LMI AEROSPACE, INC. 2005 LONG-TERM INCENTIVE PLAN

 

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                                                                    EXHIBIT 10.1

 

 

                LMI AEROSPACE, INC. 2005 LONG-TERM INCENTIVE PLAN

 

SECTION 1. PURPOSES

 

                  The purposes of the Plan are (a) to provide long-term

incentives to those directors, officers, employees and other individuals with

significant responsibility for, or potential impact on, the success and growth

of the Company and its subsidiaries, divisions and affiliated businesses, (b) to

associate the interests of such individuals with those of the Company's

stockholders, (c) to assist the Company in recruiting, retaining and motivating

qualified directors, officers, employees and such other individuals on a

competitive basis and (d) to ensure a pay for performance linkage for such

individuals.

 

SECTION 2. DEFINITIONS

 

                  As used in the Plan, the following terms shall have the

meanings set forth below:

 

                  (a) "Affiliate" means (i) any entity that, directly or

indirectly through one or more intermediaries, is controlled by the Company and

(ii) any entity in which the Company has a significant equity interest, in each

case as determined by the Committee.

 

                  (b) "Award" means any Option, Restricted Stock, Restricted

Stock Unit, Stock Appreciation Right, Performance Award, Other Stock-Based Award

or Cash Bonus Award granted under the Plan.

 

                  (c) "Award Agreement" means any written agreement, contract or

other instrument or document evidencing any Award granted under the Plan and

containing the applicable terms and conditions of the Plan and any other terms

and conditions (not inconsistent with the Plan) determined by the Committee.

 

                  (d) "Board" means the Board of Directors of the Company.

 

                  (e) "Cash Bonus Award" means any right granted under Section

6(f) of the Plan.

 

                  (f) "Change in Control" is defined in Section 10(e) of the

Plan.

 

                  (g) "Code" means the Internal Revenue Code of 1986, as amended

from time to time, and the regulations promulgated thereunder.

 

                  (h) "Committee" means a committee of Directors designated by

the Board to administer the Plan, which shall initially be the Compensation

Committee of the Board. The Committee shall be comprised of not less than such

number of Directors as shall be required to permit Awards granted under the Plan

to qualify under Rule 16b-3 and Section 162(m) of the Code, and each member of

the Committee shall be a Non-Employee Director.

 

                  (i) "Common Stock" means the common stock, having a par value

of $0.02 per share, of the Company.

 

                  (j) "Company" means LMI Aerospace, Inc., a Missouri

corporation, and any successor entity.

 

                  (k) "Director" means a member of the Board, including any

Non-Employee Director.

 

 

 

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                  (l) "Eligible Person" means any Director (including any

Non-Employee Director), officer, employee or other individual providing services

to the Company, any Subsidiary or any other individual the Committee determines

to be an Eligible Person.

 

                  (m) "Exchange Act" means the Securities Exchange Act of 1934,

as amended from time to time, and any successor thereto.

 

                  (n) "Exercise Price" means the price at which a Participant

may purchase a Share covered by an Option.

 

                  (o) "Fair Market Value" means, on any given date (i) with

respect to any property (including, without limitation, any Shares or other

securities), the fair market value of such property determined by such methods

or procedures as shall be established from time to time by the Committee, and

(ii) with respect to Common Stock, if the shares of Common Stock are included in

the NASDAQ National Market or Small-Cap Market, the closing selling price quoted

in such market which is published by The Wall Street Journal for the trading day

immediately preceding the date in question, or if no trade of the Common Stock

shall have been reported for such date, the closing price quoted in such market

which is published in The Wall Street Journal for the next day prior thereto on

which the trade of the Common Stock was reported or, if the shares of Common

Stock are not so included for trading in such market, the average of the highest

reported bid and lowest reported asked prices as quoted in the "pink sheet"

published by the National Daily Quotation Bureau for the first day immediately

preceding the date on which such Stock is traded. In all other cases, the "Fair

Market Value" shall be determined by the Compensation Committee in good faith

using any fair and reasonable means selected in its discretion.

 

                  (p) "Grant Date" means the date as of which the Committee

determines that a grant of an Award shall be effective.

 

                  (q) "Incentive Option" means an Option that is designated as

an Incentive Option and that meets the requirements of Section 422 of the Code

for "incentive stock options."

 

                  (r) "Inducement Award" means an Award granted to an Eligible

Person as an inducement to such individual's accepting employment with the

Company.

 

                  (s) "Non-Employee Director" means (i) any Director who is not

also an employee of the Company or an "Affiliate" within the meaning of Rule

16b-3 and (ii) any "outside director" within the meaning of Section 162(m) of

the Code.

 

                  (t) "Non-Qualified Option" means an Option that either is not

designated as an Incentive Option or does not meet the requirements of Section

422 of the Code for "incentive stock options."

 

                  (u) "Option" means a right granted under the Plan to a

Participant to purchase a Share at a specified price for a specified period of

time.

 

                  (v) "Other Stock-Based Award" means any right granted under

Section 6(e) of the Plan.

 

                  (w) "Participant" means an Eligible Person designated to be

granted an Award under the Plan.

 

                  (x) "Performance Award" means any right granted under Section

6(d) of the Plan.

 

                  (y) "Performance Goal" means the goals established by the

Committee, based upon one or more performance measures, as the condition(s)

precedent to earning a Performance Award.

 

                  (z) "Performance Measures" means the criteria set out in

Section 6(d)(iii) of the Plan that may be used by the Committee as the basis for

a Performance Goal.

 

 

 

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                  (aa) "Performance Period" means the period established by the

Committee during which the achievement of Performance Goals is assessed in order

to determine whether and to what extent a Performance Award has been earned.

 

                  (bb) "Performance Shares" means shares of Common Stock awarded

to a Participant based on the achievement of Performance Goals during a

Performance Period.

 

                  (cc) "Performance Units" means an Award denominated in shares

of Common Stock, cash or a combination thereof, as determined by the Committee,

awarded to a Participant based on the achievement of Performance Goals during a

Performance Period.

 

                  (dd) "Person" means any individual or entity, including a

corporation, partnership, limited liability company, association, joint venture

or trust.

 

                  (ee) "Plan" means the LMI Aerospace, Inc. 2005 Long-Term

Incentive Plan, as amended from time to time, the provisions of which are set

forth herein.

 

                  (ff) "Restricted Stock" means any Share granted under Section

6(b) of the Plan.

 

                  (gg) "Restricted Stock Unit" means any unit granted under

Section 6(b) of the Plan evidencing the right to receive a Share (or a cash

payment equal to the Fair Market Value of a Share) at some future date.

 

                  (hh) "Rule 16b-3" means Rule 16b-3 promulgated by the

Securities and Exchange Commission under the Exchange Act.

 

                  (ii) "Section 162(m) Exemption" means the exemption from the

limitation on deductibility imposed by Section 162(m) of the Code, or any

successor provision, that is set forth in Section 162(m)(4)(C) of the Code, or

any successor provision.

 

                  (jj) "Securities Act" means the Securities Act of 1933, as

amended from time to time, and any successor thereto.

 

                  (kk) "Share" or "Shares" means a share or shares of Common

Stock or such other securities or property as may become subject to Awards

subject to an adjustment as provided under Section 4(c) of the Plan.

 

                  (ll) "Stock Appreciation Right" means any right granted under

Section 6(c) of the Plan.

 

                  (mm) "Subsidiary" means a corporation or other entity

constituting a "subsidiary corporation" under Section 424(f) of the Code, or any

successor provision.

 

                  (nn) "10 Percent Stockholder" means any Person employed by the

Company who owns (including ownership through the attribution provisions of

Section 424(d) of the Code) in excess of ten percent (10%) of the outstanding

voting equity of the Company.

 

SECTION 3. ADMINISTRATION

 

                  (a) Power and Authority of the Committee. The Plan shall be

administered by the Committee. Subject to the express provisions of the Plan and

to applicable law, the Committee shall have full power and authority to: (i)

designate Eligible Persons to receive Awards; (ii) determine the type or types

of Awards to be granted to each Participant under the Plan; (iii) determine the

number of Shares and/or amount of cash to be covered by (or the method by which

payments or other rights are to be determined in connection with) each Award;

(iv) determine the terms and conditions of any Award or Award Agreement,

including time-based restrictions and performance-based restrictions; (v)

establish the

 

 

 

 

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Performance Measures for achievement of Performance Goals with respect to

Performance Awards; (vi) amend the terms and conditions of any Award or Award

Agreement and accelerate the exercisability of any option or waive any

restrictions relating to any Award; (vii) determine whether, to what extent and

under what circumstances Awards may be exercised in cash, Shares, promissory

notes (provided, however, that the par value of any Shares to be issued pursuant

to such exercise shall be paid in the form of cash, services rendered, personal

property, real property or a combination thereof and the acceptance of such

promissory notes does not conflict with Section 402 of the Sarbanes-Oxley Act of

2002), other securities, other Awards or other property, or canceled, forfeited

or suspended; (viii) determine whether, to what extent and under what

circumstances cash, Shares, promissory notes (provided, however, that the

acceptance of such promissory notes does not conflict with Section 402 of the

Sarbanes-Oxley Act of 2002), other securities, other Awards, other property and

other amounts payable with respect to an Award under the Plan shall be deferred

either automatically or at the election of the holder thereof or the Committee

(provided, however, that the par value of any Shares and Restricted Stock shall

be paid in the form of cash, services rendered, personal property, real property

or a combination thereof prior to their issuance); (ix) construe and interpret

the Plan and any instrument or agreement, including an Award Agreement, relating

to the Plan; (x) establish, amend, suspend or waive such rules and regulations

and appoint such agents as it shall deem appropriate for the proper

administration of the Plan; and (xi) make any other determination and take any

other action that the Committee deems necessary or desirable for the

administration of the Plan. Unless otherwise expressly provided in the Plan, all

designations, determinations, interpretations and other decisions under or with

respect to the Plan or any Award shall be within the sole discretion of the

Committee, may be made at any time and shall be final, conclusive and binding

upon any Eligible Person, Participant and any holder or beneficiary of any

Award.

 

                  (b) Power of Board and Other Committees. Notwithstanding

anything to the contrary contained herein, the Board or a committee of the Board

other than the Committee may, at any time and from time to time, without any

further action of the Committee, exercise the powers and duties of the Committee

under the Plan; provided, however, that the Board or such committee may not

exercise such authority to the extent that the exercise of such authority would

cause any performance-based award to cease to qualify for the Section 162(m)

Exemption.

 

SECTION 4. SHARES AVAILABLE FOR AWARDS

 

                  (a) Shares Available. Subject to adjustment as provided in

Section 4(c) of the Plan, the maximum aggregate number of Shares available for

issuance under the Plan shall be One Million Two Hundred Thousand (1,200,000).

Shares to be issued under the Plan may be either authorized but unissued Shares

or Shares reacquired and held in treasury.

 

                  (b) Accounting for Awards. For purposes of this Section 4, if

an Award entitles the holder thereof to receive or purchase Shares, the number

of Shares covered by such Award (including Shares covered by Inducement Awards)

or to which such Award relates shall be counted on the Grant Date of such Award

against the aggregate number of Shares available for granting Awards under the

Plan. Any Shares that are used by a Participant as full or partial payment to

the Company of the purchase price or Exercise Price relating to an Award or in

connection with the satisfaction of tax obligations relating to an Award, shall

again be available for granting Awards under the Plan. In addition, if any

Shares covered by an Award or to which an Award relates are not purchased or are

forfeited, or if an Award otherwise terminates without delivery of any Shares,

then the number of Shares counted against the aggregate number of Shares

available under the Plan with respect to such Award, to the extent of any such

forfeiture or termination, shall again be available for granting Awards under

the Plan.

 

                  (c) Adjustments. In the event that the Committee shall

determine that any dividend or other distribution (whether in the form of cash,

Shares, other securities or other property), recapitalization, stock split,

reverse stock split, reorganization, merger, consolidation, split-up, spin-off,

combination, repurchase or exchange of Shares or other securities of the

Company, issuance of warrants or other rights to purchase Shares or other

securities of the Company or other similar corporate

 

 

 

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transaction or event affects the Shares such that an adjustment is determined by

the Committee to be appropriate in order to prevent dilution or enlargement of

the benefits or potential benefits intended to be made available under the Plan,

then the Committee shall, in such manner as it may deem equitable, adjust any or

all of (i) the number and type of Shares (or other securities or other property)

that thereafter may be made the subject of Awards, (ii) the number and type of

Shares (or other securities or other property) subject to outstanding Awards and

(iii) the purchase price or Exercise Price with respect to any Award; provided,

however, that the number of Shares covered by any Award or to which such Award

relates shall always be a whole number.

 

                  Notwithstanding the above, in the event (i) of any

reorganization, merger, consolidation, split-up, spin-off, combination,

repurchase or exchange of Shares or other securities of the Company or any other

similar corporate transaction or event or (ii) the Company shall enter into a

written agreement to undergo such a transaction or event, the Committee may, in

its sole discretion, cancel any or all outstanding Awards and pay to the holders

of any such Awards that are otherwise vested, in cash, the value of such Awards

based upon the price per share of capital stock received or to be received by

other stockholders of the Company in such event.

 

SECTION 5. ELIGIBILITY

 

                  Any Eligible Person shall be eligible to be designated a

Participant. In determining which Eligible Persons shall receive an Award and

the terms of any Award, the Committee may take into account the nature of the

services rendered by the respective Eligible Persons, their present and

potential contributions to the success of the Company or such other factors as

the Committee, in its sole discretion, shall deem relevant.

 

SECTION 6. AWARDS

 

                  (a) Options. The Committee is hereby authorized to grant

Incentive Options and Non-Qualified Options to Eligible Persons with the

following terms and conditions and with such additional terms and conditions not

inconsistent with the provisions of the Plan as the Committee shall determine:

 

                  (i) Exercise Price. The Exercise Price for each Option shall

         be fixed by the Committee at the Grant Date, but (A) in no event may

         the Exercise Price per Share subject to an Option be less than the Fair

         Market Value per Share on the Grant Date; and (B) in no event may the

         Exercise Price for Shares subject to an Incentive Option granted to a

         10 Percent Stockholder be less than 110% of the Fair Market Value on

         the Grant Date.

 

                  (ii) Payment. Upon exercise of an Option, the full Exercise

         Price for the Shares with respect to which the Option is being

         exercised shall be payable to the Company: (A) in cash or by check

         payable and acceptable to the Company; (B) by tendering to the Company

         Common Stock owned by the Participant having an aggregate Fair Market

         Value as of the date of exercise and tender that is not greater than

         the full Exercise Price for the Shares with respect to which the Option

         is being exercised and by paying any remaining amount of the Exercise

         Price as provided in (A) above; or (C) subject to such instructions as

         the Committee may specify, at the Participant's written request the

         Company may deliver certificates for the Shares for which the Option is

         being exercised to a broker for sale on behalf of the Participant,

         provided that the Participant has irrevocably instructed such broker to

         remit directly to the Company on the Participant's behalf the full

         amount of the Exercise Price from the proceeds of such sale. In the

         event the Participant elects to make payment as allowed under clause

         (B) above, the Committee may, upon confirming that the Participant owns

         the number of shares of Common Stock being tendered, authorize the

         issuance of a new certificate for the number of Shares being acquired

         pursuant to the exercise of the Option less the number of shares of

         Common Stock being tendered upon the exercise and return to the

         Participant (or not require surrender of) the certificate for the

 

 

 

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         shares of Common Stock being tendered upon the exercise. Payment

         instruments will be received subject to collection.

 

                  (iii) Number of Shares. Each Award Agreement shall state the

         total number of Shares that are subject to the Option.

 

                  (iv) Terms Governing Exercise. In the discretion of the

         Committee, each Award Agreement may contain provisions stating that the

         Option granted therein may not be exercised in whole or in part for a

         period or periods of time or until the achievement of specific goals,

         in either case as specified in such Award Agreement. Except as so

         specified therein, any Option may be exercised in whole at any time or

         in part from time to time during its term, provided that in no event

         shall an Option, or any portion thereof, be exercisable until at least

         six (6) months after the Grant Date of such Option. No Incentive Option

         granted to a 10 Percent Stockholder may be exercisable later than five

         (5) years from the Grant Date.

 

                  (v) Termination of Employment. If a Participant's employment

         with the Company and all of its Affiliates and service as a Director

         shall terminate for a reason other than: (A) with respect to employees,

         retirement from employment in accordance with the terms of a retirement

         plan or policy of the Company or one of its subsidiaries

         ("Retirement"); (B) "Permanent Disability" (as defined in Section

         22(e)(3) of the Code); or (C) death, the Participant's Options and all

         unexercised rights thereunder shall expire and automatically terminate.

 

                  If termination of employment is due to Retirement or if

         termination of employment or service is due to Permanent Disability,

         the Participant (or his or her personal representative) shall have the

         right to exercise any Option at any time within the 12-month period

         (three-month period in the case of Retirement for Options that are

         Incentive Options) following such termination of employment or service

         or the expiration date of such Option, whichever shall first occur,

         provided that such Option shall be exercisable only to the extent it

         was exercisable immediately prior to such termination of employment or

         service.

 

                  Whether any termination of employment or service is due to

         Retirement or Permanent Disability and whether an authorized leave of

         absence or absence for military or government service or for other

         reasons shall constitute a termination of employment or service for

         purposes of the Plan shall be determined by the Committee in its sole

         discretion.

 

                  If a Participant shall die while entitled to exercise an

         Option, the Participant's estate, personal representative or

         beneficiary, as the case may be, shall have the right to exercise the

         Option at any time within the 12-month period following the date of the

         Participant's death or the expiration date of such Option, whichever

         shall first occur, provided that such Option shall be exercisable only

         to the extent that the Participant was entitled to exercise the same on

         the day immediately prior to the Participant's death.

 

                  (vi) Substitute Awards. Options may be granted under the Plan

         from time to time in substitution for stock options and stock

         appreciation rights held by employees of entities other than the

         Company who become employees of the Company as a result of a merger or

         consolidation of such other entity with the Company or any of its

         Affiliates, the acquisition by the Company or any of its Affiliates of

         assets of such other entity, or the acquisition by the Company or any

         of its Affiliates of stock of such other entity with the result that

         such other entity becomes a subsidiary of the Company or any of its

         Affiliates.

 

                  (vii) Incentive Stock Options. Notwithstanding any provisions

         herein to the contrary, the terms set forth in this clause (vii) shall

         apply to Incentive Options. With respect to Incentive Options, to the

         extent that the aggregate Fair Market Value (determined as of the Grant

 

 

 

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         Date) of the Shares with respect to which Incentive Options are

         exercisable for the first time by such Participant during any calendar

         year (under all plans of the Company) exceeds $100,000, such Options

         shall be treated as Non-Qualified Options. The per share Exercise Price

         for an Incentive Option shall not be less than 100% of the Fair Market

         Value of a Share at the Grant Date (110% of the Fair Market Value of a

         Share at the Grant Date in the case of an Incentive Option granted to a

         10% Stockholder. Further, no Incentive Option shall be exercisable

         after the expiration of ten (10) years from the Grant Date (five (5)

         years in the case of an Incentive Option granted to a 10% Stockholder).

 

                  (b) Restricted Stock / Restricted Stock Units. The Committee

is hereby authorized to grant Restricted Stock and Restricted Stock Units to

Eligible Persons with the following terms and conditions and with such

additional terms and conditions not inconsistent with the provisions of the Plan

as the Committee shall determine:

 

                  (i) Restrictions. The Committee shall impose such terms,

         conditions and/or restrictions on any Restricted Stock or Restricted

         Stock Units granted pursuant to the Plan as it may deem advisable,

         including, without limitation, a requirement that Participants pay a

         stipulated purchase price for each share of Restricted Stock or each

         share issued under a Restricted Stock Unit; restrictions based upon the

         achievement of specific Performance Goals (Company-wide, divisional

         and/or individual); time-based restrictions on vesting; and/or

         restrictions under applicable federal or state securities laws. Any

         time-based restriction period shall be for a minimum of three (3)

         years. To the extent the Restricted Stock or Restricted St