SCHEDULE 14A
(Rule 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
[x ] Definitive Proxy Statement Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
LMI AEROSPACE, INC.
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[x ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title to each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
LMI Aerospace, Inc.
3600 Mueller Road
St. Charles, Missouri 63302
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 24, 2000
TO OUR SHAREHOLDERS:
The Annual Meeting of the Shareholders of LMI Aerospace, Inc., a Missouri
corporation, will be held at the Four Points Sheraton, 3400 Rider Trail South,
Earth City, Missouri 63045, at 10:00 a.m. local time on Wednesday, May 24, 2000
for the following purposes:
1. To elect three Class II Directors for a term expiring in 2003 or until
their successors are elected and qualified;
2. To approve the Amended and Restated LMI Aerospace, Inc. 1998 Stock
Option Plan, as described in the accompanying proxy statement;
3. To ratify the selection of Ernst & Young LLP to serve as the Company's
independent auditor; and
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on April 17, 2000, as the
record date for the determination of Shareholders entitled to notice of and to
vote at the meeting and any adjournment thereof. A list of all Shareholders
entitled to vote at the meeting, arranged in alphabetical order and showing the
address of and number of shares registered in the name of each Shareholder, will
be open during usual business hours to the examination of any Shareholder for
any purpose germane to the annual meeting for ten days prior to the meeting at
the office of the Company set forth above.
A copy of the Company's annual report for its fiscal year ended December 31,
1999, accompanies this notice.
By Order of the Board of Directors,
LAWRENCE E. DICKINSON
Secretary
St. Charles, Missouri
May 5, 2000
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, PLEASE MARK, SIGN, DATE
AND RETURN YOUR PROXY IN THE ENCLOSED POSTAGE PREPAID ENVELOPE SO THAT YOUR
SHARES MAY BE REPRESENTED AND VOTED AT THE MEETING ACCORDING TO YOUR WISHES.
YOUR PROXY WILL NOT BE USED IF YOU ATTEND AND VOTE AT THE MEETING IN PERSON.
<PAGE>
LMI Aerospace, Inc.
3600 Mueller Road
St. Charles, Missouri 63302
PROXY STATEMENT
Solicitation of Proxies
The enclosed proxy is solicited by the Board of Directors of LMI
Aerospace, Inc. (the "Company") to be voted at the Annual Meeting of
Shareholders of the Company to be held at the Four Points Sheraton, 3400 Rider
Trail South, Earth City, Missouri 63045, beginning at 10:00 a.m. local time on
Wednesday, May 24, 2000, or at any adjournment thereof. Whether or not you
expect to attend the meeting in person, please return your executed proxy in the
enclosed envelope and the shares represented thereby will be voted in accordance
with your wishes. In addition to solicitation by mail, officers, directors and
employees of the Company may solicit personally or by mail, telephone, or
telegraph if proxies are not promptly received. However, except with respect to
printing and mailing expenses, the Company does not expect to incur
out-of-pocket expenses in soliciting proxies. The accompanying Notice of Annual
Meeting, this Proxy Statement and the enclosed form of proxy are first being
mailed or given to Shareholders on or about May 5, 2000. Banks, brokers, and
other custodians, nominees, and fiduciaries will be requested to send proxy
materials to beneficial owners and to request voting instruction. The Company
will reimburse them for their out-of-pocket expenses in so doing.
Revocation of Proxy
If, after sending in your proxy, you decide to vote in person or desire
to revoke your proxy for any other reason, you may do so by notifying the
Secretary of the Company, Lawrence E. Dickinson, in writing of such revocation
at any time prior to the voting of the proxy. An executed proxy with a later
date will also revoke a previously furnished proxy.
Record Date
Only Shareholders of record at the close of business on April 17, 2000
will be entitled to vote at the meeting or any adjournment thereof.
Actions to be Taken Under Proxy
Unless otherwise directed by the giver of the proxy, the persons named
in the enclosed form of proxy, that is, Ronald S. Saks, or, if unable or
unwilling to serve, Lawrence J. LeGrand, will vote:
1. FOR the election of the persons named herein as nominees for Class II
Directors of the Company for a term expiring at the 2003 Annual Meeting
of Shareholders or until their successors have been duly elected and
qualified;
2. FOR the adoption of the Amended and Restated LMI Aerospace, Inc. 1998
Stock Option Plan, as described in this proxy statement;
3. FOR the ratification of the engagement of Ernst & Young LLP as the
Company's independent auditor; and
4. According to such person's judgment on the transaction of such other
business as may properly come before the meeting or any adjournment
thereof.
Should any nominee named herein for election as a director become unavailable
for any reason, it is intended that the persons named in the proxy will vote for
the election of such other person in his stead as may be designated by the Board
of Directors. The Board of Directors is not aware of any reason that might cause
any nominee to be unavailable to serve.
Voting Securities and Security Ownership of
Certain Beneficial Owners and Management
On April 17, 2000, the record date of the Shareholders entitled to vote
at the Annual Meeting, there were outstanding 8,208,247 shares of Common Stock
$0.02 par value per share, value of the Company, each of which is entitled to
one vote on all matters submitted, including the election of directors.
Under applicable State law and the provisions of the Company's Restated
Articles of Incorporation and Amended and Restated By-laws, the affirmative vote
of the holders of a majority of the issued and outstanding shares voting in
person or by proxy is required to approve any matter that may come before the
Annual Meeting of Shareholders, including the election of directors. A majority
of the outstanding shares present or represented by proxy shall constitute a
quorum at the meeting. Shares as to which voting instructions are given on at
least one of the matters to be voted, abstentions from voting, votes which are
withheld, and all shares held by a broker who lacks authority to vote such
shares ("broker non-votes"), will be considered present for purposes of
determining the presence of a quorum. For purposes of determining if a proposal
or director nominee has received a majority vote, abstentions, withheld votes
and broker non-votes shall not be included in the vote totals and, therefore,
will have no effect on the vote.
Votes will be counted by duly appointed inspectors of election, whose
responsibilities are to ascertain the number of shares outstanding and the
voting power of each, determine the number of shares represented at the meeting
and the validity of proxies and ballots, count all votes and report the results
to the Company.
The following table sets forth as of April 17, 2000, the beneficial
ownership of each current director (including the nominees for election as
directors), each of the officers named in the Summary Compensation Table set
forth herein, the executive officers and directors as a group, and each other
Shareholder known to the Company to own beneficially more than 5% of the
outstanding Common Stock. Unless otherwise indicated, the Company believes that
the beneficial owners set forth in the table have sole voting and investment
power.
Amount and
Nature of
Name of Beneficial Percent of
Beneficial Owner Ownership Class
---------------- ---------- ----------
Ronald S. Saks(1) 2,724,859 32.9%
Union Planters Trust &
Investment Management, as 977,738 11.8%
trustee for the Profit Sharing Plan(2)
Joseph and Geraldine Burstein(3) 599,296 7.2%
Duane E. Hahn(4) 359,523 4.3%
Sanford S. Neuman 292,240 3.5%
Lawrence J. LeGrand(5) 267,816 3.2%
Ernest T. Kretschmar(6) 83,492 1.0%
Robert T. Grah(7) 79,393 *
Phillip A. Lajeunesse(8) 55,999 *
Alfred H. Kerth, III 15,000 *
Thomas M. Gunn 2,000 *
Thomas G. Unger 2,000 *
All directors & executive
officers as a group 4,552,312 55.3%
(17 in group)
* Less than 1%.
(1) Includes 521 shares held by Union Planters Trust & Investment Management
for the benefit of Mr. Saks. Also includes 2,724,338 shares of Common
Stock held of record by the Ronald S. Saks Revocable Trust U/T/A dated
June 21, 1991, for which Mr. Saks is the trustee. Mr. Saks address is
3030 N. Highway 94, St. Charles, Missouri 63302.
(2) All such shares of Common Stock are held for the benefit of the Profit
Sharing Plan. The shares subject to the Profit Sharing Plan include
shares beneficially owned by: (i) Ronald S. Saks (521); (ii) Lawrence J.
LeGrand (2,616); (iii) Duane E. Hahn (63,423); (iv) Ernest T. Kretschmar
(33,722); (v) Robert T. Grah (30,398); and (vi) Phillip A. Lajeunesse
(14,124). The address of Union Planters Trust & Investment Management is
1401 South Brentwood Blvd., 9th Floor, St. Louis, Missouri 63144.
(3) All such shares of Common Stock are held of record by the Joseph Burstein
Revocable Trust U/T/A dated August 20, 1983 for which Mr. Burstein and
Mrs. Burstein are Co-Trustees. The Bursteins' address is 536 Fairways,
St. Louis, Missouri 63141.
(4) Includes 63,423 shares of Common Stock held of record by Union Planters
Trust and Investment Management for the benefit of Mr. Hahn. Also
includes 400 shares of Common Stock issuable upon the exercise of an
immediately exercisable option to purchase such shares.
(5) Includes 2,616 shares of Common Stock held of record by Union Planters
Trust and Investment Management for the benefit of Mr. LeGrand. Also
includes 34,900 shares of Common Stock issuable upon the exercise of
immediately exercisable options to purchase such shares.
(6) Includes 33,722 shares of Common Stock held of record by Union Planters
Trust and Investment Management for the benefit of Mr. Kretschmar. Also
includes 420 shares of Common Stock issuable upon the exercise of
immediately exercisable options to purchase such shares.
(7) Includes 30,938 shares of Common Stock held of record by Union Planters
Trust and Investment Management for the benefit of Mr. Grah. Also
includes 17,200 shares of Common Stock issuable upon the exercise of
immediately exercisable options to purchase such shares.
<PAGE>
(8) Includes 14,124 shares of Common Stock held of record by Union Planters
Trust and Investment Management for the benefit of Mr. Lajeunesse. Also
includes 750 shares of Common Stock issuable upon the exercise of
immediately exercisable options to purchase such shares.
PROPOSAL 1 - ELECTION OF DIRECTORS
Information About The Nominees and Current Directors
The Company's Restated Articles of Incorporation and Amended and
Restated Bylaws provide for a division of the Board of Directors into three
classes. One of the classes is elected each year to serve a three-year term. The
term of each of the current Class II Directors expires at the 2000 Annual
Meeting of Shareholders. It is the intention of the persons named in the
accompanying proxy, unless otherwise directed, to vote for the election of the
Class II nominees listed below to serve until the 2003 Annual Meeting of
Shareholders.
The following table sets forth for each nominee and director continuing
in office, such director's age, principal occupation for at least the last five
years, present position with the Company, the year in which such director was
first elected or appointed a director (each serving continuously since first
elected or appointed), directorships with other companies whose securities are
registered with the Securities and Exchange Commission, and the class and
expiration of such director's term as director.
Class II: To be elected to serve as Director until 2003
Service as
Name Age Principal Occupation Director Since
---- --- -------------------- --------------
Thomas M. Gunn 56 Retired. Prior to 1997, Senior Vice 1998
President of Business Development
for McDonnell Douglas.
Alfred H. Kerth, III 48 President and Chief Operating Officer 1998
of the Eads Center; prior thereto,
Senior Vice President and Senior
Partner at Fleishman-Hillard in St.
Louis since 1987.
Thomas Unger 51 Chief Executive Officer of ATAB 1999
Corporation since early 1998; prior
thereto, Chief Executive Officer of
Tyee Aircraft since 1982.
Class III: To continue to serve as Director until 2001
Service as
Name Age Principal Occupation Director Since
---- --- -------------------- --------------
Ronald S. Saks 56 Chief Executive Officer and 1984
President since 1984.
Joseph Burstein 72 Chairman of the Board of the Company 1984
since 1984.
Lawrence J. LeGrand 48 Executive Vice President of the Company 1998
in April 1999; prior thereto, Chief
Operating Officer of LMI.
Class I: To continue to serve as Director until 2002
Service as
Name Age Principal Occupation Director Since
---- --- -------------------- --------------
Sanford S. Neuman 64 Assistant Secretary of the Company; 1984
A member of the law firm, Gallop,
Johnson & Neuman, L.C. for more
than the last five years.
Duane E. Hahn 47 Vice President, Regional Manager since 1990
1996; prior thereto, Vice President and
General Manager of the Auburn facility
since 1988; prior thereto, Assistant
General Manager since 1984.
<PAGE>
Director's Compensation
The Company paid to each director who is not an employee of the Company
$1,500 for each Board meeting or committee meeting attended, and reimbursed all
directors for out-of-pocket expenses incurred in connection with their
attendance at Board and committee meetings. No director who is an employee of
the Company received compensation for services rendered as a director.
Information Concerning the Board of Directors and Committees
During the fiscal year that ended on December 31, 1999, the Board of
Directors held four regular meetings and one special meeting. Each director
attended 75% or more of the aggregate of (i) the total number of meetings of the
Board of Directors held during the period and (ii) the total number of meetings
held during the period by all committees of the Board of Directors on which he
served.
The Board of Directors has a standing Audit Committee and Compensation
Committee. The Audit Committee comprised of Messrs. Saks, Gunn, Neuman and
Unger, evaluates significant matters relating to the audit and internal controls
of the Company and reviews the scope and results of the audits conducted by the
Company's independent public accountants. During fiscal 1999, the Audit
Committee met four times. The Compensation Committee consisting of Messrs. Saks,
LeGrand, Neuman, Kerth and Gunn, reviews the Company's remuneration policies and
practices, including executive compensation, and administers the Company's stock
option plans. During fiscal 1999 the Compensation Committee met four times. See
the "Compensation Committee Report" beginning on page 8 for a discussion of the
key elements and policy of the Company's executive compensation program.
The Board of Directors evaluates and nominates qualified nominees for
election or appointment as directors and qualified persons for selection as
executive officers. The Board of Directors will give appropriate consideration
to a written recommendation by a shareholder for the nomination of a qualified
person to serve as a director of the Company, provided that such recommendation
contains sufficient information regarding the proposed nominee for the Board of
Directors to properly evaluate such nominee's qualifications to serve as a
director.
Section 16(a) Beneficial Reporting Compliance
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year and Form 5 and
amendments thereto (or written representations that no Form 5 is required)
furnished to the Company, the Company believes that all such reports were timely
filed, with the exception that Michael Biffignani, Charles Somerville and Ronald
Thompson failed to timely file initial statements of beneficial ownership on
Form 3 following the commencement of their employment as executive officers of
the Company, and Alfred H. Kerth, III failed to timely file a Statement of
Beneficial Ownership on Form 4 following his sale of 10,000 shares of the
Company's Common Stock in November, 1999.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table reflects compensation
paid or payable for fiscal years 1999, 1998 and 1997 with respect to the
Company's chief executive officer and each of the four most highly compensated
executive officers whose 1999 salaries and bonuses combined exceeded $100,000 in
each instance.
<PAGE>
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
--------------------------------- ----------------------------
Restricted Securities
Stock Underlying All Other
Name and Salary Award Options Compensation
Principal Position Year ($)(1) Bonus ($) Other ($)(2) (#) ($)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ronald S. Saks......... 1999 240,425 0 0 0 0 0
President and CEO 1998 240,515 70,508 0 0 0 0
1997 151,795 246,266 0 0 0 0
Lawrence J. LeGrand.... 1999 225,425 0 0 0 0 0
Executive Vice 1998 152,800 86,767 0 200,000 32,900 0
President 1997 0 0 0 0 0 0
Duane E. Hahn.......... 1999 150,425 37,520 0 0 0 0
Vice President 1998 150,515 83,796 0 0 0 0
1997 106,795 209,748 0 0 0 0
Phillip A. Lajeunesse.. 1999 135,425 0 0 0 0 0
General Manager 1998 125,515 48,572 0 0 0 0
(Wichita, KS) 1997 94,295 102,300 0 0 0 0
Robert Grah............ 1999 115,425 0 0 0 0 0
General Manager 1998 105,515 48,572 0 0 0 0
(Tulsa, OK) 1997 71,731 81,736 0 0 0 0
Ernest T. Kretschmar... 1999 123,425 12,088 0 0 0 0
Sales Manager 1998 118,515 19,101 0 0 0 0
(St. Charles, MO) 1997 113,795 17,193 0 0 0 0
<FN>
(1) Includes cash and common stock contributed to the Company's profit
sharing and 401(k) plan.
(2) The fair market value at the date of grant is deemed to have been $6.079
per share, based on an independent valuation obtained by the Company as
of March 31, 1998, adjusted for a 2.29 to 1 stock dividend.
</FN>
</TABLE>
Option Grants. The following table sets forth certain information with
respect to grants of stock options pursuant to the Company's 1998 Stock Option
Plan (the "Option Plan") to each of the Named officers during the year ended
December 31, 1999. No stock appreciation rights were granted to the Named
Officers during such year.
<TABLE>
<CAPTION>
Individual Grants
- -------------------------------------------------------------------- Potential Realizable Value
Percent At Assumed Annual Rates
Of Total Of Stock price Appreciation
Number of Options/SARs For Option Term
Securities Granted To Exercise ---------------------------
Underlying Employees Of Base
Options/SARs In Fiscal Price Expiration
Name Granted (#) Year ($/Sh) Date 5% ($) 10% ($)
(a) (b) (c) (d) (e) (f) (g)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ernest T. Kretschmar 4,200 (1) 2.19% $2.75 12/28/09 7,264 18,408
- ------------------
<FN>
(1) The option listed above was granted at the average of the closing bid and
ask price on the date of grant. The potential realizable value assumes a
rate of annual compound stock price appreciation of 5% and 10% from the
date the option was granted over the full option term. Such rates are
required by the Securities and Exchange Commission and do not represent
the Company's estimate or projection of future prices of the Common
Stock.
</FN>
</TABLE>
Option Exercises and Fiscal Year End Values. The following table sets
forth certain information concerning option exercises and option holdings for
the year ended December 31, 1999 with respect to each of the Named Officers. No
stock appreciation rights were exercised by the Named Officers during such year
nor did any Named Officer hold any stock appreciation rights at the end of that
year.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTIONS/SAR VALUES
Number of
Securities
underlying Value of
Unexercised Unexercised
Options/SARs In-The-Money
At Fiscal Year Options/ SARs At
Shares Ended (#) Fiscal Year End
Acquired Value Exercisable/ ($)Exercisable/
Name On Exercise Realized Unexercisable Unexercisable(1)
(a) (#) (b) ($)(1)(c) (d) (e)
- -----------------------------------------------------------------------------
Duane E. Hahn 57,575 63,333 0/0 0/0
- -----------------------------------------------------------------------------
Ernest T. Kretschmar 21,385 24,185 0/0 0/0
- -----------------------------------------------------------------------------
Phillip A. Lajeunesse 16,450 18,095 0/0 0/0
- -----------------------------------------------------------------------------
Lawrence J. LeGrand 0 0 32,900/0 0/0
(1) The monetary value used in this calculation is $3.00 per share, the fair
market value of the stock as of December 31, 1999.
Employment Arrangements with Named Officers
On January 1, 1997, the Company entered into an employment agreement
with Ronald S. Saks providing for his employment as President and Chief
Executive Officer. The agreement is for a six-year period that automatically
extends for successive one-year periods. Mr. Saks' employment agreement provides
for an annual base salary in 1997 of $150,000 and of $240,000 for the remaining
years of his contract payable in equal monthly installments. Mr. Saks is also
entitled to a bonus based on the performance of the Company (the "Performance
Bonus") if its annual net income as of the last day of each fiscal year is more
than $5 million. Such bonus is capped at $120,000 for each year subsequent to
1997.
As of May 1, 1998, the Company entered into an employment agreement
with Lawrence J. LeGrand providing for his employment as the Chief Operating
Officer of the Company. Mr. LeGrand's title was changed to Executive Vice
President in 1999. The agreement will terminate on December 31, 2002 and is
automatically extended for successive one-year periods. Mr. LeGrand's employment
agreement provides for an annual base salary of $225,000 payable in equal
monthly installments during the period May 1, 1998 through December 31, 2002.
The agreement provides for a Performance Bonus if the Company's annual net
income as of the last day of each fiscal year is more than $5 million. Such
bonus is capped at $150,000.
On January 1, 2000, the Company entered into an employment agreement
with Duane E. Hahn providing for his employment as the Vice President of
Continuous Improvement. The agreement is for a two-year period that
automatically extends for successive one-year periods. Mr. Hahn's employment
agreement provides for a base salary of $140,000 payable in equal monthly
installments. Mr. Hahn is also entitled to a Performance Bonus if the Company's
annual net income as of the last day of each fiscal year is more than $2.5
million. Such bonus is capped at $70,000.
On January 1, 1998, the Company entered into an employment agreement
with Phillip A. Lajeunesse providing for his employment as the General Manager
for the Company's facility in Wichita, Kansas. The agreement is for a two-year
period that automatically extends for successive one-year periods. Mr.
Lajeunesse's employment agreement provides for a base salary of $125,000 in 1998
and $135,000 in 1999 payable in equal monthly installments. Mr. Lajeunesse is
also entitled to a Performance Bonus if the Company's annual net income as of
the last day of each fiscal year is more than $5 million. Such bonus is capped
at $50,000. Mr. Lajeunesse is currently operating under a one-year extension of
this contract as he negotiates an updated contract. Mr. Lajeunesse's annual
salary under such extension is $130,000.
All such employment agreements provide that in addition to the base
salary and formula based performance bonus, the employees may receive such
additional bonus as the Board may authorize, and shall also participate in any
health, accident and life insurance programs and other benefits available to the
employees of the Company. The employment agreements also provide that the
employees are entitled to an annual paid vacation as well as the use of an
automobile.
Each employment agreement described above may be terminated upon: (i)
the dissolution of the Corporation, (ii) the death or severe disability of the
employee, or (iii) 10 days written notice by the Company to the employee upon
breach or default by the employee of any terms of the agreement.
Compensation Committee Interlocks and Insider Participation
The following persons are on the Compensation Committee of the Company:
Ronald S. Saks, Lawrence J. LeGrand, Sanford S. Neuman, Thomas M. Gunn and
Alfred H. Kerth, III. Mr. Saks is the president and CEO of the Company and Mr.
LeGrand is COO of the Company. Mr. Neuman is a member of the law firm, Gallop,
Johnson & Neuman, L.C., which has provided legal services to the Company in
prior years and is expected to provide legal services to the Company in the
future.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Overall Policy
The Company's executive compensation program is designed to be closely
linked to corporate performance and results via contractual agreements. The
overall compensation plan provides the Company's executive officers with the
opportunity to earn cash compensation based upon annual pretax income targets
and to gain additional stock ownership to drive long term growth in value for
all of the Company's shareholders. The Company's compensation strategy is to
place significant portions of an executive's compensation package at risk,
thereby motivating these individuals to execute the tactics necessary to insure
continued growth and profitability.
The Compensation Committee was formed in 1998 in conjunction with the
Company's initial public offering. The contractual agreements with Mr. Saks and
Mr. LeGrand were approved by the Board of Directors prior to the formation of
the Compensation Committee. When the Board approved the current employment
agreements it was apprised of competitive compensation levels of peers in the
industry for similar job functions to create a guideline for evaluating the
terms of each employment contract. Additionally, the Board was knowledgeable
about the performance of each of the executives when assessing the
appropriateness of each employment contract. The Compensation Committee did
approve Mr. Hahn's new contract for 2000 and 2001.
Compensation of the President and Chief Executive Officer
The base salary and bonus package granted to Mr. Ronald S. Saks,
President and Chief Executive Officer of the Company, was based upon
compensation packages for presidents and chief executive officers of peer
companies, performance of the Common Stock of the Company given the significant
ownership Mr. Saks has in the Company, and the financial performance of the
Company. Mr. Saks' base salary for 1999 and the remaining four years covered by
his employment agreement is $240,000.00 per year. Mr. Saks is eligible for a
performance bonus of 3% of the Company's pre tax income above $5 million, not to
exceed $120,000 in any fiscal year.
Ronald S. Saks
Lawrence J. LeGrand
Sanford S. Neuman
Alfred H. Kerth, III
Thomas M. Gunn
Comparison of LMI Aerospace, Inc. Cumulative Total Return
Set forth below is a line graph presentation comparing cumulative
shareholder returns since June 30, 1998, the date of the Company's initial
public offering, on an indexed basis with the Standard & Poor's Small Cap
Aerospace/Defense Index (the "S & P Aerospace/Defense Index") which is a
nationally recognized industry standard index, and an index of peer companies
selected by the Company. The graph assumes the investment of $100 in LMI
Aerospace, Inc. Common Stock, the S & P Aerospace/Defense Index, and the peer
group index on June 30, 1998, as well as the reinvestment of all dividends.
There can be no assurance that LMI Aerospace, Inc. stock performance will
continue into the future with the same or similar trend depicted in the graph
below.
The peer group companies are weighted based on market capitalization
and are as follows: Aerosonic Corp.; Allied Research Corp.; Ducommun; DRS
Technologies Inc.; EDAC Technologies Corp.; EDO Corp.; First Aviation Services
Inc.; Hawker Pacific Aerospace; Kellstrom; SIFCO Industries; and Spacehab Inc.
<TABLE>
<CAPTION>
6/30/98 9/30/98 12/31/98 3/31/99 6/30/99 9/30/99 12/31/99
------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
LMI Aerospace, Inc. 100.0 77.5 58.1 55.0 41.9 40.0 26.9
S&P Aerospace/Defense Index 100.0 79.9 103.9 76.6 78.5 55.6 52.1
Self-Determined Peer Group 100.0 67.4 72.5 60.6 63.5 55.4 57.5
</TABLE>
<PAGE>
CERTAIN TRANSACTIONS
From time to time the Company has engaged in various transactions with
certain of its directors, executive officers and other affiliated parties. The
following paragraph summarizes certain information concerning certain
transactions and relationships that have occurred during the past fiscal year or
are currently proposed.
Sanford S. Neuman, a director of the Company, is a member of the law
firm, Gallop, Johnson & Neuman, L.C. which has provided legal services to the
Company in prior years and is expected to provide legal services to the Company
in the future.
The terms of each of the foregoing transactions were negotiated on an
arm's-length basis. All future transactions between the Company and its
officers, directors, principal shareholders and affiliates must be approved by a
majority of the independent and disinterested outside directors.
PROPOSAL 2 - APPROVAL OF THE AMENDED AND RESTATED
LMI AEROSPACE, INC. 1998 STOCK OPTION PLAN
On April 27, 2000, the Company's Board of Directors adopted, subject to
the approval of the stockholders of the Company at the next Annual Meeting of
the Company, an amendment and restatement of the LMI Aerospace, Inc. 1998 Stock
Option Plan (the "1998 Plan") to (i) increase the number of authorized shares
reserved for issuance thereunder, (ii) authorize the participation of the
Company's non-employee directors in the 1998 Plan and (iii) make certain
non-substantive changes in the wording of the 1998 Plan (as so amended and
restated, the "1998 Restated Plan"). A copy of the 1998 Restated Plan is
attached hereto as Annex A.
Amendments to the 1998 Plan
Upon the approval of the Company's shareholders, the 1998 Restated Plan
will increase the number of shares issuable pursuant to options granted under
the 1998 Plan from 600,000 to 900,000. As of April 17, 2000, 349,235 of the
600,000 shares of Common Stock were subject to existing options. Currently, 12
officers and key employees are eligible to receive option awards under the 1998
Plan.
Under the 1998 Restated Plan, non-employee directors of the Company
also will be eligible to receive non-qualified stock options. Non-qualified
stock options to purchase 3,000 of the Company's Common Stock will be granted to
each non-employee director of the Company each year, coincident with the Annual
Meeting of the Company. The exercise price for such options will be the market
value of the Company's Common Stock as of the date of such Annual Meeting. The
term of such options will be 10 years from, and such options will be fully
exercisable upon, the date of their grant. Options granted to non-employee
directors will terminate upon the earlier of the expiration of the term of such
options or the termination of an optionee's status as a director of the Company;
provided, however, that if such termination is the result of the death or
disability of such non-employee director, such non-employee director, or his or
her personal representative, shall have the same rights with respect to his or
her options as those provided to employees of the Company.
In the event that the 1998 Restated Plan is approved by the Company's
shareholders, on the date of the Company's 2000 Annual Meeting, each of the
following non-employee directors of the Company will receive nonqualified stock
options to purchase 3000 shares of the Company's Common Stock at an exercise
price equal to the fair market value of the Company's Common Stock on the date
of the Annual Meeting: Thomas M. Gunn, Alfred H. Kerth, III, Thomas Unger,
Joseph Burstein, and Sanford S. Neuman.
The 1998 Restated Plan will be approved by the stockholders of the
Company only if the holders of a majority of the issued and outstanding shares
of Common Stock present at the Annual Meeting, in person or by proxy, vote for
the approval of the 1998 Restated Plan.
The 1998 Plan was designed to provide additional incentives for
officers and other key employees of the Company to promote the success of the
business and to enhance the Company's ability to attract and retain the service
of qualified persons. The Board of Directors believes that the grant of stock
options will continue to be an important ingredient in the successful
recruitment and retention of management personnel. Accordingly, the increase in
the number of shares issuable pursuant to the 1998 Restated Plan will enable the
Company to continue to provide the incentives discussed above. The Company
believes that by permitting the issuance of nonqualified options to non-employee
directors, the 1998 Restated Plan will enable the Company to provide additional
incentives for its directors to promote the success of the Company's business
and to enhance the Company's ability to attract and retain the service of
qualified directors.
Material Terms of the 1998 Plan
The 1998 Plan is administered by the Compensation Committee of the
Board of Directors of the Company. The provisions of the 1998 Plan authorize the
Compensation Committee to grant to key employees, including officers selected by
such Committee, incentive stock options and nonqualified stock options. The 1998
Plan will expire on, and no options may be granted thereunder after May 11,
2008, subject to the right of the Board of Directors to terminate the 1998 Plan
at any time prior thereto. The Board of Directors may amend the 1998 Plan at any
time.
An option enables the optionee to purchase shares of Common Stock at
the option price. The option price per share may not be less than the fair
market value of the Common Stock at the time the option is granted, provided
that in the event of the grant of an incentive stock option to an optionee who
is or would be the beneficial owner of more than 10% of the total combined
voting power of all classes of the Company's stock, the option price may not be
less than 110% of the fair market value of the Common Stock on the date of
grant. No person may be granted incentive stock options under the 1998 Plan that
are first exercisable during any calendar year for shares having an aggregate
fair market value as of the date of grant of more than $100,000. As of April 17,
2000, the fair market value of the Company's Common Stock as quoted on the
Nasdaq national market was $2.844 per share.
In order to obtain the shares granted pursuant to the exercise of an
option, a participant must pay the full option price to the Company at the time
of exercise of the option. The purchase price may be paid in cash or, with the
consent of the Compensation Committee, stock of the Company, including stock
acquired under the same option. Incentive stock options are intended to qualify
under Section 422 of the Internal Revenue Code of 1986, as amended.
The 1998 Plan provides that stock options may be granted with terms of
no more than ten years from the date of grant, provided that with respect to the
grant of an incentive stock option to an optionee who is or would be the
beneficial owner of more than 10% of the total combined voting power of all
classes of the Company's stock, the term of such option may not exceed five
years. Nonetheless, all options granted pursuant to the 1998 Plan are not
exercisable until the date of the six month anniversary of the date of grant.
Options will survive for a limited period of time after the optionee's death,
disability or normal retirement from the Company. Any shares as to which an
option expires, lapses unexercised or is terminated or canceled may be subject
to a new option.
Federal Tax Consequences of the 1998 Plan
An optionee will not realize any income, nor will the Company be
entitled to a deduction, at the time an incentive stock option is granted. If an
optionee does not dispose of the shares acquired on the exercise of an incentive
stock option within one year after the transfer of such shares to him or within
two years from the date the incentive stock option was granted to him, for
federal income tax purposes: (a) the optionee will not recognize any income at
the time of exercise of his incentive stock option; (b) the amount by which the
fair market value (determined without regard to any restriction other than a
restriction which by its terms will never lapse) of the shares at the time of
exercise exceeds the exercise price is an item of tax preference subject to the
alternative minimum tax on individuals; and (c) the difference between the
incentive stock option price and the amount realized upon sale of the shares of
the optionee will be treated as long-term capital gain or loss. The Company will
not be entitled to a deduction upon the exercise of an incentive stock option.
Except in the case of a disposition following the death of an optionee
and certain other very limited exceptions, if the stock acquired pursuant to an
incentive stock option is not held for the minimum periods described above, the
excess of the fair market value of the stock at the time of exercise over the
amount paid for the stock generally will be taxed as ordinary income to the
optionee in the year of disposition. In such case, the Company is entitled to a
deduction for federal income tax purposes at the time and in the amount in which
income is taxed to the optionee as ordinary income by reason of the sale of
stock acquired upon the exercise of an incentive stock option.
An optionee will not realize any income at the time a nonqualified
stock option is granted, nor will the Company be entitled to a deduction at that
time. Upon exercise of a nonqualified stock option, the optionee will recognize
ordinary income (whether the nonqualified stock option price is paid in cash or
by the surrender of previously owned Common Stock), in an amount equal to the
difference between the option price and the fair market value of the shares to
which the nonqualified stock option pertains. The Company will be entitled to a
tax deduction in an amount equal to the amount of ordinary income realized by
the optionee.
Option Grants Under the 1998 Plan
The following table sets forth information with respect to the options
granted under the 1998 Plan for (i) the persons named in the Summary
Compensation Table on page 6, (ii) the persons named as nominees for election as
directors of the Company, (iii) all of the executive officers of the Company as
a group, (iv) all non-employee directors of the Company as a group, and (v) all
non-executive employees of the Company as a group.
<PAGE>
Number of Shares
Name and Position Underlying Options
- ----------------- ------------------
Ronald S. Saks
President and CEO 0
Lawrence J. LeGrand
Executive Vice President 20,000
Tom D. Baker
Chief Operating Officer 40,000
Duane E. Hahn
Vice President 4,000
Phillip A. Lajeunesse
General Manager 7,500
Robert T. Grah
General Manager 23,950
Ernest T. Kretschmar
Sales Manager 4,200
Thomas M. Gunn
Director 0
Alfred H. Kerth, III
Director 0
Thomas Unger
Director 0
Executives as a Group 174,953
Non-Employee Directors as a Group 0
Non-Executive Employees as a Group 174,282
The Board of Directors believes the adoption of the 1998 Restated Plan
is in the best interest of the Company and its stockholders and, accordingly,
recommends a vote FOR this proposal, which is Proposal 2 on the accompanying
proxy card. Proxies received in response to the solicitation of the Board of
Directors will be voted FOR the approval of the 1998 Restated Plan if no
specific instructions are included thereon for Proposal 2.
PROPOSAL 3 -RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, has
appointed Ernst & Young LLP, as the Company's independent auditors to audit the
consolidated financial statements of the Company for the current fiscal year
ending December 31, 1999.
Ernst & Young LLP has been the Company's independent auditors since
replacing KPMG Peat Marwick LLP as the Company's independent auditors in March
of 1998. KPMG Peat Marwick LLP resigned as the Company's independent auditors
and withdrew its 1995 and 1996 opinions because KPMG Peat Marwick LLP determined
that it lacked independence as a result of a $300,000 loan to the Company made
by one of its partners, Lawrence J. LeGrand, acting as trustee on behalf of a
non-family trust. During the period between the date KPMG Peat Marwick LLP was
engaged and the date on which it resigned, there were no (i) disagreements
between the Company and KPMG Peat Marwick LLP on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure or (ii) adverse opinions or a disclaimer of opinion, or qualification
or modifications as to uncertainty, audit scope or accounting principles in
connection with its report on the Company's financial statements.
A proposal will be presented at the Annual Meeting to ratify the
appointment of Ernst & Young LLP as the Company's independent auditors. One or
more of the representatives of that firm are expected to be present at the
Annual Meeting to respond to questions and to make a statement if they desire to
do so. If the Company's shareholders do not ratify this appointment at the
Annual Meeting, other independent auditors will be considered by the Board of
Directors upon the recommendation of the Audit Committee.
ANNUAL REPORT
The Annual Report of the Company for fiscal 1999 accompanies this
Notice of Annual Meeting and Proxy Statement.
FUTURE PROPOSALS
Shareholder proposals intended to be presented at the 2001 Annual
Meeting of Shareholders must be received by the Company by January 5, 2001 for
inclusion in the Company's proxy statement and proxy relating to that meeting.
Upon receipt of any such proposal, the Company will determine whether or not to
include such proposal in the proxy statement and proxy in accordance with
regulations governing the solicitation of proxies.
In order for a Shareholder to bring other business before the
Shareholder meeting, timely notice must be given to the Company by March 21,
2001. Such notice must include a description of the proposed business and the
reasons therefor. The Board or the presiding officer at the Annual Meeting may
reject any such proposals that are not made in accordance with these procedures
or that are not a proper subject for Shareholder action in accordance with
applicable law. These requirements are separate from the procedural requirements
a Shareholder must meet to have a proposal included in the Company's proxy
statement.
OTHER BUSINESS
The Board of Directors knows of no other business that will be
presented for consideration at the Annual Meeting other than as set forth in the
Notice that accompanies this Proxy Statement. However, if any other matters
properly come before the meeting, it is the intention of the persons named in
the accompanying proxy to vote on such matters in accordance with their best
judgment.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR FISCAL YEAR 1999 FILED
WITH THE COMMISSION IS AVAILABLE TO SHAREHOLDERS WITHOUT CHARGE, UPON WRITTEN
REQUEST TO LMI AEROSPACE, INC., 3600 MUELLER ROAD, ST. CHARLES, MISSOURI 63302,
ATTENTION: LAWRENCE E. DICKINSON.
By Order of the Board of Directors,
LAWRENCE E. DICKINSON
Secretary
St. Charles, Missouri
May 5, 2000
<PAGE>
PROXY
LMI AEROSPACE, INC.
ANNUAL MEETING OF SHAREHOLDERS
MAY 24, 2000
The undersigned hereby appoints Ronald S. Saks, with full power of substitution,
or if Ronald S. Saks is unable or declines to exercise such rights hereunder,
the undersigned appoints Lawrence J. LeGrand, with full power of substitution,
the true and lawful attorney and proxy of the undersigned to vote all the shares
of Common Stock, $0.02 par value per share, of LMI Aerospace, Inc. owned by the
undersigned at the Annual Meeting of Shareholders to be held at the Four Points
Sheraton, 3400 Rider Trail South, Earth City, Missouri 63045 at 10:00 a.m. local
time, May 24, 2000, and at any adjournment thereof, on the following items of
business as set forth in the Notice of Annual Meeting and Proxy Statement:
1. ELECTION OF DIRECTORS:
|_| FOR all nominees listed below (or such other person designated
by the Board of Directors to replace any unavailable nominee)
to be allocated among such nominees in his discretion
|_| WITHHOLD AUTHORITY to vote for all nominees listed below
Nominees: Thomas M. Gunn, Alfred H. Kerth, III and Thomas Unger
Instruction: To withhold authority to vote for any individual nominee, print
that nominee's name on the line provided below:
------------------------------- -------------------------------
2. APPROVAL OF THE AMENDED AND RESTATED LMI AEROSPACE, INC. 1998 STOCK
OPTION PLAN:
|_| FOR |_| AGAINST |_| WITHHOLD AUTHORITY
3. RATIFICATION OF THE ENGAGEMENT OF ERNST & YOUNG AS INDEPENDENT AUDITOR:
|_| FOR |_| AGAINST |_| WITHHOLD AUTHORITY
4. OTHER MATTERS
In his discretion with respect to the transaction of such other
business as may properly come before the meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO CHOICE IS
SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE DIRECTORS NOMINATED
BY THE BOARD OF DIRECTORS, FOR THE RATIFICATION OF ERNST & YOUNG AND IN
THE DISCRETION OF THE PROXIES ON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS
THEREOF.
DATE , 2000
-----------------------------
----------------------------------------
----------------------------------------
Please date and sign exactly as your name appears on the envelope. In the case
of joint holders, each should sign. When signing as attorney, executor, etc.,
give full title. If signer is a corporation, execute in full corporate name by
authorized officer.
<PAGE>
ANNEX A
AMENDED AND RESTATED
LMI AEROSPACE, INC.
1998 STOCK OPTION PLAN
(Restated as of May 24, 2000)
I. Purpose of the Plan
The Amended and Restated LMI Aerospace, Inc. 1998 Stock Option Plan
(the "Plan") is intended to provide a means whereby employees and directors of
LMI Aerospace, Inc., a Missouri corporation ("LMI"), and its subsidiaries
(collectively, the "Company") may develop a sense of proprietorship and personal
involvement in the development and financial success of the Company, and to
encourage them to remain with and devote their best efforts to the business of
the Company, thereby advancing the interests of the Company and its
stockholders. Accordingly, LMI may award to employees and directors of the
Company options ("Options") to purchase shares of LMI's common stock, par value
$0.02 per share (the "Stock"). Options may be either nonqualified stock options
("NQSOs") or options which are intended to qualify as incentive stock options
("ISOs") under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
II. Term of Plan
The Plan was initially approved and adopted by the directors of LMI on
May 11, 1998 and became effective as of such date. The Plan was amended and
restated in its entirety effective as of May 24, 2000. The Plan was originally
approved and adopted by the stockholders of LMI on May 11, 1998. The Plan shall
remain in effect until the earlier of ten years from the original effective date
or the earlier termination by the Board of Directors of LMI (the "Board"). If
the Plan is terminated by the Board, no Options may be awarded after the
effective date of such termination, but Options previously granted shall remain
outstanding in accordance with all applicable terms and conditions under which
they were granted and the terms and conditions of the Plan.
III. Plan Administration
The Plan shall be administered by the Board or a committee consisting
of at least two members of the Board (the "Committee"); provided that so long as
LMI is subject to the reporting requirements of the Securities Exchange Act of
1934, as amended ("1934 Act"), each member of the Committee shall be a
"Non-Employee Director" within the meaning of Rule 16b-3 under the 1934 Act, as
such rule or its equivalent is then in effect ("Rule 16b-3") and an "outside
director," within the meaning of Treas. Reg. ss.ss.1.162-27(e)(3) or any
successor thereto. Committee members shall serve at the pleasure of the Board
and may resign at any time by delivering written notice to the Board. Vacancies
in the Committee, however caused, shall be filled by the Board. The Committee is
authorized to interpret the Plan and may from time to time adopt such rules and
regulations, not inconsistent with the provisions of the Plan, as it may deem
advisable to carry out the Plan. The Committee shall act by a majority of its
members and the Committee may act either by vote at a telephonic or other
meeting or by a memorandum or other written instrument signed by all of its
members.
Subject to and consistent with the terms, restrictions and limitations
of the Plan, the Committee shall have the sole authority to: (i) grant Options;
(ii) determine the terms and provisions of each agreement with an optionee
pursuant to which Options are granted under the Plan (an "Agreement"), including
the determination of the purchase price of the Stock covered by each Option (the
"Exercise Price"), the terms and duration of each Option, the employees and
directors to whom, and the times at which, Options shall be granted, whether the
Option shall be an NQSO or an ISO, and the number of shares to be covered by
each Option; (iii) prepare and distribute, in such manner as the Committee
determines to be appropriate, information about the Plan; and (iv) make all
other determinations deemed necessary or advisable for the administration of the
Plan. The Committee may vary the terms and provisions of the individual
Agreements in its discretion, and may fix such waiting and/or vesting periods,
exercise dates or other limitations as it shall deem appropriate with respect to
Options granted under the Plan including, without limitation, the achievement of
specific goals as a condition to vesting, and may specify those conditions upon
which such vesting provisions or exercise dates may be accelerated.
Notwithstanding the foregoing, the Committee is not authorized to make any
determination inconsistent with the requirements, restrictions, prohibitions or
limitations specified in the Plan.
The day-to-day administration of the Plan may be carried out by such
officers and employees of the Company as shall be designated from time to time
by the Committee. All expenses and liabilities incurred by the Committee in
connection with the administration of the Plan shall be borne by the Company.
The Committee may employ attorneys, consultants, accountants, appraisers,
brokers or other persons, and the Committee, the Board, the Company and the
directors, officers and employees of the Company shall be entitled to rely upon
the advice, opinions or valuations of any such persons. The interpretation and
construction by the Committee of any provisions of the Plan and any
determination by the Committee under any provision of the Plan shall be final
and conclusive for all purposes. Neither the Committee nor any member thereof
shall be liable for any act, omission, interpretation, construction or
determination made in connection with the Plan in good faith, and the members of
the Committee shall be entitled to indemnification and reimbursement by the
Company in respect of any claim, loss, damage or expense (including counsel
fees) arising therefrom to the fullest extent permitted by law. The members of
the Committee shall be named as insureds in connection with any directors and
officers liability insurance coverage that may be in effect from time to time.
IV. Eligibility
Employees and directors of the Company shall be eligible to receive
Options under the Plan. In granting Options to an employee, the Committee shall
take into consideration the contribution the employee has made or may make to
the success of the Company and such other considerations as the Committee shall
determine. The Committee shall also have the authority to consult with and
receive recommendations from officers and other employees of the Company with
regard to these matters; provided, however, that the Chief Executive Officer of
the Company shall not consult with or otherwise participate in any decision with
respect to granting of Options to such Chief Executive Officer. In no event
shall any employee or his or her legal representatives, heirs, legatees,
distributees, or successors have any right to participate in the Plan, except to
such extent, if any, as the Committee shall determine. All non-employee
directors shall be granted Options as provided in Article VI hereof.
V. Shares Subject to the Plan
Subject to adjustment as provided in Article VII, the aggregate number
of shares which may be issued pursuant to the exercise of Options granted under
the Plan shall not exceed 900,000. Such shares may consist of authorized but
unissued shares of Stock or previously issued shares reacquired by LMI. Any of
such shares which remain unsold and which are not subject to outstanding Options
at the termination of the Plan shall cease to be subject to the Plan, but until
termination of the Plan and the expiration of all Options granted under the
Plan, LMI shall at all times reserve for issuance upon the exercise of Options
granted under the Plan a sufficient number of shares to meet the requirements of
the Plan and the outstanding Options. If any Option, in whole or in part,
terminates by expiration or for any other reason other than exercise, the shares
reserved for issuance upon exercise of such Option shall be available for later
grants under the Plan.
VI. Grants of Options
Options granted under the Plan shall be of such type (ISO or NQSO), for
such number of shares of Stock, and subject to such terms and conditions as the
Committee shall designate. The Committee may grant Options to any eligible
individual at any time and from time to time during the term of the Plan as set
forth in Article II. For purposes of the Plan, the date on which an Option is
granted is referred to as the "Grant Date."
To the extent that the aggregate Market Value Per Share (determined at
the Grant Date) of Stock with respect to which ISOs (determined without regard
to this sentence) are exercisable for the first time by any individual during
any calendar year (under all plans of the Company) exceeds $100,000, such ISOs
shall be treated as NQSOs. The foregoing limitation on ISOs shall be applied by
taking into account the ISOs in the order in which they were granted.
Options granted pursuant to the Plan shall be evidenced by Agreements
that shall comply with and be subject to the following terms and conditions and
may contain such other provisions, consistent with the Plan, as the Committee
shall deem advisable. References herein to "Agreements" shall include, to the
extent applicable, any amendments to such Agreements.
A. Payment of Option Exercise Price. 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: (i) in
cash or by check payable and acceptable to the Company; (ii) by
tendering to the Company shares of Stock owned by the optionee having
an aggregate Market Value Per Share (as defined below) 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 (i)
above; or (iii) subject to such instructions as the Committee may
specify, at the optionee's written request the Company may deliver
certificates for the shares of Stock for which the Option is being
exercised to a broker for sale on behalf of the optionee, provided that
the optionee has irrevocably instructed such broker to remit directly
to the Company on the optionee's behalf the full amount of the Exercise
Price from the proceeds of such sale. In the event the optionee elects
to make payment as allowed under clause (ii) above, the Committee may,
upon confirming that the optionee owns the number of shares of 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 being tendered upon the exercise and return
to the optionee (or not require surrender of) the certificate for the
shares of Stock being tendered upon the exercise. Payment instruments
will be received subject to collection.
B. Number of Shares. Each Agreement shall state the total
number of shares of Stock that are subject to the Option.
C. Exercise Price. The Exercise Price for each Option shall be
fixed by the Committee at the Grant Date, but (i) in no event may the
Exercise Price per share for shares of Stock subject to an ISO be less
than the Market Value Per Share (as defined below) on the Grant Date;
and (ii) in no event may the Exercise Price for shares of Stock subject
to an ISO granted to an employee who owns (including ownership through
the attribution provisions of Section 424(d) of the Code) in excess of
10 percent of the outstanding voting stock of the Company (a "10
percent Stockholder") be less than 110 percent of the Market Value Per
Share on the Grant Date.
D. Market Value Per Share. The "Market Value Per Share" as of
any particular date ("Date") shall be determined as follows: (i) if the
Stock is listed for trading on a national or regional stock exchange or
is included in the NASDAQ National Market or Small-Cap Market, the
closing selling price quoted on such exchange or in such market which
is published in The Wall Street Journal for the trading day immediately
preceding the Date, or if no trade of the Stock shall have been
reported for the Date, the closing price quoted on such exchange or in
such market which is published in The Wall Street Journal for the next
day prior thereto on which a trade of the Stock was reported; or (ii)
if the Stock is not so listed, admitted to trading or included in such
market, the average of the highest reported bid and lowest reported
asked prices as quoted in the "pink sheets" published by the National
Daily Quotation Bureau for the first day immediately preceding the Date
on which the Stock is traded. If shares of the Stock are not listed or
admitted to trading on any exchange, including either of such markets,
or quoted in the "pink sheets," the "Market Value Per Share" shall be
determined by the Committee in good faith using any fair and reasonable
means selected in its discretion.
E. Term. The term of each Option shall be determined by the
Committee at the Grant Date; provided, however, that each Option shall,
notwithstanding anything in the Plan or an Agreement to the contrary,
expire not more than ten years (five years with respect to an ISO
granted to an employee who is a 10 percent Stockholder) from the Grant
Date or, if earlier, the date specified in the Agreement.
F. Terms Governing Exercise. In the discretion of the
Committee, each 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 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
months after the date of grant of such Option. No ISO granted to a 10
percent Stockholder may be exercisable later than five years from the
Grant Date.
G. Termination of Employment. If an individual's employment
with the Company shall terminate for a reason other than: (i)
retirement in accordance with the terms of a retirement plan or policy
of LMI or one of its subsidiaries ("Retirement"); (ii) "Permanent
Disability" (as defined in Section 22(e)(3) of the Code); or (iii)
death, the individual's Options and all unexercised rights thereunder
shall expire and automatically terminate.
If termination of employment is due to Retirement or permanent
disability, the individual 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 ISOs) following such termination of
employment 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.
Whether any termination of employment 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 for purposes of the Plan shall
be determined by the Committee in its sole discretion.
If an individual shall die while entitled to exercise an
Option, the individual'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
optionee'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 optionee was entitled to exercise the same on the day
immediately prior to the optionee's death.
Non-qualified stock options shall be granted to each non-employee
director of the Company to purchase 3,000 shares of Stock non-qualified stock
options each year coincident with the annual meeting of the shareholders of the
Company. The Exercise Price for such Option shall be the Market Value Per Share
as of the date of the annual meeting of shareholders. The term of any such
Option shall be 10 years from date of grant and such Option shall be fully
exercisable upon grant. Except as provided in Section G of this Article VI with
respect to death and disability, any Option granted to a non-employee director
shall terminate upon the earlier of the expiration of the term of the Option or
the termination of the optionee's status as a director of the Company.
Options may be granted under the Plan from time to time in substitution
for stock options and stock appreciation rights held by employees of
corporations other than the Company who become employees of the Company as a
result of a merger or consolidation of such other corporation with any entity
within the Company, the acquisition by any entity within the Company of assets
of such other corporation, or the acquisition by any entity within the Company
of stock of such other corporation with the result that such other corporation
becomes a subsidiary of an entity within the Company.
VII. Changes in Capital Structure - Change in Control
A. Changes in Capital Structure. The existence of the Plan and the
Options granted hereunder shall not affect in any way the right or power of the
Board or the stockholders of LMI to make or authorize any adjustment,
recapitalization, reorganization or other change in LMI's capital structure or
its business, any merger or consolidation of LMI, any issuance of bonds,
debentures, preferred or prior preference stocks ahead of or affecting the Stock
or the rights thereof, the dissolution or liquidation of LMI or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding.
The shares with respect to which Options may be granted are shares of
Stock as presently constituted, but if, and whenever, prior to the termination
of the Plan or the expiration of an Option theretofore granted, LMI shall effect
a subdivision or consolidation of shares of Stock or the payment of a stock
dividend on Stock without receipt of consideration by LMI, the remaining shares
of Stock available under the Plan and the number of shares of Stock with respect
to which such Option may thereafter be exercised: (i) in the event of an
increase in the number of outstanding shares, shall be proportionately increased
and the Exercise Price per share shall be proportionately reduced; and (ii) in
the event of a reduction in the number of outstanding shares, shall be
proportionately reduced and the Exercise Price per share shall be
proportionately increased, such that there shall be no change in the aggregate
Exercise Price applicable to the unexercised portion of the Option. Adjustments
under this Article VII shall be made by the Committee, whose determination as to
what adjustments shall be made, and the extent thereof, shall be final, binding
and conclusive. No fractional shares of Stock shall be issued under the Plan or
in connection with any such adjustment.
Except as may otherwise be expressly provided in the Plan, the issuance
by LMI of shares of capital stock of any class or securities convertible into
shares of capital stock of any class for cash, property, labor, or services,
upon direct sale, upon the exercise of rights or warrants to subscribe therefor,
or upon conversion of shares or obligations of LMI convertible into such shares
of capital stock or other securities, and in any case whether or not for fair
value, shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number of shares of Stock available under the Plan or subject to
Options theretofore granted or the Exercise Price per share with respect to
outstanding Options.
If LMI effects a recapitalization or otherwise materially changes its
capital structure (both of the foregoing are herein referred to as a
"Fundamental Change"), then thereafter upon any exercise of an Option granted
before the Fundamental Change the Optionee shall be entitled to purchase under
such Option, in lieu of the number of shares of Stock as to which such Option
shall then be exercisable, the number and class of shares of capital stock and
securities to which the optionee would have been entitled pursuant to the terms
of the Fundamental Change if, immediately prior to such Fundamental Change, the
Optionee had been the holder of record of the number of shares of Stock as to
which such Option is then exercisable.
Notwithstanding anything to the contrary contained in this Article VII,
upon the dissolution or liquidation of LMI, or upon a reorganization, merger or
consolidation of LMI with one or more corporations as a result of which LMI is
not the surviving corporation (or, in the case of a three party merger where
LMI, while the surviving corporation, becomes a subsidiary of another
corporation), or upon a sale of substantially all of the assets of LMI, then the
Plan shall terminate, and any Options granted under the Plan shall terminate
simultaneously with the consummation of any such transaction (a "Control
Transaction"), provided, however, that upon the execution by the Company of an
agreement providing for or the recommendation of the Company with respect to, a
Control Transaction, all restrictions with respect to the exercisability of
outstanding Options shall lapse and each such Option shall be exercisable in
full. Notwithstanding the foregoing, if the provision shall be made in writing
in connection with the Control Transaction in question for the continuance of
the Plan, for the assumption of Options previously granted, or the substitution
for such Options with new options to purchase the stock of a successor
corporation, or parent or subsidiary thereof, with appropriate adjustments as to
number and kind of shares and the option price, Options previously granted shall
continue in the manner and under the terms so provided; provided, however, that
the Committee or the Board shall have the authority to amend this Article to
require that a successor assume all obligations under any outstanding Options.
B. Change in Control. Notwithstanding any other provision of this Plan,
if the terms of the agreement under which the Committee has granted an option
hereunder ("Subject Option Agreement") shall so provide, upon a "Change in
Control" (as hereinafter defined), any outstanding and unexercised Options
granted under a Subject Option Agreement shall become immediately and fully
exercisable, and shall remain exercisable until it would otherwise expire by
reason of lapse of time.
For purposes of this Plan, the term "Change in Control" shall mean a
change in the control of the Company 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 1934 Act; provided that, for purposes of this Plan, a Change in
Control shall be deemed to have occurred if (i) any person, corporation (other
than the Company), partnership, trust, association, pool, syndicate organization
or other entity (each, a "Person") or group of Persons acting in concert is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the 1934 Act),
directly or indirectly, of securities of the Company which represent more than
twenty-five percent (25%) of the combined voting power of the Company's then
outstanding securities; (ii) during any period of two (2) consecutive years,
individuals who at the beginning of such period constitute the Board cease for
any reason to constitute at least a majority thereof, unless the election, or
the nomination for election, by the Company's stockholders, of each new director
is approved by a vote of at least two-thirds (2/3) of the directors then still
in office who were directors at the beginning of the period but excluding any
individual whose initial assumption of office occurs as a result of either an
actual or threatened election contest (as such term is used in Rule 14a-11 of
Regulation 14A promulgated under the 1934 Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a person other than the
Board; (iii) there is consummated any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or pursuant to
which shares of Common Stock are converted into cash, securities or other
property, other than a merger of the Company in which the holders of Common
Stock immediately prior to the merger have the same proportionate ownership of
common stock of the surviving corporation immediately after the merger; (iv)
there is consummated any consolidation or merger of the Company in which the
Company is the continuing or surviving corporation in which the holders of
Common Stock immediately prior to the merger do not own more than fifty percent
(50%) of the voting capital stock of the surviving corporation immediately after
the merger; (v) there is consummated any sale, lease, exchange, or other
transfer (in one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company; or (vi) the stockholders of the
Company approve any plan or proposal for the liquidation or dissolution of the
Company.
VIII. Optionee's Agreement
If, at the time of the exercise of any Option, in the opinion of
counsel for LMI, it is necessary or desirable, in order to comply with any then
applicable laws or regulations relating to the sale of securities, for the
individual exercising the Option to agree to hold any shares issued to the
individual for investment and without intention to resell or distribute the same
and for the individual to agree to dispose of such shares only in compliance
with such laws and regulations, the individual shall be required, upon the
request of LMI, to execute and deliver to LMI, an agreement to such effect.
IX. Amendment and Termination
Subject to any requirement of stockholder approval contained in Section
422 of the Code or Rule 16b-3, the Board may from time to time and at any time
alter, amend, suspend, discontinue or terminate this Plan and any Options
hereunder; provided, that no change in any Option granted before such time may
be made which would impair the rights of the optionee without the consent of
such optionee.
X. Preemption by Applicable Laws and Regulations
Anything in the Plan or any Agreement entered into pursuant to the Plan
to the contrary notwithstanding, if, at any time specified in the Plan or in any
Agreement for the making of any determination with respect to the issuance or
other distribution of shares of Stock, any law, regulation or requirement of any
governmental authority having jurisdiction in the premises shall require either
LMI or the Optionee (or the Optionee's beneficiary), as the case may be, to take
any action in connection with any such determination, the issuance or
distribution of such shares or the making of such determination shall be
deferred until such action shall have been taken.
XI. Miscellaneous
A. No Employment Contract. Nothing contained in the Plan shall
be construed as conferring upon any employee the right to continue in
the employ of the Company.
B. Employment with Subsidiaries. Employment by the Company for
the purpose of this Plan shall be deemed to include employment by, and
to continue during any period in which an employee is in the employment
of, any subsidiary of LMI.
C. No Rights as a Stockholder. An Optionee shall have no
rights as a stockholder with respect to shares issuable upon exercise
of an Option until the date of the issuance of shares to the Optionee
pursuant to such exercise. No adjustment will be made for dividends or
other distributions or rights for which the record date is prior to the
date of such issuance.
D. No Right to Corporate Assets. Nothing contained in the Plan
shall be construed as giving any Optionee, such Optionee 's
beneficiaries, or any other person any equity or other interest of any
kind in any assets of LMI or any subsidiary or creating a trust of any
kind or a fiduciary relationship of any kind between LMI or any
subsidiary and any such person.
E. No Restriction on Corporate Action. Nothing contained in
the Plan shall be construed to prevent LMI or any subsidiary from
taking any corporate action that is deemed by it to be appropriate or
in its best interests, whether or not such action would have an adverse
effect on the Plan or any Option granted under the Plan. No Optionee,
beneficiary or other person shall have any claim against LMI or any
subsidiary as a result of any such action.
F. Non-assignability. Neither an Optionee nor an Optionee's
beneficiary shall have the power or right to sell, exchange, pledge,
transfer, assign or otherwise encumber or dispose of such employee's or
beneficiary's interest arising under the Plan or any Option granted
under the Plan; nor shall such interest be subject to seizure for the
payment of an employee's or beneficiary's debts, judgments, alimony, or
separate maintenance or be transferable by operation of law in the
event of an Optionee's or beneficiary's bankruptcy or insolvency and to
the extent any such interest arising under the Plan or an Option
granted under the Plan is awarded to a spouse pursuant to any divorce
proceeding, such interest shall be deemed to be terminated and
forfeited notwithstanding any vesting provisions or other terms herein
or in the Agreement evidencing such Option.
G. Privilege of Stock Ownership. No person entitled to
exercise any Option granted under the Plan shall have rights or
privileges of a stockholder of the Company for any shares of Stock
issuable upon exercise of such Option until such person has become the
holder of record of such shares.
H. Application of Funds. The proceeds received by the Company
from the sale of shares of Stock pursuant to the Plan shall be used for
general corporate purposes.
I. Governing Law; Construction. All rights and obligations
under the Plan shall be governed by, and the Plan shall be construed in
accordance with, the laws of the State of Missouri without regard to
the law of conflicts. Titles and headings to articles in the Plan are
for purposes of reference only, and shall in no way limit, define or
otherwise affect the meaning or interpretation of any provisions of the
Plan.
J. Tax Withholding. The Company shall have the right to take
all necessary action to satisfy applicable obligations to withhold
amounts pursuant to federal, state, or local tax law, including,
without limitation, the deduction from shares of Stock delivered to an
Optionee upon exercise of NQSO shares having an aggregate value equal
to or less than the amount required to be withheld. The Committee may
permit Optionees to elect whether to pay cash or to use shares of Stock
to satisfy tax withholding requirements. Shares so used shall be valued
at the Market Value Per Share as of the date of the event triggering a
withholding obligation.
