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EXHIBIT 10.5
DUCOMMUN INCORPORATED
STOCK OPTION AGREEMENT
This stock option agreement is made as of [date] (the "Effective Date"), between
DUCOMMUN INCORPORATED, a Delaware corporation (the "Corporation"), and [name]
("Option Holder").
R E C I T A L S
This stock option agreement is pursuant to the [plan name] (the "Plan"). This
stock option agreement DOES NOT represent an incentive stock option as defined
in Section 422A of the Internal Revenue Code. This stock option agreement
expires on [date] (the "Expiration Date").
A G R E E M E N T S
1. Grant. The Corporation hereby grants to the Option Holder the right and
option to purchase, on the terms and conditions hereinafter set forth, all or
any part of an aggregate of [#] shares of the Common Stock at the purchase price
of $[price] per share, being 100% of the fair market value of the Common Stock
on the date the option is granted, exercisable from time to time in accordance
with the provisions of this Agreement until the close of business on the
Expiration Date.
2. Definitions. Unless the context clearly indicates otherwise, and subject
to the terms and conditions of the Plan as the same may be amended from time to
time, the following terms, when used in this stock option agreement, shall have
the meanings set forth in this Section 2.
"Common Stock" shall mean the Common Stock, $.01 par value, of the
Corporation or such other class of shares or other securities as may be
applicable pursuant to the provisions of Section 7 of this stock option
agreement.
"Subsidiary" shall mean a corporation or other form of business entity
more than 50% of the voting shares of which is owned or controlled,
directly or indirectly, by the Corporation and which is designated by the
Committee for participation in the Plan by the key employees thereof.
"Committee" shall mean the Compensation Committee of the Board of
Directors of the Corporation, or if there is no such committee acting, the
Board of Directors of the Corporation.
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3. Conditions to Exercise. The Option Holder may not purchase any shares by
exercise of this option unless the Option Holder shall have remained in the
employ of the Corporation and/or a Subsidiary until at least [date]. On and
after [date], the Option Holder may purchase, by exercise of this option, an
aggregate of not more than one-fourth of the total number of shares subject to
this option. On and after [date], the Option Holder may purchase, by exercise of
this option, an additional one-fourth of such total number of shares. On and
after [date], the Option Holder may purchase, by exercise of this option, an
additional one-fourth of such total number of shares. On and after [date], until
this option expires, the Option Holder may purchase, by exercise of this option,
all or any part of the shares subject to this option. Provided, however, that
until this option expires, the Option Holder may purchase, by exercise of this
option, all or any part of the shares subject to this option at any time after a
"Change in Control" of the Corporation has occurred. For purposes of this stock
option agreement, a "Change in Control" of the Corporation shall mean a change
in control of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"); provided that, without limitation,
such a change in control shall be deemed conclusively to have occurred if (i) a
tender offer shall be made and consummated for the ownership of 25% or more of
the outstanding voting securities of the Corporation, (ii) the shareholders of
the corporation approve that the Corporation be merged or consolidated with
another corporation and as a result of such merger or consolidation less than
75% of the outstanding voting securities of the surviving or resulting
corporation shall be owned in the aggregate by the former shareholders of the
Corporation, other than affiliates (within the meaning of the Exchange Act) of
any party to such merger or consolidation, as the same shall have existed
immediately prior to such merger or consolidation, (iii) the shareholders of the
Corporation approve that the Corporation sell, lease, exchange or transfer
substantially all of its assets to another corporation, entity or person which
is not a wholly-owned subsidiary, (iv) a person, as defined in Sections 13(d)
and 14(d) (as in effect on the date hereof) of the Exchange Act, shall acquire
25% (or in the case of The Clark Estates, Inc., 30%) or more of the outstanding
voting securities of the Corporation (whether directly, indirectly, beneficially
or of record), (v) the shareholders of the Corporation approve a plan or
proposal for the liquidation or dissolution of the Corporation, or (vi) during
any period of two consecutive years, individuals who at the beginning of such
period constitute the Board of Directors cease for any reason to constitute at
least a majority thereof unless the election, or the nomination for election by
the Corporation's shareholders, of each new director was approved by a vote of
at least two-thirds of the directors then still in office who were directors at
the beginning of the period. For purposes hereof, ownership of voting securities
shall take into account and shall include ownership as determined by applying
the provisions of Rule 13d-3 (as in effect on the date hereof) under the
Exchange Act. A sale or other change in control of any Subsidiary of the
Corporation by which the Option Holder is employed shall not be deemed a Change
in Control of the Corporation for purposes of this Agreement.
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4. Exercise by the Option Holder. This option may be exercised solely by
the Option Holder, except as provided in Section 5 below in the event of the
Option Holder's death.
5. Termination. This option shall terminate if and when the Option Holder
shall cease to be an employee of the Corporation or a Subsidiary, except as
follows:
(a) Death. If the Option Holder dies while employed by the Corporation
or a Subsidiary, or while this option was exercisable by him in accordance
with paragraph (b) or (c) below after his retirement, permanent disability
or the termination of his employment other than for cause, this option may
be exercised (for not more than the number of shares as to which the Option
Holder might have exercised this Option at the time of such death) by the
personal representative of the decedent or, by such person or persons as
shall have acquired the Option Holder's rights under this option by will or
by the laws of descent and distribution at any time (i) prior to the
Expiration Date, in the event the Expiration Date is not more than one year
following the date of death, or (ii) within such one year, in the event
that the Expiration Date is more than one year following such date of
death;
(b) Retirement or Permanent Disability. If the Option Holder retires
or becomes permanently disabled, this option may be exercised (for not more
than the number of shares as to which the Option Holder might have
exercised this option on the date of his retirement or permanent
disability) at any time prior to the Expiration Date. As used herein,
"retirement" shall mean the date on which the Option Holder voluntarily
terminates his employment with the Corporation or a Subsidiary with the
permanent intention of not seeking other employment or becoming
self-employed except for part-time consulting; and "permanent disability"
shall mean the date on which the Option Holder has not worked or been able
to work due to physical or mental incapacity for a period of 180
consecutive days.
(c) Other Termination. If the employment of the Option Holder with the
Corporation or a Subsidiary is terminated for any reason other than by
death, permanent disability or retirement, this option may be exercised
(for not more than the number of shares as to which the Option Holder might
have exercised this option on the date on which his employment was
terminated) at any time (i) prior to the Expiration Date in the event the
Expiration Date is not more than three months following the date of such
retirement or termination, or (ii) within such three-month period, in the
event that the Expiration Date is more than three months following the date
of such termination of employment; provided, however, that if the Option
Holder is dismissed for cause, of which the Committee shall be the sole
judge, this option shall terminate forthwith.
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The Committee may determine that, for the purpose of the Plan, the Option Holder
while on a leave of absence will be considered as still in the employ of the
Corporation, provided that this option shall be exercisable during a leave of
absence only as to the number of shares as to which it was exercisable at the
commencement of such leave of absence.
6. Method of Exercise. A person electing to exercise this option shall
deliver to the Secretary of the Corporation a written notice of such election
and of the number of shares such person has elected to purchase and shall at the
time of exercise tender the full purchase price of the shares such person has
elected to purchase.
7. Adjustments
(a) If the outstanding shares of Common Stock of the Company are
increased, decreased, changed into or exchanged for a different number or kind
of shares or securities of the Company through recapitalization (other than the
conversion of convertible securities according to their terms),
reclassification, stock dividend, stock split or reverse stock split, an
appropriate and proportionate adjustment shall be made, or if the Company shall
spin-off, spin-out or otherwise distribute assets with respect to the
out-standing shares of Common Stock of the Company, an appropriate and
proportionate adjustment may be made in the discretion of the Committee, in (i)
the maximum number and kind of shares as to which options may be granted under
the Plan, (ii) the number and kind of shares subject to outstanding options, and
(iii) the exercise price for each share under outstanding options, without any
change in the aggregate purchase price or value applicable to the unexercised
portion of the outstanding options.
(b) In the event of the dissolution or liquidation of the Company, or
upon any merger, consolidation or reorganization of the Company with any other
corporations or entities as a result of which the Company is not the surviving
corporation, or upon the sale of all or substantially all of the assets of the
Company or the acquisition of more than 80% of the stock of the Company by
another corporation or entity, there shall be substituted for each of the shares
of Common Stock then subject to the Plan the number and kind of shares of stock,
securities or other assets which would have been issuable or payable in respect
of or in exchange for such Common Stock then subject to the Plan, as if the
optionee had been the owner of such shares as of the transaction date. Any
securities so substituted shall be subject to similar successive adjustments.
8. No Right to Continued Employment. Nothing in the Plan, in this stock
option agreement or in any other instrument executed pursuant thereto shall
confer upon the Option Holder any right to continue in the employ of the
Corporation or any Subsidiary of the Corporation or shall interfere in any way
with the right of the Corporation or any such Subsidiary to at any time
terminate the employment of the Option Holder with or without cause.
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9. Legal Requirements. No shares issuable upon the exercise of this option
shall be issued or delivered unless and until, in the opinion of counsel for the
Corporation, all applicable requirements of federal and state law and of the
Securities and Exchange Commission pertaining to the issuance and sale of such
shares and any applicable listing requirements of any national securities
exchange on which shares of the same class are then listed, shall have been
fully complied with. In connection with any such issuance or transfer, the
person acquiring the shares shall, if requested by the Corporation, give
assurances satisfactory to counsel to the Corporation in respect of such matters
as the Corporation or any Subsidiary of the Corporation may deem desirable to
assure compliance with all applicable legal requirements.
10. No Rights as a Shareholder. Neither the Option Holder nor any
beneficiary or other person claiming under or through the Option Holder shall
have any right, title or interest in or to any shares of Common Stock allocated
or reserved for the purpose of the Plan or subject to this Agreement except as
to such shares of Common Stock, if any, as shall have been issued or transferred
to such person.
11. Withholding. The Corporation or any Subsidiary of the Corporation may
make such provisions as it may deem appropriate for the withholding of any taxes
which the Corporation or such Subsidiary determines it is required to withhold
in connection with this stock option agreement and the transactions contemplated
hereby, and the Corporation or any such Subsidiary may require the Option Holder
or other person exercising this Option to pay to the Corporation or such
Subsidiary in cash any amount or amounts which may be required to be paid as
withheld taxes in connection with any exercise of this Option or any other
transaction contemplated hereby as a condition to the exercise of this Option
and issuance of shares of the Common Stock.
12. No Assignments. Neither this stock option agreement, not this option
nor any other rights and privileges granted hereby shall be transferred,
assigned, pledged or hypothecated in any way, whether by operation of law of
descent and distribution. Upon any attempt to so transfer, assign, pledge,
hypothecate or otherwise dispose of this stock option agreement, this option or
any other right or privilege granted hereby contrary to the provisions hereof,
this stock option agreement, this option and all of such rights and privileges
shall immediately become null and void.
13. Other Programs. Nothing contained in this stock option agreement shall
affect the right of the Option Holder to participate in and receive benefits
under and in accordance with the then current provisions of any pension,
insurance, profit-sharing or other employee benefit plan or program of the
Corporation or of any Subsidiary of the Corporation.
14. The Plan. The option hereby granted is subject to, and the Corporation
and Option Holder agree to be bound by all of the terms and conditions of the
Plan as the same may be amended from time to time in accordance with the terms
thereof, but
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no such amendment may adversely affect the Option Holder's rights
under this stock option agreement. Option Holder acknowledges receipt of a
complete copy of the Plan.
15. Consideration. The consideration for the rights and benefits conferred
on Option Holder by this option are the services rendered by the Option Holder
after and not before the grant of this option.
16. Applicable Law. This option has been granted as of the effective date
set forth above at Los Angeles, California, and the interpretation, performance
and enforcement of this Agreement shall be governed by the laws of the State of
California.
DUCOMMUN INCORPORATED
By:
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President and CEO
By:
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Secretary
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Option Holder
By his or her signature, the spouse of the Option Holder hereby agrees to be
bound by all the terms and conditions of this written stock option agreement.
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Spouse of Option Holder
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