EXHIBIT 4.1(a)
ORBIT
INTERNATIONAL CORP. 2006 EMPLOYEE STOCK INCENTIVE PLAN
(Approved and adopted by the
Board of Directors on April 18, 2006)
STATEMENT OF PURPOSE
The Orbit International
Corp. 2006 Employee Stock Incentive
Plan is
intended to afford an incentive to employees, corporate
officers and other key
persons employed or retained by ORBIT INTERNATIONAL
CORP. and its Subsidiaries
and affiliates to acquire a proprietary interest
in the Company and to enable
the Company and its Subsidiaries
and affiliates to attract and retain such
persons.
DEFINITIONS
For purposes of the Plan, the following terms are
defined as set forth below:
a. "10% Holder" shall mean any person who, for
purposes of Section 422 of the
Code owns more than 10% of the total
combined voting power of all classes of
stock of the employer corporation
or of any Subsidiary.
b. "Award" means a Stock Option, Stock Appreciation
Right or Restricted Stock.
c. "Board" means the Board of
Directors of the Company.
d. "Change of Control" has the
meaning set forth in Section
4.3.1.
e. "Code" means the Internal Revenue Code of 1986, as amended from
time to time,
and any successor thereto.
f. "Committee" means the Committee
referred to in Section 3.1.
g. "Common Stock" means common stock, par value $.10 per
share, of the Company.
h. "Company" means Orbit
International Corp., a Delaware
corporation.
i. "Covered Employee" means a
participant designated prior to the grant of
Restricted Stock by the Committee who is or may be a
"covered employee" within
the meaning of Section 162(m)(3) of the
Code in the year in which Restricted
Stock is expected to be taxable
to such participant.
j. "Eligible Persons" means the Eligible persons referred to in
Section 2 of the
Plan.
k. "Exchange Act" means the Securities
Exchange Act of 1934, as amended from
time to time, and any successor
thereto.
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l. "Fair Market Value" means, as of any given date, (i)
if the Common Stock is
listed or admitted to trade on a national securities exchange, the
closing price
of the Common Stock on the
Composite Tape, as published in The Wall Street
Journal, of the principal national securities exchange on which the
Common Stock
is so listed or admitted to trade, on such date, or, if
there is no trading of
the Common Stock on such date, then the
closing price of the Common Stock as
quoted on such Composite Tape on the
next preceding date on which there was
trading in such shares; (ii) if the Common Stock
is not listed or admitted to
trade on a national securities exchange but is listed
and quoted on The Nasdaq
Stock Market ("Nasdaq"), the last sale price for the
Common Stock on such date
as reported by Nasdaq, or, if there is no reported
trading of the Common Stock
on such date, then the last
sale price for the Common Stock on the next
preceding date on which there was
trading in the Common Stock; (iii) if the
Common Stock is not listed or
admitted to trade on a national securities
exchange and is not listed and quoted on Nasdaq,
the mean between the closing
bid and asked price for the
Common Stock on such date, as furnished by the
National Association of Securities
Dealers, Inc. ("NASD") Over-The-Counter
Bulletin Board (the "OTCBB") or
its successor the Bulletin Board
Exchange("BBX"); (iv) if the Common Stock is not listed or
admitted to trade on
a national securities exchange, not listed and quoted on
Nasdaq and closing bid
and asked prices are not furnished by the OTCBB,
the mean between the closing
bid and asked price for the Common Stock on such date, as
furnished by the Pink
Sheets, LLC ("Pink Sheets") or similar organization; and (v) if the
stock is not
listed or admitted to trade on a national
securities exchange, not listed and
quoted on Nasdaq and if bid
and asked prices for the Common Stock are not
furnished by the OTCBB, Pink
Sheets or a similar organization, the value
established in good faith by the Committee taking
into account such facts and
circumstances deemed to be material by the Committee to the
value of the Common
Stock in the hands of the
Eligible Person.
Notwithstanding the foregoing, for
purposes of granted Non-Qualified Stock
Options or Stock Appreciation Rights, Fair Market Value of Common
Stock shall be
determined in accordance with the
requirements of Code Section 409A, and for
purposes of granting Incentive Stock Options, Fair Market
Value of Common Stock
shall be determined in accordance with the
requirements of Code Section 422.
m. "Incentive Stock Option" means any Stock Option
designated as, and intended
to qualify as, an "incentive stock option" within the meaning
of Section 422 of
the Code.
n. "Non-Qualified Stock Option" means any Stock Option that
is not an Incentive
Stock Option.
o. "Performance Goals" means the performance goals
established by the Committee
in connection with the grant of
Restricted Stock.
p. "Plan" means the Orbit
International Corp. 2006 Employee Stock Incentive
Plan, as set forth herein and
as hereinafter amended from time to time.
q. "Qualified Performance-Based Award"
means an Award of Restricted Stock
designated as such by the
Committee at the time of grant, based
upon a
determination that (i) the recipient is or may be
a "covered employee" within
the meaning of Section 162(m)(3) of the Code in
the year in which the Company
would expect to be able to claim a tax deduction with respect to
such Restricted
Stock and (ii) the Committee wishes such Award to qualify for the
Section 162(m)
Exemption.
r. "Restricted Stock" means an
Award granted under Section 6.
s. "Section 162(m) Exemption" means
the exemption from the limitation on
deductibility imposed by Section 162(m) of the Code that is set
forth in Section
162(m)(4)(C) of the Code.
t. "Stock Appreciation Right" means
an Award granted under Section 5.
u. "Stock Option" means an
Award granted under Section 4.
v. "Subsidiary" shall have the
meaning given to the term
"Subsidiary
corporation" in Section 424(f) of
the Code.
w. "Termination of Employment" means
the termination of the participant's
employment with the Company and any of its Subsidiaries. A
participant employed
by a Subsidiary shall also be deemed to incur a Termination of
Employment if the
Subsidiary ceases to be such a
Subsidiary, and the participant does not
immediately thereafter become an employee of the Company or
another Subsidiary.
Temporary absences from employment
because of illness, vacation or leave of
absence and transfers among the
Company and its Subsidiaries shall not be
considered Terminations of Employment.
If so determined by the Committee, a
participant shall be deemed not to have incurred a
Termination of Employment if
the participant enters into a
contract with the Company or a
Subsidiary
providing for the rendering by the
participant of consulting services to the
Company or such Subsidiary on
terms approved by the Committee;
however,
Termination of Employment of the
participant shall occur when such contract
ceases to be in effect.
In addition, certain other terms used
herein have definitions given to them
in the first place in which
they are used.
STATEMENT OF THE PLAN
1. SHARES SUBJECT TO
THE PLAN.
Subject to the
provisions of Section 7, the maximum number of shares of
shares which may be issued under the Plan shall
be two hundred fifty thousand
(250,000) shares of Common Stock, par value $.10 per share,
of the Company (the
"Shares"). The Company shall at all times while
the Plan is in effect reserve
such number of shares of Common
Stock as will be sufficient to satisfy the
requirements of outstanding Awards granted under the Plan. The
Shares subject to
the Plan shall be either authorized and unissued
shares or treasury shares of
Common Stock. If any Award is forfeited, or
if any Stock Option (and related
Stock Appreciation Right, if any) terminates, expires
or lapses for any reason
without having been exercised in
full or shall cease for any reason to be
exercisable in whole or in part, or if any Stock Appreciation Right
is exercised
for cash, the unpurchased Shares subject to such Awards shall again
be available
for distribution under the Plan. No more than 30% of the
shares of Common Stock
available for grant under the Plan as of the first day
of any calendar year in
which the Plan is in effect shall be utilized in that fiscal
year for the grant
of Awards in the form of
Restricted Stock.
2. ELIGIBILITY.
Awards may be granted
only to employees, salaried officers and other key
persons employed or retained by
the Company or its Subsidiaries ("Eligible
Persons"). As used in this
Plan, the term "Subsidiaries" shall
include
Subsidiaries of a Subsidiary.
Directors who are not salaried officers
or
employees of the Company or its Subsidiaries or who are members of
the Committee
shall not be eligible for
Awards under this Plan.
3. ADMINISTRATION OF THE
PLAN.
3.1. The
Plan shall be administered either by either the full Board of
Directors or by a committee (either the full Board or the
committee is referred
to hereinafter as the "Committee")
composed of at least two non-employee
directors, each of whom shall be a
disinterested person, as defined by Rule
16b-3(c)(2)(i) under the Exchange Act, which Committee shall be
appointed by and
serve at the pleasure of the Board. Within the limits of the
express provisions
of the Plan, the Committee
shall have the authority to determine, in its
absolute discretion, (i) the individuals to whom, and the time or
times at which
Awards shall be granted, (ii)
whether and to what extent Incentive Stock
Options, Non-Qualified Stock Options, Stock
Appreciation Rights and Restricted
Stock or any combination thereof are to be granted
hereunder, (iii) the number
of Shares to be covered by
each Award granted hereunder, (iv) subject to
Sections 4.7 and 6.3(G), the terms and conditions of any Award
granted hereunder
including, but not limited to,
the option price, any vesting
condition,
restriction or limitation (which may
be related to the performance of the
participant, the Company or any
Subsidiary), and any vesting, acceleration,
forfeiture or waiver regarding any Award and the shares of Common
Stock relating
thereto, (v) modify, amend or adjust the terms and
conditions of any Award, at
any time or from time to time, including but not limited to,
Performance Goals;
provided, however, that the Committee may not adjust upwards
the amount payable
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with respect to Qualified
Performance-Based Awards or waive or alter
the
Performance Goals associated therewith or cause
such Restricted Stock to vest
earlier than permitted by Section 6.3(G);
(vi) to what extent and under what
circumstances Common Stock and other amounts
payable with respect to an Award
shall be deferred; and (vii) under what circumstances an Award may
be settled in
cash or Common Stock under Sections 6.3(B) and 10.2, provided,
however, that the
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Committee shall not have such power to the extent that
the mere possession (as
opposed to the exercise) of such power would result in
adverse tax consequences
to any participant under Code Section 409A. In making
such determinations, the
Committee may take into account such factors as the
Committee, in its absolute
discretion, shall deem relevant. Subject to the express
provisions of the Plan,
the Committee shall also have the authority to interpret the Plan,
to prescribe,
amend and rescind rules and regulations relating to it,
to determine the terms
and provisions of the respective option
instruments or agreements (which need
not be identical) and to make
all other determinations and take all other
actions necessary or advisable for
the administration of the Plan.
The
Committee's determinations on the matters referred to in this
Section 3.1 shall
be conclusive. Any determination by a majority of the
members of the Committee
shall be deemed to have been
made by the whole Committee.
3.2. Each
member of the Committee shall
be indemnified and held
harmless by the Company against any cost or
expense (including counsel fees)
reasonably incurred by him or
her, or liability (including any sum paid in
settlement of a claim with the approval of the Company)
arising out of any act
or omission to act in
connection with the Plan unless arising out of such
member's own fraud or bad faith, to the extent permitted by
applicable law. Such
indemnification shall be in addition
to any rights of indemnification the
members may have as directors or otherwise under the By-laws of the
Company, any
agreement or vote of stockholders
or disinterested directors or otherwise.
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4. STOCK OPTIONS.
Stock Options may be granted
alone or in addition to other Awards. Stock
Options granted hereunder may be either Incentive Stock Options or
Non-Qualified
Stock Options. Any Stock Option granted hereunder shall
be in such form as the
Committee may from time to time approve. Stock
Options granted under the Plan
shall be subject to the following terms and
conditions and shall contain such
additional terms and conditions as
the Committee shall deem desirable:
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4.1. Stock Option
Exercise Price. Subject to adjustments in accordance
with Sections 7 and 8, the exercise price of each Stock Option
granted under the
Plan shall be set forth in the
applicable Option Agreement, but in no event
shall such price be less than the Fair Market Value of the Shares
subject to the
Stock Option on the date the Stock Option
is granted. The exercise price for
Incentive Stock Options shall not be less than 100% of the Fair
Market Value per
share of the Common Stock at the time the Stock Option is granted,
nor less than
110% of such Fair Market Value in the case of an Incentive
Stock Option granted
to an individual who, at the time the option is
granted, is a 10% Holder. The
Fair Market Value of the Shares
shall be determined in good faith by the
Committee, with the approval of the Board, in
accordance with the Plan and in
accordance with the requirements of
Code Sections 409A and 422.
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4.2. Maximum Stock
Option Grant. With respect to Stock Options
which
are intended to qualify as Incentive Stock
Options, the aggregate Fair Market
Value (determined as of the time the
Stock Option is granted) of the Common
Stock with respect to which Incentive Stock Options
granted to any participant
(whether under this Plan or under any other stock option plan
of the Company or
its Subsidiaries) become exercisable for the first time in any
calendar year may
not exceed $100,000. The number of
Shares for which any participant, in any
calendar year, may be granted
Stock Options under the Plan not treated as
Incentive Stock Options shall be
limited to not more than 100,000.
Notwithstanding the forgoing, nothing contained in the
Plan shall be construed
to prohibit the grant of Stock Options under the Plan
to an Eligible Person by
reason of his or her holding Stock Options to purchase shares of
Common Stock or
any other securities of the
Company granted otherwise than under the Plan.
<PAGE>
4.3. Exercise of Stock
Options.
4.3.1.
Subject to the provisions in this Section 4.3 and in Section
9,
Stock Options may be exercised
in whole or in part. The Committee, in its
absolute discretion, shall determine the time or times at which any
Stock Option
granted under the Plan may be
exercised; provided, however, that each Stock
Option:
(A) shall be exercisable by a participant
only if such participant
was an Eligible Person (and in the case of
an Incentive Stock Option, was an
employee or salaried officer of the Company or any of
its Subsidiaries) at all
times beginning from the date of the grant of the
Incentive Stock Option to a
date not more than three months
(except as otherwise provided in Section 8)
before exercise of such Stock
Option;
(B) may not be exercised prior
to the expiration of at least one
year from the date of grant except in the case of the death or
disability of the
participant or otherwise with the
approval of the Committee or the Board of
Directors or, if the option agreement evidencing such Stock
Option so provides,
upon a "Change of Control" as
defined below.
(C)
shall expire no later than the
expiration of ten years (five
years in the case of an Incentive Stock Option granted to a 10%
Holder) from the
date of its grant; and
(D) shall not be
exercisable by a participant until
such
participant executes and delivers a written representation to the
effect that he
or she is acquiring the Common Stock for investment and
not with the intent of
distributing the same (unless such
Common Stock shall be appropriately
registered under the Securities Act
of 1933, as amended, or exempt from
registration thereunder).
A "Change of
Control" as used in this Section 4.3 shall mean any of
the
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following:
(i) any consolidation, merger or sale
of the Company in which the
Company is not the continuing or
surviving corporation or pursuant to which
shares of the Company's stock would be converted into cash,
securities or other
property; or
(ii) the stockholders of the Company
approve an agreement for the
sale, lease, exchange or other
transfer (in one transaction or a series of
related transactions) of all or substantially all of the
assets of the Company;
or
(iii) any approval by the
stockholders of the Company of any plan
or proposal for the liquidation
or dissolution of the Company; or
(iv) the acquisition of
beneficial ownership (within the meaning
of Rule 13d-3 under the
Exchange Act of an aggregate of 25% or more of the
voting power of the Company's outstanding voting securities by any
single person
or group (as such term is used in Rule
13d-5 under the Exchange Act), unless
such acquisition was approved by
the Board of Directors prior to
the
consummation thereof); or
(v) the appointment of
a trustee in a Chapter 11 bankruptcy
proceeding involving the Company or the conversion of
such a proceeding into a
case under Chapter 7.
As a condition of the grant of a Stock Option,
the Committee, in its absolute
discretion, may require an Eligible Person to enter into an
employment agreement
with the Company or any Subsidiary or affiliate of the Company
covering a period
of at least one year following
the grant, and if the grant specifically
requires, compliance with all terms
and conditions of any such employment
agreement shall be a condition to the exercise by the
participant of his or her
Stock Option (provided, however, that
such compliance may be waived by the
Committee in its absolute discretion).
4.3.2. Stock
Options granted under the Plan shall be exercised by the
delivery by the holder thereof to the Company at its
principal offices (to the
attention of the Secretary) of
written notice of the number of Shares with
respect to which the Stock Option is being exercised,
accompanied by payment in
full of the Stock Option exercise price of such Shares. The
exercise price shall
be payable in cash by a certified or bank check or such other
instrument as the
Company may accept; provided,
however, that in lieu of payment in cash, a
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participant may, with the approval
of the Company's Board and on
the
recommendation of the Committee, pay
for all or part of the Shares to be
purchased upon exercise of his
or her Stock Option by:
(A) tendering to the Company shares
of the Company's Common Stock
owned by such participant and having a Fair Market Value (as
determined pursuant
to Section 4.1) equal to the exercise price (or the balance
thereof) applicable
to such participant's Stock Option;
or
(B) make available any
exercise and sell (or cashless exercise)
program which the Company has
established with a broker-dealer.
4.3.3. The
holder of an option shall have none
of the rights of a
stockholder with respect to the Shares covered by his
or her option until such
Shares shall be issued to him or her upon
the exercise of his or her option.
4.4.
Termination of Service. In the
event that the service of an
individual to whom a Stock
Option has been granted under the Plan
shall
terminate (otherwise than by reason of his or her death or
total disability, or
for cause), such option may be
exercised (if and to the extent that such
individual was entitled to do
so at the date of termination of his or her
service) at any time within three months after such
termination and in no event
after the expiration of the term of the option. No option
gr
