EXHIBIT 99.1
DUCOMMUN INCORPORATED
PERFORMANCE STOCK UNIT
AGREEMENT
This performance stock unit
agreement is made as of [January 1, 2007] (the “Effective
Date”), between Ducommun Incorporated, a Delaware corporation
(the “Corporation”), and
(“Award Holder”).
R E C I T A
L S
This performance stock unit
agreement is pursuant to the [2001 or 2007] Stock Incentive Plan
(the “Plan”).
A G R E E M
E N T S
1. Grant . The Corporation
hereby grants to the Award Holder an award (the
“Award”) with a target (if the Corporation achieves the
target level performance goals described in Exhibit A) of [
] performance stock units (the “Target Units”), and a
maximum of up to two hundred percent (200%) of the Target
Units (if Corporation achieves the maximum level performance goals
described in Exhibit A), in each case subject to certain
adjustments as described herein. Each performance stock unit
represents the right to receive one share of Common Stock, subject
to the conditions set forth in this performance stock unit
agreement and the Plan.
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 performance stock unit
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 performance
stock unit 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.
3. Vesting . The Award shall
vest based on a 3-year cumulative performance cycle, beginning as
of [January 1, 2007] and ending on [December 31, 2009] (the
“Performance Period”). The vesting of the Award shall
be subject to the Corporation achieving by the end of the
Performance Period the Diluted Earnings Per Share and the Relative
Total Shareholder Return, as provided in Exhibit A attached hereto.
Following the end of the Performance Period and the collection of
relevant data necessary to determine the extent to which the
performance goals set forth in Exhibit A have been satisfied, the
Committee will determine: (a) the amount of Diluted Earnings
Per Share and Relative Total Shareholder Return that was achieved
by the Corporation over the Performance Period, and (b) the
percentage of the Target Units that become Vested Units (as defined
in Exhibit A) as of the last day of the Performance Period. The
Committee shall make these determinations in its sole discretion.
The level of achievement of Diluted Earnings Per Share and Relative
Total Shareholder Return shall be evidenced by the
Committee’s written certification, in accordance with
Internal Revenue Code Section 162(m). For the avoidance of
doubt, any performance stock units subject to this Award that do
not vest in accordance with the forgoing shall expire without
consideration at the end of the Performance Period.
4. Settlement of Vested Units
. Upon the vesting of all or a portion of the Award, one share of
Common Stock shall be issuable for each Vested Unit (as defined in
Exhibit A) (the “PSU Shares”). Thereafter, the
Corporation will transfer such PSU Shares to the Award Holder upon
the Committee’s written certification as set forth in
Section 3 and the satisfaction of any required tax withholding
obligations, securities law registration or other requirements, and
applicable stock exchange listing. No fractional shares shall be
issued with respect to the Award. The Award Holder shall not
acquire or have any rights as a shareholder of the Corporation by
virtue of this performance stock unit agreement (or the Award
evidenced hereby) until the certificates representing shares of
Common Stock issuable pursuant to this Award are actually issued
and delivered to the Award Holder in accordance with the terms of
the Plan and this performance stock unit agreement.
5. Change in Control
.
(a) In the event that a Change in
Control occurs, the Target Units shall be deemed to have become
fully vested immediately prior to the consummation of the Change in
Control, provided, however, that the Committee may, in its
discretion, increase (but not decrease) the number of performance
stock units that are deemed to vest in the event of a Change in
Control up to a maximum of two hundred percent (200%) of the
Target Units.
(b) For purposes of this performance
stock unit 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 and all government regulatory approvals necessary for
the consummation of such transaction shall have been obtained,
(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 35%
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 and
all government regulatory approvals necessary for the consummation
of such transaction shall have been obtained, 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 Award Holder is employed shall not be
deemed a Change in Control of the Corporation for purposes of this
Agreement.
6. Termination. If the Award
Holder’s employment with the Corporation or a Subsidiary
terminates before the end of the Performance Period for any reason,
except as provided in this Section 6 or in Section 5
above, then the Award will be forfeited and cancelled and
surrendered to the Corporation without payment of any
consideration, effective on the date of the Award Holder’s
termination of employment. Upon the termination of the Award
Holder’s employment with the Corporation or a Subsidiary as a
result of (a) death or “permanent disability” (as
defined herein) or (b) “retirement” (as defined
herein), the Target Units covered by the Award shall be reduced to
a number of performance stock units equal to the Target Units set
forth in Section 1 multiplied by a fraction, (i) the
numerator of which equals the number of full calendar quarters that
have elapsed be
