Stock Option Agreeemnt




 

EXHIBIT
4.1

 

FORM
OF

 

TALK
AMERICA HOLDINGS, INC. 2005 INCENTIVE PLAN

 

(the
“plan”)

 

STOCK
OPTION AGREEMENT










To:              
_____________________________________

    
Name




    
_____________________________________ 

   
Address







Exercise
Price: $_____________________  




Date of
Grant: ______________________   




Nature of
Option:     □
Nonstatutory Stock Option     □
Incentive Stock Option




Expiration
Date:_____ Anniversary of the Date of Grant (not later than the tenth
anniversary)







You (the
“Optionee”) are hereby granted under the Plan of Talk America Holdings, Inc.
("Company") and in connection with your employment with the Company, or a
subsidiary or affiliate thereof, an option (the “Option”), effective as of the
date of grant (“Date of Grant”), to purchase ________ shares of common stock of
Company, par value $.01 per share (“Common Stock”), at the exercise price shown
above. Capitalized terms used herein without other definition are defined as in
the Plan.




1. The
vesting dates for this option are as follows: in
installments, as follows: (i) ______ shares of Common Stock may be purchased on
and after the first anniversary of the Date of Grant and, (ii) an additional
________ shares of Common Stock may be purchased on and after the second
anniversary of the Date of Grant, and (iii) an additional _______ shares of
Common Stock may be purchased on and after the third anniversary of the Date of
Grant;  provided,
however, the Option shall only vest as set forth in (i), (ii), and (iii) if the
Optionee has been continuously employed by the Company or any of its affiliates
between the Date of Grant and the respective vesting date and on such vesting
date.  In
addition, the Option will vest in full (less any component or portion that would
otherwise be vested or exercisable and any portion previously vested and
exercised) upon a “Change of Control” (as that term is defined herein).
Notwithstanding the foregoing, the Committee (defined herein as defined in the
Plan), in its sole discretion, 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
of Control” shall be deemed to have occurred upon the happening of any of the
following events:

 




	 	
      (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 Directors of Company (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 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;






	 (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 that 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 Committee, in its sole discretion) certificates
representing shares of Common Stock, which will be valued at the Fair Market
Value per share of the 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 Committee, in its sole discretion) any combination of
cash and Common Stock 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.

 

3. Your
Option will, to the extent not previously exercised by you, as to any shares
purchasable hereunder (i.e. vested) expire upon the earlier of: (a) the
Expiration Date set forth at the head of this Option and (b) ninety (90) days
after your employment with the Company is terminated for any
reason.




4. In the
event of any merger, reorganization, consolidation, recapitalization, stock
dividend, stock split, reverse stock split, spin-off or similar transaction or
other change in corporate structure affecting the Common Stock, the number and
kind of shares subject to this Option and the exercise price of this Option
shall be adjusted as provided in the Plan.




5. Except as
the Committee, in its sole discretion, may permit, 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.























6. Notwithstanding
anything to the contrary contained herein, this Option is not exercisable
without the consent of the Company during the following periods of
time:




	(a)       
        	
      Until
      this Option and the offer and sale of 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; and







	 	
      (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.







7. The
following two subparagraphs shall be applicable if, on the date of exercise of
this Option, the offer and sale of 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, or such registrations(s)
shall not be effective or shall be subject to a stop order, and shall continue
to be applicable for so long as such registration has not occurred and become
effective or such stop order shall be in effect:





		
      (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.























The sole
purpose of the agreements, warranties, representations and legend set forth in
the preceding subparagraphs (a) and (b) is to prevent violations of the
Securities Act of 1933, as amended, and any applicable state securities
laws.




8. It is the
intention of the Company and the Optionee that this Option shall be a
“Nonstatutory Stock Option” or an “Incentive Stock Option” as defined in the
Plan and as designated at the head of this Option. This Option is granted
pursuant to the Plan and is subject to the terms and conditions thereof. As
provided in the Plan, the Committee has
plenary authority and discretion to interpret the Plan and this Option, to
prescribe, amend and rescind rules and regulations relating to this Option, and
to make all other determinations deemed necessary or advisable for the
administration and/or exercise of this Option. 




9. This
Option and the Plan constitute 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:
____________________________     










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