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EXHIBIT 10.7
DUCOMMUN INCORPORATED
STOCK OPTION AGREEMENT
This stock option agreement ("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 Option is being granted pursuant to the 1994 Stock Incentive Plan (the
"Plan"). This Option DOES NOT represent an incentive stock option as defined in
Section 422A of the Internal Revenue Code. This Option 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.
3. Conditions to Exercise. The Option Holder may not purchase any shares by
exercise of this option unless the Option Holder shall have served as a director
of the Corporation until at least [date]. 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
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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
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 a director of the Corporation, except as follows:
(a) Death. If the Option Holder dies while a director of the
Corporation, or while this Option was exercisable by him in accordance with
paragraph (b) below, 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 from the date of death, or
(ii) within such one year, in the event that the Expiration Date is more
than one year from such date of death.
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(b) Retirement or Other Termination. If the Option Holder retires,
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/her retirement) at any time prior to the Expiration Date. If the Option
Holder ceases to be a director of the Corporation for any reason other than
by death 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 he ceased to be a director) at any time (i)
prior to the Expiration Date, in the event the Expiration Date is not more
than three months from the date of such termination, or (ii) within such
three-month period, in the event that the Expiration Date is more than
three months from the date of such termination.
6. Method of Exercise. A person electing to exercise this option shall
deliver to the Secretary of the Corporation prior to the Expiration Date 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 Corporation are
increased, decreased, or converted into or exchanged for a different number
or kind of shares or securities of the Corporation 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
Corporation shall spin-off, spin-out or otherwise distribute assets with
respect to the outstanding shares of Common Stock of the Corporation, an
appropriate and proportionate adjustment may be made in the discretion of
the Board of Directors, 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 Corporation,
or upon any merger, consolidation or reorganization of the Corporation with
any other corporations or entities as a result of which the Corporation is
not the surviving corporation, or upon the sale of all or substantially all
of the assets of the Corporation or the acquisition of more than 80% of the
stock of the Corporation 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 Option Holder had been the
owner of such shares as of the transaction date. Any securities so
substituted shall be subject to similar successive adjustments.
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8. 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 may deem desirable to assure compliance with all applicable
legal requirements.
9. 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.
10. Withholding. The Corporation may make such provisions as it may deem
appropriate for the withholding of any taxes which the Corporation determines it
is required to withhold in connection with this Agreement and the transactions
contemplated hereby, and the Corporation may require the Option Holder or other
person exercising this option to pay to the Corporation 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.
11. No Assignments. Neither this Agreement, nor 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 transfer, assign, pledge, hypothecate or
otherwise dispose of this Agreement, this option or any other right or privilege
granted hereby contrary to the provisions hereof, this Agreement, this option
and all of such rights and privileges shall immediately become null and void.
12. 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 no such amendment may adversely affect the Option Holder's rights
under this Agreement. Option Holder acknowledges receipt of a complete copy of
the Plan.
13. 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.
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14. 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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