AMENDMENT NO. 1

         This  AMENDMENT NO. 1 (the  "Amendment"),  dated as of January 25, 1998
(the  "Amendment  Effective  Date"),  by and  among  Tel-Save,  Inc.  ("TS"),  a
Pennsylvania corporation,  and Tel-Save Holdings, Inc. ("Holdings"),  a Delaware
corporation,  with  their  principal  offices  at  6805  Route  202,  New  Hope,
Pennsylvania  18938,  on the one hand,  and  America  Online,  Inc.,  a Delaware
corporation with its principal offices at 22000 AOL Way, Dulles,  Virginia 20166
("AOL"), on the other hand (each a "party" and, collectively, the "parties").

                                  INTRODUCTION

         TS,  Holdings and AOL are parties to the  Telecommunications  Marketing
Agreement, dated as of February 22, 1997, as heretofore corrected and amended by
letter,  dated April 23, 1997 (as so  corrected  and amended to the date hereof,
but without giving effect to this Amendment, the "Agreement"). Capitalized terms
used in this Amendment without other definition are defined as in the Agreement.
The  parties  have  since  considered  further  the  marketing  and  advertising
expenditures provided in the Agreement, and, in light of both parties' desire to
increase  the  number  of End  Users  of the  Long  Distance  Telecommunications
Services, hereby agree as follows:

                                      TERMS

1.   The  Agreement is amended to provide that  references  in the  Agreement to
     "this Agreement" or "the Agreement"  (including indirect references such as
     "hereunder,"  "hereby,"  "herein"  and  "hereof")  shall  be  deemed  to be
     references to the Agreement as amended hereby.

2.   Section  I.A of the  Agreement  is  hereby  amended  to add  the  following
     definitions:

          "1.A.   "Additional  Promotion  Period"  means  the  period  from  the
          Amendment Effective Date through March 31, 1998 (as such period may be
          shortened as provided herein).

          "5.A.  "Amendment" means the Amendment No. 1 to the Agreement dated as
          of the Amendment Effective Date.

          "5.B. "Amendment Effective Date" means January 25, 1998."

3.   Section  I.A.19 of the  Agreement  is  amended to read in its  entirety  as
     follows:

          "19. "Gross  Revenues" for any calendar  quarter shall mean the sum of
          (a) total  billings by TS to End Users for the  provision  of Services
          during such quarter and (b) if such billings are in a material amount,
          total  billings  by TS to any other  end  users of  telecommunications
          services  provided by TS that would meet the definition of "Restricted
          Services,"  which such other end users became such as a direct  result
          of marketing by TS that used the AOL Marks or any variation of the



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          AOL name (whether or not such marketing has been approved by AOL or is
          otherwise in compliance  with this  Agreement,  and without  waiver of
          AOL's rights  hereunder  with respect to such approval or  compliance)
          ("Other End Users"), less * * * "

4.   Section  III.A.1 of the  Agreement is amended to add "(a)"  before  "During
     each" at the  beginning of such section and to add the following at the end
     of such section:

          "(b) Notwithstanding  anything to the contrary in this Agreement,  the
          parties agree that,  commencing  February 1, 1998 and until the end of
          the Additional  Promotion Period, AOL shall provide TS with additional
          online  promotions and  advertisements,  including Pop-Up Ads, in form
          and substance as determined  pursuant to the foregoing portion of this
          Section III.A.1,  with an Ad Value of at least * * * per month (or the
          pro-rata amounts thereof for portions of months) in addition to the Ad
          Values to be provided pursuant to Section  III.A.1(a) (the "Additional
          Promotions").  Pop-Up Ads during the Additional Promotion Period shall
          be made  available  onscreen  for at least * * * days  (instead of the
          number required pursuant to Section I.A.31 hereof), and any Pop-Up Ads
          included by AOL during the Additional  Promotion Period in excess of *
          * * Pop-Up Ads per month and any Pop-Up Ads  included by AOL with TS's
          approval during the remainder of the Introductory  Period in excess of
          * * * per month shall be counted toward AOL's  satisfaction of the * *
          * monthly requirement set forth in Section III.A.1(a) above. Following
          the expiration of the Additional  Promotion  Period,  AOL shall not be
          obligated to provide any promotions or advertisements other than those
          promotions or advertisements that were required of AOL pursuant to the
          Agreement, but without regard to this Section III.A.1.(b).

          (c) In  the  event  that  AOL  has  not  delivered  each  of the  "AOL
          Deliverables"  (as set forth in Attachment  A) in accordance  with the
          terms  hereof or has not  delivered  the Ad Values of  promotions  and
          advertisements  required by Sections III.A.1(a) and (b) to be provided
          during the  Additional  Promotion  Period,  in each case, on or before
          February  28,  1998,  TS may  elect  in its sole  discretion  that the
          Additional  Promotion Period end as of February 28, 1998 so long as TS
          has provided AOL with written  notice of such election by fascimile to
          the  attention of David Colburn (fax no.  703-265-1202)  no later than
          5:00 p.m.  EST on  February  28,  1998.  In such case:  (i) TS will be
          relieved  of any  obligation  to pay AOL  the  bounties  provided  for
          hereunder  with  respect  to any  customers  who  first  signed up for
          Services   subsequent  to  February  28,  1998,  (ii)  the  additional
          guaranteed amount to be paid by TS pursuant to this Amendment shall be
          as  adjusted  as  described  below and (iii) AOL will not  deliver the
          additional promotions contemplated hereunder thereafter.

          (d) Except for those AOL Deliverables  noted as "ongoing"  obligations
          on Attachment A ("Ongoing Deliverables"),  an AOL Deliverable shall be
          deemed  delivered  in the  event  AOL  completes  delivery  of the AOL
          Deliverable  on or before  the due date  specified  on  Attachment  A;
          provided  that AOL  shall be


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          entitled to a cure period of five (5) business days following such due
          date within which to complete its  delivery.  Any Ongoing  Deliverable
          shall be deemed  delivered if AOL has commenced  delivery of such item
          and is  continuing  without  default its  delivery as of February  28,
          1998; provided that AOL shall be entitled to a cure period of five (5)
          business  days  following  any  interruption  in  delivery of such AOL
          Deliverable within which to restore its ongoing delivery of such item.
          Notwithstanding  the  foregoing,  the cure periods with respect to the
          AOL Deliverable relating to * * * requirements and the AOL Deliverable
          relating to * * * shall be only one (1) day.  AOL shall be entitled to
          only  one (1)  cure  period  with  respect  to each  AOL  Deliverable;
          provided  that  (i) AOL  shall be  entitled  to two (2)  one-day  cure
          periods with respect to the AOL Deliverable relating to * * * and (ii)
          there  shall be no cure  period  with  respect to the AOL  Deliverable
          relating to* * *.

          (e) In the event that TS fails to deliver any "TS Deliverable" (as set
          forth in  Attachment  A),  AOL may  extend  the due date set  forth on
          Attachment A for any AOL Deliverable  that (as indicated in Attachment
          A) depends on receipt of a TS  Deliverable  specified in  Attachment A
          for a period  equal to the  number of days by which TS's  delivery  is
          overdue. AOL may toll its delivery of any Ongoing Deliverable until TS
          has  delivered  the  TS  Deliverable  specified  on  Attachment  A  as
          necessary for the delivery of such AOL Deliverable.  In the event that
          TS has not delivered any TS  Deliverable  as of February 28, 1998, any
          AOL Deliverable  specified on Attachment A as corresponding to such TS
          Deliverable  shall be deemed delivered by AOL as of such date.  Except
          as otherwise  expressly provided herein, (a) either party's failure to
          deliver its  respective  deliverables  set forth in Attachment A shall
          not be  deemed  a  breach  of the  Agreement  and  (b)  following  the
          expiration of the Additional Promotion Period,  neither party shall be
          obligated with respect to any  deliverables  set forth on Attachment A
          other than (x) those  deliverables  that were  required  of such party
          pursuant to the Agreement  (other than by reason of the Amendment) and
          (y) the * * * or the * * * program  (each,  as described  herein),  if
          any, that may be provided in the Extended Offline Promotion Period (as
          defined in Section V.C.1)."

          (f)  Notwithstanding  anything to the contrary  herein,  in connection
          with any * * * efforts directed to subscribers to the AOL Service that
          may be provided  hereunder,  AOL reserves the right to (i) approve all
          procedures,  scripts and other  materials used in connection  with any
          such effort,  such  approval  not to be  unreasonably  withheld,  (ii)
          subject  to the  proviso at the end of this  clause  (ii),  cease,  or
          otherwise limit the amount,  duration or frequency of, any such effort
          in the event AOL  determines in its  reasonable  discretion  that such
          effort (including,  without limitation, any statement or claim made by
          TS in connection with such effort or the Services (e.g., comments made
          during  a * *  *call)  is  false or  inaccurate  or  misrepresents  or
          mischaracterizes  the true  nature of the  Services  or of any party's
          role in  providing  the  Services  and has resulted or is resulting in
          significant  complaints  by  recipients  of such  efforts or  material
          disruptions of AOL's relations with existing and potential  customers,
          provided  that AOL shall


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<PAGE>



          have provided to TS at least five (5) days prior written notice of its
          intention so to cease or limit such effort, which notice shall include
          a  specific  statement  of  the  basis  for  such  action,   including
          reasonable  evidence of such basis, and TS shall not have, within five
          (5) days of such  notice,  modified  the terms of such effort or taken
          such other actions as shall be reasonably likely, in AOL's discretion,
          to (x)  prevent a  continuation  or  recurrence  of the  circumstances
          forming the basis of such notice or (y) remedy  material harm to AOL's
          business  arising from such prior occurrence (as the case may be); and
          (iii) monitor such efforts for quality  assurance  and for  compliance
          with the terms and conditions hereof.

5.   Section  III.A.2 of the  Agreement is amended to add at the end thereof the
     following:

          "Notwithstanding  anything  to the  contrary  in this  Agreement,  the
          parties  agree that any Pop-Up Ads included by AOL with TS's  approval
          subsequent to the Introductory Period and during the Term in excess of
          * * * shall be counted toward AOL's  satisfaction of the * * * monthly
          requirement set forth in this Section  III.A.2.  The total Ad Value of
          all  promotions and  advertisements  to be provided by AOL pursuant to
          this Section III.A.2 during the period from July 1, 1999, through June
          30,  2000,  shall  be  reduced  by the  amount  of the Ad Value of the
          Additional  Promotions  provided by AOL  pursuant  to Section  III.A.1
          above,  such  reduction  to be  applied  ratably to the Ad Value to be
          provided during such period."

6.   Section  III.A.4(a)  of the  Agreement is amended to add at the end thereof
     the following:

          "Notwithstanding   the  preceding  sentence,   during  the  Additional
          Promotion Period, AOL shall not deploy Pop-Up Ads having * * * ."

7.   Section  III.A.4  of the  Agreement  is amended  to add the  following  new
     Section III.A.4(d):

          "(d) Notwithstanding  anything to the contrary in this Agreement,  the
          parties agree that AOL may in its sole  discretion  replace any Pop-Up
          Ad required  hereunder (or otherwise  scheduled to be provided by AOL)
          with * * * (e.g.,  for purposes of fulfilling  requirements  of law or
          court  order or issuing  announcements  regarding  AOL  members or AOL
          policies) (each an "Excluded Pop-Up");  provided that AOL delivers the
          replaced Pop-Up Ad as soon as reasonably  possible thereafter (without
          resulting in simultaneous Pop-Up Ads) * * * ."

8.   Section V of the  Agreement  is amended to add the  following  new  Section
     V.B.6:

          "6. TS shall provide AOL biweekly with information with respect to any
          * * * efforts during the Additional  Promotion Period and the Extended
          Offline  Promotion  Period (as  defined  herein)  which is  reasonably
          required for (a) measuring  TS's efforts  hereunder or (b) delivery of
          the applicable AOL  Deliverable  (and any other  information  mutually
          agreed upon by the  parties),  but


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<PAGE>



          in no event less  information than would be required of TS pursuant to
          Section V.B.4 hereof."

9.   Section V of the Agreement is amended to add the following new Section V.C:

          "C. Additional Promotion Period.

     1.   In addition to any other payments required  hereunder (and in addition
          to any Warrant Shares due AOL pursuant to the Supplemental Warrant and
          any amendments  thereto),  TS shall pay to AOL Bounty Fees (as defined
          below) as follows:

          a.   TS shall pay to AOL the applicable  Bounty Fee for each Qualified
               End User (as defined  below) who  subscribes to the Long Distance
               Telecommunications  Services (i) during the Additional  Promotion
               Period or (ii) following the Additional Promotion Period but only
               insofar as such subscription  following the Additional  Promotion
               Period is the result of * * * efforts  directed to subscribers to
               the AOL Service that may be provided hereunder; provided however,
               that,  from and after the total number of Qualified End Users for
               which TS has paid AOL a Bounty  Fee  pursuant  to this  Amendment
               equals one million  (1,000,000),  , TS shall not,  subsequent  to
               such  date,  be  required  to pay any  further  Bounty  Fees with
               respect  to End  Users  acquired  as a  result  of any such * * *
               efforts.

          b.   A "Qualified End User" is an End User who remains an End User for
               at least thirty (30) consecutive days.

          c.   On the first day of each month commencing March 1, 1998, TS shall
               pay AOL the  aggregate  amount of such  Bounty  Fees owing to AOL
               with respect to the preceding month (or the preceding 35 days, in
               the case of the first such payment).

          2. "Bounty Fee" means (i) with respect to any  Qualified  End User who
     subscribed to the Services on or before the Change Time (as defined below),
     $* * * and (ii) with respect to any  Qualified  End User who  subscribed to
     the Services  after the Change Time,  $* * * , provided  that the amount of
     any Bounty Fee payable to any Qualified End User (i) whose  subscription is
     the result of * * * efforts  directed to subscribers to the AOL Service and
     (ii) who  subscribes  to any Services at any time after the 120th day after
     the commencement of such * * * efforts will be one-half (1/2) of the amount
     set forth in clause (i) or (ii),  as the case may be.  "Change  Time" means
     the time at which an  aggregate  of * * * persons  or  entities  shall have
     subscribed to the Services  since the  Effective  Date and become End Users
     (and  regardless  of whether  such  persons or  entities  shall then be End
     Users).

          3. In  addition  to any  other  payments  required  hereunder  (and in
     addition to any Warrant Shares due AOL pursuant to the Supplemental Warrant
     and any amendments  thereto) and provided that AOL shall have delivered the
     Ad Values of promotions and advertisements  required by Sections III.A.1(a)
     and (b)


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<PAGE>



     to be provided during the Additional Promotion Period, on April 3, 1998, in
     consideration of the Additional  Promotions and any additional promotion or
     marketing provided by AOL to TS during the Additional  Promotion Period, TS
     shall pay to AOL a guaranteed,  non-refundable amount (the "Excess Amount")
     equal to (i)  $10,000,000  (or  $3,000,000 in the event that the Additional
     Promotion  Period is terminated as of February 28, 1998 pursuant to Section
     III.A.1(c)  hereof) less (ii) the sum of (x) the aggregate  Bounty Fees, if
     any,  paid to AOL by TS prior to April 3, 1998,  and (y) the product of (i)
     the  Adjustment  Value (as  defined  below)  times  (ii) the  number of the
     Warrant Shares, if any, that shall have vested pursuant to the Supplemental
     Warrant  as of March 31,  1998,  with  respect to the  period  between  the
     Amendment  Effective Date and the end of the Additional  Promotion  Period.
     "Holdings  Share  Price"  shall mean the average of the closing  prices (as
     defined in Section 6(d) of the  Supplemental  Warrant) for one (1) share of
     Holdings'  Common  Stock during each of the four (4)  consecutive  business
     days prior to April 3, 1998. The  "Adjustment  Value" shall mean the dollar
     figure that shall be determined  using the schedule set forth in Attachment
     B.  The  Excess  Amount  shall  be  credited   against  any  subsequent  TS
     obligations  to pay Bounty Fees pursuant to the Agreement on or after April
     3, 1998  until the full  amount of such  Excess  Amount  shall have been so
     credited and,  following  payment of the Excess Amount to AOL, TS shall not
     be required to pay the Bounty Fees otherwise payable to AOL hereunder until
     such time as the aggregate  amount of otherwise  payable Bounty Fees equals
     the Excess Amount.  TS shall thereafter  commence payment of Bounty Fees to
     AOL as otherwise provided herein."

10.  The following new Section V.D is added to Section V of the Agreement:

     "D. Offline  Marketing  Costs.  TS shall be  responsible  for all costs and
     expenses  associated  with  (a) any * * *  efforts  by TS or AOL or  either
     party's  agents,  (b) any * * * efforts  by AOL or its  agents  (including,
     without limitation, any related * * * efforts) and (c) any * * * efforts by
     AOL or its agents  (specifically  including Incentive Payments,  as defined
     below,  if any, and  specifically  excluding any  television or print media
     marketing  campaigns)   (collectively,   the  "Offline  Marketing  Costs");
     provided that all Offline Marketing Costs incurred by AOL shall be approved
     in  writing in advance by TS.  The  Offline  Marketing  Costs  shall not be
     included in the calculation of Actual  Services Costs.  Except with respect
     to the  Estimated * * * Costs (as defined  below),  TS shall pay AOL within
     thirty (30) days of receipt of a monthly  invoice  from AOL  detailing  the
     Offline  Marketing Costs for the preceding  month.  Subject to TS' right to
     approve in advance all Offline Marketing Costs, as provided above, TS shall
     pay AOL in advance with respect to the Offline  Marketing Costs for any * *
     * efforts in an amount equal to AOL's reasonable  estimate for the costs of
     each effort  that AOL  provides  to TS  reasonably  in advance of the dates
     payments are due (such estimated costs, the "Estimated * * * Costs"). which
     Estimated  * * * Costs  shall be  payable  on the first  day of each  month
     (subject to AOL's having provided the estimate for such month),  commencing
     March 1, 1998,  with  respect to  Estimated * * * Costs for such


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     month. As promptly as reasonably  possible after the end of each month, AOL
     shall  provide TS with a statement  detailing the Offline  Marketing  Costs
     incurred  for any * * *  efforts  in such  month  and,  to the  extent  the
     aggregate  Costs included on such statement are less than the Estimated * *
     * Costs  previously paid by TS to AOL with respect to such month, AOL shall
     promptly  pay to TS the amount of such  difference  and,  to the extent the
     aggregate Costs included on such statement are greater than the Estimated *
     * * Costs previously paid by TS to AOL with respect to such month, TS shall
     promptly  pay to AOL  the  amount  of such  difference.  The  parties  will
     mutually  agree on how to allocate  any costs and  expenses  other than the
     Offline  Marketing Costs associated with any further offline  marketing and
     promotional   activities  occurring  during  the  remainder  of  the  Term,
     including, without limitation, any joint promotional offers with respect to
     both the AOL Service and the Long  Distance  Telecommunications  Services."
     "Incentive  Payments"  shall mean such payments as TS may elect to fund, at
     its option,  pursuant to  incentive  programs to be  implemented  for * * *
     agents,  which programs will be in form and substance to be mutually agreed
     upon by the parties.

11.  The  following  new Sections  V.F.1 and V.F.2 are added to Section V of the
     Agreement:

          "1. Substantially  concurrently herewith, TS and Holdings are entering
     into  a  written  agreement  with  CompuServe  Interactive  Services,  Inc.
     ("CompuServe")   with   respect  to  the   exclusive   marketing   of  TS's
     telecommunications  services by CompuServe (the "CompuServe  Agreement") on
     the  CompuServe  Service (as defined in the CompuServe  Agreement).  In the
     event a Change Event  occurs,  AOL shall pay, or shall cause  CompuServe to
     pay,  TS within  thirty  (30)  days of such  Change  Event an  amount  (the
     "Repayment Amount") which shall be calculated in accordance with Attachment
     E hereto;  provided  that,  with respect to that  portion of the  Repayment
     Amount  allocable to the Base Payment (the "Base  Payment  Portion"),,  AOL
     may, at its option,  elect, in lieu of paying the Base Payment Portion,  to
     provide  TS with an  additional  amount of  promotion  and  marketing  with
     respect to either the AOL Service or the  CompuServe  Service (as  mutually
     agreed upon by the parties) (the "Change Event  Promotions")  with a value,
     as measured and calculated  using the Ad Value, as defined  herein,  if the
     parties  elect to deliver the Change Event  Promotions  with respect to the
     AOL Service,  and the "Ad Value" (as defined in the CompuServe  Agreement),
     if the  parties  elect to  deliver  such  promotions  with  respect  to the
     CompuServe  Service,  equal to (a) * * * times  (b) the  amount of the Base
     Payment  Portion.  For purposes of Attachment E: (i) "Credit  Amount" shall
     mean, as of the date of the Change Event, the aggregate amounts theretofore
     credited to TS pursuant to Sections  V.C.1(b)  and (c);  (ii)  "Measurement
     Date" means the date sixty (60) days  subsequent to the Effective Date; and
     (iii) "Change Event" means * * *.  Immediately  following the Change Event,
     the parties shall cause the CompuServe Agreement to be terminated; provided
     that such  termination  shall not affect the  advertising  to be  delivered
     pursuant  to  Section  V.F.1  (in the  event AOL  elects  to  deliver  such
     advertising  in  lieu of  paying  the  Base  Payment  Portion  due to TS in
     connection  with a Change  Event).  TS hereby  expressly


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     acknowledges and agrees that neither the CompuServe online service (however
     defined in this  Agreement or the  CompuServe  Agreement) nor the end users
     thereof  (including,  without  limitation,  "End  Users" as  defined in the
     CompuServe Agreement) are or shall be deemed to be within the scope of this
     Agreement (including,  without limitation,  the exclusivity  provisions set
     forth in Section VI.A hereof),  (i) by reason of the  consummation of AOL's
     recent acquisition of CompuServe Interactive Services, Inc. (or the fact of
     such acquisition) or (ii) based on the facts known to TS existing as of the
     execution date of this Amendment.

          3. Unless and until a Change Event shall have occurred, (a) no user of
     the TS  telecommunications  services  marketed  thereunder  pursuant to the
     CompuServe  Agreement (the "TS/CS Services") shall for any purposes of this
     Agreement  (excluding any purpose related to the Supplemental  Warrant) be,
     or be deemed to be, an "End User" as defined and used herein, (b) the TS/CS
     Services  shall not be, or be deemed to be,  "Services" as defined and used
     herein,  (c) no  revenues  generated  under or by reason of the  CompuServe
     Agreement  shall form a part of, or in any respect be included  in,  "Gross
     Revenues" as defined and used herein,  and (d) TS's exclusivity  rights set
     forth in Section VII.A herein shall not apply in any manner to CompuServe's
     marketing of the TS/CS Services.

          4. From and after the date a Change  Event  shall have  occurred,  (a)
     each user of the TS/CS  Services  shall for all purposes of this  Agreement
     and the  Warrants  be,  and shall be deemed to be, an "End User" as defined
     and used herein,  (b) the TS/CS  Services  shall be, and shall be deemed to
     be, "Services" as defined and used herein, (c) all revenues generated under
     or by reason  of the  CompuServe  Agreement  shall  form a part of,  and be
     included in,  "Gross  Revenues"  as defined and used  herein,  and (d) TS's
     exclusivity  rights  set  forth in  Section  VII.A  herein  shall  apply to
     CompuServe's marketing of the TS/CS Services;  provided that, to the extent
     that the  CompuServe  Service shall be operated as a separately  accessible
     online service (e.g., subscribers are not required to access the service by
     first   accessing   the  America   Online  brand   service)   (and  without
     acknowledgment  or agreement by AOL that such CompuServe  Service satisfies
     the definition of AOL Service set forth Section I.A.9  hereof),  AOL agrees
     that TS  shall  continue  to have the  access,  linkage,  designated  area,
     display and other similar rights within and with respect to such CompuServe
     and the billing and servicing of any End Users thereon that are provided in
     the CompuServe Agreement."

          5.  AOL  hereby  consents  to TS' and  Holdings'  entering  into,  and
     performing  under,  the  CompuServe  Agreement  and agrees that,  in and of
     itself,  such  conduct  shall not  constitute a breach by TS or Holdings of
     Section  VII.A.6 of this  Agreement  or require the payment of any override
     pursuant thereto.


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12.  The  following  clause  (iv) is added to the end of  Section  XI.A.2 of the
     Agreement:

          "and (iv) any claim  relating to (a) the content of any  statement  or
          claim made by TS in connection with the Services or (b) the content of
          any promotion,  advertisement  or other marketing  (whether offline or
          online,  including  * * *)  relating to the  Services  (excluding  any
          content that was  submitted by AOL),  which content AOL (x) advised TS
          that it was not  reviewing,  (y)  did not  receive  from TS or was not
          otherwise provided a reasonable  opportunity to review or (z) reviewed
          and provided comments, suggestions or input that were not reflected by
          TS in the content  (and the claim is based on the content that was not
          reflected)."

13.  The  parties  hereby  agree to execute  an  amendment  to the  Supplemental
     Warrant  (the  "Warrant  Amendment"),  as  soon as  reasonably  practicable
     following the Amendment  Effective Date, which shall provide that each "End
     User"  (as  defined  in the  CompuServe  Agreement)  acquired  through  the
     CompuServe  Service shall be included in the  calculation of Warrant Shares
     pursuant to Section 1(a) of the  Supplemental  Warrant.  Until such time as
     the parties have executed the Warrant Amendment, this paragraph shall serve
     as a valid  amendment  to the  Supplemental  Warrant  and  shall  be  fully
     self-executing in all respects.

14.  The parties hereby agree that (a) the number of End Users who subscribed to
     the Long Distance  Telecommunications  Services  between the Effective Date
     and  December  31,  1997,  is a minimum  of * * * and (b) the number of End
     Users  who  subscribed  to the Long  Distance  Telecommunications  Services
     between  December  31,  1997,  and  January  25, 1998 is * * *. The parties
     acknowledge  that AOL is utilizing  the figure of * * * net End Users as of
     December 31, 1997 for purposes of calculating  the number of Warrant Shares
     due to AOL as of such date;  provided that, to the extent the actual number
     of net End Users from the period  between the  Effective  Date and December
     31,  1997 is greater  than * * * (the  "Excess End  Users"),  then TS shall
     continue to be responsible  to provide AOL Warrant Shares in  consideration
     of such actual Excess End Users as of December 31, 1998.

15.  This  Amendment does not, and shall not be construed to, modify any term or
     condition of the  Agreement  (including,  without  limitation,  any payment
     obligations  under the  Agreement)  other  than  those  specific  terms and
     conditions  expressly  referenced  in  this  Amendment.  Except  as  herein
     provided,  the  Agreement  shall  remain  unchanged  and in full  force and
     effect.  In the  event of any  inconsistency  or  discrepancy  between  the
     Agreement and this  Amendment,  the terms and  conditions set forth in this
     Amendment  shall  control.  Neither party shall be bound by, and each party
     specifically  objects to, any term,  condition or other  provision  that is
     different  from or in addition to the  provisions of this Amendment and the
     Agreement  (whether or not it would  materially alter this Amendment or the
     Agreement) and which is proffered by the other party in any  correspondence
     or other document, unless the party to be bound thereby specifically agrees
     to such provision in writing in accordance with the terms of the Agreement.
     This  Amendment  may be executed in  multiple  counterparts,  each of which
     shall be deemed an original, but all of which together shall constitute one
     and the same  document.  This


                                       9

<PAGE>



     Amendment  shall be governed by the internal laws of the State of New York,
     without giving effect to the principles of conflict of laws thereof.







                                       10

<PAGE>







     IN WITNESS WHEREOF, the undersigned have caused this Amendment to be signed
on their behalf as of the Amendment Effective Date.

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




                                       11

<PAGE>






                                  ATTACHMENT A

               DELIVERABLES DURING THE ADDITIONAL PROMOTION PERIOD

AOL Deliverables

Date              Description                           Status as of Signing

* * *                      * * *                                 * * *


TS Deliverables

Date              Description                           Status as of Signing

* * *                      * * *                                 * * *


[Endnotes* * * ]


<PAGE>



                                  Attachment B

                            Adjustment Value Schedule

     The "Adjustment  Value" shall mean, as of any date of calculation  thereof,
the average of the  amounts set forth in the TS column and the AOL column  below
with respect to the Holdings Share Price as of such calculation  date,  provided
that such  Adjustment  Value with respect to a Holdings  Share Price between the
prices set forth in the column below shall be determined by interpolation.



<TABLE>
<CAPTION>
                    SHARE
                    PRICE
                   HOLDINGS                       TS                          AOL                        AVERAGE
                 -------------               --------------               -------------               --------------
<S>           <C>                         <C>                          <C>                         <C>             
              $         15.00             $           8.93             $          8.13             $           8.53
              $         16.00             $           9.77             $          8.98             $           9.38
              $         17.00             $          10.62             $          9.83             $          10.23
              $         18.00             $          11.48             $         10.68             $          11.08
              $         19.00             $          12.35             $         11.54             $          11.95
              $         20.00             $          13.22             $         12.39             $          12.81
              $         21.00             $          14.11             $         13.29             $          13.70
              $         22.00             $          15.00             $         14.21             $          14.61
              $         23.00             $          15.89             $         15.12             $          15.51
              $         24.00             $          16.79             $         16.04             $          16.42
              $         25.00             $          17.70             $         16.96             $          17.33
              $         26.00             $          18.61             $         17.87             $          18.24
              $         27.00             $          19.53             $         18.79             $          19.16
              $         28.00             $          20.45             $         19.70             $          20.08
              $         29.00             $          21.37             $         20.62             $          21.00
              $         30.00             $          22.30             $         21.57             $          21.94
              $         31.00             $          23.23             $         22.53             $          22.88
              $         32.00             $          24.17             $         23.48             $          23.83
              $         33.00             $          25.11             $         24.44             $          24.78
              $         34.00             $          26.05             $         25.40             $          25.73
              $         35.00             $          26.99             $         26.35             $          26.67
</TABLE>



<PAGE>




                                  Attachment E

The Repayment  Amount shall be calculated as the sum of the amounts with respect
to the Initial Payment,  the Base Payment and the Midterm  Payment,  as each are
determined as follows (and subject to Section __ of the Agreement):

Initial Payment

With respect to any date on which the Change Event occurs:

1.  If before MD                 IA

2.  If after MD but before CL    IA x [1 - ((#M GREATER THAN MD) /22)] - CA
3.  If after CL                  IA x [1 - ((#M GREATER THAN MD) /22)] - CA




Base Payment

With respect to any date on which the Change Event occurs:

1.  If before MD and after CL    BP

2.  If after MD and after CL     BP x [1 - ((#M GREATER THAN CL) / (24 - #M@CL)]


Midterm Advance

With respect to any date on which the Change Event occurs:

1.   At all times:               MA x [1 - (#M GREATER THAN MA) / 12]

  Key:

IA                  =      Initial Advance
BP                  =      Base Payment
MA                  =      Midterm Advance
CE                  =      Change Event
CA                  =      Credit Amount
CL                  =      Commercial Launch Date
MD                  =      Measurement Date
#M GREATER THAN     =      Number of months (or portions of months) since [X]

#M@cl               =      Number  of  months  (or  portions  of  months)  since
                           Effective Date in which CL occurs