Document:

EXHIBIT 10.16

                               AMENDMENT NO. 1 to
                              EMPLOYMENT AGREEMENT

         THIS AMENDMENT NO. 1 ("Amendment")  dated as of March 28, 2001, entered
into by and among Talk.com Inc., a Delaware  corporation  (the  "Company"),  and
Gabriel Battista ("Employee").

                              W I T N E S S E T H :

         WHEREAS,  the  Company  and  Employee  are  parties  to  an  Employment
Agreement dated as of November 13, 1998 (the "Agreement")  pursuant to which the
Company  employs  Employee as its Chairman of the Board of  Directors  and Chief
Executive Officer; and

         WHEREAS,  the Company and  Employee  desire to amend the  Agreement  as
provided herein.

         NOW THEREFORE, in consideration of the foregoing,  the mutual covenants
set forth  herein and other good and  valuable  consideration,  the  receipt and
sufficiency of which is hereby  acknowledged,  the  undersigned  hereby agree as
follows:

1.  Section 2 of the  Agreement  is hereby  amended in its  entirety  to read as
follows:

"2.  TERM OF  AGREEMENT.  The  term of  Employee's  employment  hereunder  shall
commence on or prior to  December  31,  1998 (the date when  Employee  commences
employment hereunder,  the "Commencement Date") and shall continue in effect for
a period of six years thereafter, except as hereinafter provided (the "Term")."

2.  Section 4.1 of the  Agreement  is hereby  amended in its entirety to read as
follows:

"4.1 BASE SALARY.  During the Term,  Company shall pay to Employee a base salary
("Base  Salary") at the rate of five hundred  thousand  dollars  ($500,000)  per
year, which Base Salary shall be paid to Employee  commencing on January 1, 2002
in accordance with the Company's usual and customary payroll practices. The Base
Salary for the period beginning on the Commencement  Date and ending on December
31, 2001 has been previously paid to Employee by the Company and remains subject
to the other terms of this Agreement."

3. The last  sentence of Section  4.8(a) of the  Agreement is hereby  amended to
read as follows: "For purposes of this Agreement, "Change in Control" shall have
the meaning set forth in Section 4.12 below."

<PAGE>

4. The Agreement is hereby amended to insert the following after Section 4.11 of
the Agreement:

         "4.12.   Change in Control.

                  4.12.1   Change in Control.  For  purposes of this  Agreement,
"Change in Control" shall be deemed to have occurred if:

                  4.12.1.1 any Person (as defined in Section  3(a)(9)  under the
Securities  Exchange Act of 1934, as amended (the "Exchange  Act")),  other than
Company or any Significant Subsidiary (as defined below), becomes the Beneficial
Owner (as defined in Rule 13d-3 under the Exchange Act; provided,  that a Person
shall be deemed to be the  Beneficial  Owner of all shares  that any such Person
has the right to  acquire  pursuant  to any  agreement  or  arrangement  or upon
exercise of conversion rights, warrants, options or otherwise, without regard to
the 60-day period referred to in Rule 13d-3 under the Exchange Act), directly or
indirectly,  of securities of Company or any Significant  Subsidiary (as defined
below)  representing  50% or more of the combined voting power of the Company's,
or  such  Significant  Subsidiary's,  as  the  case  may  be,  then  outstanding
securities;

                  4.12.1.2  during any period of two years,  individuals  who at
the beginning of such period  constitute  the Board and any new director  (other
than a director  designated  by a person who has entered into an agreement  with
Company to effect a  transaction  described in  4.12.1.3,  4.12.1.4 or 4.12.1.5)
whose  election by the Board or  nomination  for  election by  stockholders  was
approved by a vote of at least  two-thirds  (2/3) of the directors then still in
office who either were  directors at the  beginning  of the  two-year  period or
whose  election or  nomination  for election  was  previously  so approved,  but
excluding  for this purpose any such new director  whose  initial  assumption of
office occurs as a result of either an actual or threatened  election contest or
other actual or threatened  solicitation  of proxies or consents by or on behalf
of an individual,  corporation,  partnership, group, association or other entity
other than the Board,  cease for any reason to constitute at least a majority of
the Board of either Company or a Significant Subsidiary;

                  4.12.1.3  the  consummation  of a merger or  consolidation  of
Company or any  subsidiary  of Company  owning  directly  or  indirectly  all or
substantially  all  of  the  consolidated  assets  of  Company  (a  "Significant
Subsidiary")  with any other entity,  other than a merger or consolidation  that
would result in the  holder(s) of voting  securities of Company or a Significant
Subsidiary  outstanding  immediately prior thereto  continuing to hold more than
fifty percent  (50%) of the combined  voting power of the surviving or resulting
entity outstanding immediately after such merger or consolidation;

                  4.12.1.4  the  stockholders  of  Company  approve  a  plan  or
agreement  for the sale or  disposition  of fifty  percent  (50%) or more of the
consolidated  assets of  Company  in which case the Board  shall  determine  the
effective date of the Change of Control resulting therefrom; or

                                       2
<PAGE>

                  4.12.1.5 any other event occurs that the Board determines,  in
its  discretion,  would  materially  alter  the  structure  of  Company  or  its
ownership.

         4.12.2   TERMINATION AFTER CHANGE IN CONTROL.

                  4.12.2.1 If a Change of Control shall occur during the Term of
this Agreement,  the term of Employee's  employment  hereunder shall continue in
effect  until the later of the first  anniversary  of the date of the  Change in
Control  and the date that the Term  would  otherwise  have  terminated  without
regard to the  extension in this  sentence,  except for earlier  termination  as
provided in Section 6 of this Agreement.  The rights and obligations of Employee
and Company under this Agreement upon or after any termination of the Term shall
survive any such termination.

                  4.12.2.2  Notwithstanding  the provisions of Section 7 hereof,
if a Change in Control has  occurred  and  Employee's  employment  hereunder  is
terminated  within one year of such Change in Control:  (i) by Employee for Good
Reason or (ii) by Company without Cause,  then Company shall (a) pay to Employee
the Base Salary and Benefits  through the date of  termination  plus all amounts
due to Employee  pursuant to any Due Bonus;  (b) pay to  Employee,  as severance
pay, a lump sum amount equal to the sum of (x)  twenty-four  months' Base Salary
plus (y) an  amount  equal to the  average  annual  incentive  bonus  earned  by
Employee from Company during the last four (4) completed fiscal years of Company
preceding  the date of Change in  Control,  or if  Employee  was not an  officer
during  any or all of such  prior  four (4)  fiscal  years,  the  average of the
incentives  received  during the fiscal years when Employee was such an officer;
(c) for a period of two years after the date of termination,  arrange to provide
Employee with life, disability, sickness and accident, health, vision and dental
insurance  benefits  substantially  similar to those that  Employee was entitled
prior to the Change in Control,  as well as with the other  fringe  benefits and
perquisites  to which  Employee  was  entitled  pursuant to Section 4.5; and (d)
reimburse Employee for expenses that may have been incurred,  but which have not
been paid as of the date of termination,  subject to the requirements of Section
4.6 hereof."

5.  Section 5 of the Agreement is hereby deleted in its entirety.

6.  The first sentence of Section 7 is hereby amended to read as follows:

"Except as provided in Section  4.12,  in the event that  Employee's  employment
hereunder  terminates prior to the end of the Term,  Company shall make payments
to Employee as set forth below:"

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

TALK.COM INC.                               EMPLOYEE

By:  /s/                                     /s/
    --------------------------------        -----------------------------------
     Name:  Aloysius T. Lawn IV              Gabriel Battista
     Title: EVP - General Counsel
              and Secretary

                                       3EXHIBIT 10.40

                      NON-QUALIFIED STOCK OPTION AGREEMENT

To:                 ("Employee")
    ----------------------------------------------
    Name

    ----------------------------------------------
    Address

Date of Grant: December 12, 2000
Exercise Price: $ 2.00 per share

Employee is hereby granted the option described below, effective as of the above
date of grant,  to  purchase  shares of common  stock,  $.01 par value per share
("Stock")  under the 2000 Long-Term  Incentive Plan ("Plan") of Talk.com Inc., a
Delaware  corporation  (the  "Company"),  at the  exercise  price  shown  above.
Capitalized  terms  used  herein  without  other  definition  have the  meanings
assigned in the  employment  agreement  dated as of October 13, 1998 between the
Company  and  Employee  (as  amended  to  the  date  hereof,   the   "Employment
Agreement").

         1. Employee is hereby  granted  options to purchase  137,500  shares of
Stock (the  "Option").  The Option shall have an exercise  price equal to $ 2.00
per share (the "Exercise Price") and, subject to Section 2, below, shall vest in
its entirety on the earlier of:

         (a) December 11, 2005; and

         (b) the date the Company  announces its results of  operations  for the
first  quarter of 2001, if the Company has achieved the  following:  (i) bundled
services  revenue of $48 million for the first quarter of 2001,  (ii) a total of
335,000  local lines at the end of the first  quarter  and (iii)  EBIDTA of $3.5
million for the first quarter of 2001. For purposes of the foregoing clause (b),
"bundled  services  revenue"  and  "EBITDA"  shall be  defined  as in the Credit
Facility  Agreement,  dated as of October 20, 2000, by and among the Company and
several of its affiliates and MCG Finance Corporation.

 Notwithstanding  the  foregoing,  (i) any  portion of the  Option  that was not
previously  vested and exercisable  shall become fully vested and exercisable on
the effective  date of any  termination  of the employment of Employee under the
Employment  Agreement by the Company without Cause (as defined in Section 5.3 of
the  Employment  Agreement  or a  similar  provision  in any  future  Employment
Agreement) or by Employee for Good Reason (as defined in Section  5.4(ii) of the
Employment Agreement or a similar provision in any future Employment  Agreement)
and (ii) the Board of Directors of the Company  (the  "Board") or its  designees
may  accelerate or waive the aforesaid  scheduled  vesting dates with respect to
any or all of the shares of Stock covered by the Option.

<PAGE>

         2. In the event of a "Change in Control"  (as defined in Section  4.5.1
of the Employment  Agreement) of the Company, any portion of the Option that was
not  previously  vested and  exercisable  on the effective date of the Change in
Control,  shall become fully vested and  exercisable  on such  effective date of
such Change in Control.

         3.  Employee may exercise  the Option by giving  written  notice to the
Secretary of the Company on forms  supplied by the Company at its then principal
executive  office,  accompanied  by payment of the Exercise  Price for the total
number of shares  specified to be  purchased by Employee.  The payment may be in
any of the  following  forms:  (a) cash,  which may be  evidenced by a check and
includes cash received from a so-called  "cashless  exercise" of the Option; (b)
certificates  representing  shares  of Stock,  which  will be valued at the fair
market value (as defined in the Employment  Agreement) per share of the Stock on
the date of the Option  exercise in question,  accompanied  by an  assignment of
such Stock to the Company;  or (c) any  combination  of cash and Stock valued as
provided in clause (b), immediately above. Any assignment of Stock shall be in a
form and substance reasonably satisfactory to the Chief Executive Officer of the
Company, including guarantees of signature(s) and payment of all transfer taxes,
if the Chief Executive Officer of the Company deems such guarantees necessary or
desirable.

         4. The Option will, to the extent not previously exercised by Employee,
expire on December 11, 2010.

         5. In the event of any change in the outstanding shares of the Stock by
reason of a stock  dividend,  stock  split,  consolidation,  transfer of assets,
reorganization,  conversion or what the Board deems in its reasonable discretion
to be similar  circumstances,  the number and kind of shares of Stock subject to
the Option and the Exercise Price shall be appropriately adjusted in a manner to
be determined in the reasonable discretion of the Board.

         6.  Except as  otherwise  provided  by the Board or the  Committee  (as
defined below),  this Option is not  transferable  otherwise than by will or the
laws of descent and distribution,  and is exercisable during Employee's lifetime
only by Employee,  including,  for this purpose,  Employee's  legal  guardian or
custodian in the event of the  disability of Employee.  Until the Exercise Price
has been paid in full pursuant to due exercise of this Option and certificate(s)
representing  Employee's  ownership  of  the  purchased  shares  are  issued  to
Employee, Employee does not have any rights as a shareholder of the Company. The
Company  reserves  the right  not to  deliver  to  Employee  the  certificate(s)
representing shares purchased by virtue of the exercise of the Option during any
period of time in which the Company deems,  based on the written  opinion of its
counsel, that such delivery would violate a federal,  state, local or securities
exchange rule, regulation or law.

         7.  Notwithstanding  anything to the  contrary  contained  herein,  the
Option is not exercisable:

<PAGE>

         (a) During any period of time in which the Company deems,  based on the
written opinion of its counsel, that the exercisability of the Option, the offer
to sell the shares underlying the Option,  or the sale thereof,  would violate a
federal, state, local or securities exchange rule, regulation or law; or

         (b) Until  Employee has paid or made suitable  arrangements  to pay all
federal,  state and local income tax withholding  required to be withheld by the
Company in connection with the Option exercise.

         8. The following two  paragraphs  shall be applicable  if, on a date of
exercise of the Option,  the Stock to be purchased pursuant to such exercise has
not been  registered  under the  Securities Act of 1933, as amended (the "Act"),
and under  applicable state securities laws, and shall continue to be applicable
for so long as such registration has not occurred:

         (a)  Employee  hereby  agrees,  warrants  and  represents  that he will
acquire the Stock to be issued  hereunder  for his own  account  for  investment
purposes  only,  and not with a view to, or in  connection  with,  any resale or
other distribution of any shares of such Stock,  except as hereafter  permitted.
Employee  further  agrees  that he will not at any time  make any  offer,  sale,
transfer,  pledge or other  disposition  of such  Stock to be  issued  hereunder
without  an  effective  registration  statement  under  the Act,  and  under any
applicable  state  securities  laws or an opinion of counsel  acceptable  to the
Company to the effect  that the  proposed  transaction  will be exempt from such
registration.   Employee  shall  execute  such   instruments,   representations,
acknowledgments and agreements as the Company may, in its sole discretion,  deem
advisable to avoid any violation of federal, state, local or securities exchange
rule, regulation or law.

         (b) The certificates for Stock to be issued to Employee hereunder shall
bear the following legend:

         "The shares  represented by this  certificate  have not been registered
         under the Securities Act of 1933, as amended, or under applicable state
         securities  laws.  The shares have been acquired for investment and may
         not be offered,  sold,  transferred,  pledged or otherwise  disposed of
         without an effective registration statement under the Securities Act of
         1933, as amended,  and under any applicable state securities laws or an
         opinion  of  counsel  acceptable  to  the  Company  that  the  proposed
         transaction will be exempt from such registration."

The foregoing  legend shall be removed upon  registration of the legended shares
under the Act and under any applicable  state laws or upon receipt of an opinion
of  counsel  acceptable  to the  Company  that  said  registration  is no longer
required.

         9. The sole purpose of the agreements, warranties,  representations and
legend  set forth in the two  immediately  preceding  paragraphs  is to  prevent
violations of the Act, and any applicable state securities laws.

<PAGE>

         10. It is the  intention  of the Company and  Employee  that the Option
shall not be an "Incentive  Stock Option" as that term is used in Section 422 of
the Internal Revenue Code of 1986, as amended,  and the regulations  thereunder.
The  Option is  granted  pursuant  to the Plan and is  subject  to the terms and
conditions  thereof,  except as  expressly  provided  herein.  The Board and the
Compensation Committee or similar committee thereof (the "Committee") shall have
plenary  authority  to  interpret  each of the Plan,  the  Option and this stock
option agreement, prescribe, amend and rescind rules and regulations relating to
it, and make all other  determinations  deemed  necessary or  advisable  for the
administration and/or exercise of the Option and this stock option agreement.

         11. This  agreement,  the Employment  Agreement and the Plan constitute
the entire  understanding  between the Company and Employee  with respect to the
subject  matter  hereof  and  no  amendment,  modification  or  waiver  of  this
agreement,  in whole or in part,  shall be binding  upon the Company or Employee
unless in writing and signed by the Chief  Executive  Officer of the Company and
Employee.  This agreement and the performances of the parties hereunder shall be
construed  in  accordance  with,  and  governed  by the  laws of,  the  State of
Delaware.  Employee  shall  sign a copy of this  agreement  and return it to the
Company's  Secretary,   thereby  indicating  Employee's  understanding  of,  and
agreement with its terms and conditions.

TALK.COM INC.

By:
   ---------------------------------------
   Name:
   Title:

I hereby  acknowledge  receipt of a copy of the foregoing stock option agreement
and, having read it, hereby signify my understanding  of, and my agreement with,
its terms and conditions.

------------------------------------------
As of December  __, 2000

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