EXHIBIT 10.1

                                                       December 23, 2002


America  Online,  Inc.
22000  AOL  Way
Dulles,  Virginia  20166
Attention:  General  Counsel

      Re:     Amendment and Waiver of Rights under Restructuring Agreement
              ------------------------------------------------------------

Ladies  and  Gentlemen:

     This  letter agreement sets forth our agreement and understanding regarding
the  waiver  of  certain  rights  by America Online, Inc. ("AOL") under, and the
amendment  of certain provisions of, the Restructuring and Note Agreement, dated
September 19, 2001 (the "Restructuring Agreement"), between AOL and Talk America
Holdings  Inc.  ("Talk").

     A.  AMENDMENTS

          1.  Section  4.8.  Section  4.8(a)  of  the Restructuring Agreement is
          amended  by deleting the words "on the fifth and seventh anniversaries
          of  the  date of this Agreement, (ii)" and renumbering clause (iii) to
          be  clause  (ii).

          2.  Notes.  It  is  agreed  that the aggregate principal amount of the
          Convertible  Notes  (as  defined  in  the  Restructuring  Agreement)
          outstanding  on  the  date hereof is $30,149,637.91. The terms of each
          and  every  Convertible  Note  issued  pursuant  to  the Restructuring
          Agreement  that  is  now  outstanding  or  may  hereafter be issued in
          exchange  upon  transfer  or prepayment of any outstanding Convertible
          Note  shall  be  amended as follows, and a new Convertible Note in the
          foregoing  principal  amount,  dated  July 1, 2002 and reflecting such
          amendments  shall  be  issued  to  AOL  in  exchange  for the existing
          outstanding  Convertible  Notes:


               (a)  to  make the maturity date of the Convertible Note September
                    19, 2006, each reference in the Convertible Note to the year
                    "2011"  shall  be  replaced  with  the  year  "2006";

               (b)  the  proviso  and the further proviso in the first paragraph
                    shall  be deleted in their entirety (all language after " on
                    any  overdue  installment  of  interest  until  paid").

<PAGE>

     B.  WAIVERS

          1.  Section  5.3.  Pursuant  to  Section  5.3  of  the  Restructuring
          Agreement,  AOL  has  the  right  to  prepayment of the AOL Note in an
          amount  equal to the principal amount of Subordinated Indebtedness (as
          defined  in  the  Restructuring  Agreement)  redeemed,  repurchased or
          repaid,  unless  the  cash  used  to  redeem,  repurchase or repay the
          Subordinated  Indebtedness  has  been  raised  solely for such purpose
          through the issuance of additional Subordinated Indebtedness or equity
          of  Talk.  AOL  hereby  agrees  to waive until September 30, 2003 this
          right  solely  with  respect  to the Note Buy Back (as defined below),
          provided  that  (i) the cash purchase price for any Existing Notes (as
          defined  below) purchased shall not exceed 80% of the face (principal)
          amount of such Existing Notes, (ii) the aggregate cash payment amounts
          made  by  Talk  with  respect  to both the Note Buy Back and the Stock
          Buyback  together do not exceed $10,000,000 and (iii) for every dollar
          paid  by Talk to purchase subordinated debt through the Note Buy Back,
          Talk  shall  promptly,  but  in  no  event  later than 3 business days
          following  such  Note Buy Back, prepay $.50 of the principal amount of
          the  outstanding  Convertible Notes. For purposes of this Section B of
          this  letter  agreement,  the  "Existing  Notes"  means  and includes,
          collectively,  Talk's  existing 12% Convertible Subordinated Notes due
          2007,  8%  Convertible  Subordinated Notes due 2007 and 5% Convertible
          Subordinated  Notes due 2004 (collectively, the "Existing Notes"), the
          "Note  Buy  Back"  means the purchase or other acquisition of Existing
          Notes  by  Talk,  prior  to their respective maturities, in either the
          open  market or privately, and the "Stock Buy Back" means the purchase
          or  other  acquisition by Talk with cash of shares of the common stock
          (the  "Common Stock") of Talk, in either the open market or privately.


          2.  Section  5.11.  Pursuant  to  Section  5.11  of  the Restructuring
          Agreement,  subject  to  certain  exceptions,  Talk is prohibited from
          declaring  or  making  any  payment  or  distribution of any kind with
          respect  to any of its equity interests, whether as a dividend, return
          of  capital, redemption, repurchase or otherwise. AOL hereby agrees to
          waive until September 30, 2003 this prohibition solely with respect to
          the  Stock  Buy Back provided that (i) Talk purchases the Common Stock
          at or below the market price for such Common Stock, (ii) the aggregate
          cash  payment  amounts  made by Talk with respect to both the Note Buy
          Back  and  the  Stock  Buy Back together do not exceed $10,000,000 and
          (iii)  for  every  share of Common Stock purchased by Talk through the
          Stock  Buy  Back,  Talk  shall  promptly, but in no event later than 3
          business  days  following  such  Stock Buy Back, purchase one share of
          Common  Stock  from  AOL at the greater of the price per share paid in
          the Stock Buy Back and the closing price on NASDAQ on the previous day
          as  reported  by  The  Wall Street Journal. AOL shall determine in its
          sole  discretion  which shares of Common Stock shall be purchased from
          AOL  pursuant  to  clause  (iii)  of  the  previous  sentence.


     C.  OTHER  AGREEMENTS.

          1.  November Waiver. Pursuant to a letter agreement dated November 12,
          2002,  AOL  granted  a  conditional  waiver  with  respect  to certain
          subordinated  debt repurchases. Talk acknowledges that, from this date
          forward,  such waiver shall be of no further force or effect, provided
          that such waiver shall continue to be effective as to any action taken
          by Talk prior to the date hereof pursuant to the terms of such waiver.

          2.  Limited  Effect.  Except  as  expressly  set  forth  herein,  the
          execution,  delivery  and effectiveness of this letter agreement shall
          not operate as a waiver of any right, power or remedy of AOL under any
          Transaction  Document (as defined in the Restructuring Agreement), nor
          constitute  a waiver or amendment of any provisions of any Transaction
          Document.  Except  as expressly modified herein, all of the provisions
          and  covenants  of the Transaction Documents are and shall continue to
          remain  in  full force and effect in accordance with the terms thereof
          and  are hereby in all respects ratified and confirmed. Any waivers by
          AOL are limited to the circumstances described in this letter and will
          not  be  deemed  to  be  a  waiver  of  any  other  provision  of  the
          Restructuring Agreement, or a waiver of AOL's rights under Section 5.3
          or  Section  5.11  under  any  other circumstances. The Company hereby
          expressly acknowledges that failure by AOL to enforce its rights under
          Section  5.3  or  Section  5.11 of the Restructuring Agreement in this
          instance  or  in  the  past  does  not entitle the Company to any such
          waiver  under this or any other section of the Restructuring Agreement
          in  the  future.

          3.  Representations andWarranties. Talk hereby represents and warrants
          that no Default or Event of Default exists as of the date hereof, both
          before  and  after  giving  effect  to  the  provisions  hereof.

<PAGE>

     If  you  are  in agreement with the foregoing, please so confirm by signing
the enclosed copy of this letter as provided below and returning the signed copy
to  us, whereupon this letter agreement shall be a binding agreement between us.
This  letter  may  be executed in counterparts, each of which shall be deemed an
original  with the same effect as if the signatures were on the same instrument.


                              Very  truly  yours,

                              TALK  AMERICA  HOLDINGS,  INC.


                              By:  /s/ Aloysius T. Lawn IV
                                   ------------------------------
                              Name:  Aloysius  T.  Lawn  IV
                              Title:  EVP-General  Counsel


     The  undersigned,  America  Online, Inc., hereby acknowledges the foregoing
letter  and  consents  and  agrees  to  its  terms.

AMERICA  ONLINE,  INC.


By:  /s/ Mark Wovsaniker
   -------------------------
Name:  Mark Wovsaniker
Title: Senior  Vice  President
Date:  December  20,  2002