Exhibit 10.8

NORTH PITTSBURGH SYSTEMS, INC.
2007 EXECUTIVE OFFICERS BONUS PLAN

Purpose of Plan

1.
The purpose of this Bonus Plan (the “Plan” or “this Bonus Plan”) is to further
the long-term growth and earnings of North Pittsburgh Systems, Inc. (“NPSI” or
“Company”) and its subsidiaries by offering bonus incentives to supplement the
base salaries of those officers of NPSI who will be largely responsible for such
growth. The bonuses are for achievements that are above and beyond what would
normally be expected. NPSI considers its executives to be well compensated and
with their base salaries comes an expectation of superior performance. The
bonuses are for even better performance.

Bonus Determination Period

2.
This Bonus Plan shall be in effect for Calendar Year 2007 (that is, from January
1, 2007 through December 31, 2007), except that, if a Change of Control (as
defined in Paragraph 10 below) occurs before December 31, 2007, this Bonus Plan
shall be in effect for only such shorter period that begins with January 1, 2007
and ends with the date on which the Change of Control occurs. The period during
which this Bonus Plan is in effect is hereafter referred to as the “Bonus
Determination Period.”  The establishment of any bonus plans for subsequent
periods shall be by action of NPSI’s Board of Directors upon the recommendation
of its Compensation Committee.

Eligibility and Participation

3.
Each person who is a Vice President or President of NPSI (each such office is
hereafter referred to as an “Eligible Office”) at the end of the Bonus
Determination Period or who held an Eligible Office at the time of his/her
death, retirement or termination during the Bonus Determination Period will
participate in the Plan for the period of time during the Bonus Determination
Period that such person held any Eligible Office, provided that, in accordance
with Paragraph 9 below, the retired or terminated person does not seek or enter
employment with a competing business. The persons who pursuant to this Paragraph
3 participate in the Plan are hereafter referred to collectively as the
“Participants” and individually as a “Participant.”

Total Potential Maximum Aggregate Bonus Amount

4(a).
If the Bonus Determination Period is a full calendar year, the total maximum
amount potentially payable to all Participants in the aggregate for the Bonus
Determination Period (the “Total Potential Maximum Aggregate Bonus Amount”) will
be determined at the end of the Bonus Determination Period by multiplying the
aggregate total base salaries paid throughout Year 2007 to all Participants by
20%.

 

4(b).
If a Change of Control (as defined in Paragraph 10 below) occurs before December
31, 2007, the aggregate bonus payable to all Participants shall be the total
bonus amount for each Eligible Executive Officer. For purposes of the
determination of the Total Potential Maximum Aggregate Bonus Amount when a
Change of Control has occurred, it shall be assumed that the base salaries of
all Participants in effect immediately prior to the Change of Control would have
continued for the entire year.

 
 

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Bonus Criteria

5.
The portion of the Total Potential Maximum Aggregate Bonus Amount which will be
awarded to Participants for 2007 will be determined by the Board of Directors
upon the recommendation of the Compensation Committee. In determining the
magnitude of the actual aggregate bonus amount, the Board of Directors and
Compensation Committee shall, among other things, consider, within the context
of the Company’s Business Plan, for selected services, new service growth
measured on a net adds basis.  Successful completion during 2007 of the North
Pittsburgh Telephone Company’s Fiber-to-the-Node Project and associated multi
megabit broadband equipment and products, and the successful completion of Phase
1 of the migration of the North Pittsburgh Telephone Company IT System to a new
Data Center provider shall also be considered.

Payment of Bonuses Generally

6.
The payment of any bonuses is contingent upon the NPSI Shareholders receiving
dividends during 2007 of not less than $.80 per share.  This contingency will
encourage the Officers to continue managing NPSI in a manner that will produce
adequate free cash flow to enable the Board to declare the ongoing payment of
dividends at least equal to the prior year.

Payment of Individual Bonuses

7.
The individual bonuses payable under the Plan shall be distributed in equal
amounts among all Participants, except that, unless the Board of Directors upon
the recommendation of its Compensation Committee shall determine otherwise, in
the event that a Participant held an Eligible Office for less than the full
Bonus Determination Period, (x) that Participant’s share of the bonus payable
under the Plan will be a fraction of a full share, the numerator of which is the
number of days the Participant held any Eligible Office during the Bonus
Determination Period, and the denominator of which is the total number of days
in the Bonus Determination Period, and (y) the value of a full share shall equal
the bonus payable under the plan divided by the sum of (i) the number of
Participants who held an Eligible Office throughout the full Bonus Determination
Period and (ii) all of the fractions of full shares determined pursuant to
clause (x) in this Paragraph 7.

All bonuses for a Bonus Determination Period (subject to withholding of all
applicable income and employment taxes) will be determined and paid as soon as
practicable following the Bonus Determination Period and, in the event of a
Change of Control, no later than 30 days following the occurrence of the Change
of Control.

Death of a Participant

8.
If a Participant dies during the Bonus Determination Period or thereafter before
the bonus is paid, the payment of the bonus will be made to the Participant’s
beneficiary (as designated in a writing signed and dated by the Participant and
delivered to NPSI), or to the Participant’s estate if no such beneficiary has
been designated.

 
 

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Retirement/Termination of a Participant

9.
If a person retires from an Eligible Office or is terminated therefrom during
the Bonus Determination Period and does not seek and/or enter employment with
any business that competes with NPSI or any of NPSI’s subsidiaries, the retiring
or terminated person shall be considered a Participant for the portion of the
Bonus Determination Period prior to retirement or termination and his/her bonus
shall be determined in accordance with Paragraphs 3, 5 and 7 of this Bonus Plan.
However, under no circumstances shall a retiring or terminated holder of an
Eligible Office, who seeks and/or enters employment with a business that
competes with NPSI or any of NPSI’s subsidiaries, be considered a Participant
for any portion of the Bonus Determination Period, either prior to or after
retirement or termination.

 
Change of Control
 
10.
A Change of Control shall be deemed to have occurred in the event of: (i) the
acquisition, directly or indirectly, by any person or entity (other than NPSI),
or persons or entities acting in concert, whether by purchase, merger,
consolidation or otherwise, of voting power over that number of shares of the
capital stock of NPSI or North Pittsburgh Telephone Company (“NPTC”) which, when
combined with the existing voting power of such persons or entities, aggregates
voting power over that number of shares of the capital stock of NPSI or NPTC as
has the right to cast fifty percent (50%) or more of the votes which all
shareholders of NPSI or NPTC would be entitled to cast in the election of
directors of NPSI or NPTC, respectively, under normal circumstances (that is,
for example, without giving effect to any such voting rights of preferred shares
existing by reason of a default in the payment of preferred dividends or to any
elimination of voting rights of “control shares” (as defined in 15 Pa.C.S. §
2562) pursuant to Subchapter G of Chapter 25 of the Pennsylvania Business
Corporation Law of 1988, as amended, or any successor or comparable statute) or
(ii) 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 NPSI or
NPTC to a transferee other than NPSI or NPTC, an entity of which a controlling
interest is owned by NPSI or NPTC, or an entity which, prior to the Change of
Control, owns, directly or indirectly, a controlling interest in NPSI or NPTC.

Administration of the Plan

11.
The Plan shall be administered by the Compensation Committee of the Board of
Directors of NPSI. All decisions and determinations by such Committee shall be
final and binding upon all parties. Such Committee shall have the authority to
interpret the Plan, to establish and revise rules and regulations relating to
the Plan, and to make any other determinations that it believes necessary or
advisable for administration of the Plan.

Non-Exclusivity

12.
Nothing contained in the Plan shall be deemed to preclude NPSI from establishing
other compensation or bonus plans, or limit other plans which may be in effect
from time to time, or limit the authority of NPSI to exercise its corporate
rights and powers with respect to compensation and incentives to the fullest
extent permitted by law.

 
 
 

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NPSI EXECUTIVE OFFICER BONUS PLAN

Criteria Components
 
 
 
Section I - Criteria Summary
 
 
A.      Complete installation of  the NPTC Fiber-to-the-Node Project within all
NPTC Exchanges.
   See Section II.A.

B.      Increase Multi Meg Broadband Products by specified levels.  See Section
II.B.

C.      Complete Phase 1 of the IT System Migration to a new Data Center
Provider.  See II.C.

 
 

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2007 NPSI EXECUTIVE OFFICER BONUS PLAN

Criteria Components
 
 
 
Section II - Bonus Computation

A.
Criterion 1– 40% of the Maximum Total Benefit Amount as defined in Paragraph
4(a) of the recommended 2007 Executive Bonus Plan Criterion 1 shall be based
upon the complete installation of the NPTC Fiber-to-the-Node Project within all
NPTC Exchanges.

Complete Installation of NPTC
Fiber-to-the-Node Project
 
 
Bonus
 
=
$138,028

B.
Criterion 2– 40% of the Maximum Total Benefit Amount as defined in Paragraph
4(a) of the recommended 2007 Executive Bonus Plan.  Criterion 2 shall be based
upon Multi Meg Broadband Products as follows:

Projected Increase 2007
Multi Meg Broadband
Products
 
 
Bonus
900 – 1,100
=
  $34,507
1,101 – 1,301
=
  $69,014
1,302 – 1,502
=
$103,521
1,503
=
$138,028

The above bonus amounts are not additive.  A bonus under this criterion will
only be awarded for the highest level attained.

C.
Criterion 3 – 20% of the Maximum Total Benefit Amount as defined in Paragraph
4(a) of the recommended 2007 Executive Bonus Plan.  Criterion 3 shall be based
upon the completion of Phase 1 of the migration of the North Pittsburgh
Telephone Company IT System to a new provider.  Phase 1 will consist of
evaluating and choosing a new data center provider, completion of a short-term
contract with the provider, finalizing new contracts with all software providers
and development of a schedule to complete the total project.

Complete Phase 1 of IT System Migration
 
 
Bonus
 
=
$69,014

 
 

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2007 NPSI EXECUTIVE OFFICER BONUS PLAN

Criteria Components

SALARY FOR SEVEN (7) EXECUTIVE OFFICERS YR 2007 TOTAL    $1,725,348
EXECUTIVE BONUS POOL = 20%       $345,070 (TOTAL)
DIVIDED BY SEVEN (7) OFFICERS =          $49,296
                           
CRITERIA
POOL
 
CRITERIA
   
PER
NO
ALLOCATION
AMOUNT
 DESCRIPTION
ALLOCATION SPLIT
 AMOUNT
 OFFICER
             
1
40%
$138,028
FIBER-TO-THE-NODE
COMPLETION
100% OF 40%
$138,028
$19,718
                                         
2
             40%
 
 
$138,028
 PROJECTED INCREASE 2007
MULTI MEG BROADBAND
PRODUCTS
           
900-1100
1101-1301
25% OF 40%
50% of 40%
 $34,507
$69,014
 $4,930
$9,859
     
1302-1502
75% OF 40%
$103,521
 $14,789
     
  1503
       100% OF 40%
 $138,028
            $19,718
                           
3
20%
$69,014
COMPLETION OF PHASE 1
IT SYSTEM MIGRATION
             
100% OF 20%
$69,014
$9,859
                                                                     

 

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