Document:

EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT  ("Agreement") is made and entered into as of
the  7th day of  August,  2000  among  Talk.com  Inc.,  a  Delaware  corporation
("Talk.com") and Talk.com Holding Corp., a Pennsylvania corporation and a wholly
owned   subsidiary  of  Talk.com  Inc.  (the  "Company")  and  Thomas  M.  Walsh
("Employee").

         WHEREAS,  Talk.com  and  Company  desires  to employ  Employee  as Vice
President-Finance  of Talk.com and the Company and in certain other  capacities,
and Employee desires to be employed by Talk.com and Company; and

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

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

         2. TERM OF AGREEMENT. The term of Employee's employment hereunder shall
commence on September 4, 2000 (the  "Commencement  Date") and shall  continue in
effect for a period of five years  thereafter,  except as  hereinafter  provided
(the "Term").  Employee  agrees to and shall  present  herself at the offices of
Company in New Hope,  Pennsylvania  prepared to commence  performing  her duties
hereunder on or before the Commencement Date.

         3. POSITIONS AND DUTIES.

         3.1 OFFICER  POSITIONS.  Except as may otherwise be agreed upon between
Company  and  Employee,  Employee  shall  perform  such  duties  and  have  such
responsibilities   as  Vice   President-Finance   and  such  other   duties  and
responsibilities  consistent with the foregoing duties and  responsibilities  as
may be  reasonably  assigned or  delegated to him from time to time by Company's
Chief  Executive   Officer  or  Company's  Board  of  Directors  (the  "Board"),
including,  without limitation,  service as an employee,  officer or director of
affiliates  (as that term is  defined  in Rule 405 under the  Securities  Act of
1933, as amended (the "Act"))  (hereinafter,  "Affiliates") of Company,  without

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additional  compensation.  References in this Agreement to Employee's employment
with Company shall be deemed to refer to employment with Company and/or,  as the
case may be, an Affiliate,  as the context requires.  Employee shall perform his
duties  and  responsibilities  to the  best  of  his  abilities  hereunder  in a
diligent, trustworthy,  businesslike and efficient manner. Employee shall devote
substantially all of his working time and efforts to the business and affairs of
Company;  provided,  however,  that  nothing in this  Agreement  shall  preclude
Employee from (a) engaging in charitable  activities and community affairs,  and
(b) managing his personal investments and affairs (subject to the limitations in
Section 10 hereof.

         4. COMPENSATION AND RELATED MATTERS.

         4.1 BASE SALARY.  During the Term, Company shall pay to Employee a base
salary  ("Base  Salary")  at the  rate of One  Hundred  Sixty  Thousand  Dollars
($160,000)  per year,  which Base Salary shall be paid to Employee in accordance
with Company's usual and customary payroll practices.

         4.2  BENEFIT  PLANS AND  ARRANGEMENTS.  Employee  shall be  entitled to
participate in and to receive  benefits under Company's  employee  benefit plans
and  arrangements  (including,  but not  limited  to,  bonus  plans) as are made
available to the Company's  senior  executive  officers  during the Term,  which
employee  benefit plans and arrangements may be altered from time to time at the
discretion of the Board (the "Benefits").  Employee acknowledges and agrees that
bonuses,  annual or otherwise,  are performance based and discretionary with the
Board of Directors or a Committee thereof.

         4.3 PERQUISITES. During the Term, Employee shall be entitled to receive
fringe benefits as are made available to Company's senior executive officers.

         4.4  EXPENSES.  Company  shall  promptly  reimburse  Employee  for  all
out-of-pocket  expenses related to Company's  business that are actually paid or
incurred by him in the performance of his services under this Agreement and that
are incurred,  reported and documented in accordance  with  Company's  policies,
including but not limited to continuing  education with respect to accounting as
required by applicable rules. In addition, during the Term, Company will provide
Employee  with an  automobile  or an  automobile  allowance,  as  Company  shall
determine, and if the Company determines to provide Employee with an automobile,
Company shall keep such  automobile  fully insured in accordance  with Company's
practices for similarly situated employees.

         4.5 STOCK OPTIONS.

         (a) GRANT OF OPTIONS.  Effective on the date hereof,  Employee shall be
granted an award of an option to  purchase  160,000  shares of the Common  Stock
(the "Option") in accordance with the stock option agreement in substantially in
the form thereof attached hereto as Exhibit A. The Option shall have an exercise
price  equal to  $4-5/8,  which is equal to the fair  market  value (as  defined
below) of the Common Stock on the date hereof.  The Option  expires on the tenth
anniversary of the date hereof and

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shall vest and become  exercisable,  subject to accelerated vesting in the event
of a Change in Control  (defined as provided below) of Company in  installments,
as follows: (i) options with respect to 53,334 shares of Common Stock shall vest
and become exercisable on the first anniversary of the date hereof; (ii) options
with respect to 53,333 shares of Common Stock shall vest and become  exercisable
on the second  anniversary  of the date hereof and (iii) options with respect to
53,333  shares of Common  Stock shall vest and become  exercisable  on the third
anniversary of the date hereof.  In the event of a Change in Control of Company,
all of the  options  issued  under  the  Option  which are not then  vested  and
exercisable  shall  immediately  become vested and exercisable.  The fair market
value of  Common  Stock  for  purposes  of this  Agreement  shall  mean the last
reported sale price of a share of the Common Stock on the Nasdaq National Market
System preceding the date in question or if no sale took place on such day, such
last reported sale price on the then next preceding date on which such sale took
place. For the purposes of this Agreement, a "Change of Control" shall be deemed
to have occurred if:

              (i)    any  Person  (as  defined  in  Section  3(a)(9)  under  the
                     Securities  Exchange Act of 1934, as amended (the "Exchange
                     Act")),  other than the  Company,  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 the Company or any Significant
                     Subsidiary (as defined below)  representing  50% or more of
                     the  combined  voting  power  of  the  Company's,  or  such
                     subsidiary's,   as  the  case  may  be,  then   outstanding
                     securities;

              (ii)   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 the Company to effect a
                     transaction  described  in clauses (i),  (iii),  or (iv) of
                     this  Section   2(a))  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,

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                     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  or the  Company  or a
                     Significant Subsidiary;

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

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

              (vi)   any other event occurs which the Board  determines,  in its
                     discretion,  would  materially  alter, the structure of the
                     Company or its ownership.

         (b) REGISTRATION  STATEMENT.  Company will file with the Securities and
Exchange Commission and any applicable state securities regulatory authorities a
Registration  Statement  on the  applicable  form to register  the resale of the
Award and Form S-8 (or if unavailable,  a registration statement on Form S-3) to
register the shares  issuable  upon exercise of the Option under the Act and any
applicable state securities or "Blue Sky" laws as soon as practicable  after the
date  hereof.  Notwithstanding  the  foregoing,  Company  shall be  entitled  to
postpone for a reasonable period of time the filing or the effectiveness of such
registration  statement  if the Board  shall  determine  in good faith that such
filing  or  effectiveness  would  be  materially  detrimental  to the  Company's
business interests.

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

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

         5.2 DISABILITY.  If Employee  becomes  physically or mentally  disabled
during the term hereof so that he is unable to perform services  required of him
pursuant to this Agreement for an aggregate of six (6) months in any twelve (12)
month period (a `Disability"),  Company, at its option, may terminate Employee's
employment hereunder.

         5.3 CAUSE.  Upon  written  notice,  Company  may  terminate  Employee's
employment  hereunder  for  Cause  (as  defined  below).  For  purposes  of this
Agreement,  Company  shall  have  "Cause"  to  terminate  Employee's  employment
hereunder  upon (a) a material  breach by Employee of any material  provision of
this  Agreement,   (b)  willful   misconduct  by  Employee  in  connection  with
misappropriating  any funds or property of Company, (c) attempting to obtain any
personal  profit from any  transaction in which Employee has an interest that is
adverse to the interests of Company without prior written  disclosure thereof to
the Board or (d)  Employee's  gross  neglect  in the  performance  of the duties
required to be performed by Employee under this Agreement.

         5.4 BY EMPLOYEE. Employee may terminate his employment hereunder:

         (a) Upon sixty (60) days' prior  written  notice to  Company,  provided
that,  upon the giving of such  notice by  Employee,  Company may  establish  an
earlier date for such termination under this Section 5.4 (a).

         (b) For Good Reason (as defined below)  immediately  and with notice to
Company.  "Good Reason" for  termination by Employee  shall include,  but is not
limited to, the following:

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

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

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

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

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         6.  COMPENSATION  IN  THE  EVENT  OF  TERMINATION.  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:

         6.1 BY EMPLOYEE FOR GOOD REASON; BY COMPANY WITHOUT CAUSE. In the event
that Employee's  employment  hereunder is terminated by Company without Cause or
by Employee  for Good  Reason,  then the Company  shall (a) pay to Employee  all
amounts due to Employee pursuant to any bonus that was due to Employee as of the
date of such  termination,  pursuant to the terms of such bonus (a "Due Bonus"),
(b) continue to pay to Employee  the Base Salary and Benefits to which  Employee
would be entitled  hereunder in the manner provided for herein for the period of
time  ending on the  earlier  of the date  when the Term  would  otherwise  have
expired in accordance  with Section 2 hereof and the second  anniversary  of the
date of such termination, (c) 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 4.4 hereof and (d) one hundred percent (100%) of the
outstanding  stock  options  granted to the  Employee  that are  unvested  shall
immediately vest and become exercisable.

         6.2 BY COMPANY FOR CAUSE; BY EMPLOYEE WITHOUT GOOD REASON. In the event
that Company shall terminate Employee's  employment hereunder for Cause pursuant
to Section 5.3 hereof or  Employee  shall  terminate  his  employment  hereunder
without Good Reason, all compensation and Benefits, as specified in Section 4 of
this  Agreement,  theretofore  payable or provided to Employee shall cease to be
payable or  provided,  except for any Due Bonus and any  Benefits  that may have
been due and payable  but that have not been paid as of the date of  termination
and  reimbursement  of expenses that may have been incurred,  but which have not
been paid as of the date of termination,  subject to the requirements of Section
4.4 hereof.

         6.3  DEATH.  In the event of  Employee's  death,  Company  shall not be
obligated to pay Employee or his estate or beneficiaries any compensation except
for (a) any Due Bonus or any Benefits  that may have been earned and are due and
payable  as of the date of death,  but which have not been paid as of such date,
(b)  reimbursement  of expenses that may have been incurred,  but which have not
been paid as of the date of death,  subject to the  requirements  of Section 4.4
hereof,  and (c) all  outstanding  stock  options  granted to Employee  that are
unvested shall immediately vest and become  exercisable and Employee's estate or
beneficiaries,  as the case may be, shall have the right to exercise any of such
stock  options  during the period  commencing on the date of death and ending on
the second  anniversary of the date of such  termination or for the remainder of
the  period  set  forth in the  option  agreement  applicable  to the  option in
question (the "Exercise Period'), if less.

         6.4 DISABILITY.  In the event of Employee's  Disability,  Company shall
not be obligated to pay Employee or his estate or  beneficiaries  any additional
compensation  except  for:  (a) any Due  Bonus and  Benefits  that may have been
earned and are due and payable as of the date of such Disability, but which have
not been paid as of such date, and (b)  reimbursement for expenses that may have
been incurred but which have not been

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paid as of the date of Disability,  subject to the  requirements  of Section 4.4
hereof.  Upon  termination  due  to  Disability,  fifty  percent  (50%)  of  the
outstanding   stock  options   granted  to  Employee  that  are  unvested  shall
immediately  vest  and  become   exercisable  and  Employee  or  his  estate  or
beneficiaries,  as the case may be, shall have the right to exercise any of such
stock options during the period  commencing on the date of Disability and ending
on the second  anniversary of the date of the Disability or for the remainder of
Exercise Period, if less.

         6.5 NO MITIGATION.  In the event of any termination of employment under
Section  5  hereof,  Employee  shall  be  under  no  obligation  to  seek  other
employment;  provided;  however,  that to the extent that  Employee  does obtain
other  employment   subsequent  to  the  termination  of  Employee's  employment
hereunder,  the  obligations  of  Company to pay  Benefits  (which is defined in
Section 4.2 of this Agreement and the term  "Benefits"  does not include Options
granted  pursuant to Section 4.5 of this  Agreement for purposes of this Section
6.5) under this Agreement from and after the date of  commencement of such other
employment shall terminate.

         7.  UNAUTHORIZED  DISCLOSURE.  Employee  shall not,  without  the prior
written consent of Company, disclose or use in any way, either during Employee's
employment with Company or thereafter,  except as required in the course of such
employment,  any confidential  business or technical information or trade secret
acquired  in the  course of such  employment,  whether  or not  conceived  of or
prepared  by him,  which is related to any service or business of Company or any
Affiliate;  provided,  however,  that  the  foregoing  shall  not  apply  to (a)
information  that is not unique to the Company or that is generally known to the
industry  or the  public  other  than as a result of  Employee's  breach of this
covenant, (b) information known to Employee other than from information provided
by Company or (c)  information  that Employee is required to disclose to, or by,
any governmental or judicial authority; provided, however, if Employee should be
required in the course of judicial or other governmental proceedings to disclose
any  information,  Employee  shall give Company prompt written notice thereof so
that Company may seek an  appropriate  protective  order and/or waive in writing
compliance with the  confidentiality  provisions of this  Agreement.  If, in the
absence of a protective order or the receipt of a waiver by Company, Employee is
compelled  to disclose  information  to, or pursuant to the  requirements  of, a
court or other governmental authority, Employee may disclose such information to
such court or other governmental  authority without liability to any other party
hereto.

         8. TANGIBLE  ITEMS.  All files,  records,  documents,  manuals,  books,
forms,  reports,   memoranda,   studies,  data,  calculations,   recordings  and
correspondence,  in whatever form they may exist, and all copies,  abstracts and
summaries of the  foregoing  and all physical  items  related to the business of
Company and its  affiliates,  other than  merely  personal  items,  whether of a
public  nature or not,  and whether  prepared by Employee or not,  and which are
received by Employee from, or on behalf of Company or an Affiliate in the course
of his  employment  hereunder  are and shall  remain the  exclusive  property of
Company and any such Affiliate and shall not be removed from the premises of the
Company or such Affiliate,  as the case may be, except as required in the course
of

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Employee's  employment  hereunder,  without  the prior  written  consent  of the
Company's Chief Executive  Officer or the Board,  and the same shall be promptly
returned by Employee upon the termination of Employee's  employment with Company
or at any time prior thereto upon the request of the Company's  Chief  Executive
Officer or the Board.

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

         10. CERTAIN  RESTRICTIVE  COVENANTS.  During the Term, and for a period
ending  twelve  (12)  months  after the  earlier of  Employee's  termination  of
employment  hereunder,  Employee agrees that he will not act, either directly or
indirectly, as a partner, officer, director,  substantial stockholder (an equity
interest of 5% or more) or  employee  of, or render  advisory or other  services
for, or in connection  with, or become  interested  in, or make any  substantial
financial  investment  in any firm,  corporation,  business  entity or  business
enterprise that is a provider of  telecommunication  services that competes with
Employer (each, a "Competitor"),  except with the express written consent of the
Board which shall not be unreasonably withheld.  Employee further agrees that in
the event of the  termination  of his employment  under Section 5 hereof,  for a
period of twelve (12) months  thereafter,  she will not, directly or indirectly,
employ,  offer to employ, or actively interfere with the relationship of Company
or an Affiliate with, any employee of Company or any employee of any Affiliate.

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         11. EMPLOYEE REPRESENTATIONS AND COVENANTS. Employee hereby represents,
warrants  and  covenants  to  Company  that  (a)  the  execution,  delivery  and
performance  of this  Agreement by Employee does not and will not conflict with,
breach,  violate or cause a default  under any  employment,  non-competition  or
confidentiality contract or agreement,  instrument; order, judgment or decree to
which Employee is a party or by which he is bound;  (b) Employee,  in performing
this Agreement and the duties of Employee's  employment  with Company,  will not
disclose or utilize any trade secrets of a former employer,  unless Employee has
first obtained express written  authorization  from any such former employer for
their  disclosure  or use; (c)  Employee has not brought,  and will not bring to
Company,  any documents,  records,  information  or other  materials of a former
employer that are not  generally  available to the public,  unless  Employee has
first obtained express written  authorization  from any such former employer for
their  possession  and use;  and (d) upon the  execution  and  delivery  of this
Agreement by Company,  this Agreement shall be the valid and binding  obligation
of Employee,  enforceable  in accordance  with its terms,  subject to applicable
bankruptcy,  insolvency  and  similar  laws  affecting  the rights of  creditors
generally.

         12. COMPANY  REPRESENTATIONS.  Company represents and warrants (a) that
it is duly  authorized  and  empowered  to enter  into this  Agreement,  (b) the
execution,  delivery and  performance  of this Agreement by Company does not and
will not conflict with,  breach,  violate or cause a default under any contract,
agreement,  instrument, order, judgment or decree to which Company is a party or
by which it is bound,  and (c) upon the execution and delivery of this Agreement
by  Employee,  this  Agreement  shall be the valid  and  binding  obligation  of
Company,  enforceable  in  accordance  with its  terms,  subject  to  applicable
bankruptcy,  insolvency  and  similar  laws  affecting  the  rights of  creditor
generally.

         13.  INDEMNIFICATION.  Prior  to the  Commencement  Date,  Company  and
Employee  shall  enter  into an  indemnification  agreement  in a form  mutually
acceptable  to Company and Employee and  containing  terms no less  favorable to
Employee  than those  contained  in any  indemnification  or  similar  agreement
currently in effect between Company and any of its officers.

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

         15.  EFFECT OF  AGREEMENT  ON OTHER  BENEFITS.  Except as  specifically
provided  in this  Agreement,  the  existence  of this  Agreement  shall  not be
interpreted to preclude,  prohibit or restrict  Employee's  participation in any
other  employee  benefit  plan or other plans or programs  provided to officers,
directors or employees of Company.

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         16. RIGHTS OF EMPLOYEE'S  ESTATE. If Employee dies prior to the payment
of all  amounts  due and owing to him under  the terms of this  Agreement,  such
amounts shall be paid to such  beneficiary or beneficiaries as Employee may have
last  designated  in writing filed with the Secretary of Company or, if Employee
has made no  beneficiary  designation,  to Employee's  estate.  Such  designated
beneficiary  or the  executor  of  Employee's  estate,  as the case may be,  may
exercise all of Employee's  rights hereunder.  If any beneficiary  designated by
Employee shall predecease Employee, the designation of such beneficiary shall be
deemed  revoked,  and  any  amounts  which  would  have  been  payable  to  such
beneficiary shall be paid to Employee's  estate.  If any designated  beneficiary
survives  Employee,  but dies before payment of all amounts due hereunder,  such
payments  shall,  unless  Employee  has  designated  otherwise,  be made to such
beneficiary's estate. In the event of Employee's death or judicial determination
of his  incompetence,  reference in this  Agreement to Employee  shall be deemed
where  appropriate,  to  refer  to  his  beneficiary,   estate  or  other  legal
representative.

         17.  SEVERABILITY.  It is the intent and  understanding  of the parties
hereto that if, in any action  before any court or other  tribunal of  competent
jurisdiction legally empowered to enforce this Agreement, any term, restriction,
covenant,  or  promise  is  held  to  be  unenforceable  as a  result  of  being
unreasonable or for any other reason, then such term, restriction,  covenant, or
promise shall not thereby be terminated,  but, that it shall be deemed  modified
to the extent  necessary to make it  enforceable by such court or other tribunal
and,  if it cannot be so  modified,  that it shall be deemed  amended  to delete
therefrom such provision or portion  adjudicated to be invalid or unenforceable,
and this agreement shall be deemed to be in full force and effect as so modified
and such modification or amendment in any event shall apply only with respect to
the operation of this  Agreement in the  particular  jurisdiction  in which such
adjudication is made.

         18. NOTICES.  Any notices or demands given in connection herewith shall
be in  writing  and  deemed  given when (a)  personally  delivered,  (b) sent by
facsimile  transmission  to a number  provided in writing by the addressee and a
confirmation  of the  transmission is received by the sender or (c) two (2) days
after being deposited for delivery with a recognized overnight courier,  such as
Federal  Express,  and  addressed or sent, as the case may be, to the address or
facsimile number set forth below or to such other address or facsimile number as
such party may in writing designate:

         If to Employee:   Thomas M. Walsh
                           313 Heatherfield Drive
                           Souderton, PA 18964

         If to Company:    Talk.com Inc.
                           12020 Sunrise Valley Drive
                           Suite 250
                           Reston, VA  20190
                           Attn: General Counsel
                           Fax No.:  (703) 391-7525

                                       10
<PAGE>

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

         19. WAIVER.  No provision of this Agreement may be modified,  waived or
discharged  unless such  waiver,  modification  or  discharge  is agreed to in a
writing  executed by Employee and Company.  No waiver by any party hereto at any
time of any breach by another party hereto of, or compliance with, any condition
or  provision  of this  Agreement  to be  performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same or
at any prior or subsequent time.

         20.  GOVERNING  LAW. The  validity,  interpretation,  construction  and
performance  of this  Agreement  shall be governed  by the laws of  Pennsylvania
relating to contracts made and to be performed entirely therein.

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

         22. SUCCESSORS. Company may not assign any of its rights or obligations
under this  Agreement  hereunder.  Employee  may assign his rights,  but not his
obligations, hereunder and all of Employee's rights hereunder shall inure to the
benefit  of his  estate,  personal  representatives,  designees  or other  legal
representatives.  All of the  rights of  Company  hereunder  shall  inure to the
benefit of, and be enforceable by the successors of Company. Any person, firm or
corporation  succeeding  to  the  business  of  Company  by  merger,   purchase,
consolidation  or otherwise  shall be deemed to have assumed the  obligations of
Company hereunder;  provided, however, that Company shall,  notwithstanding such
assumption  by a successor,  remain  primarily  liable and  responsible  for the
fulfillment of its obligations under this Agreement.

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

         24.  CERTAIN  WORDS.  As used in this  Agreement,  the words  "herein,"
"hereunder,"  "hereof"  and  similar  words  shall  be  deemed  to refer to this
Agreement in its entirety, and not to any particular provision of this Agreement
unless the context clearly requires otherwise.

                                       11
<PAGE>

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

Talk.com Inc.                               Talk.com Holding Corp.

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

---------------------------------------
Thomas M. Walsh

                                       12EXHIBIT 10.2

                                  TALK.COM INC.

                            INDEMNIFICATION AGREEMENT

                  This  Indemnification  Agreement  ("Agreement")  is made as of
August7,  2000,  by and  between  Talk.com  Inc.,  a Delaware  corporation  (the
"Company"), and Thomas M. Walsh ("Indemnitee").

                  WHEREAS, pursuant to that certain employment agreement between
the Company,  Talk.com  Holding Corp. and  Indemnitee  dated August 7, 2000 (the
"Employment  Agreement")  Indemnitee  will  commence  service,  on or  prior  to
September  4, 2000 as Vice  President-Finance  of the Company and will perform a
valuable service in such capacity for the Company; and

                  WHEREAS,  the  Company  desires  to  attract  and  retain  the
services  of highly  qualified  individuals,  such as  Indemnitee,  to serve the
Company  and,  in order  to  induce  Indemnitee  to  enter  into the  Employment
Agreement,  the  Company  agreed  to enter  into an  agreement  with  Indemnitee
providing for the indemnification of Indemnitee 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.       Indemnification.

                  (a) Indemnification of Indemnitee. The Company shall indemnify
and  hold  harmless  Indemnitee  to  the  fullest  extent  permitted  by  law if
Indemnitee was or is or becomes a party to, or witness or other  participant in,
or is threatened to be made a party to, or witness or other  participant in, any
threatened, pending or completed action, suit, proceeding or alternative dispute
resolution mechanism,  or any hearing,  inquiry or investigation that Indemnitee
in good faith believes might lead to the  institution of any such action,  suit,
proceeding or alternative dispute resolution mechanism, whether civil, criminal,
administrative,  investigative or other (collectively, hereinafter a "Claim") by
reason  of,  or  arising  in whole or in part out of,  any  event or  occurrence
related to the fact that  Indemnitee  is or was a  director,  officer,  manager,
employee, agent, representative or fiduciary of the Company, a subsidiary of the
Company  (a  "Subsidiary")  or an  affiliate  (as  defined in Rule 405 under the
Securities  Act of 1933, as amended) of the Company (an  "Affiliate"),  or is or
was serving at the request of the Company or any  Subsidiary  or  Affiliate as a
director,  officer,  manager,  employee,  agent,  representative or fiduciary of
another  corporation,  limited liability  company,  partnership,  joint venture,
employee  benefit plan,  trust or other entity or enterprise  (collectively,  an
"Other  Entity"),  or by  reason  of any  action  or  inaction  on the  part  of
Indemnitee while serving in any of such capacities,  whether or not the basis of
the Claim is an alleged action in an official  capacity as a director,  officer,
manager,  employee,  agent,  representative or fiduciary of the Company,  or any
Subsidiary,   Affiliate  or  Other  Entity  (any  of  the  foregoing  capacities
referenced in this Section 1(a), an "Indemnified Capacity"), against any and all
costs,  expenses and other amounts actually and reasonably  incurred and/or,  as
the case may be, paid (including,  without  limitation,  attorneys' fees and all
other  costs,  expenses and  obligations  actually  and  reasonably  incurred in
connection with

<PAGE>

investigating,  defending,  being a witness in, or  otherwise  participating  in
(including  on appeal),  or preparing  to defend,  any Claim),  and  judgements,
fines, penalties and amounts paid in connection with the settlement of any Claim
and any federal,  state,  local or foreign taxes imposed on the  Indemnitee as a
result of the actual or deemed  receipt of any  payments  under this  Agreement,
including  all  interest,  assessments  and other charges paid or payable by the
Indemnitee  in connection  with or in respect of such costs,  expenses and other
amounts (collectively, hereinafter, the "Expenses"). Without limiting the rights
of Indemnitee under Section 2(a) below, the payment of Expenses actually paid by
Employee shall be made by the Company as soon as  practicable,  but in any event
no later than thirty (30) days after written  demand by  Indemnitee  therefor is
presented to the Company.  Any event giving use to the right of Indemnitee to be
indemnified hereinafter is referred to herein as an "Indemnifiable Event."

                  (b) Reviewing Party.  Notwithstanding  the foregoing,  (i) the
obligations  of the Company  under  Section  1(a) hereof shall be subject to the
condition  that the  Reviewing  Party (as defined in Section 10(e) hereof) shall
not have determined (in a written opinion,  in any case in which the Independent
Legal Counsel (as defined in Section 10(d) hereof) is involved) that  Indemnitee
would not be  permitted to be  indemnified  under  applicable  law, and (ii) the
obligation  of the Company to make an advance  payment of Expenses to Indemnitee
pursuant to Section 2(a) hereof (an "Expense  Advance")  shall be subject to the
condition that, if, when and to the extent that the Reviewing  Party  determines
that  Indemnitee  would not be permitted to be so indemnified  under  applicable
law, the Company shall be entitled to be  reimbursed  by Indemnitee  (who hereby
agrees to so  reimburse  the Company)  for all such  amounts  theretofore  paid;
provided,  however,  that if Indemnitee  has  commenced or thereafter  commences
legal proceedings in a court of competent jurisdiction to secure a determination
that Indemnitee  could be indemnified  under  applicable law, any  determination
made by the  Reviewing  Party  that  Indemnitee  would  not be  permitted  to be
indemnified  under  applicable law shall not be binding and Indemnitee shall not
be required to  reimburse  the  Company  for any Expense  Advance  until a final
judicial  determination  is made with respect thereto (as to which all rights of
appeal  therefrom  have been  exhausted or lapsed).  Indemnitee's  obligation to
reimburse the Company for any Expense Advance shall be unsecured and no interest
shall be charged thereon.  If there has not been a Change in Control (as defined
in Section 10(c)  hereof),  the Reviewing  Party shall be selected by members of
the Board of  Directors  who are not or were not, as the case may be, a party or
parties, as the case may be, to the Claim in respect of which indemnification is
sought,  and if there  has been a Change  in  Control  (other  than a Change  in
Control  which  has  been  approved  by a  majority  of the  Company's  Board of
Directors who were directors  immediately prior to such Change in Control),  the
Reviewing Party shall be the Independent  Legal Counsel.  If, within thirty (30)
days after the Company's  receipt of written  notice from  Indemnitee  demanding
such  indemnification  (the "30-Day  Period") (i) the Reviewing Party determines
that Indemnitee  substantively would not be permitted to be indemnified in whole
or in part under  applicable  law or makes no  determination  in that regard or,
(ii) Indemnitee shall not have received full  indemnification  from the Company,
Indemnitee shall have the right to commence  litigation  seeking a determination
by a court of competent  jurisdiction  as to the  propriety  of  indemnification
under the circumstances  involved or challenging any such determination (or lack
thereof) by the Reviewing  Party or any aspect  thereof,  including the legal or
factual  bases  therefor or the failure of the  Company to fully  indemnify  the
Indemnitee,  and the Company hereby consents to service of process and to appear
in any such  proceeding and hereby appoints the Secretary of the Company (or, if
such office is not filled at a time in question, any Assistant

                                       2
<PAGE>

Secretary of the Company or, if such office is not filled at a time in question,
any Vice President of the Company - each, a "Service Receiver") as its agent for
such service of process.  Any determination by the Reviewing Party not otherwise
so challenged shall be conclusive and binding on the Company and Indemnitee.

                  (c) Change in Control.  The Company  agrees that if there is a
Change in Control  (other than a Change in Control  which has been approved by a
majority of the  Company's  Board of Directors  who were  directors  immediately
prior to such Change in Control),  then, with respect to all matters  thereafter
arising  concerning the rights of Indemnitee to payments of Expenses and Expense
Advances  under this  Agreement or any other  agreement  or under the  Company's
Certificate  of  Incorporation  or Bylaws as now or  hereafter  in  effect,  the
Company shall seek legal advice only from the  Independent  Legal Counsel.  Such
counsel, among other things, shall render its written opinion to the Company and
Indemnitee as to whether and to what extent  Indemnitee would be permitted to be
indemnified  under applicable law. The Company agrees to pay the reasonable fees
of the Independent  Legal Counsel  referred to above and to fully indemnify such
counsel  against  any and all  expenses  (including  attorneys'  fees),  claims,
liabilities  and damages  arising out of or  relating to this  Agreement  or its
engagement pursuant hereto.

                   (d) Mandatory Payment of Expenses.  Notwithstanding any other
provision of this  Agreement,  to the extent that Indemnitee has been successful
on the merits or otherwise,  including,  without limitation, the dismissal of an
action without  prejudice,  in connection  with any Claim,  Indemnitee  shall be
indemnified  against all Expenses actually and reasonably incurred by Indemnitee
in connection therewith.

         2.       Expenses; Indemnification Procedure.

                  (a)  Advancement  of Expenses.  The Company  shall advance all
Expenses incurred by Indemnitee so that the Company,  and not Indemnitee,  shall
be obligated to pay such incurred Expenses.  The advances of Expenses to be made
hereunder shall be paid by the Company to Indemnitee as soon as practicable, but
in any event no later  than five (5) days  after  written  demand by  Indemnitee
therefor to the Company.

                  (b) Notice and Cooperation by Indemnitee. Indemnitee shall, as
a  condition  precedent  to  Indemnitee's  right to be  indemnified  under  this
Agreement,  give the  Company  notice in writing as soon as  practicable  of any
Claim made against Indemnitee for which  indemnification will or could be sought
under this  Agreement;  but the  Indemnitee's  failure to so notify the  Company
shall not relieve the Company from any liability  that it may have to Indemnitee
under this Agreement, except to the extent that the Company is able to establish
that its  ability  to avoid  liability  under  such  Claim was  prejudiced  in a
material  respect by such failure.  Notice to the Company shall be directed to a
Service  Receiver at the address of the Company shown on the  signature  page of
this Agreement (or such other address as the Company shall  designate in writing
to Indemnitee).  In addition,  Indemnitee  shall, at the expense of the Company,
provide the Company  with such  information  and  cooperation  with respect to a
Claim,  or any matters  related to such Claim,  as it may reasonably  require in
connection with the  indemnification  provided for herein and as shall be within
Indemnitee's  power.  Any  costs  or  expenses  (including  attorneys'  fees and
disbursements)  actually and reasonably incurred by

                                       3
<PAGE>

Indemnitee in so cooperating shall be borne by the Company  (irrespective of the
determination as to Indemnitee's  entitlement to  indemnification),  which shall
pay any such amount within fifteen (15) days after receiving a request  therefor
from  Indemnitee,  and  the  Company  hereby  indemnifies  and  agrees  to  hold
Indemnitee harmless therefrom.

                  (c) No  Presumptions;  Burden of Proof.  For  purposes of this
Agreement, the termination of any Claim by judgment,  order, settlement (whether
with  or  without  court  approval)  or  conviction,  or  upon  a plea  of  nolo
contendere,  or its equivalent,  shall not create a presumption  that Indemnitee
did not meet any particular standard of conduct or have any particular belief or
that a court has determined that  indemnification is not permitted by applicable
law. In  addition,  neither the  failure of the  Reviewing  Party to have made a
determination  as to  whether  Indemnitee  has met any  particular  standard  of
conduct  or had  any  particular  belief,  nor an  actual  determination  by the
Reviewing  Party that Indemnitee has not met such standard of conduct or did not
have such belief,  prior to the commencement of legal  proceedings by Indemnitee
to secure a judicial  determination  that Indemnitee should be indemnified under
applicable law, shall be a defense to a claim for  indemnification by Indemnitee
hereunder or create a presumption  that  Indemnitee  has not met any  particular
standard of conduct or did not have any particular  belief.  In connection  with
any  determination by the Reviewing Party or otherwise as to whether  Indemnitee
is entitled  to be  indemnified  hereunder,  the burden of proof shall be on the
Company to establish that Indemnitee is not so entitled.

                  (d) Notice to Insurers.  If, at the time of the receipt by the
Company of a notice of a Claim pursuant to Section 2(b) hereof,  the Company has
one or more  policies  of  liability  insurance  in effect  which may cover such
Claim, the Company shall give prompt notice of the commencement of such Claim to
the  applicable  insurer(s) in accordance  with the  procedures set forth in the
applicable  policies.  The Company shall thereafter take all action necessary or
desirable to cause such  insurers to pay, on behalf of  Indemnitee,  all amounts
payable as a result of such Claim in accordance with the terms of such policies.

                  (e) Selection of Counsel.  In the event that the Company shall
be  obligated  hereunder  to pay the  Expenses  with  respect to any Claim,  the
Company,  except as otherwise  provided  below,  shall be entitled to assume the
defense of such Claim at its own expense  with counsel  approved by  Indemnitee,
upon the  delivery to  Indemnitee  of written  notice of its  election so to do.
Indemnitee's approval of such counsel shall not be unreasonably withheld.  After
delivery  of  such  notice,  approval  of such  counsel  by  Indemnitee  and the
retention of such counsel by the Company,  the Company will not be liable to the
Indemnitee under this Agreement for any fees of counsel subsequently incurred by
the  Indemnitee  with  respect  to such  Claim,  other than as  provided  below.
Indemnitee shall have the right to employ Indemnitee's own counsel in connection
with a Claim,  but the fees and expenses of such counsel  incurred after written
notice from the Company of its assumption of the defense thereof shall be at the
expense of  Indemnitee,  unless (i) the  employment of counsel by Indemnitee has
been  previously  authorized by the Company,  or,  following a Change in Control
(other  than a Change in Control  approved  by a majority  of the members of the
Board of  Directors  who were  directors  immediately  prior to such  Change  in
Control),  the  employment  of counsel by  Indemnitee  has been  approved by the
Independent Legal Counsel,  (ii) Indemnitee shall have reasonably concluded that
there may be a conflict of interest  between the Company and  Indemnitee  in the
conduct of any such  defense,  or (iii) the  Company  shall not,  in fact,  have
employed  or  retained or

                                       4
<PAGE>

continued  to employ or retain  counsel to assume the defense of such Claim,  in
each of which cases the fees and expenses of  Indemnitee's  counsel  shall be at
the  expense of the  Company.  The  Company  shall not be  entitled to assume or
control the defense of any Claim brought by or on behalf of the Company or as to
which the Indemnitee has reached the conclusion  that there may be a conflict of
interest  between the Company and  Indemnitee.  The Company shall not settle any
Claim in any manner which would impose any penalty or  limitation  on Indemnitee
without  the   Indemnitee's   written  consent  (which  approval  shall  not  be
unreasonably withheld).

                  (f) Settlement of Claims. The Company shall not be required to
indemnify  Indemnitee under this Agreement for any amounts paid in settlement of
any Claim effected  without the Company's  written consent;  provided,  however,
that  consent  by the  Company  to the  settlement  of any  claim  shall  not be
unreasonably  withheld.  Notwithstanding the foregoing,  however, if a Change in
Control has occurred  (other than a Change in Control  approved by a majority of
the members of the Board of Directors who were  directors  immediately  prior to
such  Change in  Control),  then the  Company  shall be  required  to  indemnify
Indemnitee for amounts paid in settlement of any Claim if the Independent  Legal
Counsel  has  approved  such  settlement  or has not made a  determination  with
respect to such  settlement  within (30) days after the  effective  date of such
Change in Control.

         3.       Additional Indemnification Rights; Non-Exclusivity.

                  (a) Scope.  The Company hereby agrees to indemnify  Indemnitee
to  the   fullest   extent   permitted   by  law,   notwithstanding   that  such
indemnification is not specifically  authorized by the Company's  Certificate of
Incorporation or Bylaws or by statute. In the event of any change after the date
of this Agreement in any applicable law, statute or rule which expands the right
of the Company to indemnify  Indemnitee,  it is the intent of the parties hereto
that Indemnitee shall enjoy under this Agreement the greater  benefits  afforded
by such change.  In the event of any change in any  applicable  law,  statute or
rule which  narrows the right of the Company to indemnify the  Indemnitee,  such
change, to the extent not otherwise  required by such law, statute or rule to be
applied  to this  Agreement,  shall  have no  effect  on this  Agreement  or the
parties' rights and obligations hereunder.

(b) Non-Exclusivity.  The indemnification provided by this Agreement shall be in
addition to any rights to which  Indemnitee  may be entitled under the Company's
Certificate of Incorporation or Bylaws,  any agreement,  vote of stockholders or
directors,  the General Corporation Law of the State of Delaware,  or otherwise.
The  indemnification   provided  under  this  Agreement  shall  continue  as  to
Indemnitee for any Indemnifiable Event while serving in an Indemnified  Capacity
even though Indemnitee may have ceased to serve in such Indemnified Capacity.

         4.       No  Duplication  of Payments.  The Company shall not be liable
under this  Agreement  to make any payment in  connection  with any Claim to the
extent  Indemnitee has otherwise  actually received payment (under any insurance
policy or otherwise) of the amounts otherwise indemnifiable hereunder.

         5.       Partial  Indemnification.  If Indemnitee is entitled under any
provision of this Agreement to  indemnification  by the Company for a portion of
any of the Expenses in

                                       5
<PAGE>

connection with the  investigation,  appeal or settlement of any Claim,  but not
for  the  total  amount  thereof,  the  Company  shall  nevertheless   indemnify
Indemnitee for such portion of the Expenses.

         6.       Mutual   Acknowledgment.   Both  the  Company  and  Indemnitee
acknowledge  that,  in certain  instances,  applicable  law or public policy may
prohibit  the Company  from  indemnifying  Indemnitee  under this  Agreement  or
otherwise.   Indemnitee  understands  and  acknowledges  that  the  Company  has
undertaken or may be required in the future to undertake with the Securities and
Exchange  Commission  to submit the  question of  indemnification  to a court in
certain  circumstances  for a determination  of the Company's right under public
policy to indemnify Indemnitee.

         7.       Liability  Insurance.   To  the  extent  the  Company  or  any
Subsidiary or Affiliate maintains  liability insurance  applicable to directors,
officers,  managers,  employees,  agents,  representatives or fiduciaries of the
Company or such Subsidiary or Affiliate  (collectively,  the "Covered Persons"),
Indemnitee  shall be  covered  by such  policies  in such a manner as to provide
Indemnitee  the same rights and benefits as are  accorded to the most  favorably
insured of the  Covered  Persons  who is then  serving in the same  capacity  or
capacities, as the case may be, as Indemnitee.

         8.       Exceptions.   Any  other  provision  herein  to  the  contrary
notwithstanding,  the Company  shall not be  obligated  pursuant to the terms of
this Agreement:

                  (a) Excluded Action or Omissions.  To indemnify Indemnitee for
any  Expenses  resulting  from  acts,   omissions  or  transactions  from  which
Indemnitee  may not be  indemnified  under  applicable  law, or for any Expenses
resulting  from  Indemnitee's  conduct  which is finally  adjudged  to have been
willful misconduct or knowingly fraudulent conduct;

                  (b) Claims  Initiated by  Indemnitee.  To indemnify or advance
Expenses to Indemnitee with respect to Claims  initiated or brought  voluntarily
by  Indemnitee  and not by way of  defense,  regardless  of  whether  Indemnitee
ultimately is determined to be entitled to such indemnification, Expense Advance
or  insurance  recovery,  as the  case  may  be,  except  (i)  with  respect  to
proceedings  brought to  establish  or enforce  (a) a right to, or for,  Expense
Advances  and/or,  as the case may be, (b) any other right of  Indemnitee  under
this Agreement or any other agreement or insurance policy or under the Company's
Certificate  of  Incorporation  or Bylaws now or  hereafter  in effect,  (ii) in
specific  cases,  if the Board of  Directors  has  approved  the  initiation  or
bringing of such suit or (iii) as otherwise  required  under  applicable  law or
statute;

                  (c)  Lack of  Good  Faith.  To  indemnify  Indemnitee  for any
Expenses  incurred by Indemnitee  with respect to any  proceeding  instituted by
Indemnitee  to enforce or  interpret  this  Agreement,  if a court of  competent
jurisdiction  determines  that  each  of the  material  assertions  made  by the
Indemnitee in such proceeding was not made in good faith or was frivolous; or

                  (d) Claims Under Section  16(b).  To indemnify  Indemnitee for
Expenses and the payment of profits  arising from the purchase and sale or, sale
and  purchase,  by Indemnitee of securities in violation of Section 16(b) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any similar
successor statute.

                                       6
<PAGE>

         9.       Period of Limitations. No legal action shall be brought and no
cause of action shall be asserted by or in the right of the Company with respect
to the matters addressed in this Agreement against  Indemnitee,  or Indemnitee's
estate,  spouse, heirs, executors or personal or legal representatives after the
expiration of two(2) years from the date of accrual of such cause of action, and
any claim or cause of action of the  Company  shall be  extinguished  and deemed
released  unless  asserted by the timely  filing of a legal  action  within such
two-year period; provided, however, that if any shorter period of limitations is
otherwise  applicable  to any such cause of action,  such  shorter  period shall
govern.

         10.      Construction of Certain Phrases.

                  (a) Company. For purposes of this Agreement, references to the
"Company" shall include,  in addition to the resulting  entity,  any constituent
entity (including any constituent of a constituent)  absorbed in a consolidation
or merger which, if its separate  existence had continued,  would have had power
and authority to indemnify its directors, officers, managers, employees, agents,
representation  or  fiduciaries,  so that if  Indemnitee  is or was a  director,
officer, employee, agent or fiduciary of such constituent corporation,  or is or
was  serving  at the  request of such  constituent  corporation  as a  director,
officer,  manager,  employee, agent or fiduciary of an Other Entity,  Indemnitee
shall stand in the same position  under the  provisions of this  Agreement  with
respect to the resulting or surviving entity as Indemnitee would have stood with
respect to such constituent entity if its separate existence had continued.  The
consummation of any transaction described in this Section 10(a) shall be subject
to the requirements of Section 12, below.

                  (b)  Miscellaneous  Terms.  For  purposes  of this  Agreement,
references to "fines" shall include any excise taxes assessed on Indemnitee with
respect to an employee  benefit plan;  and references to "serving at the request
of the Company or any  Subsidiary or Affiliate" or words of similar import shall
include  any  service  as  a  director,   officer,  manager,   employee,  agent,
representative  or fiduciary of the Company which imposes duties on, or involves
services by, such director, officer, manager, employee, representative, agent or
fiduciary with respect to an employee  benefit plan, or its  participants or its
beneficiaries;  and if Indemnitee acted in good faith and in a manner Indemnitee
reasonably  believed to be in the interest of the participants and beneficiaries
of an  employee  benefit  plan,  Indemnitee  shall be deemed to have  acted in a
manner "not opposed to the best interests of the Company" as referred to in this
Agreement or under any applicable law or statute.

                  (c) Change in  Control.  For  purposes  of this  Agreement,  a
"Change in Control"  shall be deemed to have  occurred if (i) any  "person"  (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than a
trustee or other fiduciary holding  securities under an employee benefit plan of
the Company or a corporation owned directly or indirectly by the stockholders of
the Company in substantially the same proportions as their ownership of stock of
the  Company,  is or becomes  the  "beneficial  owner" (as defined in Rule 13d-3
under the  Exchange  Act),  directly or  indirectly,  of Voting  Securities  (as
defined below) of the Company representing more than twenty percent (20%) of the
total  voting  power  represented  by  the  Company's  then  outstanding  Voting
Securities, (ii) during any period of two (2) consecutive years, individuals who
at the beginning of such period constitute the Board of Directors of the Company
and any new  director  (other  than a  director  designated  by a person who has
entered

                                       7
<PAGE>

into an agreement with the Company to effect a transaction  described in clauses
(i),  (iii)  and (iv) of this  Section  10(c))  whose  election  by the Board of
Directors or nomination for election by the Company's  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 period or whose  election  or
nomination  for election  was  previously  so approved,  cease for any reason to
constitute a majority thereof,  or (iii) the stockholders of the Company approve
a merger or consolidation of the Company with any other corporation other than a
merger or  consolidation  which  would  result in the Voting  Securities  of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining  outstanding  or by being  converted  into  Voting  Securities  of the
surviving  entity) at least 80% of the total  voting  power of the  resulting or
surviving entity outstanding immediately after such merger or consolidation,  or
(iv) the  stockholders of the Company approve a plan of complete  liquidation of
the Company or an agreement for the sale or  disposition  by the Company (in one
transaction  or a series of  transactions)  of all or  substantially  all of the
Company's assets. For purposes of this Agreement, "Voting Securities" shall mean
any securities the holders of which vote generally in the election of directors.

                  (d) Independent Legal Counsel. For purposes of this Agreement,
"Independent  Legal  Counsel"  shall mean an attorney or firm of attorneys,  who
shall not have otherwise performed services for the Company or Indemnitee within
the then prior three years  (other than with respect to matters  concerning  the
rights of Indemnitee under this Agreement, or of other indemnitees under similar
indemnity  agreements)  selected by the Company and  approved by  Indemnitee  in
writing, which approval shall not be unreasonably withheld.  Notwithstanding the
foregoing,  the term  "Independent  Legal Counsel" shall not include any firm or
person  who,  under  the  applicable  standards  of  professional  conduct  then
prevailing, would have a conflict of interest in representing either the Company
or Indemnitee in an action to determine  Indemnitee's  right to  indemnification
under this Agreement.

                  (e)  Reviewing  Party.  For  purposes  of  this  Agreement,  a
"Reviewing Party" shall mean (i) any person or group of persons  consisting of a
member or members of the Company's  Board of Directors  and/or,  as the case may
be, or any other person  appointed by the Board of Directors  who is not a party
to the particular Claim for which Indemnitee is seeking indemnification, or (ii)
Independent Legal Counsel.

         11.      Counterparts.  This  Agreement  may be executed in one or more
counterparts,  each of which  shall  constitute  an  original  and all of which,
together, shall constitute one and the same document.

         12.      Binding Effect;  Successors and Assigns.  This Agreement shall
be binding  upon and inure to the benefit of and be  enforceable  by the parties
hereto and their respective successors and permitted assigns, heirs and personal
and legal representatives. The Company may not assign its obligations under this
Agreement to any  individual  or entity  except by operation of law to an entity
acquiring all or substantially  all of the business and/or,  as the case may be,
assets of the Company (a  "Successor")  and, in any such case, the Company shall
continue to be  obligated  hereunder.  The Company  shall  require and cause any
Successor by written agreement in form and substance satisfactory to Indemnitee,
expressly to assume and agree to perform  this  Agreement in the same manner and
to the same  extent  that the  Company  would be  required to perform if no such
succession had taken place.  This Agreement shall

                                       8
<PAGE>

continue in effect  regardless  of whether  Indemnitee  continues to serve in an
Indemnified Capacity.

         13.      Attorneys' Fees. In the event that any action is instituted by
Indemnitee in a court of competent  jurisdiction  under this  Agreement or under
any  liability  insurance  policies  maintained  by the Company to  enforce,  or
interpret any of the terms hereof or thereof, Indemnitee shall be entitled to be
paid all Expenses actually and reasonably incurred by Indemnitee with respect to
such action,  regardless of whether Indemnitee is ultimately  successful in such
action,  and shall be  entitled  to an  advance of such  Expenses  in the manner
provided in Section 2 (a), above, with respect to such action, unless, as a part
of such action,  the court in which such action is brought  determines that each
of the material assertions made by Indemnitee as a basis for such action was not
made in good faith or was frivolous.  In the event of an action instituted by or
in the name of the Company  under this  Agreement to enforce or interpret any of
the  terms  of this  Agreement,  Indemnitee  shall  be  entitled  to be paid all
Expenses  actually  and  reasonably  incurred by  Indemnitee  in defense of such
action  (including  costs and expenses  incurred  with  respect to  Indemnitee's
counterclaims and cross-claims made in such action), and shall be entitled to an
advance of such Expenses in the manner  provided in Section 2 (a),  above,  with
respect to such  action,  unless as a part of such action such court  determines
that each of  Indemnitee's  material  defenses  to such  action were made in bad
faith or were frivolous.

         14.      Notice.  Any notices or demands given in  connection  herewith
shall be in writing and deemed given when (a) personally delivered,  (b) sent by
facsimile  transmission  to a number  provided in writing by the addressee and a
confirmation  of the  transmission is received by the sender or (c) two (2) days
after being deposited for delivery with a recognized overnight courier,  such as
Fed Ex, and  addressed or sent,  as the case may be, to the address or facsimile
number set forth  below or to such other  address  or  facsimile  number as such
party may in writing designate:

         If to Indemnitee:          Thomas M. Walsh

         If to Company:             Talk.com Inc.
                                    12020 Sunrise Valley Drive
                                    Suite 250
                                    Reston, VA  20190
                                    Attn: Secretary

         15.      Consent to  Jurisdiction.  The  Company  and  Indemnitee  each
hereby irrevocably consent to the jurisdiction of the courts of the Commonwealth
of  Pennsylvania  for all purposes in  connection  with any action or proceeding
which  arises  out of or  relates  to this  Agreement  and agree that any action
instituted  under this  Agreement  shall be commenced,  prosecuted and continued
only in the courts of the  Commonwealth of Pennsylvania in and for the County of
Philadelphia,   which  shall  be  the   exclusive  and  only  proper  forum  for
adjudicating such a claim.

         16.      Severability.  The  provisions  of  this  Agreement  shall  be
severable  in the  event  that  any  of the  provisions  hereof  (including  any
provision within a single section, paragraph or sentence) are held by a court of
competent jurisdiction to be invalid, void or otherwise  unenforceable,  and the
remaining provisions shall remain enforceable to the fullest extent permitted by
law.  Furthermore,  to the  fullest  extent  possible,  the  provisions  of this
Agreement

                                       9
<PAGE>

(including,  without limitation,  each portion of this Agreement  containing any
provision  held to be  invalid,  void or  otherwise  unenforceable,  that is not
itself held to be invalid,  void or  unenforceable)  shall be construed so as to
give effect to the intent  manifested by the provision held invalid,  illegal or
unenforceable.

         17.      Choice of Law.  This  Agreement  shall be  governed by and its
provisions  construed and enforced in  accordance  with the laws of the State of
Delaware, without regard to the conflict of laws principles thereof.

         18.      Subrogation.  In the  event of  payment  to,  or on  behalf of
Indemnitee  under this Agreement,  the Company shall be subrogated to the extent
of such payment to all of the rights of recovery of  Indemnitee,  who shall,  at
Company's expense, execute all documents required and shall do all acts that may
be  necessary  to secure such rights and to enable the  Company  effectively  to
bring suit to enforce such rights.

         19.      Amendment  and   Termination.   No  amendment,   modification,
termination or cancellation of this Agreement shall be effective unless it is in
writing signed by both of the parties hereto. No waiver of any of the provisions
of this Agreement shall be deemed to, or shall constitute a waiver of, any other
provisions  hereof  (whether  or not  similar  thereto),  nor shall such  waiver
constitute a continuing  waiver.  Except as  specifically  set forth herein,  no
failure to exercise,  or any delay in exercising,  any right or remedy hereunder
shall constitute a waiver thereof.

         20.      Integration  and Entire  Agreement.  This Agreement sets forth
the entire understanding  between the parties hereto and supersedes all previous
written  and  oral  negotiations,  commitments,  understandings  and  agreements
relating to the subject matter hereof between the parties hereto.

         21.      No Construction as Employment Agreement.  Nothing contained in
this Agreement shall be construed as giving  Indemnitee any right to be retained
in the employ of the Company or any Subsidiaries.

         22.      Certain Words. As used in this Agreement,  the words "herein,"
"hereunder,"  "hereof"  and  similar  words  shall  be  deemed  to refer to this
Agreement in its entirety, and not to any particular provision of this Agreement
unless the context clearly requires otherwise.

                                       10
<PAGE>

                  IN WITNESS  WHEREOF,  the parties  hereto have  executed  this
Agreement as of the date first above written.

                                            TALK.COM  INC.

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

AGREED TO AND ACCEPTED

INDEMNITEE:

---------------------------------------
Thomas M. Walsh

                                       11

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