EXHIBIT
10.2

NON-QUALIFIED STOCK OPTION

 

 
To:          __________________
Name

__________________
Address

Exercise Price:  $_________  

Date of Grant:  __________    
 
1. You (“Optionee”) are hereby granted, subject to the terms hereof, effective
as of the date of grant, an option to purchase [ ] shares of common stock, $.01
par value (“Stock”), of Talk America Holdings, Inc. (the “Company”) at the
exercise price shown above pursuant to the Company’s 2003 Long Term Incentive
Plan (the “Plan”). This Option shall vest and become fully exercisable in
installments, as follows: (i) [ ] shares of common stock may be purchased on the
first anniversary of the Date of Grant and, (ii) [ ] shares of common stock may
be purchased on the second anniversary of the Date of Grant, and (iii) [ ]
shares of common stock may be purchased on the third anniversary of the Date of
Grant. In addition, the Option will vest in full (less any component or portion
which would otherwise be vested or exercisable and any portion previously vested
and exercised) upon a “Change of Control”, as defined below. Notwithstanding the
foregoing the Board of Directors of the Company (the “Board”) or its designees
may accelerate or waive such vesting date with respect to any or all of the
shares of Common Stock covered by the Option. A “Change in Control” shall be
deemed to have occurred if:
 

 
          (a)
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 (or a 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
the 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 then outstanding securities;

 

(b)  
during any period of two years, individuals who at the beginning of such period
constitute the Board of Company 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 paragraph)
whose election by the Board or nomination for election by stockholders was
approved by a vote of at least two-thirds 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 (as such terms are
used in Rule 14a-11 of Regulation 14A under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of an individual,
corporation, partnership, group, associate or other entity or Person other than
the Board, cease for any reason to constitute at least a majority of the Board
of the Company;

 
 

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(c)  
the consummation of a merger or consolidation of the Company or any subsidiary
owning directly or indirectly all or substantially all of the consolidated
assets of the Company ( a “Significant Subsidiary”) with any other entity,
including 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 50% of the combined voting power of the
surviving or resulting entity outstanding immediately after such merger or
consolidation;

 

 
         (d)
the stockholders of the Company approve a plan or agreement for the sale or
disposition of all or substantially all 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

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

2. The Optionee 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 the Optionee specifies that the Optionee wishes to purchase.
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”; (b) (unless prohibited by the Board) certificates representing shares
of Common Stock of the Company, which will be valued by the Secretary of the
Company at the fair market value per share of the Company’s Common Stock on the
date of delivery of such certificates of the Company, accompanied by an
assignment of the stock to the Company; or (c) (unless prohibited by the Board)
any combination of cash and Common Stock of the Company valued as provided in
clause (b). Any assignment of stock shall be in a form and substance
satisfactory to the Secretary of the Company, including guarantees of
signature(s) and payment of all transfer taxes if the Secretary deems such
guarantees necessary or desirable.

 
 

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3. The Company agrees to use commercially reasonable efforts to file a Form S-8
and register the shares issuable upon the exercise of the Options contemplated
herein under the Securities Act of 1933 and any applicable state securities
registration requirements and to cause such shares to be listed on NASDAQ (if
such shares are not already listed or so registered).

4. Your Option will, to the extent not previously exercised by you, as to any
shares purchasable hereunder (i.e. vested) expire on the tenth anniversary of
the Date of Grant

5. In the event of any change in the outstanding shares of the Common Stock of
the Company by reason of a stock dividend, stock split, combination of shares,
recapitalization, merger, 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 subject to this Option and the
exercise price of such shares 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 except as designated by Optionee or by
will or the laws of descent and distribution, and is exercisable during the
Optionee’s lifetime only by the Optionee, including, for this purpose, the
Optionee’s legal guardian or custodian in the event of disability. Until the
exercise price has been paid in full pursuant to due exercise of this Option and
the purchased shares are delivered to the Optionee, the Optionee does not have
any rights as a stockholder of the Company. The Company reserves the right not
to deliver to the Optionee the shares purchased by virtue of the exercise of
this Option during any period of time in which the Company deems, in its sole
discretion, that such would violate a federal, state, local or securities
exchange rule, regulation or law.

 
 

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7. Notwithstanding anything to the contrary contained herein, this Option is not
exercisable without the consent of the Company until all the following events
occur and during the following periods of time:

(a)  
Until this Option and the optioned shares are approved and/or registered with
such federal, state and local regulatory bodies or agencies and securities
exchanges as the Company may deem necessary or desirable; or

(b)  
During any period of time in which the Company deems that the exercisability of
this Option, the offer to sell the shares optioned hereunder, or the sale
thereof, may violate a federal, state, local or securities exchange rule,
regulation or law, or may cause the Company to be legally obligated to issue or
sell more shares than the Company is legally entitled to issue or sell.

  
          (c)
Until the Optionee has paid or made suitable arrangements to pay (i) all
federal, state and local income tax withholding required to be withheld by the
Company in connection with the Option exercise and (ii) the Optionee’s portion
of other federal, state and local payroll and other taxes due in connection with
the Option exercise.

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

 
 

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      (a)
The Optionee hereby agrees, warrants and represents that he will acquire the
Common 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 of such shares, except as hereafter permitted. The Optionee
further agrees that he will not at any time make any offer, sale, transfer,
pledge or other disposition of such Common Stock to be issued hereunder 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 to the effect that the proposed transaction will be
exempt from such registration. The Optionee 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 Common Stock to be issued to the Optionee 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 Securities Act of 1933, as amended, and under any applicable state
laws or upon receipt of any 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 Securities Act of 1933, as amended, and any applicable state securities
laws.

10. It is the intention of the Company and the Optionee that this Option shall
not be an “Incentive Stock Option” as that term is used in Section 422 of the
Code and the regulations thereunder. This Option is granted pursuant to the
Plan. The Board and the Compensation Committee or similar committee thereof (the
“Committee”) shall have plenary authority to interpret the Plan and Option,
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.

 
 

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11. This Option constitutes the entire understanding between the Company and the
Optionee with respect to the subject matter hereof and no amendment,
modification or waiver of this Option, in whole or in part, shall be binding
upon the Company unless in writing and signed by an authorized officer of the
Company. This Option and the performances of the parties hereunder shall be
construed in accordance with and governed by the laws of the State of Delaware.

Please sign the copy of this Option and return it to the Company’s Secretary,
thereby indicating your understanding of and agreement with its terms and
conditions.

TALK AMERICA HOLDINGS, INC.

By: _______________________     
       Aloysius T. Lawn IV
       Executive Vice President-General
       Counsel and Secretary 

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

________________                                                           
_______________
Optionee       Date