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ASTRONICS CORPORATION
2001
STOCK OPTION PLAN
SECTION 1.
PURPOSE
The purpose
of the 2001 Stock Option Plan (the "Plan") of ASTRONICS
CORPORATION, a New York corporation (the "Company"), is to enable
the Company to attract, retain, and motivate key employees
responsible for the success and growth of the Company by offering
selected officers and other key employees of the Company and its
Subsidiaries an opportunity to purchase Shares of Company Stock.
The Plan provides for the grant of Options to purchase
Shares. Options granted under the Plan may include
Non-Qualified Stock Options ("NQSOs") as well as options that are
intended to qualify as Incentive Stock Options ("ISOs") under
Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
Certain
capitalized terms used in this Plan are defined in Section 2.
SECTION 2.
DEFINITIONS
a.
"Board"
means the Board of Directors of the Company.
b.
"Committee" means the Stock Option Committee of the Board,
consisting of at least 2 Directors who are not eligible to
participate in the Plan and who are appointed to the Committee by
the Board.
c.
"Director"
means a member of the Board.
d.
"Exercise
Price" means the amount for which one Share may be purchased when
an Option is exercised, as specified by the Committee in the
applicable Stock Option Agreement.
e.
"Option"
means an ISO or NQSO granted under the Plan that entitles the
holder to purchase Shares.
f.
"Optionee"
means a person who holds an Option.
g.
"Share"
means a share of Stock issuable when an Option is exercised, as
adjusted in accordance with Section 8 (if applicable).
h.
"Stock"
means the Common Stock of the Company.
i.
"Stock
Option Agreement" means the agreement or other instrument between
the Company and an Optionee that evidences and sets forth the
terms, conditions and restrictions pertaining to the
Optionee’s Option.
j.
"Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each
of the corporations other than the last corporation in the unbroken
chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other
corporations in the chain. A corporation that attains the
status of a Subsidiary on a date after the adoption of the Plan
will be considered a Subsidiary commencing as of the date.
SECTION 3.
ADMINISTRATION
a.
Stock
Option Committee . The Plan will be administered by the
Committee. Subject to and not inconsistent with the
provisions of the Plan, the Committee has the full authority and
responsibility to administer the Plan and to exercise all the
powers and authorities either specifically granted to it under the
Plan or necessary or advisable in the administration of the Plan,
including the power to:
i.
Determine and designate those employees selected to receive
Options, the time at which each Option will be granted, and the
number of Shares subject to each Option;
ii.
Determine the time and manner of exercise, the duration of the
exercise periods, and the exercise price of the Options
granted;
iii.
Prescribe, amend, or rescind any rules and regulations necessary or
appropriate for the administration of the Plan;
iv.
Correct any defect, supply any deficiency, and reconcile any
inconsistency in the Plan or in any related Option or agreement;
and
v.
Make other determinations and take such other action in connection
with the administration of the Plan as it deems necessary or
advisable.
b.
Delegation of Duties . The Committee may direct
appropriate officers of the Company to implement its rules,
regulations and determinations and to execute and deliver on behalf
of the Company such documents, forms, agreements and other
instruments as are deemed by the Committee to be necessary for the
administration and implementation of the Plan.
c.
Interpretation of Plan . The Committee has the power
to interpret and construe the Plan and all related Options and
agreements. All decisions, interpretations and determinations
of the Committee with respect to the Plan will be final and binding
on all Optionees and all persons deriving their rights from
Optionees.
d.
Indemnification . Each member of the Board and the
Committee is indemnified and held harmless by the Company against
any cost or expense (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 to the extent permitted
by applicable law. This indemnification is in addition to any
rights of indemnification a member may have as a Director
or
otherwise under the by-laws of the Company or a Subsidiary, any
agreement, any vote of shareholders or disinterested directors, or
otherwise.
SECTION 4.
ELIGIBILITY
a.
General
Rule . Options may be granted to full-time salaried
officers and key employees of the Company or any Subsidiary.
Directors who are not employees of the Company are eligible
to receive NQSOs but not ISOs.
b.
Ten-Percent Stockholders . An individual who owns more
than 10% of the total combined voting power of all classes of
outstanding stock of the Company or any of its Subsidiaries (as
determined in accordance with Section 424(d) of the Code) will
not be eligible for the grant of an ISO unless (i) the Exercise
Price is at least 110% of the Fair Market Value of a Share on the
date of grant and (ii) the Option by its terms is not exercisable
after the expiration of 5 years from the date of grant.
SECTION 5.
STOCK
SUBJECT TO PLAN
a.
Basic
Limitation . The aggregate number of Shares that may be
issued under the Plan on exercise of Options may not exceed 800,000
Shares, subject to adjustment as provided in Section 8.
Shares offered under the Plan may be authorized but unissued
Shares or Shares reacquired by the Company ("Treasury Shares").
The number of Shares that are subject to Options outstanding
at any time under the Plan must not exceed the number of Shares
that then remain available for issuance under the Plan. The
Company, during the term of the Plan, at all times will reserve and
keep available sufficient Shares to satisfy the requirements of the
Plan.
b.
Additional Shares . If any outstanding Option expires,
is canceled or otherwise terminates for any reason, the Shares
allocable to the unexercised portion of that Option will be
available again for purposes of the Plan. If Shares issued
under the Plan are reacquired by the Company, those Shares will be
available again for purposes of the Plan.
SECTION 6.
TERMS
AND CONDITIONS OF OPTIONS
a.
Stock
Option Agreement . Each grant of an Option under the Plan
will be evidenced by a Stock Option Agreement between the Optionee
and the Company. The Option will be subject to terms and
conditions that are consistent with the Plan and that the Board
deems appropriate for inclusion in a Stock Option Agreement.
The provisions of Stock Option Agreements entered into under
the Plan need not be identical.
b.
Number
of Shares . Each Stock Option Agreement will specify the
number of Shares that are subject to the Option and will provide
for the adjustment of that number in accordance with
Section 8. The Stock Option Agreement also will specify
whether the Option is an ISO or NQSO. However, if any portion
of an Option does not meet the requirements to qualify as an ISO,
that portion will be a NQSO.
c.
Exercise Price . Each Stock Option Agreement will
specify the Exercise Price. The Exercise Price under any
Option will be determined by the Committee in its sole discretion,
except that the Exercise Price may not be less than 100% of the
Fair Market Value of a Share on the date of grant, and any higher
percentage required by Section 4(b).
For
purposes of the Plan, "Fair Market Value" will be determined in the
following manner:
i.
If the Shares are listed or admitted to trading on a nationally
recognized U.S. securities exchange or the National Association of
Securities Dealers Automated Quotation System ("NASDAQ"), the Fair
Market Value will be determined with reference to the closing price
of a Share on such exchange or on NASDAQ as of the last trading day
prior to the date of grant.
ii.
If the Fair Market Value cannot be established under the provisions
of subsection (i) above, the Fair Market Value will be determined
by the Board, acting in good faith on the basis of such
information as they, in their reasonable judgment, consider
appropriate. The determination of the Board will be
conclusive and binding.
d.
Limitation on Amount . The aggregate Fair Market Value
(determined with respect to each ISO as of the time the ISO is
granted) of the Stock with respect to which ISOs are exercisable
for the first time by an Optionee during any calendar year (under
this Plan or any other ISO plan of the Company or any Subsidiary)
may not exceed $100,000.
e.
Withholding Taxes . As a condition to the exercise of
an Option, the Optionee will make such arrangements as the
Committee may require for the satisfaction of any withholding tax
obligations that may arise in connection with the exercise.
Subject to Section 7(b), the Optionee may pay any or all
required withholding taxes by delivering to the Company shares of
Stock already owned. The Company may authorize the Optionee
to pay any or all required withholding taxes by directing that
Shares otherwise deliverable upon exercise of the Option be
withheld.
The
Optionee also will make such arrangements as the Committee may
require for the satisfaction of any withholding tax obligations
that may arise in connection with the disposition of Shares
acquired by exercising an Option. Subject to Section 7(b),
the Optionee may pay any or all such required withholding taxes by
delivering to the Company shares of Stock already owned.
f.
Exercisability . Each Stock Option Agreement
will specify when all or any installment of the Option becomes
exercisable. The exercisability provisions of any Stock
Option Agreement will be determined by the Committee in its sole
discretion.
g.
Accelerated Exercisability . Unless the applicable
Stock Option Agreement provides otherwise, all of an
Optionee’s Options will become exercisable in full upon the
Optionee’s termination of employment due to retirement on or
after the Optionee’s
attainment of age 65 with 15 years of service with the Company or a
Subsidiary. Unless the applicable Stock Option Agreement
provides otherwise or the next sentence applies, all of an
Optionee’s Options may become exercisable in full, in the
sole discretion of the Committee, if the Company is subject to a
Change in Control before the
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