2005 DIRECTOR STOCK OPTION PLAN
The purpose of this 2005 Director Stock Option Plan (the Plan) is to advance the interest of
ASTRONICS CORPORATION, a New York corporation (the Company), by encouraging the efforts of
directors of the Company who are not employees, by heightening the desire of such persons to
continue in their service and by assisting the Company to compete effectively with other
enterprises for new directors.
GRANTING OF OPTIONS
Subject to the terms and conditions of this Plan, the Company may issue options (Options) to
purchase up to two hundred thousand (200,000) shares of its $.01 par value Common Stock (Shares)
to persons eligible to participate under Section 4.1 below. Two hundred thousand (200,000) of the
Companys authorized but unissued shares of Common Stock are hereby reserved for issuance under
this Plan; provided, however, that treasury shares shall also be available for issuance under this
Plan at the Companys discretion. Any Share subject to an Option that terminates for any reason
other than exercise may be made subject to a subsequent Option.
3.1 Effective Date.
This plan shall become effective upon its adoption by the Board of Directors. The Plan shall
be submitted to the shareholders of the Company for their approval within twelve months of such
adoption. No Option shall be exercisable unless and until the shareholders of the Company have
approved the Plan.
This Plan shall terminate when all of the Shares have been acquired through exercise of
Options unless sooner terminated by the Board of Directors. Any Option outstanding under this Plan
at the time of its termination shall remain in effect in accordance with its terms and conditions
and those of this Plan.
4.1 Eligible Directors.
Options may be granted to directors of the Company unless at the time of grant they are also
an executive officer or employee of the Company or any of its subsidiary corporations. As used in
this Plan, Participant means a director of the Company and includes a directors legal
representative if he or she is incompetent or deceased, or any other person who acquires the legal
right to exercise a Participants Options.
5.1 Written Agreement.
Options shall be evidenced by a written Option Agreement that shall contain such terms and
conditions as this Plan requires and such additional provisions as the Committee, as defined in
Section 6.1, may deem necessary or appropriate in its sole discretion and that do not conflict with
the provisions of this Plan. Each Option Agreement shall be signed by the Participant and an
officer of the Company designated by the Committee. Options granted pursuant to this Plan need not
be identical, but each Option shall be subject to the terms and conditions set forth in this Plan.
5.2 Time of Grant.
Options shall be granted only during the thirty (30) day period commencing one week after a
press release announcing quarterly or annual results of operations of the Company.
The purchase price of the Shares under each Option shall be as determined by the Committee,
but in no event less than the fair market value of the Shares optioned on the date of granting.
Fair market value shall be deemed to be:
||The closing price on the date of grant as reflected in reports of the
automated quotation service or national securities exchange on which
the price of the Shares is reported. In all cases where the Shares are
selling ex-dividend on the date of grant, the amount of the dividend
shall be added to the ex-dividend quotation to determine the fair
market value of the Shares as of the date of grant; or
||If the fair market value cannot be established under the provisions of
(1) above, then the fair market value shall be that value determined
in good faith by the Board of Directors based on a consideration of
the following relevant factors: the Companys net worth, prospective
earning power, its dividend paying capacity, the value of its
underlying assets, and any other factors such as the goodwill of the
business, the economic outlook in the industry, the Companys position
in the industry and its management, and the value of securities of
corporation engaged in the same or similar businesses which are listed
on a national securities exchange. The weight to be accorded by
comparison or any other evidentiary factors considered by the Board of
Directors in the determination of value will depend on the particular
circumstances applying at the time. In every case, the determination
of the Board of Directors shall be final.
5.4 Payment of Exercise Price; Taxes.
5.4.1 The exercise price of each Option shall be paid in full at the time of exercise by
cash or certified check or the exchange of Shares, or a combination of both such that the sum of
(a) the aggregate fair market value (as of the exercise date) of the Shares exchanged by the
Participant (as determined by the Committee), and (b) the cash paid, equals the total exercise
price of the Option.
5.4.2 If the exercise of an Option gives rise to an obligation of the Company to withhold
state or federal income or other taxes, or gives rise to any other tax liability of the Company of
any kind, the Participant shall tender the amount of such tax to the Company along with the
exercise price, unless the incidence of such tax cannot lawfully be placed on the Participant.
Options shall be exercisable as provided in the Option Agreement. Except as provided in
Section 5.6, in no event shall Options be exercised during the six (6) month period immediately
following such grant.
5.6 Duration of Option.
Each Option shall be exercisable for so long as the Participant is a director of the Company
and, to the extent that the Option is exercisable on the date of termination of the Participants
directorship, for thirty (30) days thereafter, but not longer than ten (10) years from the date the
Option is granted. Unless otherwise expressly provided for by the Committee, on the date of
termination of a Participants directorship, Options granted but not yet exercisable shall
thereupon become exercisable. Nothing in this Plan requires Options to be exercisable upon grant.
5.7 Death or Disability.
If a Participant dies or is permanently and totally disabled (within the meaning of section
22(e)(3) of the Internal Revenue Code of 1986, as amended (Code)) while serving as a director of
the Company, the thirty (30) day period specified in Section 5.6 above shall be one (1) year.
If a Participant is determined by the Committee to have committed an act of embezzlement,
fraud, dishonesty, deliberate or repeated disregard for the rules of the Company, unauthorized
disclosure of any of the trade secrets or confidential information of the Company, unfair
competition with the Company, inducement of any customer of the Company to breach a contract with
the Company, inducement of any principal for whom the Company acts as agent to terminate that
agency relationship or any culpable degree of negligence, then neither the Participant nor the
Participants estate shall be entitled to exercise any Option after termination of the
Participants directorship, whether or not, after termination of such directorship, such
Participant may receive payment from the Company for services rendered prior to termination,
services for the day on which termination occurs, or other benefits.
5.9 Transferability of Option.
Options shall be transferable only by will or the laws of descent and distribution.
5.10 No Employment Agreement.
No Option Agreement, nor anything contained in this Plan, shall confer upon any Participant
any right to continue as a director of the Company nor limit in any way the right of the Company,
or the shareholders thereof, to terminate a Participants directorship at any time.
5.11 Adjustments to Options.
Subject to the general limitations of this Plan, the Committee may modify or extend existing
Options. However, without the consent of the Optionee, no modification may impair the Optionees
rights or increase the Optionees obligations under the Plan. No reductions in the purchase price
of shares under Options previously granted may be made except as occasioned by Section 7.1.
5.12 Form of Agreement.
The Committee shall adopt a form of Option Agreement to be used pursuant to this Plan and may
modify, add to, or delete from the form as it shall deem appropriate, subject to the provisions set
ADMINISTRATION AND AMENDMENT OF THE PLAN
6.1 The Committee.
This Plan shall be administered by a committee (Committee) of at least two persons not
eligible to participate in the Plan and who are appointed by the Board of Directors and may or may
not be members of the Board. The Board of Directors shall fill vacancies on the Committee and may
from time to time remove members from, or add members to, the Committee, provided that at all times
the Committee shall have at least two members. The Committee shall act pursuant to the written
consent of a majority of its members or the majority vote of its members at any meeting thereof.
6.2 Committee Rights and Powers.
Subject to this Plan and to the supervision of the Board of Directors, the Committee shall
have the authority and discretion:
||to determine which of the Companys directors shall receive Options;
||to determine when Options shall be granted (subject to Section 5.2 above);
||to determine the terms and conditions of Options (which terms and
conditions may differ between Options);
||to interpret the Plan; and
||to take such action as is necessary or appropriate to the administration
of the Plan.
All decisions, determinations, and interpretations of the Committee shall be final and binding
on all Participants (subject to review by the Board of Directors in its sole and absolute
The Committee from time to time may adopt rules and regulations for implementing this Plan,
and it may from time to time suspend or terminate this Plan or make such changes and additions
hereto as it may deem desirable, without further action on the part of the Board of Directors or
the shareholders of the Company; provided, however, that unless the Companys shareholders shall
have first given their approval, then (a) the total number of Shares that may be purchased under
the Plan shall not be increased except as otherwise provided in this Plan; (b) the description of
the persons eligible to receive Options shall not be changed; and (c) the minimum exercise price
shall not be changed. The suspension, termination or amendment of this Plan shall not, without the
consent of the Participant, alter or impair any rights or obligations under any Options theretofore
granted under this Plan.
ADJUSTMENT OF AND CHANGES IN STOCK
7.1 Changes in Stock; Stock Dividends.
If the Shares presently constituted are changed into or exchanged for a different number or
kind of shares of stock or other securities of the Company or of another corporation (whether by
reason of merger, consolidation, recapitalization, reclassification, split-up, combination of
shares, or otherwise), or if the number of Shares shall be increased through the payment of a stock
dividend or other distribution, then notwithstanding any other provision of this Plan, there shall
be substituted for or added to each Share subject to this Plan the number and kind of shares of
stock or other securities into which each outstanding Share shall be entitled, as the case may be.
Outstanding Options shall also be amended as to price and other terms if necessary to reflect the
foregoing events. If there shall be any other change in the number or kind of the outstanding
Shares, or of any stock or other securities into which it shall have been exchanged, then if the
Committee shall, in its sole discretion, determine that such change equitably requires an
adjustment in any Option theretofore granted or that may be granted under this Plan, such
adjustment shall be made in accordance with such determination.
7.2 Termination of Business.
Upon any merger of the Company with another corporation where the Company is not the surviving
corporation, dissolution or liquidation of the Company, sale of substantially all the property of
the Company, or the acquisition of more than 80% of the voting power of the stock of the Company by
another corporation, then the Company shall have the right, at its option, to do any of the
||provide for the continuance of this Plan and all outstanding Options
||permit the immediate exercise of all outstanding Options not otherwise
||terminate all outstanding Options, whether exercisable or not, by
paying each holder an amount equal to the aggregate current market
price of Shares underlying the Options held by the holder less the
aggregate exercise price of such Shares; or
||terminate this Plan and all Options granted hereunder after giving
written notice to all holders of exercisable Options informing them of
the Companys intention to terminate the Options and giving the
holders a reasonable opportunity to exercise their exercisable
No right to purchase fractional Shares shall result from any adjustment in Options pursuant to
this Article VII. In the case of any such adjustment, the Shares subject to Options of each
Participant shall be rounded down to the nearest whole Share. Notice of any adjustment shall be
given by the Company to each holder of Options that shall have been so adjusted and such adjustment
(whether or not such notice is given) shall be effective and binding for all purposes of the Plan.
BINDING ON HEIRS, SUCCESSORS AND ASSIGNS
Except as provided in Section 7.2 above, this Plan shall inure to the benefit of, and be
binding upon, each successor to the Company. All obligations imposed upon the Participants and all
rights granted to the Company under this Plan shall be binding upon each Participants heirs, legal
representatives, and successors. This Plan and the Option Agreements executed between the Company
and each Participant shall be the sole and exclusive source of any and all rights that each
Participant and his or her heirs, legal representatives, or successors may have in respect to this
Plan or any Options or Shares granted hereunder, whether to the Participant or to any other person.
Options granted hereunder are not intended to be eligible for favorable tax treatment under
Section 422 of the Code. The Company does not hereby, nor by way of any Plan, document, or
otherwise, attempt to make any representation to any person, including the Participants, with
respect to the tax effect on such person of the grant or exercise of an Option or the subsequent
disposition of Shares obtained by the exercise of an Option pursuant to this Plan or any other
aspect of this Plan.
If there is any discrepancy between this Plan and any documents related to this Plan,
including any Option Agreement, this Plan shall govern. Nothing contained in this Plan shall be
construed to constitute, or be evidence of, any right in favor of any person to receive Options
hereunder or any obligation on the part of the Company to issue Options.