Exhibit 10.1
PORTA SYSTEMS
CORP.
2009 Long-Term Incentive
Plan
The purpose of
the Porta Systems Corp. 2009 Long-Term Incentive Plan (the
“Plan”) is to enable Porta Systems Corp. (the
“Company”) to attract, retain and reward key employees
of the Company and its Subsidiaries and Affiliates, and others who
provide services to the Company and its Subsidiaries and
Affiliates, and strengthen the mutuality of interests between such
key employees and such other persons and the Company’s
stockholders, by offering such key employees and such other persons
incentives and/or other equity interests or equity-based incentives
in the Company, as well as performance-based incentives payable in
cash.
For purposes of
the Plan, the following terms shall be defined as set forth
below:
(a) “Affiliate”
means any corporation, partnership, limited liability company,
joint venture or other entity, other than the Company and its
Subsidiaries, that is designated by the Board as a participating
employer under the Plan, provided that the Company directly or
indirectly owns at least 20% of the combined voting power of all
classes of stock of such entity or at least 20% of the ownership
interests in such entity.
(b) “Board”
means the Board of Directors of the Company.
(c) “Book
Value” means, as of any given date, on a per share basis (i)
the stockholders’ equity in the Company as of the last day of
the immediately preceding fiscal year as reflected in the
Company’s consolidated balance sheet, subject to such
adjustments as the Committee shall specify at or after grant,
divided by (ii) the number of then outstanding shares of Stock as
of such year-end date, as adjusted by the Committee for subsequent
events.
(d) “Cause”
means a felony conviction of a participant, or the failure of a
participant to contest prosecution for a felony, or a
participant’s willful misconduct or dishonesty, or breach of
trust or other action by which the participant obtains personal
gain at the expense of or to the detriment of the Company or
conduct which results in civil or criminal liability or penalties,
including penalties pursuant to a consent decree, order or
agreement, on the part of the Company; provided, however, that if
the participant has an Employment Agreement with the Company, a
Subsidiary or Affiliate which includes a definition of
“cause,” then “cause” shall have the
meaning as defined in such Employment Agreement.
(e) “Code”
means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.
(f) “Commission”
means the Securities and Exchange Commission or any successor
thereto.
(g) “Committee”
means the Committee referred to in Section 2 of the
Plan. If at any time no Committee shall be in office,
then the functions of the Committee specified in the Plan shall be
exercised by the Board.
(h) “Company”
means Porta Systems Corp., a Delaware corporation, or any successor
corporation.
(i) “Deferred
Stock” means an award made pursuant to Section 8 of the Plan
of the right to receive Stock at the end of a specified deferral
period.
(j) “Disability”
means disability as determined under procedures established by the
Committee for purposes of the Plan; provided that if the
participant has an Employment Agreement with the Company, a
Subsidiary or Affiliate which includes a definition of
“disability,” then “disability” shall have
the meaning as defined in such Employment Agreement.
(k) “Early
Retirement” means retirement, with the express consent for
purposes of the Plan of the Company at or before the time of such
retirement, from active employment with the Company and any
Subsidiary or Affiliate pursuant to the early retirement provisions
of the applicable pension plan of such entity.
(l) “Employment
Agreement” shall mean an employment or consulting agreement
or other agreement pursuant to which the participant performs
services for the Company or a Subsidiary or Affiliate.
(m) “Exchange
Act” means the Securities Exchange Act of 1934, as amended,
from time to time, and any successor thereto.
(n) “Fair
Market Value” means, as of any given date, the market price
of the Stock as determined by or in accordance with the policies
established by the Committee in good faith; provided, that, in the
case of an Incentive Stock Option, the Fair Market Value shall be
determined in accordance with the Code and the Treasury regulations
under the Code.
(o) “Incentive
Stock Option” means any Stock Option intended to be and
designated as an “Incentive Stock Option” within the
meaning of Section 422 of the Code.
(p) “Independent
Director” shall mean a director who is both (i) a
“non-employee director” as set forth in Rule 16b-3 of
the Commission pursuant to the Exchange Act or any successor
definition adopted by the Commission as long as said rule (or
successor rule) shall have such a definition, and (ii) an
independent director as determined by the rules or regulations of
the principal stock exchange or market on which the Stock is traded
or, if the Stock is not listed or traded on such exchange, as
defined under the rules of the Nasdaq Stock Market. Any
director who is an Affiliate of the beneficial owner of more than
40% of the outstanding Stock shall not be deemed to be an
Independent Director.
(q) “Non-Qualified
Stock Option” means any Stock Option that is not an Incentive
Stock Option.
(r) “Normal
Retirement” means retirement from active employment with the
Company and any Subsidiary or Affiliate on or after age 65 or such
other age as is designated by the Company, Subsidiary or Affiliate
as the normal retirement age.
(s) “Other
Stock-Based Award” means an award under Section 10 of the
Plan that is valued in whole or in part by reference to, or is
otherwise based on, Stock.
(t) “Plan”
means this Porta Systems Corp. 2009 Long-Term Incentive Plan, as
hereinafter amended from time to time.
(u) “Restricted
Stock” means an award of shares of Stock that is subject to
restrictions under Section 7 of the Plan.
(v) “Retirement”
means Normal Retirement or Early Retirement.
(w) “Stock”
means the common stock, par value $.01 per share, of the Company or
any class of common stock into which such common stock may
hereafter be converted or for which such common stock may be
exchanged pursuant to the Company’s certificate of
incorporation or as part of a recapitalization, reorganization or
similar transaction.
(x) “Stock
Appreciation Right” means the right pursuant to an award
granted under Section 6 of the Plan to surrender to the Company all
(or a portion) of a Stock Option in exchange for an amount equal to
the difference between (i) the Fair Market Value, as of the date
such award or Stock Option (or such portion thereof) is
surrendered, of the shares of Stock covered by such Stock Option
(or such portion thereof), subject, where applicable, to the
pricing provisions in Section 6(b)(ii) of the Plan and (ii) the
aggregate exercise price of such Stock Option or base price with
respect to such award (or the portion thereof which is
surrendered).
(y) “Stock
Option” or “Option” means any option to purchase
shares of Stock (including Restricted Stock and Deferred Stock, if
the Committee so determines) granted pursuant to Section 5 of the
Plan.
(z) “Stock
Purchase Right” means the right to purchase Stock pursuant to
Section 9 of the Plan.
(aa) “Subsidiary”
means any corporation or other business association, including a
partnership (other than the Company) in an unbroken chain of
corporations or other business associations beginning with the
Company if each of the corporations or other business associations
(other than the last corporation in the unbroken chain) owns equity
interests (including stock or partnership interests) possessing 50%
or more of the total combined voting power of all classes of equity
in one of the other corporations or other business associations in
the chain. The Board may elect to treat as a Subsidiary
an entity in which the Company possesses less than 50% of the total
combined voting power of all classes of equity if, under generally
accepted accounting principles, the Company may include the
financial statements of such entity as part of the Company’s
consolidated financial statements (other than as a minority
interest or other single line item).
In addition,
the terms “Change in Control,” “Potential Change
in Control” and “Change in Control Price” shall
have meanings set forth, respectively, in Sections 11(b), (c) and
(d) of the Plan.
(a) The
Plan shall be administered by a Committee of not less than two
directors all of whom shall be Independent Directors, who shall be
appointed by the Board and who shall serve at the pleasure of the
Board. If and to the extent that no Committee exists
which has the authority to administer the Plan, the functions of
the Committee specified in the Plan shall be exercised by the
Board.
(b) The
Committee shall have full authority to grant, pursuant to the terms
of the Plan, to officers and other persons eligible under Section 4
of the Plan, provided that Independent Directors shall not be
eligible for options or other benefits pursuant to the Plan other
than as provided in Sections 4(b) and 4(c) of the
Plan: Stock Options, Stock Appreciation Rights,
Restricted Stock, Deferred Stock, Stock Purchase Rights and/or
Other Stock-Based Awards. In particular, the Committee
shall have the authority:
(i) to select the officers and other
eligible persons to whom Stock Options, Stock Appreciation Rights,
Restricted Stock, Deferred Stock, Stock Purchase Rights and/or
Other Stock-Based Awards may from time to time be granted pursuant
to the Plan;
(ii) to determine whether and to what
extent Incentive Stock Options, Non-Qualified Stock Options, Stock
Appreciation Rights, Restricted Stock, Deferred Stock, Stock
Purchase Rights and/or Other Stock-Based Awards, or any combination
thereof, are to be granted pursuant to the Plan, to one or more
eligible persons;
(iii) to determine the number of
shares to be covered by each such award granted pursuant to the
Plan;
(iv) to determine the terms and
conditions, not inconsistent with the terms of the Plan, of any
award granted under the Plan, including, but not limited to, the
share price or exercise price and any restriction or limitation, or
any vesting, acceleration or waiver of forfeiture restrictions
regarding any Stock Option or other award and/or the shares of
Stock relating thereto, based in each case on such factors as the
Committee shall, in its sole discretion, determine;
(v) to determine whether, to what
extent and under what circumstances a Stock Option may be settled
in cash, Restricted Stock and/or Deferred Stock under Section
5(b)(x) or (xi) of the Plan, as applicable, instead of
Stock;
(vi) to determine whether, to what
extent and under what circumstances Option grants and/or other
awards under the Plan and/or other cash awards made by the Company
are to be made, and operate, on a tandem basis with other awards
under the Plan and/or cash awards made outside of the Plan in a
manner whereby the exercise of one award precludes, in whole or in
part, the exercise of another award, or on an additive
basis;
(vii) to determine whether, to what
extent and under what circumstances Stock and other amounts payable
with respect to an award under this Plan shall be deferred either
automatically or at the election of the participant, including any
provision for any determination or method of determination of the
amount (if any) deemed be earned on any deferred amount
during any deferral period;
(viii) to determine the terms and
restrictions applicable to Stock Purchase Rights and the Stock
purchased by exercising such Rights; and
(ix) to determine an aggregate number
of awards and the type of awards to be granted to eligible persons
employed or engaged by the Company and/or any specific Subsidiary,
Affiliate or division and grant to management the authority to
grant such awards, provided that no awards to any person subject to
the reporting and short-swing profit provisions of Section 16 of
the Exchange Act may be granted awards except by the
Committee.
(c) In
the event that any officers or other participants have Employment
Agreements with the Company which provide for the grant of options
to such participants, unless the Committee or the Board otherwise
determines, the options shall be treated for all purposes as if
they were granted pursuant to this Plan as long as there is a
sufficient number of shares available for grant pursuant to this
Plan.
(d) The
Committee shall have the authority to adopt, alter and repeal such
rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable; to interpret the terms and
provisions of the Plan and any award issued under the Plan and any
agreements relating thereto, and otherwise to supervise the
administration of the Plan.
(e) All
decisions made by the Committee pursuant to the provisions of the
Plan shall be made in the Committee’s sole discretion and
shall be final and binding on all persons, including the Company
and Plan participants.
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3.
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Stock
Subject to Plan.
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(a) The
total number of shares of Stock reserved and available for
distribution under the Plan shall be one million (1,000,000) shares
of Stock. In the event that awards are granted in tandem
such that the exercise of one award precludes the exercise of
another award then, for the purpose of determining the number of
shares of Stock as to which awards shall have been granted, the
maximum number of shares of Stock issuable pursuant to such tandem
awards shall be used.
(b) Subject
to Section 6(b)(v) of the Plan, if any shares of Stock that have
been optioned cease to be subject to a Stock Option, or if any such
shares of Stock that are subject to any Restricted Stock or
Deferred Stock award, Stock Purchase Right or Other Stock-Based
Award granted under the Plan are forfeited or any such award
otherwise terminates without a payment being made to the
participant in the form of Stock, such shares shall again be
available for distribution in connection with future awards under
the Plan.
(c) In
the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, stock distribution,
reverse split, combination of shares or other change in corporate
structure affecting the Stock, such substitution or adjustment
shall be made in the aggregate number of shares reserved for
issuance under the Plan, in the base number of shares, in the
number and option price of shares subject to outstanding Options
granted under the Plan, in the number and purchase price of shares
subject to outstanding Stock Purchase Rights under the Plan, and in
the number of shares subject to other outstanding awards granted
under the Plan as may be determined to be appropriate by the
Committee, in its sole discretion, provided that the number of
shares subject to any award shall always be a whole number, and
provided that the treatment of such options and rights shall be
consistent with the nature of the event. Such adjusted
option price shall also be used to determine the amount payable by
the Company upon the exercise of any Stock Appreciation Right
associated with any Stock Option.
(a) Officers
and other key employees and directors of, and consultants and
independent contractors to, the Company and its Subsidiaries and
Affiliates (but excluding, except as to Sections 4(b) and 4(c) of
the Plan, Independent Directors) who are responsible for or
contribute to the management, growth and/or profitability of the
business of the Company and/or its Subsidiaries and Affiliates are
eligible to be granted awards under the Plan.
(b) On
(i) the date this Plan is first approved by the board of directors,
and (ii) the first trading day in of the May of each year,
commencing in 2010 (provided, however, that if the Corporation
changes its fiscal year from the calendar year, the date shall be
the first trading day of the fifth month following the completion
of the fiscal year, commencing with the first such fiscal year that
ends after December 31, 2009), each person who is a Independent
Director on such date shall automatically be granted a
Non-Qualified Stock Option to purchase five thousand (5,000) shares
of Stock (or such lesser number of shares of Stock as remain
available for grant at such date under the Plan, divided by the
number of Independent Directors at such date). Such
Stock Options shall be exercisable at a price per share equal to
the greater of (i) the average of the closing price of the Common
Stock (or, if the closing price is not reported on any such day,
the average of the high bid and low asked prices on such date) for
the last ten (10) trading days in April of such year or (ii) the
par value of one share of stock,. The Non-Qualified
Stock Options granted pursuant to this Section 4(b) and pursuant to
Section 4(c) of the Plan shall become exercisable six months from
the date of grant, and shall expire on the earlier of (i) ten years
from the date of grant, or (ii) twelve (12) months from the date
such Independent Director ceases to be a director if such
Independent Director ceases to be a director other than as a result
of his death or Disability. The provisions of this
Section 4(b) and said Section 4(c) may not be amended
more than one (1) time in any six (6) month period other than to
comply with changes in the Code or the Employee Retirement Income
Security Act (“ERISA”) or the rules
thereunder.
(c) At
the time an Independent Director is first elected to the Board,
such person shall automatically be granted a Non-Qualified Stock
Option to purchase ten thousand (10,000) shares of Stock (or such
lesser number of shares of Stock as remain available for grant at
such date under the Plan, divided by the number of Independent
Directors who are elected as directors at such date). Such Stock
Options shall be exercisable at a price per share equal to the
average of the closing price of Common Stock for the preceding last
ten (10) trading days (if the closing price is not reported on any
such day, the average of the high bid and low asked prices on any
such date).
(a)
Administration . Stock Options may be granted
alone, in addition to or in tandem with other awards granted under
the Plan and/or cash awards made outside of the
Plan. Any Stock Option granted under the Plan shall be
in such form as the Committee may from time to time
approve. Stock Options granted under the Plan may be of
two types: (i) Incentive Stock Options and (ii)
Non-Qualified Stock Options. The Committee shall have
the authority to grant to any optionee Incentive Stock Options,
Non-Qualified Stock Options, or both types of Stock Options (in
each case with or without Stock Appreciation Rights).
(b)
Option Grants . Options granted under the Plan
shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with
the terms of the Plan, as the Committee, in its sole discretion,
shall deem desirable:
(i) Option Price
. The option price per share of Stock purchasable under
a Stock Option shall be determined by the Committee at the time of
grant.
(ii) Option Term
. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than ten
(10) years after the date the Option is granted.
(iii) Exercisability
. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be
determined by the Committee at or after grant. If the
Committee provides, in its sole discretion, that any Stock Option
is exercisable only in installments, the Committee may waive such
installment exercise provisions at any time at or after grant in
whole or in part, based on such factors as the Committee shall, in
its sole discretion, determine.
(iv) Method of Exercise
.
(A) Subject
to whatever installment exercise provisions apply under Section
5(b)(iii) of the Plan, Stock Options may be exercised in whole or
in part at any time during the option period, by giving written
notice of exercise to the Company specifying the number of shares
to be purchased. Such notice shall be accompanied by
payment in full of the purchase price, either by check, note or
such other instrument, securities or property as the Committee may
accept. As and to the extent determined by the
Committee, in its sole discretion, at or after grant, payments in
full or in part may also be made in the form of Stock already owned
by the optionee or, in the case of the exercise of a Non-Qualified
Stock Option, Restricted Stock or Deferred Stock subject to an
award hereunder (based, in each case, on the Fair Market Value of
the Stock on the date the option is exercised, as determined by the
Committee).
(B) If
payment of the option exercise price of a Non-Qualified Stock
Option is made in whole or in part in the form of Restricted Stock
or Deferred Stock, the Stock issuable upon such exercise (and any
replacement shares relating thereto) shall remain (or be)
restricted or deferred, as the case may be, in accordance with the
original terms of the Restricted Stock award or Deferred Stock
award in question, and any additional Stock received upon the
exercise shall be subject to the same forfeiture restrictions or
deferral limitations, unless otherwise determined by the Committee,
in its sole discretion, at or after grant.
(C) No
shares of Stock shall be issued until full payment therefor has
been received by the Company. In the event of any
exercise by note or other instrument, the shares of Stock shall not
be issued until such note or other instrument shall have been paid
in full, and the exercising optionee shall have no rights as a
stockholder until such payment is made.
(D) Subject
to Section 5(b)(iv)(C) of the Plan, an optionee shall generally
have the rights to dividends or other rights of a stockholder with
respect to shares subject to the Option when the optionee has given
written notice of exercise, has paid in full for such shares, and,
if requested, has given the representation described in Section
14(a) of the Plan.
(v) Non-Transferability of
Options . No Stock Option shall be transferable by
the optionee otherwise than by will or by the laws of descent and
distribution, and all Stock Options shall be exercisable, during
the optionee’s lifetime, only by the optionee.
(vi) Termination by Death
. Subject to Section 5(b)(ix) of the Plan with respect
to Incentive Stock Options, if an optionee’s employment by
the Company and any Subsidiary or Affiliate terminates by reason of
death, any Stock Option held by such optionee may thereafter be
exercised, to the extent such option was exercisable at the time of
death or on such accelerated basis as the Committee may determine
at or after grant (or as may be determined in accordance with
procedures established by the Committee), by the legal
representative of the estate or by the legatee of the optionee
under the will of the optionee, for a period of one year (or such
other period as the Committee may specify at grant) from the date
of such death or until the expiration of the stated term of such
Stock Option, whichever period is the shorter.
(vii) Termination by Reason of
Disability or Retirement . Subject to Section
5(b)(ix) of the Plan with respect to Incentive Stock Options, if an
optionee’s employment by the Company and any Subsidiary or
Affiliate terminates by reason of a Disability or Normal or Early
Retirement, any Stock Option held by such optionee may thereafter
be exercised by the optionee, to the extent it was exercisable at
the time of termination or on such accelerated basis as the
Committee may determine at or after grant (or as may be determined
in accordance with procedures established by the Committee), for a
period of one year (or such other period as the Committee may
specify at grant) from the date of such termination of employment
or until the expiration of the stated term of such Stock Option,
whichever period is the shorter; provided, however, that, if the
optionee dies within such one-year period (or such other period as
the Committee shall specify a
