Document:

Exhibit

AKORN, INC. 2017 OMNIBUS INCENTIVE COMPENSATION PLAN
FORM OF RESTRICTED STOCK UNIT AWARD AGREEMENT (NON-EMPLOYEE DIRECTOR)
This Restricted Stock Unit Award Agreement (this “Award Agreement”) is made and effective as of [DATE] (the “Date of Grant”) between Akorn, Inc. (the “Company”) and [FIRST NAME — LAST NAME] (the “Participant”), pursuant and subject to the provisions of the Akorn, Inc. 2017 Omnibus Incentive Compensation Plan (the “Plan”).  Any capitalized term not otherwise defined herein shall have the meaning ascribed thereto in the Plan.  Reference is made to that certain Agreement and Plan of Merger (the “Merger Agreement”), dated as of April 24, 2017, among the Company, Fresenius Kabi AG, a German stock corporation, Quercus Acquisition, Inc., a Louisiana corporation and a wholly owned subsidiary of Parent (“Merger Sub”) and, solely for purposes of Article VIII thereof, Fresenius SE & Co. KGaA, a German partnership limited by shares.
1.Award of Restricted Stock Units.  Pursuant to the provisions of the Plan and this Award Agreement, the Company shall and hereby does award to the Participant on the Date of Grant [TOTAL NUMBER OF RESTRICTED STOCK UNITS GRANTED] restricted stock units (the “Restricted Stock Units”), subject to the terms and conditions of this Award Agreement and the Plan.
2.    Vesting Schedule.  The Restricted Stock Units are subject to forfeiture as of the Date of Grant and shall vest and cease to be forfeitable in installments on the applicable date for such installment as set forth below (each such date, a “Normal Vesting Date”), in each case subject to the Participant’s continued service with the Company through the applicable Normal Vesting Date.  For purposes of this Award Agreement, except as otherwise provided in Section 17 or as otherwise determined by the Committee, the Participant’s service with the Company shall be deemed to continue so long as the Participant is employed by, or is otherwise providing services as a director, officer or consultant to, the Company or any of its Subsidiaries or Affiliates.
	
		
	Normal Vesting Date
	Number of Restricted Stock Units

	[VEST DATE PERIOD1
	NUMBER OF UNITS PERIOD1]

	 
	 

	[VEST DATE PERIOD2
	NUMBER OF UNITS PERIOD2]

	 
	 

	[VEST DATE PERIOD3
	NUMBER OF UNITS PERIOD3]

	 
	 

	[VEST DATE PERIOD4
	NUMBER OF UNITS PERIOD4]

Subject to Section 3, any unvested Restricted Stock Units shall immediately and automatically terminate and be forfeited as of the date of the Participant’s termination of service with the Company for any reason or as of the date of the Participant’s death or Disability, in each case prior to the applicable Normal Vesting Date set forth above.  For purposes of this Award Agreement, “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code.
3.    Change of Control.
(a)    In the event of a Change of Control, unless provision is made in connection with the Change of Control for (1) assumption of the Restricted Stock Units or (2) substitution for the Restricted Stock Units of new awards covering stock of a successor corporation or its “parent corporation” (as defined in Section 424(e) of the Code) or “subsidiary corporation” (as defined in Section 424(f) of the Code) with appropriate adjustments as to the number and kinds of shares underlying the Restricted Stock Units, all unvested Restricted Stock Units shall automatically vest as of immediately prior to such Change of Control and shall be settled in accordance with Section 5; provided that in the event of the consummation of the Merger (as defined in the Merger Agreement), all unvested Restricted Stock Units shall automatically be converted into an unvested award representing the opportunity to receive cash payments as described in Sections 2.03(c) and 2.04 of the Merger Agreement (the Restricted Stock Units as so converted, the “Converted Award”).
(b)    In the event the Restricted Stock Units are assumed or substituted by the successor company or its Affiliate in connection with a Change of Control or converted into the Converted Award in each case as described in clause (a) of this Section 3, if the Participant’s service with the Company is terminated for any reason following the Change of Control (including, for the avoidance of doubt, the termination of the Participant’s service with the Company that shall occur in connection with the consummation of the Merger), all unvested Restricted Stock Units (or the Converted Award, as applicable) shall automatically vest immediately prior to such termination and shall be settled in accordance with Section 5.  
4.    Vesting Date.  The “Vesting Date” means the date that a Restricted Stock Unit (or the Converted Award, as applicable) is no longer subject to forfeiture and is vested in accordance with Section 2 or Section 3, as applicable.
5.    Settlement.  Each Restricted Stock Unit represents the right to receive one Share on the applicable Vesting Date.  The Participant shall have no right to settlement of any such Restricted Stock Units prior to the applicable Vesting Date.  Prior to payment of any vested Restricted Stock Unit, such Restricted Stock Unit shall represent an unsecured obligation of the Company, payable (if at all) only from the general assets of the Company.  Any Restricted Stock Units that vest in accordance with Section 2 or Section 3 (as applicable) shall be paid to the Participant in whole Shares.  Such vested Restricted Stock Units shall be paid in whole Shares (or in cash, in the case of the Converted Award) as soon as practicable after vesting, but in no event later than sixty days following the Vesting Date.  In no event shall the Participant be permitted, directly or indirectly, to specify the taxable year of the payment of any Restricted Stock Units (or the Converted Award, as applicable) payable under this Award Agreement.  The payment of Shares (or cash, in the case of the Converted Award) pursuant to this Award Agreement shall in all cases be paid at a time or in a manner that is exempt from, or complies with, Section 409A.
6.    Participant Acknowledgments.  By executing this Award Agreement, the Participant acknowledges and agrees as follows:
(a)    The Company is not providing the Participant with advice, warranties or representations regarding any of the legal or tax effects to the Participant with respect to this Award Agreement and the Participant shall be responsible for all taxes incurred by the Participant in connection with the grant, vesting or settlement of the Restricted Stock Units.
(b)    The Participant acknowledges that he or she is (1) familiar with the terms of the grant made to him or her under this Award Agreement and the Plan, (2) has been encouraged by the Company to discuss the grant and the Plan with his or her own legal and tax advisers, and (3) agrees to be bound by the terms of the grant and the Plan.
7.    Rights as Stockholder.  None of the Participant or holder or beneficiary of the Restricted Stock Units shall have any rights as a stockholder with respect to any Shares to be distributed under this Award Agreement until he or she has become the holder of such Shares, at which point the Participant shall have all the rights of a stockholder of the Company, including with respect to voting such Shares and receipt of dividends and distributions on such Shares.  In no event shall the Participant be entitled to receive dividends or dividend equivalents with respect to any Shares deliverable under this Award Agreement prior to the vesting and settlement of the Restricted Stock Units (or the Converted Award, as applicable).
8.    Transferability; Successors and Assigns.  During the Participant’s lifetime, prior to the applicable Vesting Date, no Restricted Stock Unit (or any rights and obligations related thereto) may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Participant otherwise than by will or by the laws of descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any Affiliate; provided that, (a) the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance and (b) the Board or the Committee may permit further transferability, on a general or specific basis, and may impose conditions and limitations on any permitted transferability.  Notwithstanding the foregoing, in no event shall the Restricted Stock Units (or the Converted Award, as applicable) be transferred to a third party for value unless such transfer is specifically approved by the Committee.  All terms and conditions of the Plan and the Award Agreement shall be binding upon any permitted successors and assigns.
9.    Notices.  All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given on the second business day following the date mailed by United States Mail, postage prepaid, to the parties or their assignees at the following addresses, or at such other address as shall be given in writing by either party to the other:
		
	Company:
	Human Resources Department

cc: Legal Department Akorn, Inc.  
1925 West Field Court Suite #300 
Lake Forest, Illinois 60045 
Participant:    [FIRST NAME — LAST NAME]
[ADDRESS LINE]
[CITY, STATE ZIP CODE]
10.    Choice of Law and Venue.  The Plan and this Award Agreement and all questions relating to its validity, interpretation, performance and enforcement shall be governed by and construed in accordance with the laws of the State of Illinois, without giving effect to the conflict of laws provisions thereof.  Any legal proceeding arising out of this Award Agreement shall be brought only in a state or Federal court of competent jurisdiction located in Chicago, Illinois.
11.    Amendment.  Except as otherwise set forth in the Plan, this Award Agreement may be amended or modified only by the written agreement of the parties hereto.
12.    Entire Agreement.  The Plan and this Award Agreement and the other documents delivered hereunder (if any) constitute the full and entire understanding and agreement between the parties with regard to the subject matter hereof, and supersedes all prior agreements, understandings, inducements or conditions, express or implied, oral or written, relating to the subject matter hereof, except as herein contained.  The express terms of the Plan and this Award Agreement control and supersede any course of performance or usage of trade inconsistent with any of the terms hereof.
13.    Attorneys’ Fees.  If any legal action is necessary to enforce the terms of this Award Agreement, the prevailing party shall be entitled to recover, in addition to other amounts to which the prevailing party may be entitled, actual attorneys’ fees and costs.
14.    Severability.  If any provision of this Award Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or as to any Person, or would disqualify this Award Agreement under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of this Award Agreement, such provision shall be construed or deemed stricken as to such jurisdiction or Person and the remainder of this Award Agreement shall remain in full force and effect.
15.    Counterparts.  This Award Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument.  Signatures by facsimile and other electronic means shall be valid and enforceable.
16.    Additional Conditions to Issuance of Shares.  The vesting of the Restricted Stock Units and the issuance and transfer of Shares shall be subject to compliance by the Company and the Participant with all applicable requirements of Federal and state securities laws and with all applicable requirements of any stock exchange on which the Company’s Shares may be listed.  No Shares shall be issued pursuant to this Award Agreement unless and until any then applicable requirements of Federal or state laws and regulatory agencies have been fully complied with to the satisfaction of the Company and its counsel.  The Participant understands that the Company is under no obligation to register the Shares with the Securities and Exchange Commission, any state securities commission or any stock exchange to effect such compliance.  If at any time the Company shall determine, in its sole discretion, that the listing, registration, qualification or rule compliance of the Shares upon any securities exchange or under any state or Federal law, the tax code and related regulations or the consent or approval of any governmental regulatory authority is necessary or desirable as a condition to the issuance of Shares to the Participant (or his or her estate) hereunder, such issuance shall not occur unless and until such listing, registration, qualification, rule compliance, consent or approval shall have been completed, effected or obtained free of any conditions not acceptable to the Company.  Where the Company determines that the delivery of the payment of any Shares will violate U.S. Federal securities laws or any other applicable securities or exchange control laws, the Company shall defer delivery until the earliest date on which the Company reasonably concludes, in its sole discretion, that the delivery of such Shares will no longer cause such violation.  The Company shall make all reasonable efforts to meet the requirements of any such Federal or state law or securities exchange and to obtain any such consent or approval of any such governmental authority or securities exchange.
17.    Section 409A. 
(a)    It is intended that the Restricted Stock Units granted pursuant to this Award Agreement comply with, or are exempt from, Section 409A of the Code, and all provisions of the Award Agreement shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A of the Code.
(b)    If, at the time of the Participant’s separation from service (within the meaning of Section 409A of the Code), (1) the Participant shall be a specified employee (within the meaning of Section 409A of the Code and using the identification methodology selected by the Company from time to time) and (2) the Company makes a good faith determination that an amount payable pursuant to this Award Agreement constitutes deferred compensation (within the meaning of Section 409A of the Code) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A of the Code in order to avoid taxes or penalties under Section 409A of the Code, then the Company shall not pay such amount on the otherwise scheduled payment date but shall instead pay it on the first business day after such six-month period.  Such amount shall be paid without interest, unless otherwise determined by the Committee, in its sole discretion.
(c)    Notwithstanding any provision of the Plan or this Award Agreement to the contrary, in light of the uncertainty with respect to the proper application of Section 409A of the Code, the Company reserves the right to make amendments to this Award Agreement as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A of the Code.  In any case, the Participant shall be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on the Participant or for the Participant’s account in connection with this Award Agreement (including any taxes and penalties under Section 409A of the Code), and neither the Company nor any of its Affiliates shall have any obligation to indemnify or otherwise hold the Participant harmless from any or all of such taxes or penalties.
(d)    Each payment payable under this Award Agreement is intended to constitute a separate payment for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.
ACCEPTANCE AND ACKNOWLEDGMENT
I, [FIRST NAME — LAST NAME] a resident of the State of [STATE], accept the Restricted Stock Unit Award awarded described in this Award Agreement and in the Plan, and acknowledge receipt of a copy of the Plan and this Award Agreement.  I further acknowledge that I have read the Plan and Award Agreement carefully, I fully understand their contents, and I agree to be bound by the same.

[[NYCORP:3651570v6:3278W: 05/01/2017--04:43 PM]]Exhibit

DUCOMMUN INCORPORATED

PERFORMANCE STOCK UNIT AGREEMENT

This performance stock unit agreement is made as of January 1, 2017 (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 2013 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 fifty percent (250%) 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 6 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.

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3.    Vesting.  The Award shall vest at the end of the 3-year performance period, beginning as of January 1, 2017 and ending on December 31, 2019 (the “Performance Period”).  The vesting of the Award shall be subject to the Corporation achieving during the Performance Period the Diluted Earnings Per Share and Relative Total Shareholder Return, as provided in Exhibit A attached hereto.  Following the end of each fiscal year 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 that was achieved by the Corporation for each fiscal year of the Performance Period, and (b) the percentage and number of the Target Units for each fiscal year (for each such fiscal year, the “Earned Units”) that will become Vested Units (as defined in Exhibit A) as of the last day of the Performance Period or earlier as provided in Section 5(b).  Following the end of the Performance Period and 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 Relative Total Shareholder Return that was achieved by the Corporation over the Performance Period, and (b) the multiplier that will be applied to the Earned Units to calculate the total number of Vested Units as of the last day of the Performance Period, as provided in Exhibit A attached hereto. 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.    Termination.  
(a)    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 5, 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 (i) death or “permanent disability” (as defined herein) or (ii) “retirement” (as defined herein), the number of Vested Units and the vesting of such Vested Units shall be determined in accordance with Section 5(b) below.  As used herein, the term “retirement” shall mean that, on the date on which the Award Holder terminates employment with the Corporation or a Subsidiary, 

2

either (x)  the Award Holder is sixty-five (65) or more years of age, or (y) the combination of the Award Holder’s age plus years of service equals not less than seventy (70).  As used herein, the term “permanent disability” shall mean the date on which the Award Holder has not worked or been able to work due to physical or mental incapacity for a period of one hundred eighty (180) consecutive days.
(b)    Upon the termination of the Award Holder’s employment with the Corporation or a Subsidiary as a result of death, permanent disability or retirement as provided in Section 5(a), (i) for each full fiscal year that the Award Holder was employed by the Corporation or a Subsidiary, the Earned Units (as defined in Section 3) shall vest immediately, and (ii) for the last fiscal year (if less than a full fiscal year) that the Award Holder was employed by the Corporation or a Subsidiary, 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, (x) the numerator of which equals the number of full calendar quarters that have elapsed between January 1 of such fiscal year and the date of termination of employment, and (y) the denominator of which equals four (4), and such performance stock units (as reduced) shall then vest at such time as they become Earned Units (as defined in Section 3) provided that the Award Holder has not rendered services, directly or indirectly, to any third party engaged in competition with the Corporation or its Subsidiaries.  For the avoidance of doubt, the Total Vested Units Modifier (as defined in Exhibit A) shall not be applied in determining the Vested Units for any Award covered by this Section 5(b).
      6.       Adjustments
             (a)    If the outstanding shares of Common Stock of the Corporation are increased, decreased, changed 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 shall be made, in the number of performance stock units subject to this Award.
            (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 this Award 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 Award, as if the Award Holder had been the owner of such shares as of the transaction date.  Any securities so substituted shall be subject to similar successive adjustments.
7.     No Right to Continued Employment.   Nothing in the Plan, in this performance stock unit agreement or in any other instrument executed pursuant thereto shall confer upon the Award 

3

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 Award Holder with or without cause.
8.    Legal Requirements.  No shares issuable under this Award 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.
9.    No Rights as a Shareholder.   Neither the Award Holder nor any beneficiary or other person claiming under or through the Award 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 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 performance stock unit agreement and the transactions contemplated hereby, and the Corporation or any such Subsidiary may require the Award Holder 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 issuance of Common Stock pursuant to this Award or any other transaction contemplated hereby as a condition to the issuance of shares of the Common Stock, provided, however, that any amount withheld for taxes in connection with this Award may, at the election of the Award Holder, be paid with previously issued shares of Common Stock or the deduction of shares of Common Stock to be issued in connection with this Award.
11.    No Assignments.   Neither this performance stock unit agreement, nor this Award 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 performance stock unit agreement, this Award or any other right or privilege granted hereby contrary to the provisions hereof, this performance stock unit agreement, this Award and all of such rights and privileges shall immediately become null and void.
12.    Other Programs.   Nothing contained in this performance stock unit agreement shall affect the right of the Award 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.

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13.    The Plan.   The Award hereby granted is subject to, and the Corporation and Award 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 Award Holder’s rights under this performance stock unit agreement.  Award Holder acknowledges receipt of a complete copy of the Plan.
14.    Committee Authority.  All questions arising under the Plan or under this performance stock unit agreement shall be decided by the Committee in its total and absolute discretion.  It is expressly understood that the Committee is authorized to administer, construe and make all determinations necessary or appropriate to the administration of the Plan and this performance stock unit agreement, all of which shall be binding upon the Award Holder to the maximum extent permitted by the Plan.
15.    Consideration.   The consideration for the rights and benefits conferred on Award Holder by this Award are the services rendered by the Award Holder after and not before the grant of this Award.
16.    Applicable Law.   This Award 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: ____________________________________
                 Chief Executive Officer

By: ____________________________________
  Secretary                           

__________________________________
        Award Holder

                

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PERFORMANCE STOCK UNIT AGREEMENT
Dated as of January 1, 2017

Exhibit A

For purposes of this performance stock unit agreement, the “Diluted Earnings Per Share” means the diluted earnings per share of the Corporation for each of the Corporation’s fiscal years ending December 31, 2017, December 31, 2018 and December 31, 2019 as included in the Corporation’s audited financial statements, subject to adjustment as provided herein.  The Diluted Earnings Per Share shall be adjusted (as determined by the Committee) (i) for changes in accounting, (ii) for discontinued operations (including businesses and product lines that are sold), (iii) to exclude gain or loss on the sale of any business or product line, including but not limited to post-closing adjustments to the purchase price, any indemnity or similar payments, and any costs or expenses in connection therewith, (iv) to exclude any asset impairment write-offs or charges (whether of goodwill, intangible or tangible assets), (v) to exclude any transaction-related costs or expenses arising in connection with the purchase or sale of any business or product line, including but not limited to the effects of Financial Accounting Standards Board Accounting Standards Codification Topic 805, (vi) to exclude any costs or expenses arising in connection with the refinancing, restructuring or prepayment of any Debt, including but not limited to the unamortized portion of any original issue discount, the unamortized portion of any original issue costs and expenses, and any prepayment or make-whole payments, costs or expenses and (vii) any restructuring, reorganization or other costs, expenses or charges that the Compensation Committee determines should be adjusted to fairly reflect the operating performance of the Company.  An appropriate adjustment in the Diluted Earnings Per Share amounts in the table below also shall be made for any of the events described in Section 6(a) above.
For purposes of this performance stock unit agreement, the “Relative Total Shareholder Return” means the percentile ranking over the Performance Period of the Corporation’s total shareholder return as compared to the total shareholder return of the companies in the Russell 2000 Index at the beginning of the Performance Period.  The determination of the total shareholder return for the Corporation and the companies in the Russell 2000 Index shall include the appreciation or depreciation of stock prices plus dividends paid as if reinvested, and shall be determined based on the average closing price of the Corporation’s common stock and the average closing price of the companies in the Russell 2000 Index over the thirty (30) trading days immediately preceding the Performance Period compared to the last thirty (30) trading days of the Performance Period.  If the Russell 2000 Index ceases to be published, the Committee shall, in its discretion, substitute another broad-based stock index that it determines is appropriate.  
After the end of the Corporation’s fiscal year ending December 31, 2017, the Committee shall determine the Corporation’s Diluted Earnings Per Share for such fiscal year and the applicable percentage of Target Units earned with respect to such performance measure for such fiscal year.  After the end of the Corporation’s fiscal year ending December 31, 2018, the Committee shall determine the Corporation’s Diluted Earnings Per Share for such fiscal year and the applicable percentage of Target Units earned with respect to such performance measure for such fiscal year.  

A-1
 
 
 

 

After the end of the Corporation’s fiscal year ending December 31, 2019, the Committee shall determine the Corporation’s Diluted Earnings Per Share for such fiscal year and the applicable percentage of Target Units earned with respect to such performance measure for such fiscal year.  If the Diluted Earnings Per Share does not equal or exceed the thresholds in the table below, the Award shall expire without consideration.  
	
					
	Diluted Earnings Per Share
	2017
	2018
	2019
	Total @ Target

	Threshold
     Vesting % of Target Units
	1.34
10%
	1.34
10%
	1.34
10%
	

30%

	Target     
     Vesting % of Target Units
	1.37
33.333%
	1.45
33.333%
	1.54
33.333%
	

100%

	Maximum
     Vesting % of Target Units
	1.58
66.666%
	1.68
66.666%
	1.77
66.666%
	

200%

In the event that the Corporation’s Diluted Earnings Per Share for any fiscal year of the Performance Period falls between two of the percentages listed in the table above, the applicable percentage of Target Units earned based on such achievement shall be determined by linear interpolation.  The total number of performance stock units subject to the Award that are earned based upon the Corporation’s achievement over the Performance Period (as determined by the Committee) will be equal to the sum of (i) the percentage determined by reference to the table above with respect to the Corporation’s Diluted Earnings Per Share for the fiscal year ending December 31, 2017 multiplied by the number of Target Units set forth in Section 1 above, plus (ii)  the percentage determined by reference to the table above with respect to the Corporation’s Diluted Earnings Per Share for the fiscal year ending December 31, 2018 multiplied by the number of Target Units set forth in Section 1 above, plus (iii) the percentage determined by reference to the table above with respect to the Corporation’s Diluted Earnings Per Share for the fiscal year ending December 31, 2019 multiplied by the number of Target Units set forth in Section 1 above (such units collectively, the “Earned Units”).  
After the end of the Performance Period, the Committee shall determine the Corporation’s Relative Total Shareholder Return (compared to the companies in the Russell 2000 Index at the beginning of the Performance Period) over the Performance Period.  The Committee, in its discretion, shall establish such procedures as it deems appropriate to determine the Corporation’s percentile rank in Relative Total Shareholder Return.  The total Vesting Units will then be determined by multiplying the Earned Units by the Total Vested Units Modifier in the table below.  Notwithstanding the foregoing, the Total Vested Units Modifier shall not be greater than 1.0 unless the Corporation’s Total Shareholder Return over the Performance Period is greater than zero.

A-2
 
 
 

 

	
		
	Relative Total Shareholder Return v. Russell 2000 Index

	Total Shareholder Return Percentile Rank
	Total Vested Units Modifier

	81% - 100%
	1.25

	71% - 80%
	1.15

	61% - 70%
	1.10

	41% - 60%
	1.00

	31% - 40%
	.90

	21% - 30%
	.85

	0% - 20%
	.75

Notwithstanding anything herein to the contrary, in no event will more than two hundred fifty percent (250%) of the number of Target Units become vested hereunder.  Performance stock units granted under this Award that are not vested and remain subject to forfeiture are referred to herein as “Unvested Units.”  

A-3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00270-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00270-of-00352.parquet"}]]