EMPLOYMENT AGREEMENT
                              ---------- ---------


         THIS EMPLOYMENT AGREEMENT  ("Agreement") is made and entered into as of
the  5th  day  of  September,   1996  between  Tel-Save,  Inc.  ("Company"),   a
Pennsylvania  corporation  and a wholly-owned  subsidiary of Tel-Save  Holdings,
Inc. ("Holdings"), and Edward B. Meyercord, III ("Employee").

                              Preliminary Statement
                              ----------- ---------

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

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

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

         2. Term of Agreement. The term of Employee's employment hereunder shall
commence on October 1, 1996 (the "Effective  Date") and shall continue in effect
for a period of five years thereafter, except as hereinafter provided ("Term").

         3. Position and Duties.  Except as may otherwise be agreed upon between
Company and Employee, Employee shall perform such duties and responsibilities of
Executive Vice President-Marketing and Corporate Developments or such duties and
responsibilities  as may be reasonably assigned or delegated to him from time to
time,  including without limitation service as an employee,  officer or director
of Company and affiliates of Company without additional compensation. References
in this Agreement to Employee's employment with Company shall be deemed to refer
to employment  with Company or an affiliate.  Employee  shall perform his duties
and  responsibilities  to the best of his abilities in a diligent,  trustworthy,
businesslike and efficient  manner.  Employee shall devote  substantially all of
his working time and efforts to the  business and affairs of Company;  provided,
however,  that nothing in this  Agreement  shall  preclude the Employee from (i)
engaging in charitable  activities  and community  affairs and (ii) managing his
personal investments and affairs.

         4. Compensation and Related Matters.

                  4.1 Base Salary.  During the Term of his employment hereunder,
Company  shall  pay to  Employee  an  annualized  base  salary



<PAGE>

of not less than  $210,000,  subject  to review  from time to time by  Company's
Board of Directors ("Base Salary"). Base Salary shall be paid in accordance with
Company's usual and customary payroll practices.

                  4.2 Benefit Plans and Arrangements. Employee shall be entitled
to participate in and to receive benefits under Company's employee benefit plans
and arrangements  (including bonus plans) as are made available to the Company's
senior executives in effect during the Term of his employment  hereunder,  which
may be altered from time to time at the discretion of Company.

                  4.3 Perquisites.  During the Term of his employment hereunder,
Employee shall be entitled to receive  fringe  benefits as are made available to
the Company's senior executives.

                  4.4 Expenses.  Company shall promptly  reimburse  Employee for
all  normal  out-of-pocket  expenses  related  to  Company's  business  that are
actually paid or incurred by him in the  performance  of his services under this
Agreement and that are  incurred,  reported and  documented  in accordance  with
Company's policies.  In addition,  during the Term of his employment  hereunder,
the Company agrees to provide Employee with an automobile,  as the Company shall
determine,  and  the  Company  shall  keep  such  automobile  fully  insured  in
accordance with the Company's practices for similarly situated employees.

                  4.5 Relocation of Employee.

                           (a) The  Company   shall  pay  Employee's  reasonable
moving  expenses  incurred in connection  with  Employee's move from his current
residence in  Ridgewood,  New Jersey  ("Old  Residence")  to a new  residence in
either  the  Princeton,  New  Jersey  or  New  Hope,  Pennsylvania  areas  ("New
Residence").  Employee shall obtain the Company's  prior approval for any single
moving expenditure in excess of $1,000.

                           (b)      (i)     Subject to the limitation in Section
4.5(b)(iv),  upon the consummation of the sale of Employee's Old Residence,  the
Company  agrees to pay  Employee  the  amount of money  equal to the  difference
between the purchase  price that Employee  paid for such  residence and the sale
price that Employee received in connection with the sale of such residence.

                                    (ii)    Subject to the limitation in Section
4.5(b)(iv),  in the  event  that  and so long as the  Employee  owns  both a New
Residence and his Old Residence during the period  commencing on the date hereof
and terminating nine months thereafter  ("Transition Period"), the Company shall
reimburse  the Employee for the greater of (i) his monthly  mortgage for his New
Residence and (ii) his monthly mortgage payment for his Old Residence, provided,
however,  that  the  Company  shall  reimburse  the  Employee  only for one such
mortgage payment each month during the Transition Period.
<PAGE>

                                    (iii)   Subject to the limitation of Section
4.5(b)(iv), to the extent that Employee has not purchased the New Residence, the
Company shall provide the Employee with a two-bedroom  rental residence,  as the
Company shall determine during the Transition Period.

                                    (iv)    Notwithstanding the  foregoing,  the
Company's  aggregate liability to Employee pursuant to this Section 4.5(b) shall
not exceed fifty thousand dollars ($50,000.00).

                  4.6 Stock Options.  (a) Employee shall be granted an option to
purchase 400,000 shares of common stock of Holdings (the "Option") in accordance
with the Stock Option  Agreement  attached hereto as Exhibit A. The Option shall
have an exercise  price equal to $22.25  which is equal to the fair market value
of the common stock of Holdings on the date hereof.  The Option shall be subject
to and  conditional  upon the Option  receiving (i) the approval of the Board of
Directors  of  Holdings  and  (ii) the  affirmative  vote of a  majority  of all
outstanding shares of Holdings at the next annual meeting of the stockholders of
Holdings ("Stockholder  Approval") and the Option shall be null and void if such
approval is not obtained.  The Option shall be exercisable in  installments,  as
follows:  (i)  133,333  shares of common  stock  may be  purchased  on the first
anniversary  of the date  hereof,  (ii)  133,333  shares of common  stock may be
purchased on the second  anniversary of the date hereof and (iii) 133,334 shares
of common stock may be purchased on the third anniversary of the date hereof.

                                       (b) Company   agrees  to  file  with  the
Securities and Exchange  Commission a Registration  Statement on Form S-8 (or if
unavailable,  a  registration  statement  on Form  S-3) to register  the  shares
issuable  upon  exercise  of  the  Option  under  the  Securities  Act  of  1933
("Securities  Act") and any applicable state securities or "Blue Sky" laws on or
before the first anniversary of the date hereof.  Notwithstanding the foregoing,
the Company  shall be entitled to postpone for a  reasonable  period of time the
filing  or the  effectiveness  of such  registration  statement  if the Board of
Directors  of the  Company  shall  determine  in good faith that such  filing or
effectiveness  would  be  materially   detrimental  to  the  Company's  business
interest.

                  4.7 Signing Bonus. In consideration of Employee's Agreement to
become employed by Company,  Company shall pay Employee  $400,000 at the signing
hereof.

                  4.8 Change of  Control.  In the event of a "change in control"
of  Holdings  occurs,  Employer  shall  pay  Employee  an  amount  equal  to the
difference between $2,000,000 and the sum of (a) the aggregate "spread" upon the
Employee's  prior  exercise(s) of the Option,  if any, and (b) the amount of the
spread on the  Option on the date of the  change in  control,  if any,  assuming
Employee exercised the Option. For purposes of this paragraph 4.8: (A)
<PAGE>

"change in control"  of  Holdings  shall have been deemed to occur if (z) Daniel
Borislow  ceases for any reason to be Chairman of the Board and Chief  Executive
Officer of Holdings and the Company or (y) any of the events listed in paragraph
2(a) of the Option shall have occurred;  provided,  however,  that the foregoing
shall not apply to a change in status of Daniel  Borislow in connection with any
transaction or series of  transactions  currently  referred to by the Company as
"Project  Vineyard"  so long as  Daniel  Borislow  retains  the  title of either
Chairman of the Board or Chief  Executive  Officer of  Holdings  and the Company
thereafter;  and (B) "spread" means the difference between the fair market value
(which  shall be deemed to be the closing  price of the common stock of Holdings
on the  relevant  date) of the  shares  with  respect  to which  the  Option  is
exercised and the aggregate exercise price paid.

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

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

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

                  5.3 Cause. (a) Upon written notice,  Company may terminate the
Term  of  Employee's  employment  hereunder  for  Cause.  For  purposes  of this
Agreement,  Company  shall  have  "Cause"  to  terminate  Employee's  employment
hereunder upon (i) material breach of any material  provision of this Agreement;
(ii)  willful   misconduct  as  an  employee  of  Company  in  connection   with
misappropriating  any funds or property of Company or  attempting  to  willfully
obtain  any  personal  profit  from any  transaction  in which  Employee  has an
interest which is adverse to the interests of Company; or (iii) gross neglect or
unreasonable  refusal  to perform  the  duties  assigned  to  Employee  under or
pursuant to this Agreement.

                  5.4      By Employee.

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

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

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

                                           (b) Failure  to maintain  Employee in
a position commensurate with that referred to in Section 3 of this Agreement; or

                                           (c) The assignment to Employee of any
duties  inconsistent  with  the  Employee's  position,   authority,   duties  or
responsibilities  as contemplated  by Section 3 of this Agreement,  or any other
action by Company  which results in a diminution  of such  position,  authority,
duties or responsibilities.

                  5.5 Without Cause. Company may otherwise terminate the Term of
Employee's employment at any time upon written notice to Employee.

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

                  6.1 By Employee for Good Reason;  By Company Without Cause. In
the event that the Employee's  employment  hereunder is  terminated:  (i) by the
Employee  for good reason or (ii) by the  Company  without  Cause,  then (A) the
Company shall continue to pay and provide Employee his compensation and benefits
as set forth in Section 4 in the same  manner as before  termination,  and for a
period of time ending on the earlier of the date when the Term of this Agreement
would  otherwise have expired in accordance with Section 2 of this Agreement and
the second  anniversary  of the date of such  termination  and (B) fifty percent
(50%) of the  outstanding  stock options  granted to Employee which are unvested
shall  immediately vest and Employee shall have the right to exercise any vested
stock options during the period ending on the second  anniversary of the date of
such termination or for the remainder of the exercise period; if less.

                  6.2 By Company for Cause;  By Employee  Without Cause.  In the
event that the Company shall terminate the Employee's  employment  hereunder for
Cause pursuant to Section 5.3 hereof or Employee shall  terminate his employment
hereunder  without Good Reason,  all compensation and benefits,  as specified in
Section 4 of this  Agreement,  heretofore  payable or provided  to the  Employee
shall cease to be payable or provided,  except for salary and benefits which may
have been  earned and are due and payable but which have not been paid as of the
date of  termination  and  reimbursements  for  expenses  which  may  have  been
incurred, reported and documented but which have not been paid as of the date of
termination.
<PAGE>

                  6.3 Death. In the event of Employee's  death the Company shall
not be obligated to pay Employee or his estate or beneficiaries any compensation
except  for  salary  and  benefits  which may have been  earned  and are due and
payable  but  which  have  not  been  paid  as of the  date of  termination  and
reimbursements  for  expenses  which  may  have  been  incurred,   reported  and
documented but which have not been paid as of the date of termination; provided,
however,  that upon  termination  due to death,  all  outstanding  stock options
granted  to the  Employee  which are  unvested  shall  immediately  vest and the
Employee's  estate or  beneficiaries as the case may be, shall have the right to
exercise  any  vested  stock  options  during  the  period  ending on the second
anniversary  of the  date of such  termination  or,  for  the  remainder  of the
exercise period, if less.

                  6.4  Disability.  In the event of Employee's  disability,  the
Company  shall not be obligated  to pay Employee or his estate or  beneficiaries
any compensation  except for: (a) salary and benefits which may have been earned
and  are due  and  payable  but  which  have  not  been  paid as of the  date of
termination;  (b)  reimbursement  for  expenses  which may have  been  incurred,
reported  and  documented  but  which  have  not  been  paid  as of the  date of
termination;  and (c) the Company,  at its option,  either will pay Employee (i)
$36,000 per year until  Employee  reaches the age of 65 or (ii) a lump sum equal
to the  present  value of the amount to be paid  pursuant  to Section  6.4(c)(i)
above. Upon termination due to disability fifty percent (50%) of the outstanding
stock options granted to the Employee which are unvested shall  immediately vest
and the Employee or his estate or  beneficiaries,  as the case may be shall have
the right to exercise any vested stock  options  during the period ending on the
second  anniversary of the date of such  termination or for the remainder of the
exercise period, if less.

                  6.5  No  Mitigation.  In  the  event  of  any  termination  of
employment  under  Section 5, the Employee  shall be under no obligation to seek
other  employment;  provided,  however,  to the extent that Employee does obtain
other  employment   subsequent  to  the  termination  of  Employee's  employment
hereunder, Company's obligations under this Agreement shall terminate.

         7.  Unauthorized  Disclosure.  Employee  shall not,  without  the prior
written  consent  of  Company,  disclose  or use in any way,  either  during the
Employee's  employment  with  Company or  thereafter,  except as required in the
course of such employment, any confidential business or technical information or
trade secret acquired in the course of such employment, whether or not conceived
of or prepared by him, which is related to any service or business of Company or
any  Company  affiliate;  provided,  that the  foregoing  shall not apply to (i)
information  which is not unique to the Company or which is  generally  known to
the industry or the public other than as a result of  Employee's  breach of this
covenant, (ii) information known to the Employee prior to the Effective Date, or
(iii) information which Employee is required to

<PAGE>

disclose to or by any governmental or judicial authority;  provided, however, if
Employee  should  be  required  in the  course  of  judicial  or  administrative
proceedings  to disclose any  information  Employee  shall give  Company  prompt
written notice thereof so that Company may seek an appropriate  protective order
and/or waive in writing compliance with the  confidentiality  provisions of this
Agreement.  If, in the absence of a protective  order or the receipt of a waiver
by the Company, Employee is nonetheless,  in the written opinion of its counsel,
compelled  to disclose  information  to a court or tribunal or  otherwise  stand
liable for contempt or suffer  other  serious  censure or penalty,  Employee may
disclose such  information  to such court or tribunal  without  liability to any
other party hereto.

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

         9.  Inventions  and  Patents.  Employee  agrees  that  all  inventions,
innovations,  improvements,  developments, methods, designs, analyses, drawings,
reports,  and all  similar or related  information  which  relates to  Company's
actual or anticipated  business,  research and development or existing or future
products or services  and which are  conceived,  developed  or made by or at the
direction  of  Employee  while  employed  by Company  will be owned by  Company.
Employee also agrees to promptly perform all reasonable actions (whether before,
during or after the Term)  necessary to establish and confirm such ownership (to
the extent of such ownership).

         10. Certain Restrictive  Covenants.  For a period ending six (6) months
after the earlier of the Employee's  termination of employment  hereunder or the
Term Employee  agrees that,  he will not act either  directly or indirectly as a
partner,  officer,  director,  substantial  stockholder  or employee,  or render
advisory or other services for, or in connection with, or become  interested in,
or make any substantial financial investment in any firm, corporation,  business
entity or business enterprise  competitive with the business of Company,  except
with the express written consent of the Board of Directors of Company.  Employee
further  agrees that in the event of the  termination  of his  employment  under
Section 5, for a period of one year  thereafter,  he will not employ or offer to
employ,  call on,  solicit,  actively  interfere  with  Company's or any Company
affiliate's relationship with, or


<PAGE>

attempt  to divert or entice  away,  any  employee  of  Company  or any  Company
affiliate.

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

         12. Company  Representations.  The Company  represents and warrants (i)
that it is duly authorized and empowered to enter into this Agreement, (ii) that
the  performance  of its  obligations  under this Agreement will not violate any
agreement  between it and any other person,  firm or organization and (iii) upon
the execution and delivery of this  Agreement by the  Employee,  this  Agreement
shall be the  valid  and  binding  obligation  of the  Company,  enforceable  in
accordance in accordance with its terms.

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

         14.  Effect of Agreement  on Other  Benefits.   Except  as specifically
provided  in this  Agreement,  the  existence  of this  Agreement  shall  not be
interpreted to preclude,  prohibit or restrict the Employee's  participation  in
any other  employee  benefit or other plans or  programs  in which he  currently
participates.

         15.  Rights of  Executive's  Estate.  If the Employee dies prior to the
payment of all amounts  due and owing to him under the terms of this  Agreement,
such amounts shall be paid to such  beneficiary or beneficiaries as the Employee
may have last  designated in writing filed with the Secretary of the Company or,
if the Employee has made no beneficiary  designation,  to the Employee's estate.
Such  designated  beneficiary or the executor of his estate,  as the case my be,
may  exercise  all of  the  Employee's  rights  hereunder.  If  any  beneficiary
designated by the Employee  shall  predecease the Employee,  the  designation of
such beneficiary shall be deemed revoked, and any amounts which would have been
payable to such beneficiary shall be paid to the Employee's 
<PAGE>


estate.  If any designated  beneficiary  survives the Employee,  but dies before
payment of all amounts due hereunder,  such payments shall,  unless the Employee
has designated otherwise,  be made to such beneficiary's estate. In the event of
the Employee's death or judicial determination of his incompetence, reference in
this  Agreement to the Employee shall be deemed where  appropriate,  to refer to
his beneficiary, estate or other legal representative.

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

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

         If to Employee:

         Mr. Edward B. Meyercord, III
         202 Mountain Avenue
         Ridgewood, New Jersey 07450

         If to Company:

         Tel-Save, Inc.
         6805 Route 202
         New Hope, Pennsylvania 18938
         Attn: President

Either  party may change its address for notices by written  notice to the other
party in accordance with this Section 17.

         18.  Miscellaneous.  No  provision of this  Agreement  may be modified,
waived or discharged unless such waiver,  modification or discharge is agreed to
in writing  signed by Employee and Company.  No waiver by either party hereto at
any time of any breach by the other party  hereto of, or  compliance  with,  any
condition  or  provision  of this  Agreement to be performed by such other party
shall be deemed a waiver of similar or  dissimilar  provisions  or conditions at
the same or at any  prior or  subsequent  time.  The  validity,  interpretation,
construction  and performance of this 
<PAGE>

Agreement  shall be governed by the laws of  Pennsylvania  relating to contracts
made and to be performed entirely therein.

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

         20.  Successors.  This Agreement shall be binding upon and inure to the
benefit of the parties  hereto and their  heirs,  personal  representatives  and
successors,  including  without  limitation  any  affiliate to which Company may
assign  this  Agreement.  Employee  may not  assign or  transfer  his  rights to
compensation  and  benefits,  except by will or operation of law and,  except as
provided in Section 15 above.

         21.  Counterparts.  This  Agreement  may be  executed  in  one or  more
counterparts,  each of which shall be deemed to be an original  but all of which
together will constitute one and the same instrument.

         IN  WITNESS  WHEREOF,  each of the  parties  hereto has  executed  this
Agreement as of the day and year first written above.

Tel-Save, Inc.



By:
   ------------------------------
   Daniel Borislow
   Chairman and Chief Executive Officer



---------------------------------
Edward B. Meyercord, III