete the  performance of such party's  obligations
under this Agreement and, in the case of TS, for any information relating to any
End User  hereunder  with respect to the Services,  and, in the case of AOL, any
information  relating to any  subscriber  to the AOL Service with respect to the
AOL Service)  shall be promptly  destroyed  by such party at such other  party's
request  and such  party  shall  advise  such other  party in writing  that such
destruction  has been  completed.  This Section shall survive any termination of
this Agreement.

         C.       Public Announcement.

                  1. No press  release,  public  announcement,  confirmation  or
other  information  regarding  this  Agreement  or the  Warrants or the contents
hereof or thereof shall be made by any party  without the prior written  consent
of the other party,  which consent  shall not be  unreasonably  withheld.  It is
agreed and understood that

<PAGE>


the parties  shall work  together  to prepare  any such press  release or public
announcement. The foregoing notwithstanding,  if a party is required pursuant to
applicable  securities laws to make such a public announcement or press release,
such party shall be  permitted to do so provided  that such party has  furnished
the other  party  with the text of such  public  announcement  or press  release
sufficiently  in  advance of such  public  announcement  or press  release as to
afford the  receiving  party a  reasonable  opportunity  to review  such  public
announcement or press release and such party, to the extent  consistent with its
legal disclosure obligations, modifies such public announcement or press release
as reasonably requested by the other party.


                                  ARTICLE VIII

                         REPRESENTATIONS AND WARRANTIES

         A.       AOL Representations and Warranties.  AOL hereby represents and
warrants to TS as follows:

                  1.  Due  Organization;  Etc.  AOL  (a) is a  corporation  duly
organized,  validly existing and in good standing under the laws of the state of
its organization;  (b) is duly qualified or licensed to do business as a foreign
corporation and is in good standing in each  jurisdiction in which its ownership
or lease of property or its conduct of business  requires it so to be  qualified
or licensed; (c) has all licenses,  authorizations,  consents, orders, approvals
and qualifications  necessary to conduct its business; and (d) has the corporate
power  and  authority  to own its  properties  and  assets  and to  carry on its
business as now conducted.

                  2. Authorization.  The execution,  delivery and performance by
AOL of this  Agreement  are  within  its  corporate  powers  and have  been duly
authorized by all necessary corporate action.

                  3. No Conflict. The execution, delivery and performance by AOL
of this Agreement (i) do not contravene any provision of its charter or by-laws;
and (ii) do not  violate or conflict  with any law,  regulation  or  contractual
restriction  to which it is subject or result in a violation of or conflict with
any other agreement to which it is a party or by which it is bound.

                  4.  Enforceability.  This  Agreement  is the legal,  valid and
binding obligation of AOL, enforceable against AOL in accordance with its terms,
except  as  such  enforceability  may  be  limited  by  applicable   bankruptcy,
insolvency,  moratorium,  reorganization,  or other  laws  affecting  creditors'
rights generally or by the availability of equitable remedies.

<PAGE>



                  5. Acquisition for Investment. AOL is an "accredited investor"
within the meaning of Rule 501 of Regulation D promulgated  under the Securities
Act. AOL is acquiring the Warrants and the Holdings  Common Stock  issuable upon
exercise  thereof for its own account for  investment and not for the account of
others or with a view to the distribution or resale of such Warrants or Holdings
Common Stock.  AOL has such  knowledge and  experience in financial and business
matters  generally  that AOL is capable of evaluating the merits and risks of an
investment in the Warrants and Holdings Common Stock.  AOL is aware that neither
the Warrants nor the Holdings Common Stock issuable upon exercise thereof may be
sold or otherwise transferred absent registration under the Securities Act or an
exemption  therefrom.  AOL  acknowledges  that it has received from Holdings all
financial and other information regarding its investment in the Warrants and the
Holdings  Common Stock issuable upon exercise  thereof that it has requested and
has been afforded the opportunity to discuss such investment with Holdings.  The
only  representations  and  warranties  that  have been  made  with  respect  to
Holdings,  its  subsidiaries,  including TS, or their respective  businesses and
assets or otherwise in connection with the transactions  herein contemplated are
those contained in this Agreement and in the Warrants.

         B.       TS  Representations  and Warranties.  TS hereby represents and
warrants to AOL as follows:

                  1.  Due  Organization;  Etc.  TS  (a)  is a  corporation  duly
organized,  validly existing and in good standing under the laws of the state of
its organization;  (b) is duly qualified or licensed to do business as a foreign
corporation and is in good standing in each  jurisdiction in which its ownership
or lease of property or its conduct of business  requires it so to be  qualified
or licensed; (c) has all licenses,  authorizations,  consents, orders, approvals
and qualifications  necessary to conduct its business; and (d) has the corporate
power  and  authority  to own its  properties  and  assets  and to  carry on its
business as now conducted.

                  2. Authorization.  The execution,  delivery and performance by
TS of this  Agreement  are  within  its  corporate  powers  and have  been  duly
authorized by all necessary corporate action.

                  3. No Conflict. The execution,  delivery and performance by TS
of this Agreement (i) do not contravene any provision of its charter or by-laws;
and (ii) do not  violate or conflict  with any law,  regulation  or  contractual
restriction  to which it is subject or result in a violation of or conflict with
any other agreement to which it is a party or by which it is bound.

                  4.  Enforceability.  This  Agreement  is the legal,  valid and
binding obligation of TS, enforceable against TS in accordance

<PAGE>


 with its terms,  except as such  enforceability  may be  limited by  applicable
bankruptcy,  insolvency,  moratorium,  reorganization,  or other laws  affecting
creditors' rights generally or by the availability of equitable remedies.

                  5.  AOL   Representations.   The  only   representations   and
warranties  that have been made with respect to AOL, its  subsidiaries  or their
respective   businesses   and  assets  or  otherwise  in  connection   with  the
transactions herein contemplated are those contained in this Agreement.


                                   ARTICLE IX

                               THE EFFECTIVE DATE

         A.       The Effective Date

                  1.  Between the date hereof and 5:00 p.m.,  EST, on  Thursday,
February  27,  1997,  AOL may, in its sole  discretion,  consider  whether it is
satisfied  that the  references to AT&T set forth in Section IV.E.1 * * * and do
such investigation as it may deem necessary.  This Agreement and the obligations
of the parties  shall become  effective  for all purposes at 5:00 p.m.,  EST, on
February  27, 1997 if, on or before  such time on such date,  AOL shall not have
given  written  notice  to TS that  it had  elected  not to  proceed  with  this
Agreement,  accompanied by the return of the full amount of the Initial  Payment
to TS and of the  Warrants to Holdings  and (ii) TS has  provided to AOL a legal
opinion reasonably  acceptable to AOL with respect to the valid issuance and due
authorization  of the  Warrants  and (iii) the check  representing  the  Initial
Payment delivered to AOL on the date hereof shall have cleared so long as it was
deposited in a bank on Monday,  February  24, 1997.  Such time on such date that
this Agreement so becomes  effective,  or such earlier time as the parties shall
agree  in  writing  that  this  Agreement  shall be  effective,  is  called  the
"Effective Date."

                  2. If AOL shall elect, as provided  above,  not to proceed and
shall, on or before 5:00 p.m., EST, on February 27, 1997, have returned the full
amount of the Initial Payment to TS and the Warrants to Holdings, this Agreement
and the Warrants  shall be void and of no further force and effect,  without any
further obligation on the part of any party hereto.

         B.       Announcement.

                  Immediately  following the Effective  Date, if it shall occur,
TS  and  AOL  shall  publicly   announce  the  entering  into  the  relationship
contemplated by this Agreement, subject to the parties' mutual agreements on the
content of such announcement and the procedures for the same pursuant to Section
VII.C.

<PAGE>




                                    ARTICLE X

                              TERM AND TERMINATION

         A.       Term of Agreement.

                  1. The term of this Agreement shall be for the Term;  provided
that,  notwithstanding  anything set forth in this Agreement to the contrary, so
long as any End User  shall  be  using  any  Service,  each of TS and AOL  shall
continue  to perform  its  obligations  under  Article IV and  Section  III.D.1,
respectively,  with  respect  to End  Users  post such Term as well as any other
obligations that survive termination or expiration of this Agreement pursuant to
Section XI.K.

         B.       Extension of the Term.

                  1.  If  this  Agreement   shall  not   previously   have  been
terminated,  AOL shall have the right,  by  irrevocable  written notice to TS at
least  ninety (90) days prior to the end of the  initial  Term or the end of any
extension thereof pursuant to the provisions of this Section, to extend the term
of  this  Agreement  for  successive  four-calendar-quarter  periods  (each,  an
"Extension  Period"),  on the same terms and conditions herein provided,  except
that,  against each Quarterly  Payment Amount to be paid to AOL for any calendar
quarter in any Extension Period after the second Extension  Period,  there shall
be credited to TS, as of the last day of such quarter,  a portion of the Initial
Payment  equal  to the  lesser  of (a) * * * of the  amount  that,  but for this
provision,  was to be paid to AOL in respect of such quarter pursuant to Section
V.B.1(a)  hereof and (b) the then remaining  portion of the Initial Payment that
shall not  theretofore  have been  credited  to TS  pursuant  to either  Section
V.B.1.(b)  hereof or this provision,  and such amount so credited shall, for all
purposes,  be deemed to have been paid by TS to AOL and to have  satisfied  TS's
obligation  to AOL in such amount.  Each such notice shall be binding on AOL and
TS for all purposes hereof.

                  2. In connection with each of the first two Extension Periods,
if any,  elected by AOL,  and in  consideration  thereof and to induce AOL so to
extend,  Holdings  shall  deliver  to AOL,  on or  before  the  first day of the
applicable  Extension  Period, a warrant (each, an "Additional  Warrant" and the
Additional  Warrant that is issued with respect to the first  Extension  Period,
the "First  Additional  Warrant" and the Additional  Warrant that is issued with
respect to the second  Extension  Period,  the "Second  Additional  Warrant") to
purchase up to 1,000,000  shares (as such number would have been adjusted  after
the  date  hereof  pursuant  to the  terms  of  the  Supplemental  Warrant,  the
"Additional  Warrant  Number") of Holdings  Common Stock,  at an exercise  price
equal to the average

<PAGE>


of the closing prices of such Common Stock for the ten (10) consecutive business
days before the issuance of such Additional  Warrant,  and  substantially in the
form of the  Supplemental  Warrant,  except  that (a) the  "Vesting  Multiplier"
thereunder  shall be 1 (as such number would have been  adjusted  after the date
hereof pursuant to the terms of the Supplemental  Warrant), (b) the "Termination
Date" shall be the fifth  anniversary  of the issuance  date of such  Additional
Warrant  and (c) the  "Warrant  Shares"  thereunder  shall mean at any time such
number  of  shares  of  Common  Stock as shall  have  vested  as of such time as
follows:

                           (i) such  number of  shares of Common  Stock as shall
                  equal the product of the "Vesting Multiplier" times the amount
                  by which (x) the number  (the "First  Quarter  Number") of End
                  Users for whom TS is providing  Services as of the last day of
                  the first full calendar  quarter of such Extension Period (the
                  "First Vesting Date") exceeds (y) the number of End Users (the
                  "Starting  Number") for whom TS was  providing  services as of
                  the last  day of the  calendar  quarter  next  preceding  such
                  Extension  Period,  shall  vest and  shall be  Warrant  Shares
                  thereunder as of such First Vesting Date; and

                           (ii) such  number of shares of Common  Stock as shall
                  equal the product of the "Vesting Multiplier" times the amount
                  by which  (x) the  number of End Users  (each,  a  "Subsequent
                  Quarter  Number") for whom TS is providing  Services as of the
                  last day of each full calendar  quarter  (each,  a "Subsequent
                  Vesting  Date") after the First  Vesting Date and on or before
                  the last  day of the  full  calendar  quarter  in  which  this
                  Agreement  is  terminated,  exceeds  (y) the  greatest  of the
                  Starting  Number,  the  First  Quarter  Number  and any  prior
                  Subsequent  Quarter  Number,  shall  vest and shall be Warrant
                  Shares thereunder as of such Subsequent Vesting Date;

provided that in no event will the aggregate number of Warrant Shares exceed the
Additional  Warrant  Number,  subject  to  further  adjustment  as  provided  in
Paragraph 6 of such  Additional  Warrant and to  successive  reduction  upon any
exercise of such Additional  Warrant as provided in such Additional  Warrant and
provided,  further,  that no Warrant Shares under the Second Additional  Warrant
shall vest until all  Warrant  Shares  have  vested  under the First  Additional
Warrant  (and no  Warrant  Shares  shall vest  under any  Additional  Warrant on
account of any End User that was the basis of any Warrant  Share  vesting  under
the other Additional Warrant).

<PAGE>




         C.       Termination of Agreement.

                  1.       This Agreement may be terminated as follows:

                           a.     TS and AOL may terminate this Agreement at any
time by mutual written consent.

                           b.      Either TS or AOL may terminate this Agreement
at any time upon 30 days  prior  written  notice to the  other  upon a  material
breach  by the  other  in the  performance  of its  agreements  and  obligations
hereunder  and such other  party's  failure to cure such  breach  within 30 days
after written notice thereof,  provided that the party giving notice pursuant to
this  clause (b) is not in such  breach of this  Agreement  as would  permit the
other party to give a notice pursuant to this clause (b).

                           c.      Either AOL or TS may terminate this Agreement
by  thirty  (30)  days  prior  written  notice  to the  other in the event of an
acquisition  of the other party,  or all or  substantially  all of the assets of
such other party,  through  merger,  asset  acquisition,  stock  acquisition  or
otherwise, by a competitor of the party giving such notice * * * .

                           d.      If, at any  time during the Term, AT&T ceases
to provide long distance  telecommunications  services to TS, TS shall  promptly
inform AOL in writing and AOL may,  upon thirty (30) days  written  notice to TS
given  within  fourteen  (14)  days  after  AOL  receives  notice  of such  AT&T
termination  from  TS,  plus  payment  by AOL to TS of an  amount  equal  to the
aggregate of all amounts  theretofore paid to AOL by TS pursuant to Section V.B.
hereof,  if any (i.e.,  not  including  the  Initial  Payment),  terminate  this
Agreement;  provided,  however,  that AOL shall have no  obligation  to make the
foregoing payment if TS shall not have contracted for viable substitute services
to replace those formerly provided by AT&T.

                           e.       If, as the result, direct or indirect, of an
event  described  in  Section  XII.O,  which  event is either  incurable  or has
continued for at least 60 days, the performance of this Agreement  substantially
as contemplated hereby is rendered impracticable, either AOL or TS may terminate
this Agreement by 30 days prior written notice to the other.

         D.       Effects of Termination.

                  1. Except as otherwise  provided  below,  upon  termination or
expiration of this Agreement,  neither party shall have any further liability or
obligation  to the other,  other than for  amounts  accrued but unpaid as of the
date of expiration on termination,  liabilities for any damages to which a party
may be entitled in connection with a termination  pursuant to Section  X.C.1(b),
obligations   contemplated  to  be  performed  or  observed  subsequent  to  any
termination or expiration of this

<PAGE>


 Agreement and obligations that are  specifically  described herein as surviving
termination of this Agreement.

                  2. Upon the  expiration or any  termination  of this Agreement
after the first day of the Test Launch  Period,  and provided that AOL elects to
continue  to provide to TS online  billing  services of the types  described  in
Section  III.D.  hereof,  TS  shall  pay to AOL,  for each  subsequent  calendar
quarter,  in arrears at the time and in accordance with the procedures set forth
in Section V.B.3 hereof, an amount equal to * * * of the Pre-Tax Profit for such
quarter  derived by TS, or any  successor  to TS, or any third party to which TS
may  assign  customers  who were  End  Users  as of the  date of  expiration  or
termination of this Agreement, from telecommunication  services in the nature of
the  Services  provided  to  customers  who  were  End  Users  as of the date of
expiration or  termination  of this  Agreement.  Such election shall be made not
less than 30 days prior to expiration or 10 days prior to the effective  date of
termination,  as the case may be, by written notice to TS. Against the amount of
each  payment to be made to AOL by TS pursuant to this  Section for any calendar
quarter,  there shall be credited to TS, as of the last day of such quarter,  in
accordance  with the terms of this  Agreement,  an amount equal to the lesser of
(a) * * * of the amount that, but for this  provision,  was to be paid to AOL in
respect of such quarter pursuant to this Section X.D.2 and (b) the amount of (i)
the sum of * * * , plus the aggregate of all * * * , plus * * * , minus (ii) the
sum of the aggregate  amount of * * * , plus any amount  theretofore paid by AOL
to TS pursuant to * * * .

                  3. If this Agreement shall have been terminated by TS pursuant
to  Section  X.C.1(b)  hereof by reason  of a  material  breach by AOL or by AOL
pursuant  to Section  X.C.1(c)  hereof or by either  party  pursuant  to Section
X.C.1(e) hereof, AOL shall, within 10 days after such termination,  pay to TS in
immediately available funds, the amount, if any, equal to the Unamortized Amount
at the time of such termination.

                  4. If this Agreement terminates (other than by AOL pursuant to
Section X.C.1(b)) or expires, in each case, on or after June 30, 2000, and * * *
, then:

                           a.       AOL  shall not * * * and TS shall not * * *,
                                    but AOL and TS may * * * ;

                           b.       AOL shall not * * * ; and

                           c.       If, during the two (2)-year period after the
                                    date of termination  or expiration,  * * * ,
                                    TS experiences  End User  attrition  greater
                                    than it would have experienced had AOL * * *
                                    , then AOL shall make TS whole with  respect
                                    to * * * .

<PAGE>




Other than the  restrictions set forth above in this Section X.D.4, AOL shall be
entitled * * * .

                  5. If at any time  subsequent to the expiration or termination
of this  Agreement,  TS shall make or receive  any offer to  transfer or assign,
directly or indirectly,  all or any portion of its rights to provide Services to
End Users,  which shall in any event  include  assumption by the offeror of TS's
responsibilities  to End Users and  obligations to AOL hereunder,  TS shall give
AOL  written  notice of such  offer,  stating  the name of the  third  party and
describing the offer's material terms. If AOL shall not, within thirty (30) days
after  receiving  such  notice,  offer to  acquire  such  rights  on  terms  and
conditions  substantially similar to those offered by or to such third party (it
being  understood  that  if the  offer  to or  from  the  third  party  includes
securities  of such third party,  AOL shall have no  obligation  to provide such
securities  as part of its offer but shall be  required  to  provide  equivalent
value),  TS shall be free to transfer or assign such rights to such third party,
provided that any such  transaction is completed  within a period of ninety (90)
days after  expiration of the foregoing thirty (30) day period.  Otherwise,  AOL
shall have the right,  exercisable  for thirty (30) days, to acquire such rights
upon the terms set forth in AOL's offer.

                  6.  Termination   without  Cause.   Notwithstanding   anything
provided in this Section  X.D.6 or otherwise in this  Agreement,  neither TS nor
AOL has the right to terminate this Agreement without cause.

                           a. If AOL should nonetheless terminate this Agreement
         without  cause,  TS may elect as its sole remedy,  in lieu of its other
         remedies  in law and  equity,  to be  awarded  liquidated  compensatory
         damages in an amount of $ * * * less amounts previously credited to AOL
         pursuant  to  Section  V.B.1(b).   The  parties  have  agreed  to  this
         liquidated damage clause because of the difficulty of ascertaining with
         accuracy, in advance, the amount of damages that TS would suffer if AOL
         were to terminate  this contract  without  cause.  The parties  further
         agree that (i) these liquidated damage payments are wholly compensatory
         in nature and constitute a reasonable  approximation  of the damages TS
         would actually suffer in the event of a termination by AOL, and (ii) as
         a result of a  termination  by AOL,  TS would  lose  funds  that it had
         invested in its arrangement with AOL and these liquidated damages would
         provide  the  funds  necessary  for  TS  to  establish  and  finance  a
         comparable  arrangement  with another online service if it elects to do
         so.

                           b. If TS should nonetheless  terminate this Agreement
         without  cause,  AOL,  as a remedy  in  addition  to  those it  already
         possesses in equity and in law,  shall be able to require TS to provide
         180 days of Service under this  Agreement  from the date of termination
         or notice of

<PAGE>


         termination,  whichever is earlier.  The purpose of this 180-day period
         is to provide AOL with the time  necessary  reasonably  to transfer End
         Users to other comparable  telecommunications carrier(s) with a minimum
         of disruption.

                           c. For  purposes  of this  Section  X.D.6  only,  the
         parties  further agree that a  termination  made by either party with a
         good faith belief that such party has a right to terminate  pursuant to
         a provision of this  Agreement (a  "Permitted  Termination"),  which is
         ultimately determined not to have been effected pursuant to a provision
         of this Agreement,  will not constitute a termination without cause for
         purposes of this  Section.  A  termination  without  cause shall be any
         termination other than a Permitted Termination.


                                   ARTICLE XI

                                    REMEDIES

         A.       Indemnification.

                  1. Subject to the terms and conditions of this Article XI, AOL
hereby  indemnifies  and agrees to defend and hold  harmless TS from and against
all  losses,  costs,  damages  and  expenses,   including,  without  limitation,
reasonable  attorneys' fees (collectively  "Damages"),  incurred by TS resulting
from or  relating  to (i) a breach  of any  representation  or  warranty  of AOL
contained in this Agreement,  (ii) the  non-performance  of any obligation to be
performed by AOL under this Agreement or (iii) any claim that the AOL Marks that
are authorized by this Agreement  infringe the  intellectual  property rights of
any third party.

                  2. Subject to the terms and  conditions of this Article XI, TS
hereby  indemnifies  and agrees to defend and hold harmless AOL from and against
all Damages  incurred by AOL  resulting  from or relating to (i) a breach of any
representation  or  warranty  of  TS  contained  in  this  Agreement,  (ii)  the
non-performance  of any covenant or  obligation to be performed by TS under this
Agreement or (iii) any claim that any TS trademarks,  service marks, trade names
or logos displayed in connection with the marketing of the Services infringe the
intellectual property rights of any third party.

         B.       Conditions of Indemnification.

                  1. The party seeking indemnification under this Agreement (the
"Indemnified  Party")  shall  promptly  notify  the party  expected  to  provide
indemnification under this Agreement (the "Indemnifying Party") of the facts and
circumstances  upon  which the  Indemnified  Party  intends  to base a claim for
indemnification hereunder ("Notice of Claim"). Notice shall in

<PAGE>


all  events be  considered  prompt if given (a) no later than  thirty  (30) days
after the Indemnified  Party learns of such facts and  circumstances,  or (b) if
later, in sufficient time to allow the Indemnifying Party to exercise its rights
pursuant to this subpart 3 without any material  impairment of, or prejudice to,
the Indemnifying Party in the exercise of such rights.

         C.       Defense of Third-Party Claims.

                  1. Subject to subsection (b) below,  if Damages arise out of a
third  party claim  seeking  recovery of money  damages (a "Money  Claim"),  the
Indemnifying  Party  shall have the right and  obligation,  at its  expense,  to
assume sole control of the defense of such Money Claim with  counsel  reasonably
acceptable  to  the  Indemnified  Party.   Notwithstanding  the  foregoing,  the
Indemnified  Party  shall have the right to employ  its own  counsel in any such
case,  but the fees and expenses of such counsel  shall be at the expense of the
Indemnified  Party unless (x) the  employment  of such  counsel  shall have been
authorized in writing by the  Indemnifying  Party in connection with the defense
of such action at the expense of the Indemnifying Party, or (y) the Indemnifying
Party  shall not have  employed  counsel to have  charge of the  defense of such
action  within a reasonable  time after the Notice of Claim is given,  or having
assumed such  defense,  fails to pursue it within  reasonable  time,  or (z) the
named parties to such claim include both the  Indemnified  and the  Indemnifying
Parties  and the  Indemnified  Party  shall have been  advised  by counsel  that
counsel employed by the Indemnifying Party would, under applicable  professional
standards,  have a conflict in representing both the Indemnifying  Party and the
Indemnified  Party,  in any of  which  events  such  fees  and  expenses  of one
additional  counsel for the Indemnified Party shall be borne by the Indemnifying
Party.  The  Indemnified  Party shall have the right to settle or compromise any
Money Claim and recover the amount paid in such settlement from the Indemnifying
Party without the consent of the Indemnifying Party if the Indemnified Party has
given written  notice  thereof to the  Indemnifying  Party and the  Indemnifying
Party has failed to assume the defense of the Money Claim or, having assumed the
defense,  has failed to pursue it diligently within a reasonable length of time.
The  Indemnifying  Party shall have the right to settle or compromise  any Money
Claim against the Indemnified Party without the consent of the Indemnified Party
provided  that the  terms  of such  settlement  or  compromise  provide  for the
unconditional  release of the Indemnified Party and require the payment of money
damages only by the Indemnifying Party.

                  2.  If  Damages  arise  out of a  third  party  claim  seeking
equitable relief alone or in addition to monetary damages and, if such equitable
relief,  standing alone, if obtained,  would materially and adversely affect the
business, operations, assets or financial condition of the Indemnified Party (an
"Equitable  Claim"),  the  Indemnified  Party  shall be  entitled to defend such
Equitable Claim with counsel reasonably acceptable to the

<PAGE>


Indemnifying  Party in a reasonable  manner under the  circumstances  and at the
reasonable  expense of the Indemnifying  Party. The Indemnifying  Party shall be
provided by counsel to the Indemnified Party with regular information  regarding
the  costs  of such  defense.  The  Indemnifying  Party  shall  be  entitled  to
participate at its own expense in the defense of any such Equitable  Claim.  The
Indemnified  Party  shall  make  no  settlement,   compromise,   admission,   or
acknowledgment   which  would  give  rise  to  liability  on  the  part  of  the
Indemnifying Party without the prior written consent of the Indemnifying  Party,
which shall not be unreasonably withheld or delayed.

                  3. The parties  shall  extend  reasonable  cooperation  to one
another in connection with the defense of any third-party claim pursuant to this
Article  XI  and,  in   connection   therewith,   shall  furnish  such  records,
information,  and testimony and attend such conferences,  discovery proceedings,
hearings, trials, and appeals as may be reasonably requested.

                  4.   Notwithstanding   anything  else  in  this  Agreement  or
elsewhere  contained,  IT IS  EXPRESSLY  UNDERSTOOD  AND AGREED  THAT EXCEPT FOR
LIABILITY  AMONG THE PARTIES HERETO ARISING UNDER SECTIONS IIIE,  IIIF, VIIB AND
VIIC HEREOF, NO PARTY SHALL BE LIABLE TO ANY OTHER PARTY OR ANY OTHER PERSON FOR
ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL LOSSES OR DAMAGES, INCLUDING,
WITHOUT LIMITATION,  LOSS OF GOODWILL OR LOSS OF PROFITS,  ARISING IN ANY MANNER
FROM THIS AGREEMENT OR THE  PERFORMANCE  OR  NONPERFORMANCE  OF ITS  OBLIGATIONS
HEREUNDER.

         D.       Arbitration.

                  1.  If  the  parties  are  unable  to  resolve  any   dispute,
controversy  or claim  arising  under this  Agreement  (excluding,  any disputes
relating to intellectual property rights or confidentiality) (each a "Dispute"),
such  Dispute  will be  submitted  to senior  executive  officers of each of the
parties  for  resolution.  If such  officers  are unable to resolve  the Dispute
within ten (10) days after  submission to them,  the dispute shall be solely and
finally  settled by  arbitration in accordance  with the Commercial  Arbitration
Rules of the American Arbitration  Association ("AAA") then obtaining;  provided
that the Federal Rules of Evidence  shall apply in toto to any such Dispute and,
subject to the  arbitrators'  limiting  the time for and scope of  discovery  to
comply with the time limit set forth in Section  XI.D.4,  the  Federal  Rules of
Civil Procedure shall apply with respect to discovery.

                  2.  The   arbitration   panel   shall  be  composed  of  three
arbitrators,  one of whom shall be chosen by AOL, one by TS and the third by the
two so chosen.  If both or either of AOL or TS fails to choose an  arbitrator or
arbitrators  within seven (7) days after  receiving  notice of  commencement  of
arbitration or if the two arbitrators fail to choose a third  arbitrator  within
seven (7)

<PAGE>


days after their  appointment,  the then  director of the office of the American
Arbitration  Association in the District of Columbia shall,  upon the request of
both or either of the  parties to the  arbitration,  appoint the  arbitrator  or
arbitrators required to complete the board.

                  3. Unless the parties to the arbitration shall otherwise agree
to a place of arbitration,  the place of arbitration shall be in the District of
Columbia.

                  4. The arbitration  panel shall commence  proceedings no later
than  sixty  (60)  days  after the  appointment  of the  third  arbitrator.  All
discovery  shall  be  completed  prior  to  commencement  of  proceedings.  Such
proceedings  shall be  conducted  for no less than  three (3) full days per week
until completed.

                  5. The arbitration  panel is empowered to render the following
awards in  accordance  with the  terms and  conditions  of this  Agreement:  (i)
enjoining a party from performing any act  prohibited,  or compelling a party to
perform any act required,  by the terms of this  Agreement and any order entered
pursuant to this  Agreement  or deemed  necessary  by the  arbitration  panel to
resolve disputes arising under or relating to this Agreement or any order;  (ii)
where, and only where,  violations of this Agreement have been found, shortening
or lengthening  any period  established  by this  Agreement or any order;  (iii)
monetary  awards  and  (iv)  ordering  such  other  legal or  equitable  relief,
including  any  provisional  legal  or  equitable  relief,  or  specifying  such
procedures as the arbitrators deem appropriate, to resolve any Dispute submitted
to it for  arbitration.  The  arbitration  panel shall not be empowered to award
consequential  or punitive  damages and shall not be empowered to award specific
performance  in  the  event  that  such  performance  would  have  a  materially
detrimental  effect on aspects of the  party's  business  that are not  directly
related hereto.

                  6. When  resolving a Dispute  arising  under Article II hereof
and resulting  from the failure of the parties to mutually  agree on a guideline
to be included on the Performance  List of one of the parties,  each party shall
submit to the  arbitrators a form of the particular  guideline  proposed by such
party.  The  arbitrators'  decision  in any such  instance  shall be  limited to
designating  one of the proposals as being the most  consistent  with  generally
accepted industry practice in the context of comparable  business  arrangements.
The proposed guideline so designated by the arbitrators shall be included in the
Performance List of the appropriate party.

                  7. The  arbitrators  shall render their decision within thirty
(30) days after  submission of all evidence and the conclusion of all testimony.
The decision of the arbitrators shall be by majority vote and, at the request of
either  party,  the  arbitration  panel  shall  issue to both  parties a written
explanation of the reasons for the award and a full statement of

<PAGE>


the facts as found and the rules of law applied in reaching its decision.

                  8. Any  monetary  awards shall be made and shall be payable in
U.S.  dollars free of any tax or any other deduction  (except as may be required
by law). Monetary awards shall include interest from the date of breach or other
violation  of this  Agreement  to the date when the  award is paid in full.  The
interest rate or rates applied  during such period shall be the lower of 12% per
annum or the maximum rate permitted by applicable law (the "Interest Rate").

                  9. The  award of the  arbitration  panel  will be the sole and
exclusive  remedy  between  the  parties   regarding  any  and  all  claims  and
counterclaims with respect to the subject matter of the arbitrated  dispute.  An
award rendered in connection with an arbitration shall be final and binding upon
the parties,  and any judgment upon such an award may be entered and enforced in
any court of competent jurisdiction. The parties hereby waive all jurisdictional
defenses in connection with any  arbitration  hereunder or the enforcement of an
order or award rendered pursuant thereto (assuming that the terms and conditions
of this  arbitration  clause have been  complied  with),  defenses  based on the
general invalidity of this Agreement or this arbitration clause. With respect to
any order  issued by the  arbitration  panel  pursuant  to this  Agreement,  the
parties  expressly  agree and  consent  (i) to the  bringing of an action by one
party against the other in the federal courts of the forum state agreed to above
to enforce and confirm such order;  and (ii) that any federal  court  sitting in
such state may enter  judgment and enforce such order,  whether  pursuant to the
U.S. Arbitration Act or otherwise.

                  10.  Neither  party  shall  be  excused  from  performing  its
obligations hereunder during the pendency of such arbitration.

         E.       Reservation  of  Remedies.  Except where  otherwise  expressly
specified,  the rights and remedies  granted to a party under this Agreement are
cumulative  and in addition to, and not in lieu of, any other rights or remedies
which the party may possess at law or in equity.

         F.       Survival.  This Article XI shall survive  termination  of this
Agreement.


                                   ARTICLE XII

                                     GENERAL

         A.       Regulatory  Filings.  Each of TS and AOL will cooperate to the
extent  reasonably  practicable  in the  preparation  and  filing  of any  other
regulatory  filings  necessary or advisable to permit the proposed  transactions
and the provision of the Services

<PAGE>


hereunder,  including,  without limitation,  the provision of any information as
may reasonably be necessary therefor.

         B.       Notices. All notices and other communications  hereunder shall
be given by telephone and  immediately  confirmed in writing and shall be deemed
given if delivered  personally or mailed by registered or certified mail (return
receipt  requested) to the parties at the following  addresses (or at such other
address for a party as shall be specified by like notice):

                  1.       if to TS or Holdings:

                           Tel-Save Holdings, Inc.
                           Law Department
                           6805 Route 202
                           New Hope, Pennsylvania 18938
                           Attention: General Counsel

                           Telephone Number: (215) 862-1500
                           Facsimile Number: (215) 862-1515

                  2.       if to AOL:

                           America Online Inc.
                           22000 AOL Way
                           Dulles, Virginia 20166-9323
                           Attention: General Counsel
                           Telephone Number: (703) 265-2739
                           Facsimile Number: (703) 265-2208

                           with a copy to:

                           Head of Business Affairs
                           AOL Networks
                           22000 AOL Way
                           Dulles, Virginia 20166-9323
                           Telephone Number:  (703) 265-2365
                           Facsimile Number:  (703) 265-1206

         C.       Interpretation.  The headings  contained in this Agreement are
for  reference  purposes  only and shall not  affect in any way the  meaning  or
interpretation of this Agreement. References to Sections, Articles and Schedules
refer to  sections,  articles and exhibits of this  Agreement  unless  otherwise
stated.

         D.       Severability.  If any term, provision, covenant or restriction
of this  Agreement is held by a court of competent  jurisdiction  to be invalid,
void or unenforceable,  the remainder of the terms,  provisions,  covenants, and
restrictions  of this Agreement  shall remain in full force and effect and shall
in no way be affected,  impaired or invalidated  and the parties shall negotiate
in good faith to modify  this  Agreement  to  preserve,  to the  fullest  extent
legally permitted, each party's anticipated

<PAGE>


benefits and obligations  under this Agreement.  If the parties are unable to so
agree, the matter shall be resolved pursuant to Article XI.D hereof.

         E.       Entire  Agreement.  This  Agreement,  together  with the other
agreements referred to herein and the schedules attached hereto, constitutes the
entire  agreement,  and supersedes all other prior agreements and  undertakings,
both  written and oral,  among the parties  with  respect to the subject  matter
hereof.

         F.       Assignments. This Agreement (i) is not intended to confer upon
any  other  person  any  rights or  remedies  hereunder;  and (ii)  shall not be
assigned  by  operation  of law  or  otherwise  except  (a)  to a  wholly  owned
subsidiary  (provided such subsidiary becomes a party to this Agreement and that
the transferring  party agrees and acknowledges that it is not released from its
obligations  hereunder),   or  (b)  to  any  entity  that  may  acquire  all  or
substantially all of the assets of a party hereto. This Agreement, together with
the other agreements referred to herein and the schedules attached hereto, shall
inure to the benefit of and be binding upon the parties'  respective  successors
and permitted assigns.

         G.       Governing  Law.  This  Agreement  shall  be  governed  in  all
respects, including validity, interpretation and effect, by the internal laws of
the State of New York,  without  giving effect to the  principles of conflict of
laws thereof.

         H.       Amendments.  No  provision of this  Agreement  may be amended,
modified  or waived  except by written  agreement  duly  executed by each of the
parties,  by, in the case of AOL, an officer of at least equal  standing to that
officer who signed this Agreement on behalf of AOL.

         I.       Independent  Contractors.  The parties to this  Agreement  are
independent contractors.  Neither party is an agent, representative,  or partner
of the other party.  Neither  party shall have any right,  power or authority to
enter  into any  agreement  for or on  behalf  of, or incur  any  obligation  or
liability of, or to otherwise bind, the other party. This Agreement shall not be
interpreted  or construed to create an  association,  agency,  joint  venture or
partnership between the parties or to impose any liability  attributable to such
a relationship upon either party.

         J.       No  Waiver.  The  failure  of either  party to insist  upon or
enforce strict performance by the other party of any provision of this Agreement
or to exercise any right under this Agreement shall not be construed as a waiver
or  relinquishment to any extent of such part's right to assert or rely upon any
such provision or right in that or any other instance; rather, the same shall be
and remain in full force and effect.

<PAGE>



         K.       Survival.  Any provision of this Agreement which  contemplates
performance  or  observance  subsequent  to, or  otherwise  states that it would
survive,  any  termination  or  expiration  of this  Agreement  will survive the
termination  or  expiration  of this  Agreement.  This Article XII shall survive
termination of this Agreement.

         L.       Third Party Beneficiaries.  This Agreement is intended for the
benefit  of the  parties  hereto  and  thereto,  as the case may be,  and  their
respective  successors and permitted assigns, and are not for the benefit of nor
may any provision  hereof be enforced by, any other person,  including,  without
limitation, any End User (such End Users having no rights whatsoever herein).

         M.       Counterparts.  This Agreement may be executed in any number of
counterparts,  each of which shall constitute an original, but together shall be
construed as one document.

         N.       Nonsolicitation.  Neither  party,  for itself,  or through any
third party shall, directly or indirectly, solicit or attempt to solicit, entice
or  persuade  any  employee  of or  consultant  to the other  party to leave the
services of such other party.

         O.       Force Majeure.  Neither Party shall be held liable for failure
to perform any of its obligations hereunder if such failure is (i) due to an Act
of God, fire, explosion,  accident,  flood,  landslide,  lightning,  earthquake,
storm,  civil  disturbance,  power  failure,  strike or other labor  disturbance
affecting a party other than TS or AOL,  act of war  (whether war be declared or
not), national defense  requirement,  failure of a non-party  telecommunications
carrier,  failure or  disruption  of  machinery,  apparatus  or  systems;  acts,
injunction,  or restraint of government (whether or not now threatened) and (ii)
beyond the reasonable control of such party. For purposes of this Section XII.O,
a failure shall not be deemed to be beyond the  reasonable  control of the party
affected if

                  (i)      such failure would not have occurred had the affected
                           party  been   performing  in   accordance   with  the
                           provisions   of   this   Agreement,   including   its
                           Performance  List,  or in accordance  with  generally
                           accepted industry practice; or

                  (ii)     with respect to acts,  injunctions  or  restraints of
                           governments,  such failure  results from the unlawful
                           act or omission  of the  affected  party  (other than
                           actions contemplated by the parties in furtherance of
                           this Agreement).

Upon  such  an  occurrence,  the  party  whose  performance  is  affected  shall
immediately  give written notice of the occurrence to the other party, and shall
thereafter  exert all  reasonable  efforts to overcome the occurrence and resume
performance of this Agreement.

<PAGE>


If, despite such efforts,  the affected party cannot overcome the occurrence and
resume performance within 90 days following  notification given hereunder,  then
unless either party has  terminated  this  Agreement in accordance  with Section
X.C.1(e),  the parties shall mutually agree on an equitable  resolution.  If the
parties are unable to reach mutual agreement,  the matter shall be submitted for
resolution in accordance with Section XI.D.


                                  ARTICLE XIII

                               HOLDINGS GUARANTEE

                  Holdings hereby unconditionally guarantees to AOL (i) the full
and prompt  payment of all amounts which may become due and owing to AOL from TS
pursuant  to this  Agreement  and (ii) the due  performance  by TS of all of its
obligations  under this  Agreement,  (all of the  foregoing,  collectively,  are
hereinafter  referred to as the  "Guaranteed  Obligations").  The obligations of
Holdings  under  this  Article  shall  not  be  impaired  by  any  modification,
supplement,  extension or amendment of any contract or agreement between AOL and
TS, whether now existing or hereafter arising,  including,  without  limitation,
this Agreement,  nor by any modification,  release or other alteration of any of
the  Guaranteed  Obligations or of any security  therefor,  and the liability of
Holdings  shall apply to the  Guaranteed  Obligations  as so altered,  modified,
supplemented,    extended   or   amended.   No   invalidity,   irregularity   or
unenforceability  of all or any  part of the  Guaranteed  Obligations  or of any
security therefor (including, without limitation, as a result of the bankruptcy,
reorganization  or insolvency of the TS, or pursuant to any  assignment  for the
benefit of creditors,  receivership, or similar proceeding) shall affect, impair
or be a defense to the obligations of Holdings under this Article XIII which are
a primary  obligations of Holdings,  and nothing shall  discharge or satisfy the
liability of Holdings  hereunder  except the full payment and performance of the
Guaranteed  Obligations.  This Article XIII shall  survive  termination  of this
Agreement.

                                      * * *





<PAGE>






         IN WITNESS  WHEREOF,  the undersigned  have caused this Agreement to be
signed on their behalf as of the day and year first written above.

AMERICA ONLINE INC.


By       /s/ David M. Colburn
         -------------------------------
         Name: David M. Colburn
         Title: Senior Vice President


TEL-SAVE, INC.


By       /s/ Daniel Borislow
         -------------------------------
         Name: Daniel Borislow
         Title: Chairman & CEO


TEL-SAVE HOLDINGS, INC.

By       /s/ Daniel Borislow
         -------------------------------
         Name: Daniel Borislow
         Title: Chairman & CEO




<PAGE>

                                                                    CONFIDENTIAL

                                   Schedule A




<PAGE>

Schedule A

ACTUAL SERVICES COSTS


        COST SEGMENT                                 DETERMINATION

Interstate Access                           Specific to state supplied by TMI on
                                            a monthly basis
Intrastate Access                           Specific to state supplied by TMI on
                                            a monthly basis
International Access                        Specific to state supplied by TMI on
                                            a monthly basis
             ***                                            ***
Interstate, Intrastate, and International   Actual  tariff cost to Tel-Save from
Switched Services for servicing unserved    AT&T with applicable discounts based
areas                                       on total Tel-Save usage.  Calculated
                                            in 18 second and 8 second increments
International                               Charge per minute  based on contract
                                            tariff and  applicable  discounts in
                                            18 and 6 second increments          
Connection & SDN Charges for                Charged at $0.002 per minute  billed
International and Overflow  connections     in  six   second   increments   plus
                                            applicable usage                    
             ***                                            ***

PIC Charge to change  reimbursement         Actual   cost   to   reimburse   new
                                            customers  for  the  LEC  charge  to
                                            change IXC PIC                      
Calling Card                                18(cent)per   completed   call  plus
                                            applicable usage
Customer Service                            60(cent)per End User,  revisit after
                                            12 months  with AOL  option to adopt
                                            new cost based on actual and audited
                                            servicing,  personnel,  and  telecom
                                            expenses
Billing                                     Actual   charges   for  credit  card
                                            processing
Amortization/Overhead                       2.0% of total bill
Uncollectables                              Actual uncollectable funds
Credits/Adjustments                         Actual credits and  adjustments  for
                                            billing cycle




<PAGE>

ACCESS COSTS FOR INTERSTATE AND INTRASTATE
To be updated as access is reduced by Local Exchange Carrier from TMI files on a
monthly basis

<TABLE>
<CAPTION>

     STATE       OTHER        OTHER        GTE          GTE          UNITED       UNITED
                 INTER        INTER        INTER        INTER        INTER        INTER
                 ORIG         TERM         ORIG         TERM         ORIG         TERM
<S>              <C>          <C>          <C>          <C>          <C>          <C>
ALABAMA          0.0248690    0.0268390    0.0381421    0.0499541
ALASKA           0.0500000    0.0500000    0.0500000    0.0500000
ARIZONA          0.0285371    0.0265371
ARKANSAS         0.0248774    0.0248774    0.0367722    0.0485012
CALIFORNIA       0.0222033    0.0222033    0.0256877    0.0266877
COLORADO         0.026585     0.0265835
CONNECTICUT      0.0274745    0.0274745
DELAWARE         0.0220000    0.0220000
D.C.             0.0220000    0.0220000
FLORIDA          0.0248690    0.0258390    0.0270190    0.0396190    0.0295197    0.0350807
GEORGIA          0.0248690    0.0288390
HAWAII                                     0.0050000    0.0350000
IDAHO            0.0265371    0.0285371    0.0466057    0.0552857
ILLINOIS         0.0218103    0.0218103    0.0401230    0.0496400
INDIANA          0.0246083    0.0248083    0.0336408    0.0419588    0.0316487    0.0459507
IOWA             0.0265371    0.0265371    0.0410699    0.0483128
KANSAS           0.0248774    0.0248774                              0.0376265    0.0621685
KENTUCKY         0.0248690    0.0268390    0.0374140    0.0469290
LOUISIANA        0.0248690    0.0268390
MAINE            0.0372191    0.0372181
MARYLAND         0.0220000    0.0220000
MASS.            0.0372191    0.0372191
MICHIGAN         0.0254523    0.0254523    0.0373855    0.0477925
MINNESOTA        0.0265371    0.0265371    0.0624690    0.0716690    0.0377255    0.0822655
MISSISSIPPI      0.0248690    0.0268390
MISSOURI         0.0248774    0.0248774    0.0302374    0.0387958    0.0378245    0.0623645
MONTANA          0.0265421    0.0265421    0.0509669    0.0615389
NEBRASKA         0.0285421    0.0265421    0.0373240    0.0419177    0.0375275    0.0620675
NEVADA           0.0269182    0.0269182                              0.0137726    0.0137726
NEW HAMP.        0.0372191    0.0372191
NEW JERSEY       0.0220000    0.0220000                              0.0302582    0.0312712
NEW MEXICO       0.0265371    0.0265371    0.0331642    0.0444722
NEW YORK         0.0362624    0.0382624
NO. CAROLINA     0.0248690    0.0268390    0.0353736    0.0436876    0.0265114    0.0305674
NO. DAKOTA       0.0265371    0.0265371
OHIO             0.0254533    0.0254533    0.0353310    0.0448450    0.0353933    0.0482873
OKLAHOMA         0.0248774    0.0248774    0.0320951    0.0436561
OREGON           0.0265421    0.0265421    0.0350241    0.0456371    0.0476351    0.0628511
PENN.            0.0220000    0.0220000    0.0309838    0.0405008    0.0301082    0.0311232
RHODE ISLAND     0.0372191    0.0372191
S0. CAROLINA     0.0248690    0.0268390    0.0343256    0.0438416    0.0242097    0.0327797
SO. DAKOTA       0.0265371    0.0265371
TENNESSEE        0.0248690    0.0268390                              0.0242587    0.0328287
TEXAS            0.0248374    0.0248374    0.0336265    0.0488165    0.0387155    0.0632555
UTAH             0.0265371    0.0265371
VERMONT          0.0372191    0.0372191
VIRGINIA         0.0220000    0.0220000    0.0429233    0.0547353    0.0240137    0.0325837
WASHINGTON       0.0265371    0.0265371    0.0347073    0.0442243    0.0474551    0.0626711
W. VIRGINIA      0.0220000    0.0220000
WISCONSIN        0.0242993    0.0242993    0.0387878    0.0482848
WYOMING          0.0265371    0.0265371                              0.0381215    0.0626615

AVG COST         0.0268936    0.0272554    0.0376733    0.0465297    0.0326001    0.0454051
</TABLE>


                                       1
<PAGE>

ACCESS COSTS FOR INTERSTATE AND INTRASTATE
To be updated as access is reduced by Local Exchange Carrier from TMI files on a
monthly basis
<TABLE>
<CAPTION>

     STATE       OTHER        OTHER         GTE          GTE           UNITED       UNITED
                 INTRA        INTRA         INTRA        INTRA         INTRA        INTRA
                 ORIG         TERM          ORIG         TERM          ORIG         TERM
<S>              <C>          <C>           <C>          <C>           <C>          <C>      
ALABAMA          0.0184310    0.0184310     0.0329320    0.0368079
ALASKA           0.0500000    0.0500000     0.0500000    0.0500000
ARIZONA          0.0413882    0.0552170
ARKANSAS         0.0171454    0.0171454     0.0247144    0.0247144
CALIFORNIA       0.0106331    0.0106331     0.0252765    0.0249790
COLORADO         0.0484920    0.0583830
CONNECTICUT      0.0274692    0.0274692
DELAWARE         0.0149040    0.0249040
D.C.
FLORIDA          0.0263882    0.0349182     0.0559929    0.0681251     0.0658033    0.0734033
GEORGIA          0.0184342    0.0184342
HAWAII                                      0.0350000    0.0350000
IDAHO            0.0389071    0.0446071     0.1210000    0.1190000
ILLINOIS         0.0153893    0.0153893     0.0269911    0.0282688
INDIANA          0.0237213    0.0237213     0.0340897    0.040569
IOWA             0.0354717    0.0459117     0.0690030    0.0697443
KANSAS           0.0382030    0.0421830                                0.0988820    0.0997070
KENTUCKY         0.0149304    0.0149304
LOUISIANA        0.0209992    0.0257492
MAINE            0.2162800    0.1028600
MARYLAND         0.0239875    0.0239875
MASS.            0.0082470    0.0373370
MICHIGAN         0.0241044    0.0241044     0.0378386    0.0477925
MINNESOTA        0.0274213    0.0546183     0.0599495    0.0888815     0.0523780    0.0717220
MISSISSIPPI      0.0251472    0.0271172
MISSOURI         0.0261800    0.0343130     0.0743483    0.1158612     0.0823230    0.1232230
MONTANA          0.0262087    0.0262087     0.0566871    0.0566871
NEBRASKA         0.0592550    0.0783550     0.0717579    0.1042748     0.0855610    0.1267810
NEVADA           0.0298640    0.0298640                                0.0116143    0.0116143
NEW HAMP.        0.0358190    0.0358190
NEW JERSEY       0.0321340    0.0321340                                0.0473470    0.0473470
NEW MEXICO       0.0558800    0.0558800     0.0976368    0.0987636
NEW YORK         0.0446480    0.0446480
NO. CAROLINA     0.0332722    0.0650722     0.0479884    0.0905676     0.0268000    0.0690000
NO. DAKOTA       0.0591000    0.0591000
OHIO             0.0209413    0.0217103     0.0254827    0.0568089     0.0368503    0.0657503
OKLAHOMA         0.0248694    0.0548694     0.0575194    0.0410184
OREGON           0.0224284    0.0382214     0.0365995    0.0529869     0.0447708    0.0660808
PENN.            0.0344015    0.0344015     0.0629748    0.0829748     0.0486800    0.0727400
RHODE ISLAND     0.0720000    0.0152520
S0. CAROLINA     0.0294633    0.0458533     0.0314857    0.0304373     0.0168136    0.1080386
SO. DAKOTA       0.0297437    0.0297437
TENNESSEE        0.0400712    0.0538112                                0.0205846    0.0273816
TEXAS            0.0446000    0.0718000     0.0477575    0.0868575     0.0468000    0.0988000
UTAH             0.0242497    0.0404497
VERMONT          0.0369100    0.0536580
VIRGINIA         0.0261860    0.0261860     0.0378184    0.0378184     0.0518540    0.0756540
WASHINGTON       0.0327200    0.0455200     0.0423512    0.0600584     0.0461100    0.0919800
W. VIRGINIA      0.0272460    0.0272460     0.0587235    0.0587235
WISCONSIN        0.0187743    0.0187743     0.0334258    0.0399541
WYOMING          0.0402237    0.0522227                                0.1008380    0.1032380

AVG COST         0.0348342    0.0382696     0.0501238    0.0601495     0.0487732    0.0767002
</TABLE>


                                       2

<PAGE>


         INTERNATIONAL COSTS

INTERNATIONAL COSTS/MINUTE
- APPLICABLE  DISCOUNTS  APPLY BASED ON TOTAL  TEL-SAVE USAGE PER TARIFF
- TO BE UPDATED AS RATES ARE REDUCED BY IXC
<TABLE>
<CAPTION>
                          INITIAL        EACH           INITIAL           EACH           INITIAL           EACH           INITIAL   
       COUNTRY             1ST 18      6 SEC. OR        1ST 18         6 SEC. OR          1ST 18        6 SEC. OR          1ST 18   
<S>                       <C>                        <C>              <C>              <C>             <C>              <C>         
Albania                   $ 0.3795     $  0.1265     $  0.3605250     $  0.1201750     $  0.3510375    $  0.1170125     $  0.1138500
Algeria                   $ 0.2895     $  0.0965     $  0.2750250     $  0.0916750     $  0.2677875    $  0.0892625     $  0.2605500
American Samoa            $ 0.2430     $  0.0810     $  0.2308500     $  0.0769500     $  0.2247750    $  0.0749250     $  0.2187000
Andorra                   $ 0.1485     $  0.0495     $  0.1410750     $  0.0470250     $  0.1373625    $  0.0457875     $  0.1336500
Angola                    $ 0.4050     $  0.1350     $  0.3847500     $  0.1282500     $  0.3746250    $  0.1248750     $  0.3645000
Anguilla                  $ 0.1890     $  0.0630     $  0.1795500     $  0.0598500     $  0.1748250    $  0.0582750     $  0.1701000
Antarctica                $ 0.3750     $  0.1250     $  0.3562500     $  0.1187500     $  0.3468750    $  0.1156250     $  0.3375000
Antigua and Barbuda       $ 0.1860     $  0.0620     $  0.1767000     $  0.0589000     $  0.1720500    $  0.0573500     $  0.1674000
Argentina                 $ 0.2432     $  0.0811     $  0.2310400     $  0.0770450     $  0.2249600    $  0.0750175     $  0.2188800
Armenia                   $ 0.3069     $  0.1023     $  0.2915550     $  0.0971850     $  0.2838825    $  0.0946275     $  0.2762100
Aruba                     $ 0.1788     $  0.0596     $  0.1698600     $  0.0566200     $  0.1653900    $  0.0551300     $  0.1609200
Australia                 $ 0.0789     $  0.0263     $  0.0749550     $  0.0249850     $  0.0729825    $  0.0729825     $  0.0710100
Austria                   $ 0.1579     $  0.0526     $  0.1500050     $  0.0499700     $  0.1460575    $  0.0486550     $  0.1421100
Azerbaijan                $ 0.4050     $  0.1350     $  0.3847500     $  0.1282500     $  0.3746250    $  0.1248750     $  0.3645000
Bahamas, The              $ 0.0879     $  0.0293     $  0.0835050     $  0.2078350     $  0.0813075    $  0.0271025     $  0.0791100
Bahrain                   $ 0.2656     $  0.0885     $  0.2523200     $  0.0840750     $  0.2456800    $  0.0818625     $  0.2390400
Bangladesh                $ 0.3885     $  0.1295     $  0.3690750     $  0.1230250     $  0.3593625    $  0.1197875     $  0.3496500
Barbados                  $ 0.1583     $  0.0528     $  0.1503850     $  0.0501600     $  0.1464275    $  0.0488400     $  0.1424700
Belarus                   $ 0.3054     $  0.1018     $  0.2901300     $  0.0967100     $  0.2824950    $  0.0941650     $  0.2748600
Belgium                   $ 0.1232     $  0.0411     $  0.1170400     $  0.0390450     $  0.1139600    $  0.0380175     $  0.1108800
Belize                    $ 0.2490     $  0.0830     $  0.2365500     $  0.0788500     $  0.2303250    $  0.0767750     $  0.2241000
Benin                     $ 0.2679     $  0.0893     $  0.2545050     $  0.0848350     $  0.2478075    $  0.0826025     $  0.2411100
Bermuda                   $ 0.1358     $  0.0453     $  0.1290100     $  0.0430350     $  0.1256150    $  0.0419025     $  0.1222200
Bhutan                    $ 0.8550     $  0.2850     $  0.8122500     $  0.2707500     $  0.7908750    $  0.2636250     $  0.7695000
Bolivia                   $ 0.2530     $  0.0843     $  0.2403500     $  0.0800850     $  0.2340250    $  0.0779775     $  0.2277000
Bosnia and Herzegovin     $ 0.2839     $  0.0946     $  0.2697050     $  0.0898700     $  0.2626075    $  0.0875050     $  0.2555100
Botswana                  $ 0.2396     $  0.0799     $  0.2276200     $  0.0759050     $  0.2216300    $  0.0739075     $  0.2156400
Brazil                    $ 0.1421     $  0.0474     $  0.1349950     $  0.0450300     $  0.1314425    $  0.0438450     $  0.1278900
Brunei                    $ 0.3914     $  0.1305     $  0.3718300     $  0.1239750     $  0.3620450    $  0.1207125     $  0.3522600
Bulgaria                  $ 0.2430     $  0.0810     $  0.2308500     $  0.0769500     $  0.2247750    $  0.0749250     $  0.2187000
</TABLE>
                             EACH      
       COUNTRY            6 SEC. OR    

Albania                   $ 0.1138500  
Algeria                   $ 0.0868500  
American Samoa            $ 0.0729000  
Andorra                   $ 0.0445500  
Angola                    $ 0.1215000  
Anguilla                  $ 0.0567000  
Antarctica                $ 0.1125000  
Antigua and Barbuda       $ 0.0558000  
Argentina                 $ 0.0729900  
Armenia                   $ 0.0920700  
Aruba                     $ 0.0536400  
Australia                 $ 0.0236700  
Austria                   $ 0.0473400  
Azerbaijan                $ 0.1215000  
Bahamas, The              $ 0.0263700  
Bahrain                   $ 0.0796500  
Bangladesh                $ 0.1165500  
Barbados                  $ 0.0475200  
Belarus                   $ 0.0916200  
Belgium                   $ 0.0369900  
Belize                    $ 0.0747000  
Benin                     $ 0.0803700  
Bermuda                   $ 0.0407700  
Bhutan                    $ 0.2565000  
Bolivia                   $ 0.0758700  
Bosnia and Herzegovin     $ 0.0851400  
Botswana                  $ 0.0719100  
Brazil                    $ 0.0426600  
Brunei                    $ 0.1174500  
Bulgaria                  $ 0.0729000  

                                     Page 1

<PAGE>
<TABLE>
<CAPTION>
                          INITIAL        EACH           INITIAL           EACH           INITIAL           EACH           INITIAL   
       COUNTRY             1ST 18      6 SEC. OR        1ST 18         6 SEC. OR          1ST 18        6 SEC. OR          1ST 18   
<S>                       <C>                        <C>              <C>              <C>                              <C>
Burkina                   $ 0.1916     $  0.0639     $  0.1820200     $  0.0607050     $  0.1772230    $  0.0591075     $  0.1724400
Burma                     $ 1.0050     $  0.3350     $  0.9547500     $  0.3182500     $  0.9296250    $  0.3098750     $  0.9045000
Burundi                   $ 0.8609     $  0.2870     $  0.8178550     $  0.2726500     $  0.7963325    $  0.2654750     $  0.7748100
Cambodia                  $ 0.5826     $  0.1942     $  0.5534700     $  0.1844900     $  0.5389050    $  0.1796350     $  0.5243400
Cameroon                  $ 0.3467     $  0.1156     $  0.3293650     $  0.1098200     $  0.3206975    $  0.1069300     $  0.3120300
Canada                    $ 0.0379     $  0.0126     $  0.0360050     $  0.0119700     $  0.0350575    $  0.0116550     $  0.0341100
Canary Island             $ 0.0060     $  0.0020     $  0.0057000     $  0.0019000     $  0.0055500    $  0.0018500     $  0.0054000
Cape Verde                $ 0.0405     $  0.1335     $  0.3804750     $  0.1268250     $  0.3704625    $  0.1234875     $  0.3604500
Cayman Islands            $ 0.1640     $  0.0547     $  0.1558000     $  0.0519650     $  0.1517000    $  0.0505975     $  0.1476000
Central African           $ 0.6360     $  0.2120     $  0.6042000     $  0.2014000     $  0.5883000    $  0.1961000     $  0.5724000
Republic
Chad                      $ 1.0710     $  0.3570     $  1.0174500     $  0.3391500     $  0.9906750    $  0.3302250     $  0.9639000
Chagos Archlpelago        $ 0.3670     $  0.1225     $  0.3486500     $  0.1163750     $  0.3394750    $  0.1133125     $  0.3303000
Chile                     $ 0.1215     $  0.0405     $  0.1154250     $  0.0384750     $  0.1123875    $  0.0374625     $  0.1093500
China                     $ 0.3379     $  0.1126     $  0.3210050     $  0.1069700     $  0.3125575    $  0.1041550     $  0.3041100
Colombia                  $ 0.2148     $  0.0716     $  0.2040600     $  0.0680200     $  0.1986900    $  0.0662300     $  0.1933200
Cornoros                  $ 0.6647     $  0.2216     $  0.6314650     $  0.2105200     $  0.6148475    $  0.2049800     $  0.5982300
Congo                     $ 0.3224     $  0.1075     $  0.3062800     $  0.1021250     $  0.2982200    $  0.0994375     $  0.2901600
Cook Islands              $ 0.7078     $  0.2359     $  0.6724100     $  0.2241050     $  0.6547150    $  0.2182075     $  0.6370200
Costa Rico                $ 0.8132     $  0.0611     $  0.1740400     $  0.0580450     $  0.1694600    $  0.0565175     $  0.1648800
Cote d'Ivoire             $ 0.3628     $  0.1209     $  0.3446600     $  0.1148550     $  0.3355900    $  0.1118325     $  0.3265200
Croatia                   $ 0.2180     $  0.0727     $  0.2071000     $  1.0690650     $  0.2016500    $  0.0672475     $  0.1962000
Cuba                      $ 0.2976     $  0.0992     $  0.2827200     $  0.0942400     $  0.2752800    $  0.0917600     $  0.2678400
Cyprus                    $ 0.2180     $  0.0727     $  0.2071000     $  0.0690650     $  0.2016500    $  0.0672475     $  0.1962000
Czech Republic            $ 0.2180     $  0.0727     $  0.2071000     $  0.0690500     $  0.2016500    $  0.0674750     $  0.1962000
Denmark                   $ 0.1579     $  0.0526     $  0.1500050     $  0.0499700     $  0.1460575    $  0.0486550     $  0.1421100
Djibouti                  $ 0.4569     $  0.1523     $  0.4340550     $  0.1446850     $  0.4226325    $  0.1408775     $  0.4112100
Dominica                  $ 0.1971     $  0.0657     $  0.1872450     $  0.0624150     $  0.1823175    $  0.0607725     $  0.1773900
Dominican Republic        $ 0.1170     $  0.0390     $  0.1111500     $  0.0370500     $  0.1082250    $  0.0360750     $  0.1053000
Ecuador                   $ 0.2492     $  0.0831     $  0.2367400     $  0.0789450     $  0.2305100    $  0.0768675     $  0.2242800
Egypt                     $ 0.2767     $  0.0922     $  0.2628650     $  0.0875900     $  0.2559475    $  0.0852850     $  0.2490300
El Salvador               $ 0.2235     $  0.0745     $  0.2123250     $  0.0707750     $  0.2067375    $  0.0689125     $  0.2011500
Equatorial Guinea         $ 0.6338     $  0.2113     $  0.6021100     $  0.2007350     $  0.5862650    $  0.1954525     $  0.5704200
Estonia                   $ 0.3047     $  0.1016     $  0.2894650     $  0.0965200     $  0.2818475    $  0.0939800     $  0.2742300
</TABLE>
                             EACH      
       COUNTRY            6 SEC. OR    

Burkina                   $ 0.0575100 
Burma                     $ 0.3015000 
Burundi                   $ 0.2583000 
Cambodia                  $ 0.1747800 
Cameroon                  $ 0.1040400 
Canada                    $ 0.0113400 
Canary Island             $ 0.0018000 
Cape Verde                $ 0.1201500 
Cayman Islands            $ 0.0492300 
Central African           $ 0.1908000 
Republic                              
Chad                      $ 0.3213000 
Chagos Archlpelago        $ 0.1102500 
Chile                     $ 0.0364500 
China                     $ 0.1013400 
Colombia                  $ 0.0644400 
Cornoros                  $ 0.1994400 
Congo                     $ 0.0967500 
Cook Islands              $ 0.2123100 
Costa Rico                $ 0.0549900 
Cote d'Ivoire             $ 0.1088100 
Croatia                   $ 0.0654430 
Cuba                      $ 0.0892800 
Cyprus                    $ 0.0654300 
Czech Republic            $ 0.0654300 
Denmark                   $ 0.0473400 
Djibouti                  $ 0.1370700 
Dominica                  $ 0.0591300 
Dominican Republic        $ 0.0351000 
Ecuador                   $ 0.0747900 
Egypt                     $ 0.0829800 
El Salvador               $ 0.0670500 
Equatorial Guinea         $ 0.1901700 
Estonia                   $ 0.0914400 
                      
                                     Page 2

<PAGE>
<TABLE>
<CAPTION>
                          INITIAL        EACH           INITIAL           EACH           INITIAL           EACH           INITIAL   
       COUNTRY             1ST 18      6 SEC. OR        1ST 18         6 SEC. OR          1ST 18        6 SEC. OR          1ST 18   
<S>                       <C>          <C>           <C>              <C>              <C>             <C>              <C>
Ethiopia                  $ 0.3887     $  0.1296     $  0.3692650     $  0.1231200     $  0.3595475    $  0.1198800     $  0.3498300
Fiji                      $ 0.3783     $  0.1261     $  0.3593850     $  0.1197950     $  0.3499275    $  0.1166425     $  0.3404700
Finland                   $ 0.1211     $  0.0404     $  0.1150450     $  0.0383800     $  0.1120175    $  0.0373700     $  0.1089900
France                    $ 0.0632     $  0.0211     $  0.0600400     $  0.0200450     $  0.0584600    $  0.0195175     $  0.0568800
French Guiana             $ 0.2386     $  0.0795     $  0.2266700     $  0.0755250     $  0.2207050    $  0.0735375     $  0.2147400
French Overseas           $ 0.2175     $  0.0725     $  0.2066250     $  0.0688750     $  0.2011875    $  0.0670625     $  0.1957500
French Polynesia          $ 0.4040     $  0.1347     $  0.3838000     $  0.1279650     $  0.3737000    $  0.1245975     $  0.3636000
Gabon                     $ 0.2526     $  0.0842     $  0.2399700     $  0.0799900     $  0.2336550    $  0.0778850     $  0.2273400
Gambia, The               $ 0.2482     $  0.0827     $  0.2357900     $  0.0785650     $  0.2295850    $  0.0764975     $  0.2233800
Georgia                   $ 0.5100     $  0.1700     $  0.4845000     $  0.1615000     $  0.4717500    $  0.1572500     $  0.4590000
Germany                   $ 0.0632     $  0.0211     $  0.0600400     $  0.0200450     $  0.0584600    $  0.0195175     $  0.0568800
Ghana                     $ 0.2718     $  0.0906     $  0.2582100     $  0.0860700     $  0.2514150    $  0.0838050     $  0.2446200
Gibraltar                 $ 0.2386     $  0.0795     $  0.2266700     $  0.0755250     $  0.2207050    $  0.0735375     $  0.2147400
Greece                    $ 0.2053     $  0.0648     $  0.1950350     $  0.0615600     $  0.1899025    $  0.0599400     $  0.1847700
Greenland                 $ 0.2087     $  0.0696     $  0.1982650     $  0.0661200     $  0.1930475    $  0.0643800     $  0.1878300
Grenada                   $ 0.2037     $  0.0679     $  0.1935150     $  0.0645050     $  0.1884225    $  0.0628075     $  0.1833300
Guadeloupe                $ 0.2961     $  0.0987     $  0.2812950     $  0.0937650     $  0.2738925    $  0.0912975     $  0.2664900
Guam                      $ 0.1976     $  0.0659     $  0.1877200     $  0.0626050     $  0.1827800    $  0.0609575     $  0.1778400
Guatemala                 $ 0.2136     $  0.0712     $  0.2029200     $  0.0674000     $  0.1975800    $  0.0658600     $  0.1922400
Guinea-Bissau             $ 0.5976     $  0.1992     $  0.5677200     $  0.1892400     $  0.5527800    $  0.1842600     $  0.5378400
Guinea                    $ 0.3981     $  0.1327     $  0.3781950     $  0.1260650     $  0.3682425    $  0.1227475     $  0.3582900
Guyana                    $ 0.3030     $  0.1010     $  0.2878500     $  0.0959500     $  0.2802750    $  0.0934250     $  0.2727000
Haiti                     $ 0.2251     $  0.0750     $  0.2138450     $  0.0712500     $  0.0208175    $  0.0693750     $  0.2025900
Honduras                  $ 0.2716     $  0.0905     $  0.2580200     $  0.0859750     $  0.2512300    $  0.0837125     $  0.2444400
Hong Kong                 $ 0.1283     $  0.0428     $  0.1218850     $  0.0406600     $  0.1186775    $  0.0395900     $  0.1154700
Hungary                   $ 0.2180     $  0.0727     $  0.2071000     $  0.0690650     $  0.2016500    $  0.0672475     $  0.1962000
Iceland                   $ 0.2507     $  0.0836     $  0.2381650     $  0.0794200     $  0.2318975    $  0.0773300     $  0.2256300
India                     $ 0.2905     $  0.0986     $  0.2759750     $  0.0936700     $  0.2687125    $  0.0912050     $  0.2614500
Indonesia                 $ 0.3388     $  0.1129     $  0.3218600     $  0.1072550     $  0.3133900    $  0.1044325     $  0.3049200
Iran                      $ 0.2866     $  0.0955     $  0.2722700     $  0.0907250     $  0.2651050    $  0.0883375     $  0.2579400
Iraq                      $ 0.4955     $  0.1652     $  0.4707250     $  0.1569400     $  0.4583375    $  0.1528100     $  0.4459500
Ireland                   $ 0.1225     $  0.0408     $  0.1163750     $  0.0387600     $  0.1133125    $  0.0377400     $  0.1102500
Israel                    $ 0.2433     $  0.0811     $  0.2311350     $  0.0770450     $  0.2250525    $  0.0750175     $  0.2189700
</TABLE>
                             EACH      
       COUNTRY            6 SEC. OR    

Ethiopia              $ 0.1166400 
Fiji                  $ 0.1134900 
Finland               $ 0.0363600 
France                $ 0.0189900 
French Guiana         $ 0.0715500 
French Overseas       $ 0.0652500 
French Polynesia      $ 0.1212300 
Gabon                 $ 0.0757800 
Gambia, The           $ 0.0744300 
Georgia               $ 0.1530000 
Germany               $ 0.0189900 
Ghana                 $ 0.0815400 
Gibraltar             $ 0.0715500 
Greece                $ 0.0583200 
Greenland             $ 0.0626400 
Grenada               $ 0.0611100 
Guadeloupe            $ 0.0888300 
Guam                  $ 0.0593100 
Guatemala             $ 0.0640800 
Guinea-Bissau         $ 0.1792800 
Guinea                $ 0.1194300 
Guyana                $ 0.0909000 
Haiti                 $ 0.0675000 
Honduras              $ 0.0814500 
Hong Kong             $ 0.0385200 
Hungary               $ 0.0654300 
Iceland               $ 0.0752400 
India                 $ 0.0887400 
Indonesia             $ 0.1016100 
Iran                  $ 0.0859500 
Iraq                  $ 0.1486800 
Ireland               $ 0.0367200 
Israel                $ 0.0729900 

                                     Page 3

<PAGE>
<TABLE>
<CAPTION>
                          INITIAL        EACH           INITIAL           EACH           INITIAL           EACH           INITIAL   
       COUNTRY             1ST 18      6 SEC. OR        1ST 18         6 SEC. OR          1ST 18        6 SEC. OR          1ST 18   
<S>                       <C>          <C>           <C>              <C>              <C>             <C>              <C>
Italy                     $ 0.1263     $  0.0421     $  0.1199850     $  0.0399950     $  0.1168275    $  0.0389425     $  0.1136700
Jamaica                   $ 0.2069     $  0.0690     $  0.1965550     $  0.0655500     $  0.1913825    $  0.0638250     $  0.1862100
Japan                     $ 0.0915     $  0.0305     $  0.0869250     $  0.0289750     $  0.0846375    $  0.0282125     $  0.0823500
Jordan                    $ 0.2526     $  0.0842     $  0.2399700     $  0.0799900     $  0.2336550    $  0.0778850     $  0.2273400
Kazakhstan                $ 0.5069     $  0.1690     $  0.4815550     $  0.1605500     $  0.4688825    $  0.1563250     $  0.4562100
Kenya                     $ 0.2494     $  0.0831     $  0.2369300     $  0.0789450     $  0.2306950    $  0.0768675     $  0.2244600
Kiribati                  $ 0.8058     $  0.2686     $  0.7655100     $  0.2551700     $  0.7453650    $  0.2484550     $  0.7252200
Korea, South              $ 0.1688     $  0.0563     $  0.1603600     $  0.0534850     $  0.1561400    $  0.0520775     $  0.1519200
Kuwait                    $ 0.2818     $  0.0939     $  0.2677100     $  0.0892050     $  0.2606650    $  0.0868575     $  0.2536200
Kyrgyzstan                $ 0.5285     $  0.1762     $  0.5020750     $  0.1673900     $  0.4886250    $  0.1629850     $  0.4756500
Laos                      $ 0.8230     $  0.2743     $  0.7818500     $  0.2605850     $  0.7612750    $  0.2537275     $  0.7407000
Latvia                    $ 0.2985     $  0.0995     $  0.2835750     $  0.0945250     $  0.2761125    $  0.0920375     $  0.2686500
Lebanon                   $ 0.4143     $  0.1381     $  0.3935850     $  0.1311950     $  0.3832275    $  0.1277425     $  0.3728700
Lesotho                   $ 0.2977     $  0.0992     $  0.2828150     $  0.0942400     $  0.2753725    $  0.0917600     $  0.2679300
Liberia                   $ 0.1860     $  0.0620     $  0.1767000     $  0.0589000     $  0.1720500    $  0.0573500     $  0.1674000
Libya                     $ 0.3041     $  0.1014     $  0.2888950     $  0.0963300     $  0.2812925    $  0.0937950     $  0.2736900
Liechtenstein             $ 0.2022     $  0.0674     $  0.1920900     $  0.0640300     $  0.1870350    $  0.0623450     $  0.1819800
Lituania                  $ 0.3050     $  0.1017     $  0.2897500     $  0.0966150     $  0.2821250    $  0.0940725     $  0.2745000
Luxembourg                $ 0.1832     $  0.0611     $  0.1740400     $  0.0580450     $  0.1694600    $  0.0565175     $  0.1648800
Macau                     $ 0.4232     $  0.1411     $  0.4020400     $  0.1340450     $  0.3914600    $  0.1305175     $  0.3808800
Madagascar                $ 1.0933     $  0.3644     $  1.0386350     $  0.3461800     $  1.0113025    $  0.3370700     $  0.9839700
Malawi                    $ 0.2884     $  0.0961     $  0.2739800     $  0.0912950     $  0.2667700    $  0.0888925     $  0.2595600
Malaysia                  $ 0.2223     $  0.0741     $  0.2111850     $  0.0703950     $  0.2056275    $  0.0685425     $  0.2000700
Maldives                  $ 0.6290     $  0.2097     $  0.5975500     $  0.1992150     $  0.5818250    $  0.1939725     $  0.5661000
Mali                      $ 0.4443     $  0.1481     $  0.4220850     $  0.1406950     $  0.4109775    $  0.1369925     $  0.3998700
Malta                     $ 0.3050     $  0.1017     $  0.2897500     $  0.0966150     $  0.2821250    $  0.0940725     $  0.2745000
Marshall Islands          $ 0.4175     $  0.1392     $  0.3966250     $  0.1322400     $  0.3861875    $  0.1287600     $  0.3757500
Mauritania                $ 0.3847     $  0.1282     $  0.3654650     $  0.1217900     $  0.3558475    $  0.1185850     $  0.3462300
Mauritius                 $ 0.5220     $  0.1740     $  0.4959000     $  0.1653000     $  0.4828500    $  0.1609500     $  0.4698000
Mexico                    $ 0.1650     $  0.0550     $  0.1567500     $  0.0522500     $  0.1526250    $  0.0508750     $  0.1485000
Indonesia, Federated      $ 0.3847     $  0.1282     $  0.3654650     $  0.1217900     $  0.3558475    $  0.1185850     $  0.3462300
Midway Atoll              $ 0.4890     $  0.1630     $  0.4645500     $  0.1548500     $  0.4523250    $  0.1507750     $  0.4401000
Moldova                   $ 0.4200     $  0.1400     $  0.3990000     $  0.1330000     $  0.3885000    $  0.1295000     $  0.3780000
</TABLE>
                             EACH      
       COUNTRY            6 SEC. OR    

Italy                    $ 0.0378900
Jamaica                  $ 0.0621000
Japan                    $ 0.0274500
Jordan                   $ 0.0757800
Kazakhstan               $ 0.1521000
Kenya                    $ 0.0747900
Kiribati                 $ 0.2417400
Korea, South             $ 0.0506700
Kuwait                   $ 0.0845100
Kyrgyzstan               $ 0.1585800
Laos                     $ 0.2468700
Latvia                   $ 0.0895500
Lebanon                  $ 0.1242900
Lesotho                  $ 0.0892800
Liberia                  $ 0.0558000
Libya                    $ 0.0912600
Liechtenstein            $ 0.0606600
Lituania                 $ 0.0915300
Luxembourg               $ 0.0549900
Macau                    $ 0.1269900
Madagascar               $ 0.3279600
Malawi                   $ 0.0864900
Malaysia                 $ 0.0665900
Maldives                 $ 0.1887300
Mali                     $ 0.1332900
Malta                    $ 0.0915300
Marshall Islands         $ 0.1252800
Mauritania               $ 0.1153800
Mauritius                $ 0.1566000
Mexico                   $ 0.0495000
Indonesia, Federated     $ 0.1153800
Midway Atoll             $ 0.1467000
Moldova                  $ 0.1260000

                                     Page 4

<PAGE>
<TABLE>
<CAPTION>
                          INITIAL        EACH           INITIAL           EACH           INITIAL           EACH           INITIAL   
       COUNTRY             1ST 18      6 SEC. OR        1ST 18         6 SEC. OR          1ST 18        6 SEC. OR          1ST 18   
<S>                       <C>          <C>           <C>              <C>              <C>             <C>              <C>         
Mongolia                  $ 0.9599     $  0.3200     $  0.9119050     $  0.3040000     $  0.8879075    $  0.2960000     $  0.8639100
Montserrat                $ 0.1988     $  0.0663     $  0.1886000     $  0.0629850     $  0.1838900    $  0.0613275     $  0.1789200
Morocco                   $ 0.3333     $  0.1111     $  0.3166350     $  0.1055450     $  0.3083025    $  0.1027675     $  0.2999700
Mozambique                $ 0.4969     $  0.1656     $  0.4720550     $  0.1573200     $  0.4596325    $  0.1531800     $  0.4472100
Namibia                   $ 0.2728     $  0.0926     $  0.2639100     $  0.0879700     $  0.2569650    $  0.0856550     $  0.2500200
Nauru                     $ 1.1330     $  0.3777     $  1.0763500     $  0.3588150     $  1.0480250    $  0.3493725     $  1.0197000
Nepal                     $ 0.3422     $  0.1141     $  0.3250900     $  1.1083950     $  0.3165350    $  0.1055425     $  0.3079800
Netherlands               $ 0.1010     $  0.0337     $  0.0959500     $  0.0320150     $  0.0934250    $  0.0311725     $  0.0909000
Netherlands Antilles      $ 0.1924     $  0.0641     $  0.1827800     $  0.0608950     $  0.1779700    $  0.0592925     $  0.1731600
New Caledonia             $ 0.4143     $  0.1381     $  0.3935850     $  0.1311950     $  0.3832275    $  0.1277425     $  0.3728700
New Zealand               $ 0.1672     $  0.0557     $  0.1588400     $  0.0529150     $  0.1546600    $  0.0515225     $  0.1504800
Nicaragua                 $ 0.2445     $  0.0815     $  0.2322750     $  0.0774250     $  0.2261625    $  0.0753875     $  0.2200500
Niger                     $ 0.4580     $  0.1527     $  0.4351000     $  0.1450650     $  0.4236500    $  0.1412475     $  0.4122000
Nigeria                   $ 0.1947     $  0.0649     $  0.1849650     $  0.0616550     $  0.1800975    $  0.0600325     $  0.1752300
Niue                      $ 0.6296     $  0.2099     $  0.5981200     $  0.1994050     $  0.5823800    $  0.1941575     $  0.5666400
Norfolk Island            $ 0.6293     $  0.2098     $  0.5978350     $  0.1993100     $  0.5821025    $  0.1940650     $  0.5663700
Northern Mariana          $ 0.3600     $  0.1200     $  0.342000      $  0.1140000     $  0.3330000    $  0.1110000     $  0.3240000
Island
Norway                    $ 0.1195     $  0.0398     $  0.1135250     $  0.0378100     $  0.1105375    $  0.0368150     $  0.1075500
Oman                      $ 0.2896     $  0.0965     $  0.2751200     $  0.0916750     $  0.2678800    $  0.0892625     $  0.2606400
Pacific Islands           $ 0.4791     $  0.1597     $  0.4551450     $  0.1517150     $  0.4431675    $  0.1477225     $  0.4311900
Pakistan                  $ 0.3969     $  0.1323     $  0.3770550     $  0.1256850     $  0.3671325    $  0.1223775     $  0.3572100
Panama                    $ 0.1947     $  0.0649     $  0.1849650     $  0.0616550     $  0.1800975    $  0.0600325     $  0.1752300
Papua New Guinea          $ 0.3225     $  0.1075     $  0.3063750     $  0.1021250     $  0.2983125    $  0.0994375     $  0.2902500
Paraguay                  $ 0.3057     $  0.1019     $  0.2904150     $  0.0968050     $  0.2827725    $  0.0942575     $  0.2751300
Peru                      $ 0.2142     $  0.0714     $  0.2034900     $  0.0678300     $  0.1981350    $  0.0660450     $  0.1927800
Philippines               $ 0.1926     $  0.0642     $  0.1829700     $  0.0609900     $  0.1781550    $  0.0593850     $  0.1733400
Poland                    $ 0.2175     $  0.0725     $  0.2066250     $  0.0688750     $  0.2011875    $  0.0670625     $  0.1957500
Portugal                  $ 0.1986     $  0.0662     $  0.1886700     $  0.0628900     $  0.1837050    $  0.0612350     $  0.1787400
Qalar                     $ 0.2559     $  0.0853     $  0.2431050     $  0.0810350     $  0.2367075    $  0.0789025     $  0.2303100
Reunion                   $ 0.4563     $  0.1521     $  0.4335800     $  0.1444950     $  0.4221700    $  0.1406925     $  0.4107600
Romania                   $ 0.3116     $  0.1039     $  0.2960200     $  0.0987050     $  0.2882300    $  0.0961075     $  0.2804400
Russia                    $ 0.3632     $  0.1211     $  0.3450400     $  0.1150450     $  0.3359600    $  0.1120175     $  0.3268800
Rwanda                    $ 0.5018     $  0.1673     $  0.4767100     $  0.1589350     $  0.4641650    $  0.1545725     $  0.4516200
</TABLE>
                             EACH      
       COUNTRY            6 SEC. OR    

Mongolia                $ 0.2880000
Montserrat              $ 0.0596700
Morocco                 $ 0.0999900
Mozambique              $ 0.1490400
Namibia                 $ 0.0833400
Nauru                   $ 0.3399300
Nepal                   $ 0.1026900
Netherlands             $ 0.0303300
Netherlands Antilles    $ 0.0576900
New Caledonia           $ 0.1242900
New Zealand             $ 0.0501300
Nicaragua               $ 0.0733500
Niger                   $ 0.1374300
Nigeria                 $ 0.0584100
Niue                    $ 0.1889100
Norfolk Island          $ 0.1888200
Northern Mariana        $ 0.1080000
Island                             
Norway                  $ 0.0358200
Oman                    $ 0.0868500
Pacific Islands         $ 0.1437300
Pakistan                $ 0.1190700
Panama                  $ 0.0584100
Papua New Guinea        $ 0.0967500
Paraguay                $ 0.0917100
Peru                    $ 0.0642600
Philippines             $ 0.0577800
Poland                  $ 0.0652500
Portugal                $ 0.0595800
Qalar                   $ 0.0767700
Reunion                 $ 0.1368900
Romania                 $ 0.0935100
Russia                  $ 0.1089900
Rwanda                  $ 0.1505700

                                     Page 5

<PAGE>
<TABLE>
<CAPTION>
                          INITIAL        EACH           INITIAL           EACH           INITIAL           EACH           INITIAL   
       COUNTRY             1ST 18      6 SEC. OR        1ST 18         6 SEC. OR          1ST 18        6 SEC. OR          1ST 18   
<S>                       <C>          <C>           <C>              <C>              <C>             <C>             <C>          
Saint Helena              $ 0.5504     $  0.1835     $  0.5228800     $  0.1743250     $  0.5091200    $  0.1697375    $  0.4953600 
Saint Kids and Nevis      $ 0.1924     $  0.0641     $  0.1827800     $  0.0608950     $  0.1779700    $  0.0592925    $  0.1731160
Saint Lucia               $ 0.2159     $  0.0720     $  0.2051050     $  0.0684000     $  0.1997075    $  0.0666000    $  0.1943100 
Saint Pierre and          $ 0.2121     $  0.0707     $  0.2014950     $  0.0671650     $  0.1961925    $  0.0653975    $  0.1908900 
Saint Vincent and         $ 0.2102     $  0.0701     $  0.1996900     $  0.0665950     $  0.1944350    $  0.0648425    $  0.1891800 
the ____
Sao Tome and Principe     $ 0.5303     $  0.1768     $  0.5037850     $  0.1679410     $  0.4905275    $  0.1635215    $  0.4772700 
Saudia Arabia             $ 0.3510     $  0.1170     $  0.3334500     $  0.1111500     $  0.3246750    $  0.1082250    $  0.3159000 
Senegal                   $ 0.4137     $  0.1379     $  0.3930150     $  0.1310050     $  0.3826725    $  0.1275575    $  0.3723300 
Serbia                    $ 0.2839     $  0.0946     $  0.2697050     $  0.0898700     $  0.2626075    $  0.0875050    $  0.2555100 
Seychelles                $ .05099     $  0.1700     $  0.4844050     $  0.1615000     $  0.4716575    $  0.1572500    $  0.4589100 
Sierra Leone              $ 0.3187     $  0.1062     $  0.3027650     $  0.1008900     $  0.2947975    $  0.0982350    $  0.2863000 
Singapore                 $ 0.1105     $  0.0368     $  0.1049750     $  0.0349600     $  0.1022125    $  0.0340400    $  0.0994500 
Slovakia                  $ 0.2180     $  0.0727     $  0.2071000     $  0.0690650     $  0.2016500    $  0.0672475    $  0.1962000 
Solomon Islands           $ 0.4791     $  0.1597     $  0.4551450     $  0.1517150     $  0.4431675    $  0.1477225    $  0.4311900 
Somalia                   $ 0.5761     $  0.1920     $  0.5472950     $  0.1824000     $  0.5328925    $  0.1776000    $  0.5184900 
South Africa              $ 0.1704     $  0.0568     $  0.1618800     $  0.0539600     $  0.1576200    $  0.0525400    $  0.1533600 
Spain                     $ 0.1579     $  0.0526     $  0.1500050     $  0.0499700     $  0.1460575    $  0.0486550    $  0.1421100 
Sri Lanka                 $ 0.3757     $  0.1252     $  0.3569150     $  0.1189400     $  0.3475225    $  0.1158100    $  0.3381300 
Sudan                     $ 0.4994     $  0.1665     $  0.4744300     $  0.1581750     $  0.4619450    $  0.1540125    $  0.4494600 
Suriname                  $ 0.3353     $  0.1118     $  0.3185350     $  0.1062100     $  0.3101525    $  0.1034150    $  0.3017700 
Swaziland                 $ 0.2985     $  0.0995     $  0.2835750     $  0.0945250     $  0.2761125    $  0.0920375    $  0.2686500 
Sweden                    $ 0.0773     $  0.0258     $  0.0734350     $  0.0245100     $  0.0715025    $  0.0238650    $  0.0695700 
Switzerland               $ 0.0899     $  0.0300     $  0.0854050     $  0.0285000     $  0.0831575    $  0.0277500    $  0.0809100 
Syria                     $ 0.4192     $  0.1397     $  0.3982400     $  0.1327150     $  0.3877600    $  0.1292225    $  0.3772800 
Taiwan                    $ 0.1559     $  0.0520     $  0.1481050     $  0.0494000     $  0.1442075    $  0.0481000    $  0.1403100 
Tajikistan                $ 0.9308     $  0.3103     $  0.8842600     $  0.2947850     $  0.8609900    $  0.2870275    $  0.8377200 
Tanzania                  $ 0.2646     $  0.0882     $  0.2513700     $  0.0837900     $  0.2447550    $  0.0815850    $  0.2381400 
Thailand                  $ 0.2522     $  0.0841     $  0.2395900     $  0.0798950     $  0.2332850    $  0.0777925    $  0.2269800 
Togo                      $ 0.2510     $  0.0837     $  0.2384500     $  0.0795150     $  0.2321750    $  0.0774225    $  0.2259000 
Tonga                     $ 0.3546     $  0.1182     $  0.3368700     $  0.1122900     $  0.3280050    $  0.1093350    $  0.3191400 
Trinidad and Tobago       $ 0.1990     $  0.0663     $  0.1890500     $  0.0629850     $  0.1840750    $  0.0613275    $  0.1791000 
</TABLE>
                             EACH      
       COUNTRY            6 SEC. OR    

Saint Helena             $ 0.1651500 
Saint Kids and Nevis     $ 0.0576900 
Saint Lucia              $ 0.0648000 
Saint Pierre and         $ 0.0636300 
Saint Vincent and        $ 0.0630900 
the ____                             
Sao Tome and Principe    $ 0.1591020 
Saudia Arabia            $ 0.1053000 
Senegal                  $ 0.1241100 
Serbia                   $ 0.0851400 
Seychelles               $ 0.1530000 
Sierra Leone             $ 0.0955800 
Singapore                $ 0.0331200 
Slovakia                 $ 0.0654300 
Solomon Islands          $ 0.1437300 
Somalia                  $ 0.1728000 
South Africa             $ 0.0511200 
Spain                    $ 0.0473400 
Sri Lanka                $ 0.1126800 
Sudan                    $ 0.1498500 
Suriname                 $ 0.1006200 
Swaziland                $ 0.0895500 
Sweden                   $ 0.0232200 
Switzerland              $ 0.0270000 
Syria                    $ 0.1257300 
Taiwan                   $ 0.0468000 
Tajikistan               $ 0.2792700 
Tanzania                 $ 0.0793800 
Thailand                 $ 0.0756900 
Togo                     $ 0.0753300 
Tonga                    $ 0.1063800 
Trinidad and Tobago      $ 0.0596700 

                                     Page 6

<PAGE>
<TABLE>
<CAPTION>
                          INITIAL        EACH           INITIAL           EACH           INITIAL           EACH           INITIAL   
       COUNTRY             1ST 18      6 SEC. OR        1ST 18         6 SEC. OR          1ST 18        6 SEC. OR          1ST 18   
<S>                       <C>          <C>           <C>              <C>              <C>             <C>              <C>         
Tunisia                   $ 0.3090     $  0.1030     $  0.2935500     $  0.0978500     $  0.2858250    $  0.0952750     $  0.2781000
Turkey                    $ 0.2451     $  0.0817     $  0.2328450     $  0.0776150     $  0.2267175    $  0.0755725     $  0.2205900
Turkmenistan              $ 0.7652     $  0.2551     $  0.7269400     $  0.2423450     $  0.7078100    $  0.2359675     $  0.6886800
Turks and Caicos          $ 0.2037     $  0.0679     $  0.1935150     $  0.0645050     $  0.1884225    $  0.0628075     $  0.1833300
Islands
Tivalu                    $ 0.7790     $  0.2593     $  0.7400500     $  0.2463350     $  0.7205750    $  0.2398525     $  0.7011000
Uganda                    $ 0.2745     $  0.0915     $  0.2607750     $  0.0869250     $  0.2539125    $  0.0846375     $  0.2470500
Ukraine                   $ 0.3050     $  0.1017     $  0.2897500     $  0.0966150     $  0.2821250    $  0.0940725     $  0.2745000
United Arab Emirates      $ 0.2212     $  0.0737     $  0.2101400     $  0.0700150     $  0.2046100    $  0.0681725     $  0.1990800
United Kingdom            $ 0.0455     $  0.0152     $  0.0432250     $  0.0144400     $  0.0420875    $  0.0140600     $  0.0409500
Uruguay                   $ 0.2342     $  0.0781     $  0.224900      $  0.0741950     $  0.2166350    $  0.0722425     $  0.2107800
Uzbekistan                $ 0.3050     $  0.1017     $  0.2897500     $  0.0966150     $  0.2821250    $  0.0940725     $  0.2745000
Vanuatu                   $ 0.8124     $  0.2708     $  0.7717800     $  0.2572600     $  0.7514700    $  0.2504900     $  0.7311600
Venezuela                 $ 0.1233     $  0.0411     $  0.1171350     $  0.0390450     $  0.1140525    $  0.0380175     $  0.1109700
Vietnam                   $ 0.4216     $  0.1405     $  0.4005200     $  0.1334750     $  0.3899800    $  0.1299625     $  0.3794400
Virgin Islands,           $ 0.1847     $  0.0616     $  0.1754650     $  0.0585200     $  0.1708475    $  0.0569800     $  0.1662300
British
Wallis and Futuna         $ 0.5696     $  0.1899     $  0.5411200     $  0.1804050     $  0.5268800    $  0.1756575     $  0.5126400
Western Samoa             $ 0.2515     $  0.0838     $  0.2389250     $  0.0796100     $  0.2326375    $  0.0775150     $  0.2263500
Yemen                     $ 0.2950     $  0.0986     $  0.2811050     $  0.0936700     $  0.2737075    $  0.0912050     $  0.2663100
Zaire                     $ 0.3326     $  0.1109     $  0.3159700     $  0.1053550     $  0.3076550    $  0.1025825     $  0.2993400
Zambia                    $ 0.2920     $  0.0973     $  0.2774000     $  0.0924350     $  0.2701000    $  0.0900025     $  0.2628000
Zimbabwe                  $ 0.2077     $  0.0692     $  0.1973150     $  0.0657400     $  0.1921225    $  0.0640100     $  0.1869300
</TABLE>
                             EACH      
       COUNTRY            6 SEC. OR    

Tunisia                  $ 0.0927000
Turkey                   $ 0.0735300
Turkmenistan             $ 0.2295900
Turks and Caicos         $ 0.0611100
Islands                             
Tivalu                   $ 0.2333700
Uganda                   $ 0.0823500
Ukraine                  $ 0.0915300
United Arab Emirates     $ 0.0663300
United Kingdom           $ 0.0136800
Uruguay                  $ 0.0702900
Uzbekistan               $ 0.0915300
Vanuatu                  $ 0.2437200
Venezuela                $ 0.0369900
Vietnam                  $ 0.1264500
Virgin Islands,          $ 0.0554400
British                             
Wallis and Futuna        $ 0.1709100
Western Samoa            $ 0.0754200
Yemen                    $ 0.0887400
Zaire                    $ 0.0998100
Zambia                   $ 0.0875700
Zimbabwe                 $ 0.0622800

                                     Page 7
<PAGE>

         INTERNATIONAL COSTS


INTERNATIONAL COSTS/MINUTE
- APPLICABLE  DISCOUNTS  APPLY BASED ON TOTAL  TEL-SAVE USAGE PER TARIFF 
- TO BE UPDATED AS RATES ARE REDUCED BY IXC

                            Cost/Min.     Cost/Min.      Cost/Min.    Cost/Min.
        Country             No Disc.        @ 5%           7.5%          10%

Albania                     $ 1.2650      $ 1.2018       $ 1.1701       $ 1.1385
Algeria                     $ 0.9650      $ 0.9168       $ 0.8926       $ 0.8685
American Samoa              $ 0.8100      $ 0.7695       $ 0.7493       $ 0.7290
Andorra                     $ 0.4950      $ 0.4703       $ 0.4579       $ 0.4455
Angola                      $ 1.3500      $ 1.2825       $ 1.2488       $ 1.2150
Anguilla                    $ 0.6300      $ 0.5985       $ 0.5828       $ 0.5670
Antarctica                  $ 1.2500      $ 1.1875       $ 1.1563       $ 1.1250
Antigua and Barbuda         $ 0.6200      $ 0.5890       $ 0.5735       $ 0.5580
Argentina                   $ 0.8109      $ 0.7704       $ 0.7501       $ 0.7298
Armenia                     $ 1.0230      $ 0.9719       $ 0.9463       $ 0.9207
Aruba                       $ 0.5960      $ 0.5662       $ 0.5513       $ 0.5364
Australia                   $ 0.2630      $ 0.2499       $ 0.2433       $ 0.2367
Austria                     $ 0.5261      $ 0.4998       $ 0.4866       $ 0.4735
Azerbaijan                  $ 1.3500      $ 1.2825       $ 1.2488       $ 1.2150
Bahamas, The                $ 0.2930      $ 0.2784       $ 0.2710       $ 0.2637
Bahrain                     $ 0.8851      $ 0.8408       $ 0.8187       $ 0.7966
Bangladesh                  $ 1.2950      $ 1.2303       $ 1.1979       $ 1.1655
Barbados                    $ 0.5279      $ 0.5015       $ 0.4883       $ 0.4751
Belarus                     $ 1.0180      $ 0.9671       $ 0.9417       $ 0.9162
Belgium                     $ 0.4109      $ 0.3904       $ 0.3801       $ 0.3698
Belize                      $ 0.8300      $ 0.7885       $ 0.7678       $ 0.7470
Benin                       $ 0.8930      $ 0.8484       $ 0.8260       $ 0.8037
Bermuda                     $ 0.4529      $ 0.4303       $ 0.4189       $ 0.4076
Bhutan                      $ 2.8550      $ 2.7075       $ 2.6363       $ 2.5650
Bolivia                     $ 0.8431      $ 0.8009       $ 0.7799       $ 0.7588
Bosnia and Herzegovin       $ 0.9461      $ 0.8988       $ 0.8751       $ 0.8515
Botswana                    $ 0.7989      $ 0.7590       $ 0.7390       $ 0.7190
Brazil                      $ 0.4739      $ 0.4502       $ 0.4384       $ 0.4265
Brunei                      $ 1.3049      $ 1.2397       $ 1.2070       $ 1.1744

                                     Page 1


<PAGE>



                            Cost/Min.     Cost/Min.      Cost/Min.    Cost/Min.
        Country             No Disc.        @ 5%           7.5%          10%

Bulgaria                    $ 0.8100      $ 0.7695       $ 0.7493       $ 0.7290
Burkina                     $ 0.6389      $ 0.6070       $ 0.5910       $ 0.5750
Burma                       $ 3.3500      $ 3.1825       $ 3.0988       $ 3.0150
Burundi                     $ 2.8669      $ 2.7264       $ 2.6547       $ 2.5829
Cambodia                    $ 1.9420      $ 1.8449       $ 1.7964       $ 1.7478
Cameroon                    $ 1.1559      $ 1.0981       $ 1.0692       $ 1.0403
Canada                      $ 0.1261      $ 0.1198       $ 0.1166       $ 0.2235
Canary Island               $ 0.0200      $ 0.0190       $ 0.0185       $ 0.0180
Cape Verde                  $ 1.3350      $ 1.2683       $ 1.2349       $ 1.2015
Cayman Islands              $ 0.5469      $ 0.5196       $ 0.5059       $ 0.4922
Central African             $ 2.1200      $ 2.0140       $ 1.9610       $ 1.9080
 Republic
Chad                        $ 3.5700      $ 3.3915       $ 3.3915       $ 3.2130
Chagos Archlpelago          $ 1.2245      $ 1.1633       $ 1.1327       $ 1.1021
Chile                       $ 0.4050      $ 0.3848       $ 0.3746       $ 0.3645
China                       $ 1.1261      $ 1.0698       $ 1.0416       $ 1.0135
Colombia                    $ 0.7160      $ 0.6802       $ 0.6623       $ 0.6444
Cornoros                    $ 2.2159      $ 2.1051       $ 2.0497       $ 1.9943
Congo                       $ 1.0749      $ 1.0212       $ 0.9943       $ 0.9674
Cook Islands                $ 2.3591      $ 2.2411       $ 2.1822       $ 2.1232
Costa Rico                  $ 0.6109      $ 0.5804       $ 0.5651       $ 0.5498
Cote d'Ivoire               $ 1.2091      $ 1.1486       $ 1.1184       $ 1.0882
Croatia                     $ 0.7269      $ 0.6906       $ 0.6724       $ 0.6542
Cuba                        $ 0.9920      $ 0.9424       $ 0.9176       $ 0.8928
Cyprus                      $ 0.7269      $ 0.6906       $ 0.6724       $ 0.6542
Czech Republic              $ 0.7269      $ 0.6906       $ 0.6724       $ 0.6542
Denmark                     $ 0.5261      $ 0.4998       $ 0.4866       $ 0.4735
Djibouti                    $ 1.5230      $ 1.4469       $ 1.4088       $ 1.3707
Dominica                    $ 0.6570      $ 0.6242       $ 0.6077       $ 0.5913
Dominican Republic          $ 0.3900      $ 0.3705       $ 0.3608       $ 0.3510
Ecuador                     $ 0.8309      $ 0.7894       $ 0.7686       $ 0.7478
Egypt                       $ 0.9221      $ 0.8760       $ 0.8529       $ 0.8299
El Salvador                 $ 0.7450      $ 0.7078       $ 0.6891       $ 0.6705
Equatorial Guinea           $ 2.1129      $ 2.0073       $ 1.9544       $ 1.9016

                                     Page 2


<PAGE>



                            Cost/Min.     Cost/Min.      Cost/Min.    Cost/Min.
        Country             No Disc.        @ 5%           7.5%          10%

Estonia                     $ 1.0159      $ 0.9651       $ 0.9397       $ 0.9143
Ethiopia                    $ 1.2959      $ 1.2311       $ 1.1987       $ 1.1663
Fiji                        $ 1.2610      $ 1.1980       $ 1.1664       $ 1.1349
Finland                     $ 0.4039      $ 0.3837       $ 0.3736       $ 0.3635
France                      $ 0.2109      $ 0.2004       $ 0.1951       $ 0.1898
French Guiana               $ 0.7951      $ 0.7553       $ 0.7355       $ 0.7156
French Overseas             $ 0.7250      $ 0.6888       $ 0.6706       $ 0.6525
 Department
French Polynesia            $ 1.3469      $ 1.2796       $ 1.2459       $ 1.2122
Gabon                       $ 0.8420      $ 0.7999       $ 0.7789       $ 0.7578
Gambia, The                 $ 0.8271      $ 0.7857       $ 0.7651       $ 0.7444
Georgia                     $ 1.7000      $ 1.6150       $ 1.5725       $ 1.5300
Germany                     $ 0.2109      $ 0.2004       $ 0.1951       $ 0.1898
Ghana                       $ 0.9060      $ 0.8607       $ 0.8381       $ 0.8154
Gibraltar                   $ 0.7951      $ 0.7553       $ 0.7355       $ 0.7156
Greece                      $ 0.6589      $ 0.6260       $ 0.6095       $ 0.5930
Greenland                   $ 0.6959      $ 0.6611       $ 0.6437       $ 0.6263
Grenada                     $ 0.6790      $ 0.6451       $ 0.6281       $ 0.6111
Guadeloupe                  $ 0.9870      $ 0.9377       $ 0.9130       $ 0.8883
Guam                        $ 0.6589      $ 0.6260       $ 0.6095       $ 0.5930
Guatemala                   $ 0.7120      $ 0.6764       $ 0.6586       $ 0.6408
Guinea-Bissau               $ 1.9920      $ 1.8924       $ 1.8426       $ 1.7928
Guinea                      $ 1.3270      $ 1.2607       $ 1.2275       $ 1.1943
Guyana                      $ 1.0100      $ 0.9595       $ 0.9343       $ 0.9090
Haiti                       $ 0.7501      $ 0.7126       $ 0.6938       $ 0.6751
Honduras                    $ 0.9051      $ 0.8598       $ 0.8372       $ 0.8146
Hong Kong                   $ 0.4279      $ 0.4065       $ 0.3958       $ 0.3851
Hungary                     $ 0.7269      $ 0.6906       $ 0.6724       $ 0.6542
Iceland                     $ 0.8359      $ 0.7941       $ 0.7732       $ 0.7523
India                       $ 0.9807      $ 0.9317       $ 0.9071       $ 0.8826
Indonesia                   $ 1.1291      $ 1.0726       $ 1.0444       $ 1.0162
Iran                        $ 0.9551      $ 0.9073       $ 0.8835       $ 0.8596
Iraq                        $ 1.6519      $ 1.5693       $ 1.5280       $ 1.4867
Ireland                     $ 0.4081      $ 0.3877       $ 0.3775       $ 0.3673

                                     Page 3


<PAGE>



                            Cost/Min.     Cost/Min.      Cost/Min.    Cost/Min.
        Country             No Disc.        @ 5%           7.5%          10%

Israel                      $ 0.8110      $ 0.7705       $ 0.7502       $ 0.7299
Italy                       $ 0.4210      $ 0.4000       $ 0.3894       $ 0.3789
Jamaica                     $ 0.6899      $ 0.6554       $ 0.6382       $ 0.6209
Japan                       $ 0.3050      $ 0.2898       $ 0.2831       $ 0.2745
Jordan                      $ 0.8420      $ 0.7999       $ 0.7789       $ 0.7578
Kazakhstan                  $ 1.6899      $ 1.6054       $ 1.5632       $ 1.5209
Kenya                       $ 0.8311      $ 0.7895       $ 0.7688       $ 0.7480
Kiribati                    $ 2.6860      $ 2.5517       $ 2.4846       $ 2.4174
Korea, South                $ 0.5629      $ 0.5348       $ 0.5207       $ 0.5066
Kuwait                      $ 0.9391      $ 0.8921       $ 0.8687       $ 0.8452
Kyrgyzstan                  $ 1.7619      $ 1.6738       $ 1.6298       $ 1.5857
Laos                        $ 2.7431      $ 2.6059       $ 2.5374       $ 2.4688
Latvia                      $ 0.9950      $ 0.9453       $ 0.9204       $ 0.8955
Lebanon                     $ 1.3810      $ 1.3120       $ 1.2774       $ 1.2429
Lesotho                     $ 0.9921      $ 0.9425       $ 0.9177       $ 0.8929
Liberia                     $ 0.6200      $ 0.5890       $ 0.5735       $ 0.5580
Libya                       $ 1.0139      $ 0.9632       $ 0.9379       $ 0.9125
Liechtenstein               $ 0.6740      $ 0.6403       $ 0.6235       $ 0.6066
Lituania                    $ 1.0169      $ 0.9661       $ 0.9406       $ 0.9152
Luxembourg                  $ 0.6109      $ 0.5804       $ 0.5651       $ 0.5498
Macau                       $ 0.4109      $ 1.3404       $ 1.3051       $ 1.2698
Madagascar                  $ 3.6441      $ 3.4619       $ 3.3708       $ 3.2797
Malawi                      $ 0.9611      $ 0.9130       $ 0.8890       $ 0.8650
Malaysia                    $ 0.7410      $ 0.7040       $ 0.6854       $ 0.6669
Maldives                    $ 2.0969      $ 1.9921       $ 1.9396       $ 1.8872
Mali                        $ 1.4810      $ 1.4070       $ 1.3699       $ 1.3329
Malta                       $ 1.0169      $ 0.9661       $ 0.9406       $ 0.9152
Marshall Islands            $ 1.3919      $ 1.3223       $ 1.2875       $ 1.2527
Mauritania                  $ 1.2821      $ 1.2180       $ 1.1859       $ 1.1539
Mauritius                   $ 1.7400      $ 1.6530       $ 1.6095       $ 1.5660
Mexico                      $ 0.5500      $ 0.5225       $ 0.5088       $ 0.4950
Indonesia, Federated        $ 1.2821      $ 1.2180       $ 1.1859       $ 1.1539
Midway Atoll                $ 1.6300      $ 1.5485       $ 1.5078       $ 1.4670

                                     Page 4


<PAGE>



                            Cost/Min.     Cost/Min.      Cost/Min.    Cost/Min.
        Country             No Disc.        @ 5%           7.5%          10%

Moldova                     $ 1.4000      $ 1.3300       $ 1.2950       $ 1.2600
Mongolia                    $ 3.1999      $ 3.0399       $ 2.9599       $ 2.8799
Montserrat                  $ 0.6629      $ 0.6298       $ 0.6132       $ 0.5966
Morocco                     $ 1.1110      $ 1.0555       $ 1.0277       $ 0.9999
Mozambique                  $ 1.6561      $ 1.5733       $ 1.5319       $ 1.4905
Namibia                     $ 0.9260      $ 0.8797       $ 0.8566       $ 0.8334
Nauru                       $ 3.7769      $ 3.5881       $ 3.4936       $ 3.3992
Nepal                       $ 1.1409      $ 1.0839       $ 1.0553       $ 1.0268
Netherlands                 $ 0.3369      $ 0.3201       $ 0.3116       $ 0.3032
Netherlands Antilles        $ 0.6411      $ 0.6090       $ 0.5930       $ 0.5770
New Caledonia               $ 1.3810      $ 1.3120       $ 1.2774       $ 1.2429
New Zealand                 $ 0.5571      $ 0.5292       $ 0.5153       $ 0.5014
Nicaragua                   $ 0.8150      $ 0.7743       $ 0.7539       $ 0.7335
Niger                       $ 1.5269      $ 1.4506       $ 1.4124       $ 1.3742
Nigeria                     $ 0.6490      $ 0.6166       $ 0.6003       $ 0.5841
Niue                        $ 2.0989      $ 1.9940       $ 1.9415       $ 1.8890
Norfolk Island              $ 2.0979      $ 1.9930       $ 1.9406       $ 1.8881
Northern Mariana Island     $ 1.2000      $ 1.1400       $ 1.1100       $ 1.0800
Norway                      $ 0.3981      $ 0.3782       $ 0.3682       $ 0.3583
Oman                        $ 0.9651      $ 0.9168       $ 0.8927       $ 0.8686
Pacific Islands (Palau)     $ 1.5970      $ 1.5172       $ 1.4772       $ 1.4373
Pakistan                    $ 1.3230      $ 1.2569       $ 1.2238       $ 1.1907
Panama                      $ 0.6490      $ 0.6166       $ 0.6003       $ 0.5841
Papua New Guinea            $ 1.0750      $ 1.0213       $ 0.9944       $ 0.9675
Paraguay                    $ 1.0190      $ 0.9681       $ 0.9426       $ 0.9171
Peru                        $ 0.7140      $ 0.6783       $ 0.6605       $ 0.6426
Philippines                 $ 0.6420      $ 0.6099       $ 0.5939       $ 0.5778
Poland                      $ 0.7250      $ 0.6888       $ 0.6706       $ 0.6525
Portugal                    $ 0.6620      $ 0.6289       $ 0.6124       $ 0.5958
Qalar                       $ 0.8530      $ 0.8104       $ 0.7890       $ 0.7677
Reunion                     $ 1.5211      $ 1.4450       $ 1.4070       $ 1.3690
Romania                     $ 1.0389      $ 0.9870       $ 0.9610       $ 0.9350
Russia                      $ 1.2109      $ 1.1504       $ 1.1201       $ 1.0898

                                     Page 5


<PAGE>



                            Cost/Min.     Cost/Min.      Cost/Min.    Cost/Min.
        Country             No Disc.        @ 5%           7.5%          10%

Rwanda                      $ 1.6729      $ 1.5893       $ 1.5474       $ 1.5056
Saint Helena                $ 1.8349      $ 1.7432       $ 1.6973       $ 1.6514
Saint Kids and Nevis        $ 0.6411      $ 0.6090       $ 0.5930       $ 0.5770
Saint Lucia                 $ 0.7199      $ 0.6839       $ 0.6659       $ 0.6479
Saint Pierre and Miquel     $ 0.7070      $ 0.6717       $ 0.6540       $ 0.6363
Saint Vincent and the       $ 0.7009      $ 0.6659       $ 0.6483       $ 0.6308
 ----
Sao Tome and Principe       $ 1.7678      $ 1.6794       $ 1.6352       $ 1.5910
Saudia Arabia               $ 1.1700      $ 1.1115       $ 1.0823       $ 1.0530
Senegal                     $ 1.3790      $ 1.3101       $ 1.2756       $ 1.2411
Serbia                      $ 0.9461      $ 0.8988       $ 0.8751       $ 0.8515
Seychelles                  $ 1.6999      $ 1.6149       $ 1.5724       $ 1.5299
Sierra Leone                $ 1.0621      $ 1.0090       $ 0.9824       $ 0.9559
Singapore                   $ 0.3681      $ 0.3497       $ 0.3405       $ 0.3313
Slovakia                    $ 0.7269      $ 0.6906       $ 0.6724       $ 0.6542
Solomon Islands             $ 1.5970      $ 1.5172       $ 1.4772       $ 1.4373
Somalia                     $ 1.9201      $ 1.8241       $ 1.7761       $ 1.7281
South Africa                $ 0.5680      $ 0.5396       $ 0.5254       $ 0.5112
Spain                       $ 0.5261      $ 0.4998       $ 0.4866       $ 0.4735
Sri Lanka                   $ 1.2521      $ 1.1895       $ 1.1582       $ 1.1269
Sudan                       $ 1.6649      $ 1.5817       $ 1.5400       $ 1.4984
Suriname                    $ 1.1179      $ 1.0620       $ 1.0341       $ 1.0061
Swaziland                   $ 0.9950      $ 0.9453       $ 0.9204       $ 0.8955
Sweden                      $ 0.2579      $ 0.2450       $ 0.2386       $ 0.2321
Switzerland                 $ 0.2999      $ 0.2849       $ 0.2774       $ 0.2699
Syria                       $ 1.3971      $ 1.3272       $ 1.2923       $ 1.2574
Taiwan                      $ 0.5199      $ 0.4939       $ 0.4809       $ 0.4679
Tajikistan                  $ 3.1029      $ 2.9478       $ 2.8702       $ 2.7926
Tanzania                    $ 0.8820      $ 0.8379       $ 0.8159       $ 0.7938
Thailand                    $ 0.8409      $ 0.7989       $ 0.7778       $ 0.7568
Togo                        $ 0.8369      $ 0.7951       $ 0.7741       $ 0.7532
Tonga                       $ 1.1820      $ 1.1229       $ 1.0934       $ 1.0638
Trinidad and Tobago         $ 0.6631      $ 0.6299       $ 0.6134       $ 0.5968
Tunisia                     $ 1.0300      $ 0.9785       $ 0.9528       $ 0.9270

                                     Page 6


<PAGE>



                            Cost/Min.     Cost/Min.      Cost/Min.    Cost/Min.
        Country             No Disc.        @ 5%           7.5%          10%

Turkey                      $ 0.8170      $ 0.7762       $ 0.7557       $ 0.7353
Turkmenistan                $ 2.5509      $ 2.4234       $ 2.3596       $ 2.2958
Turks and Caicos            $ 0.6790      $ 0.6451       $ 0.6281       $ 0.6111
 Islands
Tivalu                      $ 2.5941      $ 2.4644       $ 2.3995       $ 2.3347
Uganda                      $ 0.9150      $ 0.8693       $ 0.8464       $ 0.8235
Ukraine                     $ 1.0169      $ 0.9661       $ 0.9406       $ 0.9152
United Arab Emirates        $ 0.7371      $ 0.7002       $ 0.6818       $ 0.6634
United Kingdom              $ 0.1519      $ 0.1443       $ 0.1405       $ 0.1367
Uruguay                     $ 0.7809      $ 0.7419       $ 0.7223       $ 0.7028
Uzbekistan                  $ 1.0169      $ 0.9661       $ 0.9406       $ 0.9152
Vanuatu                     $ 2.7080      $ 2.5726       $ 2.5049       $ 2.4372
Venezuela                   $ 0.4110      $ 0.3905       $ 0.3802       $ 0.3699
Vietnam                     $ 1.4051      $ 1.3348       $ 1.2997       $ 1.2646
Virgin Islands, British     $ 0.6159      $ 0.5851       $ 0.5697       $ 0.5543
Wallis and Futuna           $ 1.8989      $ 1.8040       $ 1.7565       $ 1.7090
Western Samoa               $ 0.8381      $ 0.7962       $ 0.7752       $ 0.7543
Yemen                       $ 0.9861      $ 0.9368       $ 0.9121       $ 0.8875
Zaire                       $ 1.1089      $ 1.0535       $ 1.0257       $ 0.9980
Zambia                      $ 0.9731      $ 0.9244       $ 0.9001       $ 0.8758
Zimbabwe                    $ 0.6921      $ 0.6575       $ 0.6402       $ 0.6229

                                     Page 7
<PAGE>
                                    800 Costs


Interstate 800 Readyline
------------------------
To be updated as tariff changes are made or negotiated.
--------------------------------------------------------


                             Rate            Rate
  National                  Per Hr          Per Min
  --------                  ------          --------
All States                  $ 6.60          $ 0.11


<TABLE>
<CAPTION>

                            Day            Eve           N/W          Day           Eve         N/W
                           Rate           Rate           Rate         Per           Per         Per
   State                  Per Hr         Per Hr         Per Hr        Min           Min         Min
   -----                  -------        -------       -------      -------       -------      -------
<S>                       <C>            <C>           <C>          <C>           <C>          <C>    
ALABAMA                   $ 10.20        $ 10.20       $ 10.20      0.17000       0.17000      0.17000
ALASKA
ARIZONA                   $ 13.20        $ 12.00       $ 10.80      0.22000       0.20000      0.18000
ARKANSAS                  $ 15.96        $ 15.96       $ 15.96      0.26600       0.26600      0.26600
CALIFORNIA                $ 11.61        $  9.25       $  7.40      0.18350       0.15417      0.12333
COLORADO                  $ 15.01        $ 12.07       $ 11.76      0.25017       0.20117      0.19600
CONNECTICUT               $ 13.71        $ 13.71       $ 13.71      0.22850       0.22850      0.22850
DELAWARE                  $ 14.18        $ 13.50       $ 13.50      0.23633       0.22500      0.22500
D.C.
FLORIDA                   $ 15.29        $ 14.82       $ 14.82      0.25483       0.24700      0.24700
GEORGIA                   $ 12.40        $ 12.40       $ 12.40      0.20667       0.20667      0.20667
HAWAII                    $ 14.19        $ 14.19       $ 14.19      0.23650       0.23650      0.23650
IDAHO                     $ 18.00        $ 18.00       $ 18.00      0.30000       0.30000      0.30000
ILLINOIS                  $ 12.60        $ 12.15       $ 12.15      0.21000       0.20250      0.20250
INDIANA                   $ 12.46        $ 12.46       $ 12.46      0.20767       0.20767      0.20767
IOWA                      $ 16.05        $ 15.29       $ 15.29      0.26750       0.25483      0.25483
KANSAS                    $ 17.73        $ 17.73       $ 17.73      0.29550       0.29550      0.29550
KENTUCKY                  $ 15.36        $ 15.36       $ 15.36      0.25600       0.25600      0.25600
LOUISIANA                 $ 12.60        $ 12.60       $ 12.60      0.21000       0.21000      0.21000
MAINE                     $ 22.20        $ 22.20       $ 22.20      0.37000       0.37000      0.37000
MARYLAND                  $ 10.20        $  8.75       $  9.75      0.17000       0.16250      0.16250
MASSACHUSETTS             $ 10.08        $  9.25       $  8.00      0.16800       0.15417      0.13333
MICHIGAN                  $ 13.23        $ 12.60       $ 12.60      0.22050       0.21000      0.21000
MINNESOTA                 $ 13.68        $ 13.68       $ 13.68      0.22800       0.22800      0.22800
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
<S>                       <C>            <C>           <C>          <C>           <C>          <C>    
MISSISSIPPI               $ 10.20        $ 10.20       $ 10.20      0.17000       0.17000      0.17000
MISSOURI                  $ 15.60        $ 15.60       $ 15.60      0.26000       0.26000      0.26000
MONTANA                   $ 14.63        $ 14.63       $ 14.63      0.24383       0.24383      0.24383
NEBRASKA                  $ 16.38        $ 16.38       $ 16.38      0.27300       0.27300      0.27300
NEVADA                    $ 12.83        $ 10.66       $  8.54      0.21383       0.17767      0.14233
NEW HAMPSHIRE             $ 19.20        $ 19.20       $ 19.20      0.32000       0.32000      0.32000
NEW JERSEY                $ 10.08        $  9.27       $  9.00      0.16800       0.15450      0.15000
NEW MEXICO                $ 15.60        $ 12.90       $ 10.80      0.26000       0.21500      0.18000
NEW YORK                  $ 13.65        $ 10.98       $  9.18      0.22750       0.18300      0.15300
NO. CAROLINA              $ 13.80        $ 13.80       $ 13.80      0.23000       0.23000      0.23000
NO. DAKOTA                $ 14.40        $ 14.40       $ 14.40      0.24000       0.24000      0.24000
OHIO                      $ 13.50        $ 13.50       $ 13.50      0.22500       0.22500      0.22500
OKLAHOMA                  $ 16.94        $ 16.94       $ 16.94      0.28233       0.28233      0.28333
OREGON                    $ 15.84        $ 15.09       $ 15.09      0.26400       0.25150      0.25150
PENNSYLVANIA              $ 12.92        $ 10.80       $  9.60      0.21533       0.18000      0.16000
RHODE ISLAND              $ 13.42        $ 10.06       $ 10.06      0.22367       0.18767      0.16767
SO. CAROLINA              $ 14.22        $ 14.22       $ 14.22      0.23700       0.23700      0.23700
SO. DAKOTA                $ 15.01        $ 14.36       $ 14.36      0.25017       0.23933      0.23933
TENNESSEE                 $ 12.66        $ 12.66       $ 12.66      0.21100       0.21100      0.21100
TEXAS                     $ 12.27        $ 12.27       $ 12.27      0.20450       0.20450      0.20450
UTAH                      $ 12.99        $ 12.37       $ 12.37      0.21650       0.20617      0.20617
VERMONT                   $ 14.68        $ 11.48       $ 10.97      0.24467       0.19133      0.18283
VIRGINIA                  $ 14.18        $ 10.80       $ 10.80      0.23633       0.18000      0.18000
WASHINGTON                $ 12.47        $ 11.88       $ 11.88      0.20783       0.19800      0.19800
W. VIRGINIA               $ 13.53        $ 13.20       $ 13.20      0.22550       0.22000      0.22000
WISCONSIN                 $ 13.23        $ 12.60       $ 12.60      0.22050       0.21000      0.21000
WYOMING                   $ 15.33        $ 15.33       $ 15.33      0.25550       0.25550      0.25550
AVG COST                  $ 14.05        $ 13.32       $ 13.06      0.23409       0.22202      0.21764
</TABLE>
<PAGE>

                                    SDN Costs


Interstate SDN
--------------
To be updated as tariff changes are made or renegotiated
--------------------------------------------------------

        NATIONAL                         1st                             ADD'L
                                       18 SEC.                          6 SEC.
ALL STATES                             $0.0282                          $0.0084


Interstate SDN
--------------
To be updated as tariff changes are made or renegotiated
<TABLE>
<CAPTION>

                                                     InterLATA
        State          DAY         DAY           EVE         EVE          N/W          N/W
                       1ST        ADD'L         RATE         PER          PER          PER
                     18 SEC       6 SEC        PER HR        MIN          MIN          MIN
<S>                  <C>          <C>          <C>          <C>         <C>          <C>   
ALABAMA              0.0468       0.0156       0.0384       0.0128      0.0384       0.0128
ALASKA
ARIZONA              0.0678       0.0226       0.0474       0.0158      0.0474       0.0158
ARKANSAS             0.0603       0.0201       0.0540       0.0160      0.0540       0.0180
CALIFORNIA           0.0429       0.0143       0.0342       0.0114      0.0342       0.0114
COLORADO             0.0510       0.0170       0.0408       0.0136      0.0408       0.0136
CONNECTICUT          0.0543       0.0181       0.0489       0.0163      0.0489       0.0163
DELAWARE             0.0492       0.0164       0.0489       0.0163      0.0489       0.0163
D.C
FLORIDA              0.0705       0.0235       0.0618       0.0206      0.0618       0.0206
GEORGIA              0.0528       0.0176       0.0444       0.0148      0.0444       0.0148
HAWAII               0.0792       0.0264       0.0534       0.0178      0.0396       0.0132
IDAHO                0.0672       0.0224       0.0540       0.0180      0.0540       0.0180
ILLINOIS             0.0519       0.0173       0.0465       0.0155      0.0465       0.0155
INDIANA              0.0516       0.0172       0.0444       0.0148      0.0444       0.0148
IOWA                 0.0648       0.0216       0.0558       0.0186      0.0588       0.0186
KANSAS               0.0705       0.0235       0.0618       0.0206      0.0818       0.0208
KENTUCKY             0.0582       0.0194       0.0519       0.0173      0.0519       0.0173
LOUISIANA            0.0504       0.0168       0.0456       0.0152      0.0456       0.0152
MAINE                0.1200       0.0400       0.1200       0.0400      0.1200       0.0400
MARYLAND             0.0519       0.0173       0.0426       0.0142      0.0426       0.0142
MASS.                0.0516       0.0172       0.0435       0.0145      0.0435       0.0145
</TABLE>



<PAGE>



                                    SDN Costs


Interstate SDN
--------------
To be updated as tariff changes are made or renegotiated
<TABLE>
<CAPTION>

                                                       IntarLATA
        State          DAY          DAY            EVE        EVE         N/W          N/W
                       1ST         ADD'L          RATE        PER         PER          PER
                     18 SEC        6 SEC         PER HR       MIN         MIN          MIN
<S>                  <C>           <C>           <C>         <C>        <C>          <C>   
ALABAMA              0.0468        0.0156        0.0384      0.0128     0.0384       0.0128
ALASKA
ARIZONA              0.0678        0.0226        0.0474      0.0158     0.0474       0.0158
ARKANSAS             0.0603        0.0201        0.0540      0.0180     0.0540       0.0180
CALIFORNIA           0.0246        0.0082        0.0198      0.0066     0.0198       0.0066
COLORADO             0.0510        0.0170        0.0408      0.0136     0.0408       0.0136
CONNECTICUT          0.0543        0.0181        0.0489      0.0163     0.0489       0.0163
DELAWARE             0.0492        0.0164        0.0489      0.0163     0.0489       0.0163
D.C
FLORIDA              0.0540        0.0180        0.0492      0.0164     0.0492       0.0164
GEORGIA              0.0528        0.0176        0.0444      0.0148     0.0444       0.0148
HAWAII               0.0792        0.0264        0.0534      0.0178     0.0396       0.0132
IDAHO                0.0576        0.0192        0.0492      0.0164     0.0486       0.0162
ILLINOIS             0.0198        0.0068        0.0163      0.0061     0.0183       0.0061
INDIANA              0.0480        0.0180        0.0444      0.0148     0.0444       0.0148
IOWA                 0.0507        0.0169        0.0477      0.0159     0.0477       0.0159
KANSAS               0.0705        0.0235        0.0618      0.0206     0.0618       0.0206
KENTUCKY             0.0558        0.0186        0.0510      0.0170     0.0510       0.0170
LOUISIANA            0.0504        0.0168        0.0456      0.0152     0.0456       0.0152
MAINE                0.1200        0.0400        0.1200      0.0400     0.1200       0.0400
MARYLAND             0.0495        0.0165        0.0405      0.0135     0.0405       0.0135
MASS.                0.0279        0.0093        0.0228      0.0076     0.0150       0.0050
</TABLE>

                                       2

<PAGE>



                                    SDN Costs


Interstate SDN
--------------
To be updated as tariff changes are made or renegotiated

<TABLE>
<CAPTION>

                                                         InterLATA
        State              DAY        DAY         EVE        EVE         N/W         N/W
                           1ST       ADD'L       RATE        PER         PER         PER
                         18 SEC      6 SEC      PER HR       MIN         MIN         MIN
<S>                      <C>         <C>        <C>         <C>        <C>         <C>   
MICHIGAN 292             0.0510      0.0170     0.0408      0.0136     0.0408      0.0136
MICHIGAN 430             0.0554      0.0192     0.0443      0.0153     0.4430      0.0153
MICHIGAN 925             0.0597      0.0216     0.0477      0.0172     0.4770      0.0172
MINNESOTA                0.0555      0.0185     0.0429      0.0143     0.0429      0.0143
MISSISSIPPI              0.0480      0.0160     0.0441      0.0147     0.0441      0.0147
MISSOURI                 0.0720      0.0240     0.0612      0.0204     0.0612      0.0204
MONTANA                  0.0510      0.0170     0.0408      0.0136     0.0408      0.0136
NEBRASKA                 0.0684      0.0228     0.0579      0.0193     0.0579      0.0193
NEVADA                   0.0480      0.0160     0.0384      0.0128     0.0384      0.0128
NEW HAMP.                0.0804      0.0268     0.0804      0.0288     0.0804      0.0268
NEW JERSEY               0.0537      0.0179     0.0453      0.0151     0.0453      0.0151
NEW MEXICO               0.0780      0.0260     0.0624      0.0208     0.0624      0.0208
NEW YORK                 0.0654      0.0218     0.0552      0.0184     0.0552      0.0184
NO. CAROLINA             0.0642      0.0214     0.0546      0.0182     0.0546      0.0182
NO. DAKOTA               0.0660      0.0220     0.0534      0.0178     0.0534      0.0178
OHIO                     0.0510      0.0170     0.0453      0.0151     0.0453      0.0151
OKLAHOMA                 0.0612      0.0204     0.0552      0.0184     0.0552      0.0184
OREGON 55                0.0639      0.0213     0.0630      0.0210     0.0630      0.0210
OREGON 292               0.0702      0.0234     0.0630      0.0210     0.0630      0.0210
OREGON 430               0.0744      0.0248     0.0630      0.0210     0.0630      0.0210
OREGON 440               0.0774      0.0258     0.0630      0.0210     0.0630      0.0210
PENN.                    0.0522      0.0174     0.0458      0.0152     0.0456      0.0152
RHODE ISLAND             0.0780      0.0260     0.0690      0.0230     0.0690      0.0230
SO. CAROLINA             0.0609      0.0203     0.0504      0.0168     0.0504      0.0168
SO. DAKOTA               0.0579      0.0193     0.0462      0.0154     0.0462      0.0154
TENNESSEE                0.0630      0.0210     0.0567      0.0189     0.0587      0.0189
TEXAS                    0.0615      0.0205     0.0579      0.0193     0.0579      0.0193
UTAH                     0.0630      0.0210     0.0504      0.0168     0.0504      0.0168
VERMONT                  0.0648      0.0216     0.0519      0.0173     0.0519      0.0173
VIRGINIA                 0.0537      0.0179     0.0453      0.0151     0.0453      0.0151
WASHINGTON               0.0561      0.0187     0.0495      0.0165     0.0495      0.0165
</TABLE>


                                       3

<PAGE>

                                    SDN Costs

Interstate SDN
--------------
To be updated as tariff changes are made or renegotiated

<TABLE>
<CAPTION>

                                                                  IntraLATA
        State              DAY        DAY         EVE        EVE         N/W         N/W
                           1ST       ADD'L       RATE        PER         PER         PER
                         18 SEC      6 SEC      PER HR       MIN         MIN         MIN
<S>      <C>             <C>         <C>        <C>         <C>        <C>         <C>   
MICHIGAN 292             0.0510      0.0170     0.0408      0.0136     0.0408      0.0136
MICHIGAN 430             0.0554      0.0192     0.0443      0.0153     0.4430      0.0153
MICHIGAN 925             0.0597      0.0216     0.0477      0.0172     0.4770      0.0172
MINNESOTA                0.0555      0.0185     0.0429      0.0143     0.0429      0.0143
MISSISSIPPI              0.0480      0.0160     0.0441      0.0147     0.0441      0.0147
MISSOURI                 0.0720      0.0240     0.0612      0.0204     0.0612      0.0204
MONTANA                  0.0510      0.0170     0.0408      0.0136     0.0408      0.0136
NEBRASKA                 0.0684      0.0228     0.0579      0.0193     0.0579      0.0193
NEVADA                   0.0480      0.0160     0.0384      0.0128     0.0384      0.0128
NEW HAMP.                0.0804      0.0268     0.0804      0.0288     0.0804      0.0268
NEW JERSEY               0.0414      0.0138     0.0354      0.0118     0.0285      0.0095
NEW MEXICO               0.0780      0.0260     0.0624      0.0208     0.0624      0.0208
NEW YORK                 0.0552      0.0184     0.0474      0.0158     0.0435      0.0145
NO. CAROLINA             0.0642      0.0214     0.0546      0.0182     0.0546      0.0182
NO. DAKOTA               0.0660      0.0220     0.0534      0.0178     0.0534      0.0178
OHIO                     0.0510      0.0170     0.0453      0.0151     0.0453      0.0151
OKLAHOMA                 0.0612      0.0204     0.0552      0.0184     0.0552      0.0184
OREGON 55                0.0639      0.0213     0.0630      0.0210     0.0630      0.0210
OREGON 292               0.0702      0.0234     0.0630      0.0210     0.0630      0.0210
OREGON 430               0.0744      0.0248     0.0630      0.0210     0.0630      0.0210
OREGON 440               0.0774      0.0258     0.0630      0.0210     0.0630      0.0210
PENN.                    0.0522      0.0174     0.0456      0.0152     0.0456      0.0152
RHODE ISLAND             0.0780      0.0260     0.0690      0.0230     0.0690      0.0230
SO. CAROLINA             0.0609      0.0203     0.0504      0.0168     0.0504      0.0168
SO. DAKOTA               0.0579      0.0193     0.0462      0.0154     0.0462      0.0154
TENNESSEE                0.0447      0.0149     0.0417      0.0139     0.0417      0.0139
TEXAS                    0.0615      0.0205     0.0579      0.0193     0.0579      0.0193
UTAH                     0.0630      0.0210     0.0504      0.0168     0.0504      0.0168
VERMONT                  0.0648      0.0216     0.0519      0.0173     0.0519      0.0173
VIRGINIA                 0.0537      0.0179     0.0453      0.0151     0.0453      0.0151
WASHINGTON               0.0561      0.0187     0.0495      0.0165     0.0495      0.0165
</TABLE>

                                       4

<PAGE>



                                    SDN Costs


Interstate SDN
--------------
To be updated as tariff changes are made or renegotiated

                                                  InterLATA
      State           DAY       DAY         EVE       EVE        N/W      N/W
                      1ST      ADD'L       RATE       PER        PER      PER
                    18 SEC     6 SEC      PER HR      MIN        MIN      MIN
W. VIRGINIA         0.0555     0.0185     0.0468     0.0156    0.0468     0.0156
WISCONSIN           0.0525     0.0176     0.0390     0.0130    0.0390     0.0130
WYOMING             0.0750     0.0250     0.0600     0.0200    0.0600     0.0200

AVG COST            0.0613     0.0205     0.0522     0.0174    0.0676     0.0174



                                       5

<PAGE>




                                    SDN Costs


Interstate SDN
--------------
To be updated as tariff changes are made or renegotiated

                                                   IntraLATA
      State          DAY       DAY         EVE       EVE       N/W       N/W
                     1ST      ADD'L       RATE       PER       PER       PER
                   18 SEC     6 SEC      PER HR      MIN       MIN       MIN
W. VIRGINIA        0.0555     0.0185     0.0468     0.0156    0.0468     0.0156
WISCONSIN          0.0525     0.0176     0.0390     0.0130    0.0390     0.0130
WYOMING            0.0750     0.0250     0.0600     0.0200    0.0600     0.0200

AVG COST           0.05849    0.01954    0.05008    0.01673   0.06480    0.01652



                                       6



<PAGE>


                                                                    CONFIDENTIAL


                                   Schedule B

                            Checklist Items Schedule







<PAGE>

PERIOD                       TASK                              WHO

Pre launch                   * * *                             AOL
Pre launch                   * * *                             TS and AOL
Pre launch                   * * *                             TS and AOL
Pre launch                   * * *                             TS and AOL
Pre launch                   * * *                             TS and AOL
Pre launch                   * * *                             AOL
Pre launch                   * * *                             TS and AOL
Pre launch                   * * *                             TS
Pre launch                   * * *                             TS
Pre launch                   * * *                             AOL
Pre launch                   * * *                             AOL
Pre launch                   * * *                             AOL
Pre launch                   * * *                             TS
Pre launch                   * * *                             TS and AOL
Pre launch                   * * *                             TS and AOL
Pre launch                   * * *                             AOL

Test Launch                  * * *                             TS and AOL
Test Launch                  * * *                             AOL
Test Launch                  * * *                             TS and AOL
Test Launch                  * * *                             TS and AOL
Test Launch                  * * *                             TS
Test Launch                  * * *                             TS
Test Launch                  * * *                             TS
Test Launch                  * * *                             TS
Test Launch                  * * *                             AOL
Test Launch                  * * *                             AOL
Test Launch                  * * *                             AOL
Test Launch                  * * *                             AOL
Test Launch                  * * *                             TS
Test Launch                  * * *                             AOL
Test Launch                  * * *                             AOL
Test Launch                  * * *                             TS
Test Launch                  * * *                             AOL
Test Launch                  * * *                             TS
Test Launch                  * * *                             TS and AOL
Test Launch                  * * *                             TS and AOL
Test Launch                  * * *                             TS
Test Launch                  * * *                             TS
Test Launch                  * * *                             TS
Test Launch                  * * *                             TS
Test Launch                  * * *                             TS

<PAGE>


Test Launch                  * * *                             AOL and TS
Test Launch                  * * *                             TS
Test Launch                  * * *                             TS
Test Launch                  * * *                             TS
Test Launch                  * * *                             TS and AOL
Test Launch                  * * *                             TS
Test Launch                  * * *                             TS and AOL
Test Launch                  * * *                             TS and AOL

Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL
Initial Launch               * * *                             AOL

Commercial                   * * *                             TS and AOL
  Rollout
Commercial                   * * *                             AOL
  Rollout
Commercial                   * * *                             AOL
  Rollout


<PAGE>



                                                                    CONFIDENTIAL


                                   SCHEDULE C


                         Initial Long Distance Services

                           1. Outbound and inbound long distance,  including but
not limited to interlata,  intralata,  intrastate,  international  and toll-free
services.

                           2.  Calling  cards,  including  but  not  limited  to
domestic and international, credit and debit cards

                           3. Operator  services,  including but not limited to,
collect calling, etc.

                           4. Directory assistance.

                           5. Conference calling.

                           6. Private line and dedicated services.

                           7. Online Billing and paper Billing  Services for all
telecom services.



<PAGE>




                                                                    CONFIDENTIAL



                                   Schedule D

                                  Rate Schedule






<PAGE>
                                   SCHEDULE D

                                  RATE SCHEDULE

All prices billed at full minute increments
Note:    Pricing for  Intrastate/Intralata  and International will be reflective
         of AT&T One Rate plan rates  discounted by 20% when information is made
         available.




                                      
                                      1 + Direct         Calling
INTERSTATE                            Dialed Rate         Card  
----------                            ------------       ---------
Direct Dial - 1+AC+number                 $  0.097        $  0.240
800 Readyline                             $  0.240             ---


                                     page 1

<PAGE>


                                   SCHEDULE D

                                  RATE SCHEDULE

All prices billed at full minute increments
Note:    Pricing for  Intrastate/Intralata  and International will be reflective
         of AT&T One Rate plan rates  discounted by 20% when information is made
         available.

  Intrastate/Intralata (By state)       1+Direct          Calling
                                       Dialed Rate         Card
                                       ------------       ---------
ALABAMA                                $  0.97            $  0.240
ARIZONA                                $  0.150           $  0.240
ARKANSAS                               $  0.097           $  0.240
CALIFORNIA                             $  0.097           $  0.240
COLORADO                               $  0.150           $  0.240
CONNECTICUT                            $  0.097           $  0.240
DELAWARE                               $  0.097           $  0.240
FLORIDA                                $  0.097           $  0.240
GEORGIA                                $  0.097           $  0.240
IDAHO                                  $  0.120           $  0.240
ILLINOIS                               $  0.097           $  0.240
INDIANA                                $  0.097           $  0.240
IOWA                                   $  0.120           $  0.240
KANSAS                                 $  0.120           $  0.240
KENTUCKY                               $  0.097           $  0.240
LOUISIANA                              $  0.097           $  0.240
MAINE                                  $  0.450           $  0.240
MARYLAND                               $  0.097           $  0.240
MASSACHUSETTS                          $  0.097           $  0.240
MICHIGAN                               $  0.097           $  0.240
MINNESOTA                              $  0.097           $  0.240
MISSISSIPPI                            $  0.097           $  0.240
MISSOURI                               $  0.097           $  0.240
MONTANA                                $  0.097           $  0.240
NEBRASKA                               $  0.150           $  0.240
NEVADA                                 $  0.097           $  0.240
NEW HAMPSHIRE                          $  0.097           $  0.240
NEW JERSEY                             $  0.097           $  0.240
NEW MEXICO                             $  0.150           $  0.240
NEW YORK                               $  0.120           $  0.240
NO. CAROLINA                           $  0.120           $  0.240

                                     Page 2

<PAGE>

                                   SCHEDULE D

                                  RATE SCHEDULE

All prices billed at full minute increments
Note:    Pricing for  Intrastate/Intralata  and International will be reflective
         of AT&T One Rate plan rates  discounted by 20% when information is made
         available.

  Intrastate/Intralata (By state)       1+Direct          Calling
                                       Dialed Rate         Card
                                      ------------       ---------

NO. DAKOTA                             $  0.150           $  0.240
OHIO                                   $  0.097           $  0.240
OKLAHOMA                               $  0.120           $  0.240
OREGON                                 $  0.097           $  0.240
PENNSYLVANIA                           $  0.097           $  0.240
RHODE ISLAND                           $  0.120           $  0.240
SO. CAROLINA                           $  0.097           $  0.240
SO. DAKOTA                             $  0.097           $  0.240
TENNESSEE                              $  0.120           $  0.240
TEXAS                                  $  0.150           $  0.240
UTAH                                   $  0.097           $  0.240
VERMONT                                $  0.120           $  0.240
VIRGINIA                               $  0.097           $  0.240
WASHINGTON                             $  0.097           $  0.240
W. VIRGINIA                            $  0.097           $  0.240
WISCONSIN                              $  0.097           $  0.240
WYOMING                                $  0.120           $  0.240
800 Readyline (all states)             $  0.240              ___

                                     Page 3
<PAGE>

                                   SCHEDULE D

                                  RATE SCHEDULE

All prices billed at full minute increments
Note:    Pricing for  Intrastate/Intralata  and International will be reflective
         of AT&T One Rate plan rates  discounted by 20% when information is made
         available.

                                         1 + Direct     Calling
INTERSTATE                               Dialed Rate       Card
----------                               -----------   --------
Direct Dial - 1+AC+number                  $  0.097    $  0.240
800 Readyline                              $  0.240         ---



                                     page 4

<PAGE>

                                   SCHEDULE D

                                  RATE SCHEDULE

All prices billed at full minute increments
Note:    Pricing for  Intrastate/Intralata  and International will be reflective
         of AT&T One Rate plan rates  discounted by 20% when information is made
         available.

             International (by country)               1+Direct          Calling
                                                     Dialed Rate          Card
                                                     -----------       ---------
ALBANIA                                              $  1.550          $  1.650
ALGERIA                                              $  1.200          $  1.300
AMERICAN SAMOA                                       $  1.000          $  1.100
ANDORRA                                              $  0.650          $  0.750
ANGOLA                                               $  1.650          $  1.750
ANGUILLA                                             $  0.800          $  0.900
ANTARTICA                                            $  1.550          $  1.650
ANTIGUA AND BARBUDA                                  $  0.800          $  0.900
ARGENTINA                                            $  0.800          $  0.900
ARMENIA                                              $  1.250          $  1.350
ARUBA                                                $  0.750          $  0.850
AUSTRALIA                                            $  0.500          $  0.600
AUSTRIA                                              $  0.650          $  0.750
AZERBAIJAN                                           $  1.700          $  1.800
BAHAMAS                                              $  0.500          $  0.600
BAHRAIN                                              $  1.100          $  1.200
BANGLADESH                                           $  1.600          $  1.700
BARBADOS                                             $  0.650          $  0.750
BELARUS                                              $  1.250          $  1.350
BELGIUM                                              $  0.600          $  0.700
BELIZE                                               $  1.050          $  1.150
BENIN                                                $  1.100          $  1.200
BERMUDA                                              $  0.600          $  0.700
BHUTAN                                               $  3.500          $  3.600
BOLIVIA                                              $  1.050          $  1.150
BOSNIA and HERZEGOVINA                               $  1.200          $  1.300
BOTSWANA                                             $  1.000          $  1.100
BRAZIL                                               $  0.550          $  0.650
BRUNEI                                               $  1.600          $  1.700
BULGARIA                                             $  1.000          $  1.100
BURKINA                                              $  0.800          $  0.900

                                     page 5

<PAGE>
                                   SCHEDULE D

                                  RATE SCHEDULE

All prices billed at full minute increments
Note:    Pricing for  Intrastate/Intralata  and International will be reflective
         of AT&T One Rate plan rates  discounted by 20% when information is made
         available.

             International (by country)               1+Direct          Calling
                                                     Dialed Rate          Card
                                                     -----------       ---------
BURMA                                                $  4.100          $  4.200
BURUNDI                                              $  3.500          $  3.600
CAMBODIA                                             $  2.400          $  2.500
CAMEROON                                             $  1.450          $  1.550
CANADA                                               $  0.160          $  0.260
CANARY ISLAND                                        $  0.300          $  0.400
CAPE VERDE                                           $  1.650          $  1.750
CAYMAN ISLANDS                                       $  0.700          $  0.800
CENTRAL AFRICAN REPUBLIC                             $  2.600          $  2.700
CHAD                                                 $  4.350          $  4.450
CHAGOS ARCHIPELAGO                                   $  1.650          $  1.750
CHILE                                                $  0.750          $  0.850
CHINA                                                $  1.100          $  1.200
COLOMBIA                                             $  0.750          $  0.850
COMOROS                                              $  2.700          $  2.800
CONGO                                                $  1.350          $  1.450
COOK ISLANDS                                         $  2.900          $  3.000
COSTA RICA                                           $  0.750          $  0.850
COTE D'IVOIRE                                        $  1.500          $  1.600
CROATIA                                              $  0.900          $  1.000
CUBA                                                 $  1.000          $  1.100
CYPRUS                                               $  0.900          $  1.000
CZECH REPUBLIC                                       $  0.900          $  1.000
DENMARK                                              $  0.700          $  0.800
DJIBOUTI                                             $  1.900          $  2.000
DOMINICA                                             $  0.850          $  0.950
DOMINICAN REPUBLIC                                   $  0.500          $  0.600
ECUADOR                                              $  1.000          $  1.100
EGYPT                                                $  1.000          $  1.100
EL SALVADOR                                          $  0.900          $  1.000
EQUATORIAL GUINEA                                    $  2.600          $  2.700

                                     page 6

<PAGE>
                                   SCHEDULE D

                                  RATE SCHEDULE

All prices billed at full minute increments
Note:    Pricing for  Intrastate/Intralata  and International will be reflective
         of AT&T One Rate plan rates  discounted by 20% when information is made
         available.

             International (by country)               1+Direct          Calling
                                                     Dialed Rate          Card
                                                     -----------       ---------
ESTONIA                                              $  1.250          $  1.350
ETHIOPIA                                             $  1.600          $  1.700
FIJI                                                 $  1.550          $  1.650
FINLAND                                              $  0.550          $  0.650
FRANCE                                               $  0.300          $  0.400
FRENCH GUIANA                                        $  1.000          $  1.100
FRENCH OVERSEAS DEPARTMENTS                          $  1.000          $  1.100
FRENCH POLYNESIA                                     $  1.700          $  1.800
GABON                                                $  1.050          $  1.150
GAMBIA, THE                                          $  1.050          $  1.150
GEORGIA                                              $  2.100          $  2.200
GERMANY                                              $  0.300          $  0.400
GHANA                                                $  1.150          $  1.250
GIBRALTAR                                            $  1.000          $  1.100
GREECE                                               $  0.750          $  0.850
GREENLAND                                            $  0.900          $  1.000
GRENADA                                              $  0.900          $  1.000
GUADALOUPE                                           $  1.250          $  1.350
GUAM                                                 $  0.850          $  0.950
GUATEMALA                                            $  0.900          $  1.000
GUINEA-BISSAU                                        $  2.450          $  2.550
GUINEA                                               $  1.650          $  1.750
GUYANA                                               $  1.100          $  1.200
HAITI                                                $  0.800          $  0.900
HONDURAS                                             $  1.000          $  1.100
HONG KONG                                            $  0.500          $  0.600
HUNGARY                                              $  0.900          $  1.000
ICELAND                                              $  1.050          $  1.150
INDIA                                                $  1.000          $  1.100
INDONESIA                                            $  1.100          $  1.200
IRAN                                                 $  1.000          $  1.100

                                     page 7

<PAGE>
                                   SCHEDULE D

                                  RATE SCHEDULE

All prices billed at full minute increments
Note:    Pricing for  Intrastate/Intralata  and International will be reflective
         of AT&T One Rate plan rates  discounted by 20% when information is made
         available.

             International (by country)               1+Direct          Calling
                                                     Dialed Rate          Card
                                                     -----------       ---------
IRAQ                                                 $  2.050          $  2.150
IRELAND                                              $  0.600          $  0.700
ISRAEL                                               $  0.850          $  0.950
ITALY                                                $  0.600          $  0.700
JAMAICA                                              $  0.700          $  0.800
JAPAN                                                $  0.400          $  0.500
JORDAN                                               $  1.050          $  1.150
KAZAKHSTAN                                           $  2.100          $  2.200
KENYA                                                $  1.050          $  1.150
KIRIBATI                                             $  3.250          $  3.350
KOREA, SOUTH                                         $  0.600          $  0.700
KUWAIT                                               $  1.200          $  1.300
KYRGYZSTAN                                           $  2.150          $  2.250
LAOS                                                 $  3.350          $  3.450
LATVIA                                               $  1.250          $  1.350
LEBANON                                              $  1.700          $  1.800
LESOTHO                                              $  1.250          $  1.350
LIBERIA                                              $  0.800          $  0.900
LIBYA                                                $  1.250          $  1.350
LIECHTENSTEIN                                        $  0.850          $  0.950
LITHUANIA                                            $  1.250          $  1.350
LUXEMBOURG                                           $  0.800          $  0.900
MACAU                                                $  1.750          $  1.850
MADAGASCAR                                           $  4.450          $  4.550
MALAWI                                               $  1.200          $  1.300
MALAYSIA                                             $  1.000          $  1.100
MALDIVES                                             $  2.550          $  2.650
MALI                                                 $  1.850          $  1.950
MALTA                                                $  1.250          $  1.350
MARITIME - ATLANTIC                                  $  5.000          $  5.100
MARITIME - OTHER OCEANS                              $  5.000          $  5.100

                                     page 8

<PAGE>
                                   SCHEDULE D

                                  RATE SCHEDULE

All prices billed at full minute increments
Note:    Pricing for  Intrastate/Intralata  and International will be reflective
         of AT&T One Rate plan rates  discounted by 20% when information is made
         available.

             International (by country)             1+Direct          Calling
                                                   Dialed Rate          Card
                                                   -----------       ---------
MARITIME - PACIFIC                                  $  5.000          $  5.100
MARSHALL ISLANDS                                    $  1.700          $  1.800
MAURITANIA                                          $  1.600          $  1.700
MAURITIUS                                           $  2.150          $  2.250
MEXICO                                              $  0.500          $  0.600
MICRONESIA, FEDERATED STATES OF                     $  1.150          $  1.250
MIDWAY ATOLL                                        $  2.150          $  2.250
MOLDOVA                                             $  1.750          $  1.850
MONGOLIA                                            $  3.900          $  4.000
MONTSERRAT                                          $  0.850          $  0.950
MOROCCO                                             $  1.400          $  1.500
MOZAMBIQUE                                          $  2.050          $  2.150
NAMIBIA                                             $  1.150          $  1.250
NAURU                                               $  4.550          $  4.650
NEPAL                                               $  1.400          $  1.500
NETHERLANDS                                         $  0.400          $  0.500
NETHERLANDS ANTILLES                                $  0.800          $  0.900
NEW CALEDONIA                                       $  1.700          $  1.800
NEW ZEALAND                                         $  0.700          $  0.800
NICARAGUA                                           $  1.000          $  1.100
NIGER                                               $  1.900          $  2.000
NIGERIA                                             $  1.000          $  1.100
NIUE                                                $  2.550          $  2.650
NORFOLK ISLAND                                      $  2.550          $  2.650
NORTHERN MARIANA ISLANDS                            $  1.600          $  1.700
NORWAY                                              $  0.500          $  0.600
OMAN                                                $  1.200          $  1.300
PACIFIC ISLANDS (PALAU)                             $  1.950          $  2.050
PAKISTAN                                            $  1.400          $  1.500
PANAMA                                              $  0.750          $  0.850
PAPUA NEW GUINEA                                    $  1.350          $  1.450

                                     page 9

<PAGE>
                                   SCHEDULE D

                                  RATE SCHEDULE

All prices billed at full minute increments
Note:    Pricing for  Intrastate/Intralata  and International will be reflective
         of AT&T One Rate plan rates  discounted by 20% when information is made
         available.

             International (by country)               1+Direct          Calling
                                                     Dialed Rate          Card
                                                     -----------       --------
PARAGUAY                                             $  1.250          $  1.350
PERU                                                 $  1.000          $  1.100
PHILIPPINES                                          $  0.600          $  0.700
POLAND                                               $  0.750          $  0.850
PORTUGAL                                             $  0.850          $  0.950
QATAR                                                $  1.050          $  1.150
REUNION                                              $  1.900          $  2.000
ROMANIA                                              $  1.300          $  1.400
RUSSIA                                               $  1.200          $  1.300
RWANDA                                               $  2.050          $  2.150
SAINT HELENA                                         $  2.250          $  2.350
SAINT KITTS AND NEVIS                                $  0.650          $  0.750
SAINT LUCIA                                          $  0.900          $  1.000
SAINT PIERRE AND MIQUELON                            $  0.900          $  1.000
SAINT VINCENT AND THE GRENADINES                     $  0.900          $  1.000
SAO TOME AND PRINCIPE                                $  2.400          $  2.500
SAUDI ARABIA                                         $  1.200          $  1.300
SENEGAL                                              $  1.700          $  1.800
SERBIA                                               $  1.200          $  1.300
SEYCHELLES                                           $  2.100          $  2.200
SIERRA LEONE                                         $  1.300          $  1.400
SINGAPORE                                            $  0.550          $  0.650
SLOVAKIA                                             $  0.900          $  1.000
SLOVENIA                                             $  0.900          $  1.000
SOLOMON ISLANDS                                      $  1.950          $  2.050
SOMALIA                                              $  2.350          $  2.450
SOUTH AFRICA                                         $  0.750          $  0.850
SPAIN                                                $  0.700          $  0.800
SRI LANKA                                            $  1.550          $  1.650
SUDAN                                                $  2.050          $  2.150
SURINAME                                             $  1.250          $  1.350

                                     page 10

<PAGE>
                                   SCHEDULE D

                                  RATE SCHEDULE

All prices billed at full minute increments
Note:    Pricing for  Intrastate/Intralata  and International will be reflective
         of AT&T One Rate plan rates  discounted by 20% when information is made
         available.

             International (by country)               1+Direct          Calling
                                                     Dialed Rate          Card
                                                     -----------       ---------
SWAZILAND                                            $  1.250          $  1.350
SWEDEN                                               $  0.400          $  0.500
SWITZERLAND                                          $  0.500          $  0.600
SYRIA                                                $  1.750          $  1.850
TAIWAN                                               $  0.550          $  0.650
TAJIKISTAN                                           $  3.750          $  3.850
TANZANIA                                             $  1.100          $  1.200
THAILAND                                             $  1.000          $  1.100
TOGO                                                 $  1.050          $  1.150
TONGA                                                $  1.500          $  1.600
TRINIDAD & TOBAGO                                    $  0.800          $  0.900
TUNISIA                                              $  1.300          $  1.400
TURKEY                                               $  1.000          $  1.100
TURKMENISTAN                                         $  3.100          $  3.200
TURKS AND CAICOS ISLANDS                             $  0.900          $  1.000
TUVALU                                               $  3.150          $  3.250
UGANDA                                               $  1.150          $  1.250
UKRAINE                                              $  1.250          $  1.350
UNITED ARAB EMIRATES                                 $  0.950          $  1.050
UNITED KINGDOM                                       $  0.200          $  0.300
URUGUAY                                              $  1.000          $  1.100
UZBEKISTAN                                           $  1.250          $  1.350
VANUATU                                              $  3.300          $  3.400
VENEZUELA                                            $  0.500          $  0.600
VIETNAM                                              $  1.350          $  1.450
VIRGIN ISLANDS, BRITISH                              $  0.800          $  0.900
WALLIS AND FUTUNA                                    $  2.300          $  2.400
WESTERN SAMOA                                        $  1.050          $  1.150
YEMEN                                                $  1.250          $  1.350
ZAIRE                                                $  1.400          $  1.500
ZAMBIA                                               $  1.200          $  1.300

                                     page 11

<PAGE>
                                   SCHEDULE D

                                  RATE SCHEDULE

All prices billed at full minute increments
Note:    Pricing for  Intrastate/Intralata  and International will be reflective
         of AT&T One Rate plan rates  discounted by 20% when information is made
         available.

             International (by country)               1+Direct          Calling
                                                     Dialed Rate          Card
                                                     -----------        -------
ZIMBABWE                                             $  0.900           $ 1.000




                                     page 12

<PAGE>
                                   SCHEDULE D

                                  RATE SCHEDULE

All prices billed at full minute increments
Note:    Pricing for  Intrastate/Intralata  and International will be reflective
         of AT&T One Rate plan rates  discounted by 20% when information is made
         available.


                                                  1 + Direct      Calling
                                                 Dialed Rate       Card
OTHER SERVICES                                   -----------      -------
Directory Assistance                              $  0.750        $  0.850
Collect (Automated or Operator Assisted)          $  2.250             ---
Billed to 3rd Party                               $  2.350             ---
Coin Sent Paid Operator                           $  2.300             ---
Person to Person                                  $  4.900             ---
Source: AT&T Tariff F.C.C. No.27


                                     page 13



<PAGE>


                                                                    CONFIDENTIAL


                                   Schedule E

                             Performance Milestones



<PAGE>


Commitment or Deliverable          Amount              Milestone

1.  * * *                          $7 mil              Issuance of Press Release


2.  * * *                          $10 mil             Execution of Agreement

3.  * * *                          $20 mil             Execution of Agreement

4.  * * *                          $9 mil              Execution of Agreement

5.  * * *                          $3 mil              Certification by AOL
                                                       of Completion

6.  * * *                          $1.5 mil            Certification by AOL
                                                       of Completion

7.  * * *                          $1 mil              Certification by AOL
                                                       of Completion

8.  * * *                          $1 mil              Certification by AOL
                                                       of Completion

9.  * * *                          $2 mil              Certification by AOL
                                                       of Completion

10. * * *                          $2 mil              Certification by AOL
                                                       of Completion

11. * * *                          $0.5 mil            Delivery of list of
                                                       test customers