TEL-SAVE.COM, INC.


                                                                   EXHIBIT 10.42



                          REGISTRATION RIGHTS AGREEMENT

         This REGISTRATION  RIGHTS AGREEMENT (this  "Agreement") is entered into
as of January 5, 1999 by and among  TEL-SAVE.COM,  INC., a Delaware  corporation
(the "Company"), and AMERICA ONLINE, INC., a Delaware corporation ("Investor").

                                    RECITALS

         WHEREAS,  the Company and the Investor  have entered into an Investment
Agreement of even date herewith (the "Investment Agreement"),  pursuant to which
the Investor has agreed to purchase 2,894,737 shares (the "Purchased Shares") of
common stock,  par value $.01 per share, of the Company ("Common  Stock"),  upon
the terms and conditions set forth therein;

         WHEREAS, pursuant to the Investment Agreement,  Investor shall exchange
5,076,016  warrants for 1,226,635 shares of Common Stock (the "Warrant  Exchange
Shares");

         WHEREAS,  following the Closing of the Investment  Agreement,  Investor
will own warrants (the "Remaining  Warrants") for a total of 2,721,984 shares of
Common Stock;

         WHEREAS,  pursuant to the terms of the Investment  Agreement,  Investor
shall have the right to put certain  warrants  and shares to the Company and the
Company  shall have the right to elect to purchase  such warrants and shares for
cash or shares of Common Stock (the "Additional Shares");

         WHEREAS,  in order to induce the Investor to enter into the  Investment
Agreement,  the Company has agreed to provide the registration  rights set forth
in this  Agreement  for the  benefit of  Investor  and its  direct and  indirect
transferees upon the terms and conditions set forth herein; and

         WHEREAS, the execution and delivery of this Agreement is a condition to
the Investor's obligations pursuant to the Investment Agreement.

         NOW, THEREFORE, in consideration of the mutual premises,  covenants and
conditions set forth herein, the parties hereby agree as follows:

          1. Definitions. For the purposes of this Agreement:

         "Affiliate"  means any  individual  or entity  directly  or  indirectly
controlling,  controlled  by or  under  common  control  with,  a party  to this
Agreement.  Without limiting the foregoing,  the direct or indirect ownership of
50% or more of the outstanding  voting  securities of an entity, or the right to
receive 50% or more of the profits or earnings of an entity,  shall be deemed to
constitute control.


<PAGE>



         "Business  Day" means a day other than a Saturday,  Sunday or other day
on which commercial banks in New York City are authorized or required to close.

         "Commission" means the U.S.  Securities and Exchange  Commission or any
other governmental authority from time to time administering the Securities Act.

          "Common  Stock" means the common stock,  par value $.01 per share,  of
the Company.

         "DTC" means the Depository Trust Company.

         "Exchange Act" means the  Securities  Exchange Act of 1934, as amended,
or any  successor  federal  statute  and the  rules and the  regulations  of the
Commission promulgated thereunder,  all as the same shall be in effect from time
to time.

         "Holder"  means  any  person  owning or  having  the  right to  acquire
Registrable  Securities,  including an Affiliate or any  successor,  assignee or
transferee of Investor or a Holder that has received  Registrable  Securities in
accordance with Section 12 hereof.

         "NASD" means the National Association of Securities Dealers, Inc.

         "Person"  means any natural  person,  firm,  partnership,  association,
corporation,   company,   trust,  business  trust,  government  entity,  limited
liability company or other entity.

         "Prospectus"   means  the  prospectus   included  in  any  Registration
Statement,  as amended or supplemented by any prospectus supplement with respect
to the  terms of the  offering  or any  portion  of the  Registrable  Securities
covered by such Registration  Statement and all other amendments and supplements
to  the  prospectus,  including  post-effective  amendments,  and  all  material
incorporated  by  reference  or deemed to be  incorporated  by reference in such
prospectus.

         "Registrable  Securities"  means  (a)  the  Purchased  Shares,  Warrant
Exchange  Shares,  the  Warrant  Shares  and  the  Additional  Shares,  whenever
acquired, and (b) any capital stock or other securities of the Company issued or
issuable  with  respect  to such  shares  (i) upon any  conversion  or  exchange
thereof,  (ii) by way of stock  dividend or other  distribution,  stock split or
reverse  stock  split,  or (iii) in  connection  with a  combination  of shares,
recapitalization, merger, consolidation, exchange offer or other reorganization.
As to any particular Registrable  Securities,  once issued such securities shall
cease to be  Registrable  Securities  when  (A) a  Registration  Statement  with
respect to the sale of such  securities  shall have become  effective  under the
Securities  Act and such  securities  shall have been  disposed of in accordance
with  such  Registration   Statement,   (B)  such  securities  shall  have  been
distributed to the public in reliance upon Rule 144 (or any successor provision)
under the Securities Act, provided that at the time such securities 




<PAGE>

are  proposed  to be  disposed  of,  they may be sold under Rule 144 without any
limitation on the amount of such securities  which may be sold or (c) they shall
have ceased to be outstanding.

         "Registration  Expenses"  means all fees and  expenses  incident to the
performance of or compliance with the provisions of this  Agreement,  whether or
not any Registration Statement is filed or becomes effective, including, without
limitation, all (a) registration and filing fees (including, without limitation,
(i)  fees  with  respect  to  filings  required  to be made and  other  expenses
associated with the NASD and any other applicable exchange in connection with an
underwritten  offering,  and (ii) fees and  expenses  of  compliance  with state
securities  or  blue  sky  laws  (including,   without   limitation,   fees  and
distributions  of counsel for the underwriter or underwriters in connection with
blue sky  qualifications  of the  Registrable  Securities and  determination  of
eligibility of the Registrable  Securities for investment under the laws of such
jurisdictions  as  are  provided  in  Section  4(e)),   (b)  printing   expenses
(including,   without   limitation,   expenses  of  printing   certificates  for
Registrable  Securities  in a form eligible for deposit with DTC and expenses of
printing prospectuses),  (c) fees and disbursements of all independent certified
public  accountants  referred  to  in  Sections  4  and  5  (including,  without
limitation,  the  reasonable  expenses of any special  audit and "cold  comfort"
letters required by or incident to such performance),  (d) the fees and expenses
of any  "qualified  independent  underwriter"  or  other  independent  appraiser
participating  in an  offering  pursuant  to the NASD Rules of  Conduct  and the
corresponding  rules of any other applicable  exchange,  (e) liability insurance
under the Securities Act or any other  securities  laws, if the Company  desires
such insurance, (f) fees and expenses of all attorneys, advisers, appraisers and
other  persons  retained by the Company or any  Subsidiary  of the Company,  (g)
internal  expenses  of the  Company  and its  Subsidiaries  (including,  without
limitation,  all salaries and expenses of officers and  employees of the Company
and its  Subsidiaries,  other general  overhead  expenses of the Company and its
Subsidiaries,  and other  expenses for the  performance  of legal or  accounting
duties),  (h) the expense of any annual audit and the  preparation of historical
and pro forma  financial  statements  or other  data  normally  prepared  by the
Company  in the  ordinary  course of  business,  (i) the  expenses  relating  to
printing,   word  processing  and  distributing  all  Registration   Statements,
underwriting  agreements,  securities sales agreements,  and any other documents
necessary  in  order  to  comply  with  this  Agreement,  and (j) any  fees  and
disbursements of any other underwriters and  broker-dealers  customarily paid by
issuers or sellers of securities;  provided, however, that in all cases in which
the Company is required to pay  Registration  Expenses  hereunder,  Registration
Expenses shall exclude any underwriting  discounts,  selling  commissions or any
transfer taxes payable in respect of the sale of the  Registrable  Securities by
the Holders thereof.

         "Registration  Statement"  means  any  registration  statement  of  the
Company that covers any of the Registrable Securities pursuant to the provisions
of this Agreement,  and all amendments and supplements to any such  registration
statement,  including  post-effective  amendments,  in each case  including  the
Prospectus, all exhibits and all material incorporated by reference or deemed to
be incorporated by reference in such registration statement.

         "Rule  144"  means  Rule 144 (or any  successor  provision)  under  the
Securities Act.


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<PAGE>


         "Securities  Act" means the Securities Act of 1933, as amended,  or any
successor  federal  statute,  and the rules and  regulations  of the  Commission
promulgated thereunder, all as the same shall be in effect from time to time.


         "Underwritten   registration"  or   "underwritten   offering"  means  a
registration  in which  Registrable  Securities are sold to an  underwriter  for
reoffering to the public.

          "Warrant  Shares"  means any  shares  issuable  upon  exercise  of the
Remaining Warrants.

          2. Registration.

                  (a) Immediate  Registration.  The Company shall as promptly as
practicable,  but in no event later than  forty-five (45) calendar days from the
date hereof,  file a "shelf"  Registration  Statement pursuant to Rule 415 under
the  Securities  Act to permit the resale of the Purchased  Shares,  the Warrant
Exchange  Shares,  the Warrant Shares and an additional Six Million  (6,000,000)
shares of Common  Stock  that may be issued  from time to time  pursuant  to the
Investment  Agreement.  The  Company  shall use its best  efforts  to cause such
Registration Statement to become effective as promptly as practicable, but in no
event  later than ninety  (90) days from the date of this  Agreement;  provided,
however,  that the Company shall not be required to file its report on Form 10-K
for the year ended  December 31, 1998 prior to March 31, 1999.  In any event and
notwithstanding  anything to the contrary in this  Agreement,  the Company shall
file the Registration Statement no later than the date it files any registration
statement  with  respect to the sale of shares on its own behalf or on behalf of
any other  Person and shall seek  effectiveness  of the  Registration  Statement
concurrent with any other registration statement.

                  (b)  Registration  Statement  Form.  Registrations  under this
Section 2 shall be on such  appropriate  form of  Registration  Statement of the
Commission  as shall be selected by the  Company and  available  to it under the
Securities Act. The Company agrees to include in any such Registration Statement
all  information  which,  in the  opinion of counsel  chosen by the Holders of a
majority of the  Registrable  Securities  to be  included  in such  Registration
Statement and counsel to the Company,  is required to be included  therein under
the Securities Act.

                  (c) Suspension.  If the Board of Directors of the Company,  in
its good faith judgment,  determines that any registration  under the Securities
Act of Registrable  Securities  should not be made or continued because it would
materially  interfere  with any  material  financing,  acquisition,  corporation
reorganization, merger, or other transaction involving the Company or any of its
subsidiaries (a "Valid Business Reason"),  (i) the Company may postpone filing a
Registration Statement until such Valid Business Reason no longer exists, but in
no  event  for more  than  sixty  (60)  days,  and  (ii) in case a  Registration
Statement  has been filed,  if the Valid  Business  Reason has not resulted from
actions taken by the Company, the Company may postpone amending or supplementing
such  Registration  Statement until such Valid Business Reason no longer exists,
but in no event for more than  sixty  (60)  days  (the  "Postponement  Period");
provided,  however,  that in no event shall the Company be permitted to postpone
filing,  amending or  supplementing a Registration  Statement within one hundred
twenty (120) days after the



                                       -4-



<PAGE>

expiration of any Postponement Period; and provided,  further,  that the Company
must comply with the provisions of Section 5.1(e) of the Investment Agreement in
connection with any such postponement.

                  (d) Incidental Registration.  Each time that the Company shall
determine to engage in an  underwritten  offering  (either for its own behalf or
for the behalf of any holder of any of the Company's  Common Stock) of shares of
the Company's  Common Stock, the Company shall give prompt written notice of its
determination  to the  Investor.  Upon  the  written  request  of  the  Investor
delivered within thirty (30) days after its receipt of the Company's notice, the
Company shall use its best efforts to include the  Registrable  Securities  that
the Investor has requested to be so included and  registered,  if necessary,  in
such  underwritten  offering  on the same  terms and  conditions  as the  shares
otherwise being sold through underwriters. If, in the good faith judgment of the
managing  underwriter of such offering,  the inclusion of all of the Registrable
Securities  requested  to  be  included  and  registered,  if  necessary,  would
materially  and adversely  affect the  successful  marketing of the other shares
proposed  to be  offered,  then the amount of the shares to be  included  in the
offering  by each  Person  participating  in the  offering  shall be  reduced by
multiplying the number of shares each Person proposed to include in the offering
by a fraction,  the numerator of which is the number of shares that the managing
underwriter,  in its good faith  judgment,  determines  can be  included in such
offering without materially and adversely affecting the successful  marketing of
the shares and the  denominator of which is the total number of shares  proposed
to be included in the offering.

         3.  Allocation  of  Expenses.  The  Company  will  pay  all  reasonable
Registration  Expenses  of all  registrations  under this  Agreement;  provided,
however,  that in an  underwritten  offering  in which the  Holders  receive net
proceeds  of  such  offering  in  excess  of  $19.00  per  share,   the  Holders
participating  in such offering will pay the  following  fees and expenses:  (a)
fees with respect to filings to be made and other expenses  associated  with the
NASD and any other applicable exchange, (b) fees and expenses of compliance with
state  securities  or blue sky laws,  (c) fees and  expenses  of any  "qualified
independent  underwriter" or other  independent  appraiser  participating  in an
offering  pursuant to the NASD Rules of Conduct and the  corresponding  rules of
any other  applicable  exchange;  (d) the expenses  relating to  printing,  word
processing  and  distributing   underwriting  agreements  and  securities  sales
agreements;   and  (e)  any  fees  and   disbursements   of   underwriters   and
broker-dealers customarily paid by sellers of securities.

         4. Obligations of the Company.  If and whenever the Company is required
to use best efforts to effect the  registration  under the Securities Act of any
Registrable Securities pursuant to this Agreement, the Company shall:

                  (a) file with the Commission,  as promptly as  practicable,  a
Registration  Statement with respect to such Registrable Securities and make all
required filings with the NASD and any other applicable exchange;

                  (b) prepare and file with the Commission  such  amendments and
supplements to the Registration  Statement and the Prospectus used in connection
therewith and such other 



                                       -5-




<PAGE>

documents as may be necessary to keep the  Registration  Statement  continuously
effective  until (i) the  consummation  of the disposition by the Holders of all
the Registrable  Securities  covered by such Registration  Statement or (ii) the
date all  Registrable  Securities are freely salable by the Holders  pursuant to
Rule 144(k);

                  (c) furnish to counsel  (if any)  selected by the Holders of a
majority of the Registrable  Securities  covered by such Registration  Statement
and to counsel for the underwriters in any  underwritten  offering copies of all
documents  proposed  to be filed with the  Commission  in  connection  with such
registration (other than documents to be incorporated by reference) a reasonable
time prior to the proposed filing thereof and give reasonable  consideration  in
good faith to any comments of such Holders, counsel and underwriters;

                  (d) furnish to each Holder of such securities, without charge,
such number of conformed copies of such Registration  Statement and of each such
amendment  and  supplement  thereto  (in  each  case,   including  all  exhibits
(including  all  exhibits  incorporated  by  reference),  financial  statements,
schedules,  and all documents  incorporated  therein,  deemed to be incorporated
therein by reference or filed  therewith,  except that the Company  shall not be
obligated to furnish any Holder of securities  with more than two copies of such
exhibits and  documents),  such numbers of copies of the Prospectus  included in
such  Registration   Statement   (including  each  preliminary   prospectus)  in
conformity  with  the  requirements  of  the  Securities  Act,  and  such  other
documents,  as such Holder may  reasonably  request in order to  facilitate  the
disposition of the Registrable Securities owned by such Holder;

                  (e) use its best efforts to register or qualify and  cooperate
with  the  Holders  of  Registrable  Securities,   the  underwriters  and  their
respective  counsels in connection with the  registration or  qualification  (or
exemption from such registration or qualification) of the securities  covered by
such Registration Statement under such other securities or blue sky laws of such
jurisdictions  as each  Holder  shall  request;  provided,  however,  that where
Registrable  Securities are offered other than through an underwritten offering,
the Company agrees to cause its counsel to perform blue sky  investigations  and
file  registrations  and  qualification  required  to be filed  pursuant to this
Section  4(e);  keep each  such  registration  or  qualification  (or  exemption
therefrom)  effective during the period such Registration  Statement is required
to be effective  hereunder and do any and all other acts and things which may be
necessary or advisable to enable such Holder to consummate  the  disposition  in
such  jurisdictions  of the  securities  owned by such  Holder,  except that the
Company  shall not for any such  purpose be required to qualify  generally to do
business  as a foreign  corporation  in any  jurisdiction  wherein  it is not so
qualified,  subject itself to taxation in any jurisdiction  wherein it is not so
subject, or take any action which would subject it to general service of process
in any jurisdiction wherein it is not so subject;

                  (f) notify each Holder of  Registrable  Securities  subject to
such  Registration  Statement  if a  Prospectus  included  in such  Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material  fact  required to be stated  therein or  necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading upon discovery by the Company of such material misstatement
or omission


                                       -6-

<PAGE>

or upon the  discovery by the Company of the  happening of any event as a result
of which the Company  believes  that there would be a material  misstatement  or
omission, and, as promptly as is practicable, prepare and furnish to such Holder
a  reasonable  number of  copies  of a  supplement  to or an  amendment  of such
Prospectus  as  may  be  necessary  so  that,  as  thereafter  delivered  to the
purchasers  of such  securities,  such  Prospectus  shall not  include an untrue
statement  of a material  fact or omit to state a material  fact  required to be
stated  therein or necessary  to make the  statements  therein,  in light of the
circumstances under which they were made, not misleading;

                  (g)  otherwise  use  its  best  efforts  to  comply  with  all
applicable  rules and regulations of the  Commission,  and make available to its
security holders,  as soon as reasonably  practicable,  an earnings statement of
the Company complying with the provisions of Section 11(a) of the Securities Act
and Rule 158 under the Securities Act (or any similar rule promulgated under the
Securities Act);

                  (h)  promptly  notify  each Holder of  Registrable  Securities
covered by such Registration  Statement,  their counsel and the underwriters (i)
when  such  Registration  Statement,  or any  post-effective  amendment  to such
Registration  Statement,  shall have become  effective,  or any  amendment of or
supplement to the Prospectus used in connection  therewith shall be filed,  (ii)
of any request by the  Commission  to amend such  Registration  Statement  or to
amend or supplement such Prospectus or for additional information,  (iii) of the
issuance by the  Commission of any stop order  suspending the  effectiveness  of
such Registration  Statement or of any order preventing or suspending the use of
any  preliminary  prospectus or the initiation or threatening of any proceedings
for any of such purposes,  (iv) of the suspension of the  qualification  of such
securities for offering or sale in any  jurisdiction,  or of the  institution of
any  proceedings  for  any of such  purposes  and (v)  if,  at any  time  when a
Prospectus is to be required by the Securities Act to be delivered in connection
with the sale of the Registrable Securities,  the representations and warranties
of the Company  contained  in any the  underwriting  agreement  contemplated  in
Section  5(b)  below,  to the  knowledge  of the  Company,  cease to be true and
correct in any material respect;

                  (i) use its best  efforts to prevent the issuance of any order
suspending  the  effectiveness  of the  Registration  Statement  or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from  qualification) of any of the Registrable  Securities covered
thereby  for sale in any  jurisdiction,  and,  if any such order is  issued,  to
obtain the withdrawal of any such order at the earliest possible moment;

                  (j) if requested by the managing  underwriter,  if any, or the
Holders of a majority of the  Registrable  Securities  being sold in  connection
with  an  underwritten  offering,  (i)  promptly  incorporate  in  a  prospectus
supplement  or  post-effective   amendment  such  information  as  the  managing
underwriter,  if any, or such Holders  reasonably request to be included therein
to comply  with  applicable  law,  and (ii) make all  required  filings  of such
prospectus  supplement or such  post-effective  amendment as soon as practicable
after the Company has received notification of the matters to be incorporated in
such prospectus supplement or post-effective amendment;


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<PAGE>

                  (k) use its best efforts to cause the  Registrable  Securities
covered by a  Registration  Statement to be registered  with,  and to obtain the
consent or approval of, each governmental agency or authority,  whether federal,
state,  local or foreign,  which may be required to effect such  registration or
the offering or sale in connection  therewith or to enable the Holders to offer,
or to consummate the disposition of, the Registrable  Securities subject to such
Registration Statement, except as may be required solely as a consequence of the
nature of such Holder's business,  in which case the Company will cooperate with
all reasonable  respects with the filing of the  Registration  Statement and the
granting of such approvals;

                  (l)  cooperate  with the  Holders  to  facilitate  the  timely
preparation and delivery of certificates  representing Registrable Securities to
be sold pursuant to the  Registration  Statement and not bearing any  Securities
Act legend, and cause certificates for such Registrable  Securities to be issued
for such  numbers of shares and  registered  in such  names as the  Holders  may
reasonably  request  at  least  two  (2)  Business  Days  prior  to any  sale of
Registrable Securities;

                  (m)  agree  not  to  file  or  make  any   amendment   to  any
Registration  Statement  with  respect  to any  Registrable  Securities,  or any
amendment of or supplement to the Prospectus used in connection therewith, which
refers to any Holder of any  securities  covered  thereby by name,  or otherwise
identifies  such Holder as the holder of any securities of the Company,  without
the consent of such Holder, such consent not to be unreasonably withheld, except
that no such consent shall be required for (i) any disclosure  that is necessary
to comply with federal and state  securities  laws,  (ii) any disclosure that is
necessary  to avoid or correct a  misstatement  or omission in any  Registration
Statement  or  Prospectus,  (iii) the  release  of  information  that is ordered
pursuant  to a  subpoena  or other  order from a court or  governmental  body of
competent  jurisdiction,  or  (iv)  such  other  information  as has  been  made
generally available to the public other than by violation of this agreement.

         5.  Underwritten  Offerings.  The  provisions  of this Section 5 do not
establish  additional  registration  rights  or give the  Holders  any  right to
participate in any Company-initiated  offering,  underwritten or otherwise,  but
instead  set forth  procedures  applicable,  in  addition  to those set forth in
Sections 2 and 4, to any registration that is an underwritten offering.

                  (a) Underwriting  Agreement.  If requested by the underwriters
for any  underwritten  offering  by  Holders,  the  Company  shall enter into an
underwriting agreement with such underwriters for such offering,  such agreement
to be reasonably satisfactory in substance and form to the Holders of a majority
of the  Registrable  Securities  to be covered by such  registration  and to the
underwriters and to contain such  representations  and warranties by the Company
and such other terms and provisions as are  customarily  contained in agreements
of this type,  including,  but not limited to,  indemnities to the effect and to
the extent  provided in Section 9,  provisions  for the  delivery  of  officers'
certificates,  opinions of counsel and accountants' "cold comfort" letters,  and
hold-back arrangements.  The Holders of Registrable Securities to be distributed
by such underwriters shall be parties to such underwriting agreement and may, at
their option,  require that



                                       -8-

<PAGE>

any or all of the  representations  and warranties by, and the agreements on the
part of, the Company to and for the benefit of such  underwriters be made to and
for the benefit of such Holders and that any or all of the conditions  precedent
to the obligations of such underwriters under such underwriting agreements shall
also be conditions precedent to the obligations of such Holders. No such Holders
shall be required by the Company to make any  representations  or warranties to,
or agreements with, the Company or the underwriters other than  representations,
warranties or agreements regarding such Holder and such Holder's intended method
of distribution.

                  (b)  Selection of  Underwriters.  The Holders of a majority of
the Registrable Securities to be Registered pursuant to such offering shall have
the right to select one or more underwriters to administer the offering, subject
to the consent of the Company, which shall not be unreasonably withheld.

                  (c) Inclusion of Securities in an  Underwritten  Offering.  No
securities of any selling stockholder (other than a Holder) shall be included in
an underwritten offering initiated by a Holder without the prior written consent
of Holders of not less than 75% of the  Registrable  Securities  proposed  to be
sold in such underwritten offering.

         6.  Preparation,  Reasonable  Investigation.  In  connection  with  the
preparation and filing of each Registration  Statement  registering  Registrable
Securities  under the Securities  Act, upon receipt of reasonable  assurances of
confidentiality, the Company shall give the Holders of Registrable Securities to
be so registered and their  underwriters,  if any, and their respective  counsel
and  accountants,  the  opportunity to  participate  in the  preparation of such
Registration  Statement,  each Prospectus included therein (other than documents
to be  incorporated  by  reference)  or  filed  with  the  Commission,  and each
amendment thereof or supplement thereto, and shall give each of them such access
to all pertinent financial, corporate, and other documents and properties of the
Company and its Subsidiaries,  and such opportunities to discuss the business of
the Company with its officers,  directors,  employees and the independent public
accountants  who have issued audit reports on its financial  statements as shall
be necessary, in the opinion of such Holders' and such underwriters'  respective
counsel,  to  conduct a  reasonable  investigation  within  the  meaning  of the
Securities Act.

          7. Certain Obligations of Holders.

                  (a) The  Company may  require  each Holder of any  Registrable
Securities  as to which any  registration  is being  effected  to furnish to the
Company  such  information  regarding  such  Holder and the  intended  method of
disposition of such  securities as the Company may from time to time  reasonably
request in writing and as shall be required to effect the  registration  of such
Holder's Registrable Securities.  Each such Holder agrees to furnish promptly to
the  Company  all  information  required  to be  disclosed  in order to make the
information  previously  furnished to the Company by such Holder not  materially
misleading.


                                       -9-


<PAGE>


                  (b)  Each  Holder  of  Registrable  Securities  covered  by  a
Registration  Statement agrees that, upon receipt of any notice from the Company
pursuant to Section 4(f), such Holder will promptly  discontinue the disposition
of Registrable  Securities  pursuant to such  Registration  Statement until such
Holder  shall  have  received  either  notice  from  the  Company  that (i) such
Registration  Statement  has  been  amended  and  has  received  copies  of  the
supplemented  or amended  Prospectus or (ii) use of the Prospectus or Prospectus
Supplement  may be  resumed.  If so directed  by the  Company,  each Holder will
deliver  to the  Company  (at the  Company's  expense)  all  copies,  other than
permanent file copies,  in such Holder's  possession of the Prospectus  covering
such Registrable Securities at the time of receipt of such notice.

          8. Indemnification and Contribution.

                  (a) In the event of any registration of any of the Registrable
Securities under the Securities Act pursuant to this Agreement, the Company will
indemnify  and hold  harmless  the  Holder of such  securities,  its  directors,
officers,  and employees,  each other Person who participates as an underwriter,
broker or dealer in the  offering  or sale of such  securities,  and each  other
Person,  if any, who controls such Holder,  underwriter,  broker,  dealer or any
such  participating  Person  within  the  meaning of the  Securities  Act or the
Exchange Act,  against any losses,  claims,  damages,  or liabilities,  joint or
several,  to  which  such  Holder  or  any  such  director,  officer,  employee,
underwriter,  broker,  dealer,  participating  Person, or controlling Person may
become  subject,  insofar as such losses,  claims,  damages,  or liabilities (or
actions or  proceedings  in respect  thereof) arise out of or are based upon any
untrue  statement or alleged untrue  statement of any material fact contained in
any  Registration   Statement  under  which  such  Registrable  Securities  were
registered under the Securities Act or Prospectus  contained in the Registration
Statement,  or any amendment or supplement to such  Registration  Statement,  or
arise out of or are based  upon the  omission  or  alleged  omission  to state a
material fact required to be stated  therein or necessary to make the statements
therein not  misleading;  and the Company shall  reimburse  such Holder and each
such director,  officer, employee,  underwriter,  broker, dealer,  participating
Person, and controlling Person in connection with investigating or defending any
such loss, claim, damage,  liability,  action or proceeding as such expenses are
incurred;  provided,  however,  that the Company  will not be liable in any such
case to the  extent  that any such loss,  claim,  damage,  liability  or expense
arises out of or is based upon any untrue  statement  or  omission  made in such
Registration  Statement or Prospectus,  or any such amendment or supplement,  in
reliance upon and in conformity with  information  furnished to the Company,  in
writing, by or on behalf of such Holder,  underwriter,  participating  Person or
controlling Person  specifically for use in the preparation  thereof;  provided,
further,  that the  Company  shall not be liable in any such case to the  extent
that any such loss,  claim,  damage,  liability  or expense  arises out of or is
based upon an untrue  statement or alleged  untrue  statement of a material fact
contained in such Registration  Statement or Prospectus contained therein or any
omission  to state  therein a material  fact  required  to be stated  therein or
necessary  to make the  statements  therein  not  misleading  if (i) such untrue
statement  or  omission  is  corrected  in an  amendment  or  supplement  to the
Prospectus or Prospectus supplement and the seller of the Registrable Securities
thereafter  fails to deliver  the  Prospectus  or  Prospectus  supplement  as so
amended  or  supplemented  prior  to  or  concurrently  with  the  sale  of  the
Registrable  Securities  to the person  asserting  such loss,  claim,  damage or
liability  after the




                                       -10-



<PAGE>


Company has furnished such seller with a sufficient number of copies of the same
or (ii) if the seller received  written notice from the Company of the existence
of such an untrue  statement or an omission and the seller  continued to dispose
of  Registrable  Securities  prior to the time of the  receipt  of either (A) an
amended or supplemented Prospectus or Prospectus supplement or (B) a notice from
the Company that the use of the existing Prospectus or Prospectus supplement may
be resumed.

                  (b) In the event of any registration of any of the Registrable
Securities  under the Securities Act pursuant to this Agreement,  each Holder of
such securities, severally and not jointly, will indemnify and hold harmless the
Company,  each of its directors and officers and each  underwriter  (if any) and
each person, if any, who controls the Company or any such underwriter within the
meaning of the Securities Act or the Exchange Act,  against any losses,  claims,
damages, or liabilities,  joint or several, to which the Company, such directors
and officers,  underwriters,  or controlling Persons may become subject, insofar
as such losses,  claims,  damages,  or liabilities (or actions or proceedings in
respect  thereof) arise out of or are based upon any untrue statement or alleged
untrue  statement of a material  fact  contained in any  Registration  Statement
under  which  such  securities  were  registered  under  the  Securities  Act or
Prospectus  contained  in  the  Registration  Statement,  or  any  amendment  or
supplement to the Registration  Statement, or arise out of or are based upon any
omission  or alleged  omission  to state a material  fact  required to be stated
therein or  necessary  to make the  statements  therein not  misleading,  if the
statement  or  omission  was  made  in  reliance  upon  and in  conformity  with
information relating to such Holder furnished in writing to the Company by or on
behalf of such Holder  expressly for use in connection  with the  preparation of
such Registration Statement,  Prospectus,  amendment,  or supplement;  provided,
however, that the liability of each such Holder hereunder shall be in proportion
to and limited to the net amount  received by such Holder  (after  deducting any
underwriting discount and expenses) from the sale of Registrable Securities sold
in connection with such registration.

                  (c)   Promptly   after   receipt  by  a  person   entitled  to
indemnification  pursuant  to this  Section  8  ("Indemnitee")  of notice of the
commencement  of any action or the  written  assertion  of any claim  subject to
indemnification  under this  Section 8, the  Indemnitee  shall notify the Person
obligated  to  provide   indemnification   pursuant  to  this   Agreement   (the
"Indemnifying  Person"), in writing of the commencement or the written assertion
thereof.  Failure by an  Indemnitee to so notify the  Indemnifying  Person shall
relieve the Indemnifying Person from the obligation to indemnify such Indemnitee
only to the extent that the  Indemnifying  Person  suffers  actual and  material
prejudice  as a result of such  failure  but in no event  shall such  failure to
notify  the  Indemnifying  Person  (i)  constitute  prejudice  suffered  by  the
Indemnifying  Person if it has otherwise  received  notice of the actions giving
rise to such  obligation  to indemnify or (ii) relieve it from any  liability or
obligation  that it may  otherwise  have to such  Indemnitee.  In case  any such
action or claim shall be brought or asserted against any Indemnitee and it shall
notify the  Indemnifying  Person of the commencement or assertion  thereof,  the
Indemnifying Person shall assume the defense of such action or claim,  including
employment  of counsel to be chosen by the  Indemnifying  Party  (which  counsel
shall be reasonably satisfactory to the Indemnitee) and payment of expenses. The
Indemnitee shall be entitled to employ its own counsel in any such case, but the


                                      -11-


<PAGE>


legal  fees  and  expenses  of  such  counsel  shall  be at the  expense  of the
Indemnitee,  unless the employment of such counsel shall have been authorized in
writing by the Indemnifying Party in connection with the defense of such action,
or the Indemnifying  Party shall not have employed counsel to take charge of the
defense of such action or the Indemnitee  shall have  reasonably  concluded that
there may be defenses  available  to it or them which are  different  from or in
addition to those  available to the  Indemnifying  Party, in any of which events
such fees and expenses  shall be borne by the  Indemnifying  Party.  Without the
prior  consent of the  Indemnitee,  no  Indemnifying  Party shall enter into any
settlement of any such action or claim that does not include as an unconditional
term thereof the giving by the claimant or  plaintiff  to such  Indemnitee  of a
release from all liability in respect to such claim or litigation.

                  (d) If for any reason the foregoing  indemnity is unavailable,
or is insufficient  to hold harmless an Indemnitee,  other than by reason of the
exceptions  provided  in this  Section  8, then the  Indemnifying  Person  shall
contribute to the amount paid or payable by the Indemnifying  Person as a result
of such losses, claims, damages liabilities or expenses in such proportion as is
appropriate to reflect the relative fault of the Indemnifying  Person on the one
hand and the  Indemnitee  on the  other in  connection  with the  statements  or
omissions which resulted in such losses,  claims,  damages,  or liabilities,  as
well as any other relevant equitable considerations. The relative fault shall be
determined by reference  to, among other  things,  whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the Holders of
Registrable Securities covered by the Registration Statement in question and the
parties'  relative intent,  knowledge,  access to information and opportunity to
correct or prevent such statement or omission.

                  (e) The  Company  and the  Holders  agree that it would not be
just and equitable if contribution pursuant to this Section 8 were determined by
pro rata  allocation  or by any other method of  allocation  which does not take
account of the equitable  considerations referred to in Section 8(d). The amount
paid or payable by an Indemnitee as a result of the losses,  claims, damages and
liabilities  referred to in Section 8(d) shall be deemed to include,  subject to
the limitations set forth above, any legal or other expenses reasonably incurred
by such Indemnitee in connection with  investigating or defending any such claim
or litigation.  Notwithstanding  anything to the contrary in this Section 8, (A)
no such  Holder  will be  required  to  contribute  any  amount in excess of the
proceeds it received  from the sale of its  Registrable  Securities  pursuant to
such   Registration   Statement,    (B)   no   Person   guilty   of   fraudulent
misrepresentation,  within the meaning of Section 11(f) of the  Securities  Act,
shall be  entitled  to  contribution  from any Person who was not guilty of such
fraudulent  misrepresentation  and (c) no party shall be liable for contribution
under this Section 8 except to the extent and under such  circumstances  as such
party  would  have  been  liable  to  indemnify  under  this  Section  8 if such
indemnification were enforceable under applicable law.

         9. Indemnification with Respect to Underwritten  Offering. In the event
that Registrable  Securities are sold pursuant to a Registration Statement in an
underwritten  offering,  the  Company  agrees  to  enter  into  an  underwriting
agreement  containing  customary  representations


                                      -12-

<PAGE>

and  warranties  with respect to the business and operations of an issuer of the
securities  being  registered  and  customary  covenants  and  agreements  to be
performed by such issuer, including without limitation customary provisions with
respect to indemnification by the Company of the underwriters of such offering.

         10.  Reports  Under  Securities  Exchange  Act of 1934.  With a view to
making  available to the Holders the benefits of Rule 144 promulgated  under the
Securities  Act and any other rule or regulation of the  Commission  that may at
any time permit a Holder to sell  Registrable  Securities  of the Company to the
public  without  registration  and to making Form S-3 under the  Securities  Act
available for the registration of Registrable Securities, the Company agrees to:

                  (a) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;

                  (b) file with the  Commission  in a timely  manner all reports
and other  documents  required of the Company under the  Securities  Act and the
Exchange Act; and

                  (c)  furnish to any  Holder,  so long as such  Holder owns any
Registrable  Securities,  forthwith upon request (i) a written  statement by the
Company that it has complied with the reporting  requirements  of Rule 144 under
the Securities Act, any other such applicable  reporting  requirements under the
Securities Act and all applicable reporting requirements under the Exchange Act,
(ii) a copy of the most  recent  annual or  quarterly  report of the Company and
such other reports and  documents so filed by the Company,  and (iii) such other
information as may be reasonably requested in availing any Holder of any rule or
regulation of the  Commission  which permits the selling of any such  securities
without Registration or pursuant to such form.

         11.  Successors,  Assigns  and  Transferees.  This  Agreement  shall be
binding  upon and shall  inure to the  benefit of each party  hereto,  and their
respective successors, assigns and transferees. The Investor or any other Holder
under this Agreement may assign its rights under this Agreement to any Affiliate
or to other  successors,  assigns and  transferees  of the  Investor or any such
Holder;  provided,  however,  that the Company is given written  notice from the
Investor  or any such Holder at the time of such  transfer  stating the name and
address of the transferee or assign and  identifying the securities with respect
to which the rights  hereunder  are being  transferred.  As a  condition  to the
effectiveness of any transfer permitted hereunder (i) the transferee or assignee
shall  agree,  in  writing,  upon  request  of the  Company,  to be bound by the
provisions of this Agreement, and (ii) the Company shall be given written notice
at the time of or within a reasonable  time after said  transfer or  assignment,
stating the name and address of said  transferee or assign and  identifying  the
securities  with respect to which such  registration  rights are being assigned.
This Agreement shall survive any transfer of Registrable Securities to and shall
inure to the  benefit of an  Affiliate  or such other  successors,  assigns  and
transferees of the Investor or any such Holder. In addition,  and whether or not
any express  transfer or assignment shall have been made, the provisions of this
Agreement  which are for the  benefits  of the  parties  hereto  other  than the
Company  shall also be for the  benefit  of and  enforceable  by any  subsequent
Holder or Registrable Securities.



                                      -13-

<PAGE>

          12. Miscellaneous.

                  (a) Adjustments Affecting Registrable Securities.  The Company
will not take any  action,  or permit any change to occur,  with  respect to its
securities  that would  adversely  affect the  ability of the Holders to include
such  Registrable  Securities  in a  registration  undertaken  pursuant  to this
Agreement.

                  (b) No  Waivers.  No failure or delay on the part of any party
in exercising any right, power or privilege  hereunder shall operate as a waiver
thereof,  nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.

                  (c) Amendments. Any provision of this Agreement may be amended
or waived if, but only if, such  amendment or waiver is in writing and is signed
by the Company and the Investor.

                  (d)  Severability.  If any term or provision of this Agreement
is  held  by  a  court  of  competent   jurisdiction  to  be  invalid,  void  or
unenforceable,  the remainder of the terms and  provisions  shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.

                  (e) Notices. All notices, requests and other communications to
any party  hereunder  shall be given in  writing  (including  on  telecopier  or
similar writing) and shall be given to such party at its address,  or telecopier
number  set forth on the  signature  pages  hereof,  or such other  address,  or
telecopier  number as such party may hereafter  specify for such  purpose.  Each
such notice,  request or other  communication shall be effective (i) if given by
telecopy,  when such telecopy is transmitted to the telecopy number specified on
the  signature  page  hereto and the  appropriate  answer  back  (i.e.,  machine
confirmation or telephone  confirmation) is received,  (ii) if given by mail, by
registered mail only 72 hours after such  communication is deposited in the mail
with first class postage prepaid,  addressed as aforesaid,  or (iii) if given by
any other means,  when received at the address  specified on the signature  page
hereto.

                  (f) Entire  Agreement.  This Agreement  constitutes the entire
agreement  and  understanding  among the  parties  hereto  with  respect  to the
transactions contemplated hereby and supersedes any and all prior agreements and
understandings, written or oral, relating to the subject matter hereof.

                  (g)  Governing  Law.  The laws of the State of New York  shall
govern  the  interpretation,  validity  and  performance  of the  terms  of this
Agreement,  regardless  of the  law  that  might  be  applied  under  applicable
principles of conflicts of laws.



                                      -14-

<PAGE>

                  (h)   Counterparts.   This   Agreement   may  be  executed  in
counterparts,  each of which shall be an original with the same effect as if the
signatures thereto and hereto were upon the same instrument.


                  (i) No  Third  Party  Beneficiaries.  Except  as  provided  by
Sections 8 and 11,  nothing in this  Agreement  shall confer any rights upon any
Person other than the parties hereto,  each such party's  respective  successors
and permitted assigns and transferees.

                            [Signature page follows]













                                       15


<PAGE>



             IN WITNESS  WHEREOF,  the parties hereto have caused this Agreement
to be duly executed by their respective  authorized officers or representatives,
as of the date first above written.

TEL-SAVE.COM, INC.


By: _________________________     Address:
       Name:                      Tel-Save.com, Inc.
       Title:                     6805 Route 202
                                  New Hope, Pennsylvania  18938
                                  Fax: 215-862-1515
                                  Attention: Chief Financial Officer

AMERICA ONLINE, INC.


By: _________________________     Address:
       Name:                      America Online, Inc.
       Title:                     22000 AOL Way
                                  Dulles, Virginia  20166
                                  Fax:  (703) 265-2208
                                  Attention:  General Counsel

                                  with a copy to:
                                  America Online, Inc.
                                  22000 AOL Way
                                  Dulles, Virginia 20166
                                  Fax: (703) 265-1202
                                  Attention:  Senior Vice President, Head of
                                              Business Affairs


                                       16