LMI Aerospace, Inc. 8-K [lmi-8k_062717.htm]

 

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is entered into between LMI Aerospace,
INc. (“Employer”) and DANIEL G. KORTE (“Executive”).

 

1.          Purpose and Employment. The purpose of this Agreement is to define
the relationship between Employer as an employer and Executive as an employee of
Employer. Employer hereby employs Executive, and Executive hereby accepts
employment with Employer upon all of the terms and conditions set forth in this
Agreement.

 

2.          Duties and Position.

 

A.          Position. Employer hereby employs Executive as its Chief Executive
Officer, reporting to the Chief Executive Officer of Employer’s parent entity,
Sonaca S.A. (“Parent”). Executive’s title and/or reporting structure may be
modified by the Parent during Executive’s employment, subject to Section 5(C)2.

 

B.          Duties. Executive shall perform and discharge well and faithfully,
on behalf of Employer and its subsidiaries, duties commensurate with the
position of Chief Executive Officer. Executive shall also perform any such other
and further duties, responsibilities, and functions, at such locations, and in
such manner as may be specified from time to time by the Parent during
Executive’s employment.

 

C.          Duty of Loyalty. Executive agrees to devote so much of Executive’s
time, attention and energies to the business of Employer as is necessary for the
successful operation of Employer and shall endeavor at all times to improve the
business of Employer. Executive shall not engage in any other business
activities without the advance written consent of Employer. Such consent by
Employer shall not be unreasonably withheld provided that such other business
activities do not detract from or violate Executive’s duties for and obligations
to Employer.

 

D.          Compliance with Employer Policies. Executive agrees to comply with
and be subject to all of Employer’s policies and procedures, including
reasonable amendments to such policies and procedures adopted by Employer during
the term of Executive’s employment, as well as such reasonable rules and
regulations as are adopted from time to time by Employer.

 

3.          Term. The term of Executive’s employment under this Agreement shall
commence at the Effective Time, as defined in that certain Agreement and Plan of
Merger, dated as of February 16, 2017, by and between Sonaca S.A., Sonaca USA
Inc., Luminance Merger Sub, Inc. and LMI Aerospace Inc. (“Effective Date”) and
shall continue until terminated by either Party in accordance with the terms of
this Agreement (“Term”). Each full year of the Term shall be referred to herein
as a “Term Year.”

 

Employment Agreement

 

Page 1 

 

 

4.          Compensation

 

A.          Base Salary. For all services to be rendered by Executive in any
capacity hereunder, Executive shall be entitled to receive from Employer an
annual “Base Salary” in the amount of Five Hundred Fifteen Thousand Dollars
($515,000.00). Executive’s Base Salary shall be increased by at least three
percent (3%) each Term Year. Such Base Salary, as so increased, shall constitute
“Base Salary” hereunder. The then current Base Salary shall not be reduced
during the Term. All payments of Base Salary shall be paid in accordance with
Employer’s normal payroll procedures and shall be less any authorized or
required payroll deductions. In the event this Agreement is in effect for only a
portion of any particular year, the amount of Executive’s Base Salary for that
year shall be prorated on the basis of the actual number of pay periods during
such year that this Agreement was in effect.

 

B.Bonuses and Incentives.

 

1.          Initial Bonus: Executive shall be entitled to an initial bonus in
the amount of Seven Hundred Fifty Thousand Dollars ($750,000.00) (“Initial
Bonus”). The Initial Bonus shall be paid within five (5) calendar days of
Closing and shall be less such amounts are required to be withheld by law.
Executive acknowledges that the Initial Bonus is in full satisfaction of any
obligation of the Employer to award a Long-Term Incentive (as defined in the
Prior Employment Agreement) under the Prior Employment Agreement.

 

2.          Annual Performance Bonus: Executive shall be eligible for annual
bonuses each calendar year (each an “Annual Performance Bonus”) beginning with
calendar year 2017. The Annual Performance Bonuses shall be equal to not less
than fifty percent (50%) of the then current annual Base Salary and up to one
hundred and ten percent (110%) of the then current annual Base Salary, provided
that LMI and Sonaca Group meet certain performance objectives for the subject
calendar year, which objectives shall be determined and agreed upon between
Executive and Employer no later than sixty (60) days after the start of each
calendar year. The performance objectives for 2017 are attached as Exhibit A
hereto. In no event shall Employer be obligated to pay Executive any Annual
Performance Bonus if minimum performance goals are not achieved. Each Annual
Performance Bonus shall be paid in the following calendar year on or before
March 15 and shall be less such amounts as are required to be withheld by law.
In the event of a Qualifying Termination (defined in Section 5 below) or upon
Executive’s death or termination as a result of Executive’s disability,
Executive shall be entitled to a prorated amount of the Annual Performance Bonus
for the calendar year in which the Qualifying Termination occurred which shall
be paid to Executive no later than March 15th of the year following the year in
which the Qualifying Termination occurred.

 

Employment Agreement

 

Page 2 

 

 

3.          Annual Incentive Payment: Executive shall be entitled to an annual
incentive payment for each calendar year (each an “Annual Incentive Payment”)
beginning with calendar year 2018. The Annual Incentive Payment for each
calendar year shall be equal to three quarters times (.75 x) the prior year’s
annual Base Salary. Each Annual Incentive Payment shall vest in three (3)
installments, the first installment of which will vest on the last day of the
calendar year to which it pertains and the second and third installments of
which will vest on the last day of the two (2) successive calendar years
immediately following the calendar year to which the Annual Incentive Payment
pertains (each a “Vesting Date”), provided that Executive is employed on the
Vesting Date. Each Annual Incentive Payment shall be paid over a three (3) year
period beginning on January 30 of the three (3) successive calendar years
immediately following each Vesting Date. For purposes of illustration, the
Annual Incentive Payment for calendar year 2018 will equal $386,250.00
($515,000.00 (prior year’s annual Base Salary) times three quarters (.75)),
which will vest in three (3) installments on December 31, 2018, December 31,
2019, and December 31, 2020, and will be paid in three (3) equal installments of
$128,750.00 on January 30, 2019, January 30, 2020, and January 30, 2021. All
payments of the Annual Incentive Payment shall be less such amounts as are
required to be withheld by law. In the event of any termination of Executive’s
employment, for any reason, Executive shall be entitled to payment of any fully
or partially vested Annual Incentive Payments, which shall be paid to Executive
no later than March 15th of the year following the year to which Executive’s
termination of employment occurs.

 

4.          Annual Performance Incentive Payment: Executive shall be eligible
for annual performance incentive payments each calendar year (each an “Annual
Performance Incentive Payment”) beginning with calendar year 2018, provided that
LMI and Sonaca Group meet performance objectives for the subject calendar year,
which objectives shall be determined and agreed upon between Executive and
Employer no later than sixty (60) days after the start of each calendar year,
and further provided that Executive is maintaining a satisfactory level of
performance as reasonably determined by Employer. The Annual Performance
Incentive Payment for each calendar year shall be equal to not less than fifty
percent (50%) and up to one hundred and ten percent (110%) of three quarters
times (.75 x) the prior year’s annual Base Salary. Each Annual Performance
Incentive Payment shall vest in three (3) installments, the first installment of
which will vest on the last day of the calendar year to which it pertains and
the second and third installments of which will vest on the last day of the two
(2) successive calendar years immediately following the calendar year to which
the Annual Performance Incentive Payment pertains (each a “Vesting Date”),
provided that Executive is employed on the Vesting Date. Each Annual Performance
Incentive Payment shall be paid over a three (3) year period beginning on
January 30 of the three (3) successive calendar years immediately following the
calendar to which the Annual Performance Incentive Payment pertains. For
purposes of illustration, assuming Executive is entitled to 100% of the Annual
Performance Incentive Payment, the Annual Performance Incentive Payment for
calendar year 2018 will equal $386,250.00 ($515,000.00 (prior year’s annual Base
Salary) times three quarters (.75)), which will vest in three (3) installments
on December 31, 2018, December 31, 2019, and December 31, 2020, and will be paid
in three (3) equal installments of $128,750.00 on January 30, 2019, January 30,
2020, and January 30, 2021. All payments of the Annual Performance Incentive
Payment shall be less such amounts as are required to be withheld by law. In the
event of a Qualifying Termination (defined in Section 5 below) or upon
Executive’s death or termination as a result of Executive’s disability,
Executive shall be entitled to a prorated amount of one-third (1/3) of the total
Annual Performance Incentive Payment for the calendar year in which the
Qualifying Termination occurred, which shall be paid to Executive no later than
March 15th of the year following the year in which Executive’s termination of
employment occurred. In the event of any termination of Executive’s employment,
for any reason, Executive shall be entitled to payment of any fully or partially
vested Annual Performance Incentive Payments which shall be paid to Executive no
later than March 15th of the year following the year in which Executive’s
termination of employment occurred. In no event shall Employer be obligated to
pay Executive the Annual Performance Incentive Payment if minimum performance
goals are not met.

 

Employment Agreement

 

Page 3 

 

 

C.Fringe Benefits.

 

1.          Provided that Executive meets the applicable eligibility
requirements, Executive shall be eligible to participate in such employee fringe
benefit plans as may be authorized and adopted from time to time by Employer,
including the following: any health insurance plan; any medical reimbursement
plan; any qualified retirement plan; any disability or leave pay plan; any
disability insurance plan; any group term life insurance plan; and such other
employee benefit plans offered by Employer for which Executive is eligible
pursuant to the terms of such plans. Employer may also furnish such other
benefits to Executive as Employer shall determine from time to time within its
sole discretion to be in the best interests of Employer and Executive.

 

2.          Employer shall provide Executive during the term of Executive’s
employment an annual automobile allowance in the amount of Seven Thousand
Dollars ($7,000.00). The automobile allowance shall be increased by at least
three percent (3%) each Term Year. Such amount shall be paid to Executive no
later than March 15th of the year following the year for which it is provided.

 

3.          Employer retains the right to implement, modify or discontinue these
benefits at any time, with or without notice.

 

D.          Business Expenses. Throughout the term of Executive’s employment
hereunder, Employer shall reimburse Executive for all reasonable and necessary
travel, entertainment, and other business expenses that may be incurred in
direct connection with the performance of Executive’s duties hereunder and in
accordance with policies concerning travel and expense reimbursement adopted
from time to time by Employer.

 

Employment Agreement

 

Page 4 

 

 

E.          Paid Leave. Executive shall be entitled to paid vacation time
(“Vacation”) to use during each Term Year. The numbers of days of Vacation shall
be at the discretion of Executive, provided however, that any Vacation shall be
taken by Executive at such time or times as do not conflict, as reasonably
practicable, with Executive’s duties and responsibilities hereunder. As Vacation
is not earned or accrued annually, Executive shall not receive any compensation
for unused Vacation. Executive shall also be eligible for other paid leave in
accordance with Employer’s policies, as amended, adopted, suspended or
terminated from time to time by Employer.

 

5.          Termination of Employment. The phrase “termination of employment”
shall mean that Executive has incurred a separation from service within the
meaning of Section 409A of the Internal Revenue Code of 1986, as amended
(“Section 409A”) and the regulations thereunder.

 

A.          Termination by Employer for “Cause.” This Agreement and Executive’s
employment hereunder may be immediately terminated by Employer, at its option,
for “Cause,” either with or without notice, if Executive shall:

 

1.          Engage in negligent or willful misconduct; or

 

2.          Perform his/her duties in a significantly unsatisfactory manner
against position expectations (other than such failure resulting from physical
or mental illness) and fail to improve such performance in response to
corrective feedback;

 

3.          Violate material Employer codes or policies (such as, but not
limited to, the Code of Ethics and Business Conduct, and policies regarding
harassment, workplace violence, confidential information or drug testing); or

 

4.          Commit acts of dishonesty of any kind, including willful
misrepresentation, falsification of records, or breach of Executive’s fiduciary
duty to Employer, in Executive’s interactions or dealings with the Employer, its
Executives or customers.

 

5.          Refuse to comply with any reasonable, lawful direction of the Parent
or Parent officer; or

 

6.          Engage in business practices or conduct that, in the reasonable
opinion of the Employer, may or will result in a material injury or loss to
Employer, including damage to customer relations or business prospects; or

 

7.          Use alcohol, to the extent that such use interferes with the
performance of the Executive’s obligations under this Agreement or causes or
could cause embarrassment or reputational damage to Employer, continuing after
written warning, or use of illegal drugs, with or without previous warning; or

 

8.          Lose or have suspended any licenses, clearances or bonding required
to perform Executive’s duties under this Agreement; or

 

Employment Agreement

 

Page 5 

 

 

9.          Willfully violate any law, rule, or government regulation (other
than traffic violations, misdemeanors, or similar offenses that do not involve
moral turpitude) or be convicted of or plead nolo contendere to any felony.

 

For purposes of defining Cause, no act, or failure to act, of Executive shall be
considered “willful” unless done, or omitted to be done, by Executive
deliberately and with knowledge of the consequences of such action or inaction.
In the event of any such termination for Cause by Employer, Employer shall be
obligated to pay Executive (i) the Base Salary due Executive under this
Agreement up to Executive’s termination date; and (ii) any vested, but unpaid,
Annual Incentive Payment and/or Annual Performance Incentive Payment. Such
amounts will be paid to Executive no later than March 15th of the year following
the year in which Executive’s termination for Cause occurred.

 

B.          Termination by Employer Without Cause. This Agreement and
Executive’s employment hereunder may be immediately terminated by Employer
without Cause. In the event of any such termination by Employer without Cause,
Employer shall be obligated to pay Executive (i) the Base Salary due Executive
under this Agreement up to Executive’s termination date; (ii) any vested, but
unpaid, Annual Incentive Payment and/or Annual Performance Incentive Payment;
(iii) a prorated amount of the Annual Bonus and the Annual Performance Incentive
Payment for the calendar year in which the termination occurred; and (iv)
Severance as defined below. The amounts due to Executive, other than Severance
(which shall be paid in accordance with Section 6(A) below) shall be paid to
Executive no later than March 15th of the year following the year in which
Executive’s termination by Employer without Cause occurred.

 

C.          Termination by Executive.

 

1.          This Agreement and Executive’s employment hereunder may be
terminated by Executive with thirty (30) calendar days’ written notice (“Notice
Period”) to Employer. Upon receiving notice of termination from Executive,
Employer reserves the right to terminate this Agreement immediately or at any
time during the Notice Period. Provided Executive has given the required thirty
(30) calendar days’ notice, if Employer elects to terminate this Agreement
before the termination date set forth in Executive’s notice, Employer shall be
obligated to continue to pay Executive the Base Salary that would have been due
Executive under this Agreement to the end of Executive’s Notice Period, but not
exceeding thirty (30) days. If Executive terminates this Agreement with less
than thirty (30) calendar days’ notice or if Executive elects not to remain
employed for the full Notice Period, Employer shall only be obligated to pay
Executive the Base Salary due Executive up to the earlier of (i) the end of
Executive’s Notice Period or (ii) the termination date set by Employer. Employer
shall further be obligated to pay Executive any vested, but unpaid, Annual
Incentive Payment and/or Annual Performance Incentive Payment. The amounts due
to Executive shall be paid to Executive no later than March 15th of the year
following the year in which Executive’s termination occurred.

 

Employment Agreement

 

Page 6 

 

 

2.          Notwithstanding anything to the contrary in this section (C), in the
event Executive terminates this Agreement for Good Reason, Employer shall be
obligated to pay Executive (i) the Base Salary due Executive under this
Agreement through the Notice Period; (ii) any vested, but unpaid, Annual
Incentive Payment and/or Annual Performance Incentive Payment; (iii) a prorated
amount of the Annual Bonus and the Annual Performance Incentive Payment for the
calendar year in which the termination occurred; and (iv) Severance as defined
below. The amounts due to Executive, other than Severance (which shall be paid
in accordance with Section 6(A) below) shall be paid to Executive no later than
March 15th of the year following the year in which Executive’s termination for
Good Reason occurred. “Good Reason” is defined as the occurrence of any of the
following:

 

a.          An involuntary reduction or diminution in Executive’s title,
authority, duties, reporting relationship or responsibilities (other than
temporarily while the Executive is physically or mentally incapacitated or as
required by applicable law), relative to Executive’s title, duties, authority,
reporting relationship or responsibilities in effect immediately prior to such
reduction which would cause Executive’s position with Employer to become of
materially less responsibility, authority and/or importance; or

 

b.          Requiring Executive to relocate his primary work location more than
fifty (50) miles from his/her then-present location; or

 

c.          A material reduction in Executive’s salary, bonus opportunity or
benefits; or

 

d.          Executive is not given sufficient authority for Executive to carry
out the responsibilities contemplated hereunder; or

 

e.          Employer otherwise materially breaches this Agreement.

 

3.          In order to qualify as Good Reason, in addition to the occurrence of
one of the circumstances above, Executive must:

 

a.          provide written notice to Employer of Good Reason no more than
ninety (90) days after the initial existence of Good Reason, and

 

b.          afford Employer thirty (30) days to remedy the material change or
breach, and

 

c.          Executive must terminate within one-hundred-twenty (120) days
following the initial existence of any Good Reason if Employer fails to remedy
the same.

 

Employment Agreement

 

Page 7 

 

 

D.          Death of Executive. This Agreement and Executive’s employment
hereunder shall terminate automatically upon the death of Executive. In the
event Executive’s employment is terminated by reason of Executive’s death,
Employer shall pay to Executive’s estate (i) the Base Salary due Executive under
this Agreement up to Executive’s termination date; (ii) any vested, but unpaid,
Annual Incentive Payment and/or Annual Performance Incentive Payment; and (iii)
a prorated amount of the Annual Bonus and the Annual Performance Incentive
Payment for the calendar year in which the termination occurred. The amounts due
to Executive shall be paid to Executive no later than March 15th of the year
following the year in which Executive’s death occurred.

 

E.          Disability of Executive. This Agreement and Executive’s employment
hereunder may be terminated in the event of Executive’s disability. For purposes
of this Agreement, “disability” shall mean Executive cannot perform the
essential functions of Executive’s employment position, with or without a
reasonable accommodation, by reason of physical or mental impairment or other
similar causes for a continuous period of ninety (90) days and under
circumstances where it is not expected that Executive will be able to return to
the continuous full-time performance of Executive’s duties within a period of
twelve (12) months from the date such disability began. Such disability shall be
certified by a duly licensed physician, and in the event Executive and Employer
disagree, each shall select a duly licensed physician to examine Executive and
the two physicians shall appoint a third duly licensed physician to examine
Executive, in which case the findings of a majority shall control. The cost
involved in such examination shall be borne by Company. It is understood that
Executive’s occasional sickness or other incapacity of short duration (a
“temporary disability”) may not result in Executive having a disability,
however, any such temporary disability may constitute disability if such
temporary disability is prolonged or recurring. The foregoing definition of
disability is not intended to and shall not affect the definition of
“disability” or any similar or related term in any insurance policy Employer may
provide. If Employer elects to terminate the employment relationship on this
basis, Employer shall notify Executive or Executive’s representative in writing
and the termination shall become effective on the date that such notification is
given. In the event of a termination of employment by reason of Executive’s
disability, Employer shall pay to Executive (i) the Base Salary due Executive
under this Agreement up to Executive’s termination date; (ii) any vested, but
unpaid, Annual Incentive Payment and/or Annual Performance Incentive Payment;
and (iii) a prorated amount of the Annual Bonus and the Annual Performance
Incentive Payment for the calendar year in which the termination occurred. The
amounts due to Executive shall be paid to Executive no later than March 15th of
the year following the year in which Executive’s disability occurred.

 

F.          Corporate Dissolution. This Agreement and Executive’s employment
hereunder shall terminate in the event of the termination of the business or
corporate existence of Employer. In the event of any such termination by
Employer, Employer shall be obligated to pay Executive (i) the Base Salary due
Executive under this Agreement up to Executive’s termination date; (ii) any
vested, but unpaid, Annual Incentive Payment and/or Annual Performance Incentive
Payment; (iii) a prorated amount of the Annual Bonus and the Annual Performance
Incentive Payment for the calendar year in which the termination occurred; and
(iv) Severance as defined below. The amounts due to Executive, other than
Severance (which shall be paid in accordance with Section 6(A) below) shall be
paid to Executive no later than March 15th of the year following the year in
which Executive’s termination due to termination of the business or corporate
existence of Employer occurred.

 

Employment Agreement

 

Page 8 

 

 

G.          Reconciliation of Compensation Owed Executive. After any termination
of Executive’s employment hereunder, all compensation and amounts due to
Executive with respect to work performed or expenses incurred prior to the date
of termination shall be reconciled with amounts due to Employer from Executive.
Each party shall be entitled to offset against any amounts that may be due to
the other party such amounts as are due from such other party to it or him. The
parties shall proceed expeditiously to accomplish the foregoing, and the
resulting amount due from one party to the other shall be paid promptly after it
is determined but in no event later than March 15th of the year following the
year of Executive’s termination of employment.

 

H.          Executive Cooperation. Following any notice of termination,
Executive shall fully cooperate with Employer in all matters relating to the
winding up of Executive’s pending work on behalf of Employer and the orderly
transfer of any such pending work to such other Executives of Employer as may be
designated by Employer. To that end, Employer shall be entitled to such full
time or part time services of Executive as Employer may reasonably require
during all or any part of the period from the time of giving any such notice
until the effective date of such termination. Executive further agrees to
cooperate with and provide assistance to Employer and its legal counsel in
connection with any litigation (including arbitration or administrative
hearings) or investigation affecting Employer, in which (in the reasonable
judgment of Employer) Executive’s assistance or cooperation is needed. Executive
shall, when requested by Employer, provide testimony or other assistance and
shall travel at Employer’s request in order to fulfill this obligation;
provided, however, that, in connection with such litigation or investigation,
Employer shall attempt to accommodate Executive’s schedule, shall provide
Executive with reasonable notice in advance of the times in which Executive’s
cooperation or assistance is needed, and shall reimburse Executive for any
reasonable expenses incurred in connection with such matters.

 

6.          Severance. In the event of a termination by Employer without Cause
as defined in Section 5(B), by Executive for Good Reason as defined in Section
5(C), or in the case of Corporate Dissolution as defined in Section 5(F) (each a
“Qualifying Termination”), Employer agrees to provide Executive with the
following payments and benefits, which shall be referred to as “Severance.” As a
condition of receiving the Severance hereunder, Executive will be required to
execute a release agreement in a form reasonably acceptable to Executive and
Employer.

 

A.          Severance Pay.

 

1.          In the event of a Qualifying Termination occurring on or after the
Effective Date until the first anniversary of the Effective Date, Employer shall
provide Executive with Severance Pay in an amount that is equal to two and
one-half times (2 ½ x) Executive’s then current annual Base Salary.

 

Employment Agreement

 

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2.          In the event of a Qualifying Termination occurring on or after the
first anniversary of the Effective Date until the second anniversary of the
Effective Date, Employer shall provide Executive with Severance Pay in an amount
that is equal to one and one half times (1.5 x) Executive’s then current annual
Base Salary.

 

3.          In the event of a Qualifying Termination occurring on or after the
second anniversary of the Effective Date or any time thereafter, Employer shall
provide Executive with Severance Pay in an amount that is equal to one times (1
x) Executive’s then current annual Base Salary.

 

Severance Pay shall be less such amounts required to be withheld by law. The
Severance Pay shall be paid following termination in equal installments per
Employer’s regular pay schedule over the length of the period of Base Salary on
which the amount of Severance Pay is based (e.g. one-year period if Qualifying
Termination occurs on or after the second anniversary of the Effective Date),
commencing on the next regular payroll date following after the date the
revocation period for the release agreement described below has expired and no
revocation has occurred. If any payment hereunder fails to be exempt from
Internal Revenue Code (“Code”) Section 409A, and the applicable revocation
period spans two calendar years, commencement of payment of the installments
will not occur until the second calendar year and after the release agreement
has become effective.

 

B.          Benefits Continuation. In addition to Severance Pay, if Executive
elects continuation coverage under one or more of Employer’s health plans
(“Health Plans”) pursuant to the continuation coverage terms of such Health
Plan(s) and as required by the Consolidated Omnibus Budget Reconciliation Act of
1985 (“COBRA”), then for a period equal to the lesser of eighteen (18) months or
the number of months of Severance Pay (“Benefits Continuation Period”),
Executive shall pay a reduced, monthly COBRA premium for continuation coverage.
The monthly premium to be paid by Executive shall be equal to the payroll
deduction contribution then being paid, each month, by Employer’s actively
employed, similarly situated executives, for the selected Health Plans’
coverage. Such coverage shall be provided in accordance with terms of the Health
Plan(s) as may exist or may be amended from time to time. If Executive elects to
continue COBRA coverage beyond the Benefits Continuation Period, Executive will
be responsible for payment of the full, regular COBRA premium for any coverage
continuation thereafter. In the event the Health Plan for which Executive’s
COBRA coverage is provided is subject to the nondiscrimination rules under
section 105(h) of the Code, the amount of the payment of the full, regular COBRA
premium less the amount paid by Executive will be treated as taxable income to
Executive.

  

Employment Agreement

 

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7.          Confidential Information.

 

A.          Non-Disclosure. Executive shall, during the course of Executive’s
employment and at all times subsequent to Executive’s employment, hold in
strictest and total confidence all Confidential Information. Executive will at
no time, except as authorized by Employer in writing or as required by any law,
rule or regulation after providing prior written notice to Employer within
sufficient time for Employer to object to production or disclosure or quash
subpoenas related to the same, directly or indirectly, use for Executive’s
benefit or for the benefit of others, or disclose, communicate, divulge, furnish
to, or convey to any other person, firm, or corporation, any Confidential
Information, nor shall Executive permit any other person or entity to use
Confidential Information in competition with Employer. Executive acknowledges
that disclosure of Confidential Information to or use of the same by third
parties would greatly affect the effective and successful conduct of the
business of Employer and the goodwill of Employer, and that any breach of the
terms of this subsection (A) shall be a material breach of this Agreement.

 

B.          Defend Trade Secrets Act (DTSA) Notice. Pursuant to 18 USC §
1833(b), Executive may not be held criminally or civilly liable under any
federal or state trade secret law for disclosure of a trade secret: (i) made in
confidence to a government official, either directly or indirectly, or to an
attorney, solely for the purpose of reporting or investigating a suspected
violation of law; and/or (ii) in a complaint or other document filed in a
lawsuit or other proceeding, if such filing is made under seal. Additionally,
should Executive pursue legal action against Employer for retaliation based on
the reporting of a suspected violation of law, Executive may disclose a trade
secret to his/her attorney and use the trade secret information in the court
proceeding, so long as any document containing the trade secret is filed under
seal and the individual does not disclose the trade secret except pursuant to
court order.

 

C.          Definitions.

 

1.          “Confidential Information” shall mean any information proprietary to
Employer and not generally known, including trade secrets; Inventions;
technology, whether now known or hereafter discovered; information pertaining to
research, development, techniques, engineering, purchasing, marketing, selling,
accounting, licensing, know how, processes, products, equipment, devices,
models, prototypes, computer hardware, computer programs and flow charts,
program code, software libraries, databases, formulae, compositions,
discoveries, cost systems, pending business transactions, the identity of
customers and potential customers, and the particular needs and requirements of
customers; customer lists; customer histories and records; personnel
information; financial information; and confidential and proprietary information
of customers and other third parties received by Employer. Confidential
Information shall also include all derivatives thereof, any information that
qualifies as a “trade secret” under the Uniform Trade Secret Act or the Defend
Trade Secrets Act of 2016.

 

Employment Agreement

 

Page 11 

 

 

2.          “Invention” shall mean all ideas, discoveries, developments,
inventions, improvements, innovations, technology, computer programs, software,
products, methods, systems or plans, whether or not shown or described in
writing or reduced to practice or use, and whether or not entitled to the
protection of applicable patent, trademark, copyright, or similar laws, relating
in any manner to any of Employer’s present or future products, services,
manufacturing or research.

 

3.          The term Confidential Information shall not apply to the following:
(a) information that is or becomes public knowledge other than through the fault
of Executive; (b) information that is received by Executive from a third party
who is under no obligation to keep the information confidential; (c) information
that Executive can show by written records was in Executive’s possession prior
to the date of disclosure by Employer to Executive of the Confidential
Information in question; or (d) information that is individually developed by
Executive, and that Executive can show by written or other tangible evidence was
so independently developed.

 

D.          Return of Confidential Information. Upon termination of Executive’s
employment with Employer or at any other time upon Employer’s request, Executive
shall deliver promptly to Employer all originals and all copies (including
photocopies, facsimiles, and computer or other means of electronic storage
whether now known or hereafter discovered) of all documents and other materials
then in the Executive’s possession and whether prepared by the Executive or
others that constitute Confidential Information or relate in any way to business
of Employer. Executive will not make or retain any copies of the foregoing and
will so represent to Employer upon Executive’s termination of employment.
Furthermore, upon Executive’s termination of employment, Executive will return
to Employer all computer hardware and/or software provided by or owned by
Employer.

 

E.          Assignment of Inventions. Any Invention that Executive, either alone
or with others makes, discovers, devises, conceives, reduces to practice, or
otherwise possesses while employed by Employer shall be “works made for hire” as
that term is defined in the United States Copyright Laws and the sole property
of Employer. Executive further agrees to assign, and does hereby irrevocably
assign, to Employer or Employer’s designee, Executive’s entire right, title and
interest in: (i) all Inventions, (ii) all trademarks and copyrights in any of
the Inventions, and any applications with respect thereto, and all of the
goodwill appurtenant thereto, and (iii) all patent applications and patents with
respect to any of the Inventions, including those in foreign countries, which
Executive conceives or makes (whether alone or with others) while employed by
Employer. Additionally, both while employed by Employer and afterwards,
Executive agrees to execute and deliver at Employer’s expense any documents that
Employer may reasonably consider necessary or helpful to assure the originality
of all Inventions, obtain or maintain patents, trademarks, copyrights or any
other registrations, whether during the prosecution of applications therefor or
during the conduct of an interference, opposition, litigation or other matter
(all related expenses to be borne by Employer), and to vest ownership in,
transfer and convey, by assignment or otherwise, all right, title and interest
in and to such items to Employer.

 

Employment Agreement

 

Page 12 

 

 

8.          Restrictive Covenants.

 

A.          Limitation on Competition. During the term of Executive’s employment
and for a period of one (1) year after the termination of such employment for
any reason (the “Restricted Period”), Executive shall not, engage directly or
indirectly, either personally or as an Executive, partner, associate partner,
owner, officer, manager, agent, advisor, consultant or otherwise, or by means of
any corporate or other entity or device, in any business which is competitive
with the business of Employer. For purposes of this covenant, a business will be
deemed competitive if it is conducted in whole or in part within any geographic
area wherein Employer is engaged in marketing its products, and if it involves
the design or manufacture of products for the aerospace industry that are the
same or substantially similar to those designed or manufactured by Employer or
if it is in any manner competitive, as of the date of cessation of the
Executive’s employment, with any business then being conducted by Employer or as
to which Employer has then formulated definitive plans to enter;

 

B.          Non-Solicitation of Customers. During Executive’s employment and
during the Restricted Period, Executive shall not, individually or collectively,
as a participant in a partnership, sole proprietorship, corporation, limited
liability corporation, or other entity, or as an operator, investor,
shareholder, partner, director, Executive, consultant, manager, sales
representative, independent contractor or advisor of any such entity, or in any
other capacity whatsoever, either directly or indirectly (i) solicit any
business from any Customer or assist any other entity in soliciting any business
from any Customer; (ii) request or advise any Customer to withdraw, curtail, or
cancel any of such Customer’s business or other relationships with Employer; or
(iii) otherwise interfere with any relationship between Employer and any
Customer. As used in this section, “Customer” shall mean any person or entity
(and/or their respective affiliates or successors) with which Executive had
substantial contact by reason of Executive’s employment with Employer and to
which Employer rendered any services or sold anything of value to.

 

C.          Non-Solicitation of Suppliers. During Executive’s employment and
during the Restricted Period, Executive shall not induce or attempt to induce
any salesman, distributor, supplier, manufacturer, representative, agent, jobber
or other person transacting business with Employer to terminate their
relationship with or Employer, or to represent, distribute or sell products in
competition with products of Employer; or

 

D.          Non-Solicitation of Employees. During Executive’s employment and
during the Restricted Period, Executive shall not (i) participate, directly or
indirectly, in or be materially involved in any manner in the hiring or any
attempt to hire as an employee, officer, director, consultant, or advisor any
person who is, at the time of such hiring or attempted hiring, or was within six
(6) months of such hiring or attempted hiring, an employee of Employer; or (ii)
otherwise, directly or indirectly, induce or attempt to induce any employee of
Employer or of any affiliate of Employer to leave the employ of Employer.

 

Employment Agreement

 

Page 13 

 

 

E.          Reasonableness of Restrictions. It is the intention of the parties
to restrict the activities of Executive under this Section 8 only to the extent
necessary for the protection of legitimate business interests of Employer.
Executive acknowledges that Executive’s covenant not to compete unfairly is
necessary to protect the legitimate business interests of Employer, and that
irreparable harm and damage will be done to Employer in the event that Executive
competes unfairly with Employer. Executive has carefully read and considered the
provisions of this Section titled “Restrictive Covenants” and, having done so,
agrees that the restrictions set forth herein are fair and reasonable and are
reasonably required for the protection of the legitimate business interests of
Employer. Executive further agrees and acknowledges that the geographic and
durational limitations set forth herein are reasonable under the circumstances
considering Executive’s access to Employer’s Confidential Information and
customer relationships and other relevant factors, and agrees that Employer’s
need for the protection afforded herein is greater than any hardship Executive
might experience by complying with the terms set forth therein. However, the
parties specifically covenant and agree that should any of the provisions set
forth therein, under any set of circumstances not now foreseen by the parties,
be deemed too broad for such purpose, said provisions will nevertheless be valid
and enforceable to the extent necessary for such protection.

 

F.          Tolling. In the event of a breach by Executive of this Section
entitled “Restrictive Covenants,” then the restrictive periods referenced herein
shall be tolled and shall begin to run or recommence running only at such time
as the breach is alleviated or remedied.

 

9.          Remedies. In the event of the breach by Executive of any of the
terms of this Agreement, notwithstanding anything to the contrary contained in
this Agreement, Employer may terminate the employment of the Executive in
accordance with the provisions of Section 5. It is further agreed that any
breach or evasion of any of the terms of this Agreement by Executive will result
in immediate and irreparable injury to Employer and will authorize recourse to
injunction and/or specific performance as well as to other legal or equitable
remedies to which Employer may be entitled. In addition to any other remedies
that it may have in law or equity, Employer also may require an accounting and
repayment to Employer of all profits, compensation, remuneration or other
benefits realized, directly or indirectly, as a result of such breaches by the
Executive or by a competitor’s business controlled, directly or indirectly, by
the Executive. No remedy conferred by any of the specific provisions of this
Agreement is intended to be exclusive of any other remedy and each and every
remedy given hereunder or now or hereafter existing at law or in equity by
statute or otherwise. The election of any one or more remedies by Employer shall
not constitute a waiver of the right to pursue other available remedies. If
either party shall commence a proceeding against the other to enforce and/or
recover damages for breach of this Agreement, the prevailing party in such
proceeding shall be entitled to recover from the other party all reasonable
costs and expenses of enforcement and collection of any and all remedies and
damages, or all reasonable costs and expenses of defense, as the case may be.
The foregoing costs and expenses shall include reasonable attorneys’ fees.

 

Employment Agreement

 

Page 14 

 

 

10.          Assignability. This Agreement may be assigned by Employer to any
other entity wholly-owned by Employer or to any other entity which purchases
substantially all of the assets of Employer or acquires a majority of the stock
of Employer. The services to be performed by Executive hereunder are personal in
nature and, therefore, Executive shall not assign Executive’s rights or delegate
Executive’s obligations under this Agreement, and any attempted or purported
assignment or delegation not herein permitted shall be null and void.

 

11.          Binding Effect; Third Party Beneficiaries. Subject to the
provisions of Section 11, this Agreement shall inure to the benefit of and may
be enforced by Employer and its successors or assigns, and it shall be binding
upon Executive and Executive’s heirs, successors, and assigns. Except as
expressly set forth herein, this Agreement is not intended to confer any rights
or remedies upon any other person or entity.

 

12.          Disclosure of Existence of Agreement. To preserve Employer’s rights
under this Agreement, Employer may advise any third party of the existence of
this Agreement and its terms, and Executive specifically releases and agrees to
indemnify and hold Employer harmless from any liability for doing so.

 

13.          Governing Law. This Agreement shall be deemed for all purposes to
have been made in the State of Missouri, notwithstanding either the place of
execution hereof, nor the performance of any acts in connection herewith or
hereunder in any other jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of Missouri, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Missouri or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Missouri

 

14.          Venue and Jurisdiction. The exclusive venue and jurisdiction for
any litigation concerning this Agreement shall be in the Circuit Court for the
11th Judicial District, St. Charles County, Missouri, unless that court lacks
jurisdiction, in which case such action shall be brought in the United States
District Court for the Eastern District of Missouri. Any of the foregoing courts
shall have personal jurisdiction over Executive and jurisdiction over matters
arising out of this Agreement, and Executive hereby irrevocably waives any and
all objections to personal jurisdiction, venue or convenience in the
aforementioned courts.

 

15.          Waiver. No waiver by either party hereto of any condition or
provision of this Agreement to be performed by the other party shall be deemed a
waiver of similar or dissimilar provisions or condition at the same or at any
prior or subsequent time. Waiver by either party hereto of any breach or
violation of any provision of this Agreement shall not operate as or be
construed to be a waiver of any subsequent breach thereof or as a waiver by any
other entity.

 

16.          Severability. Should any one or more sections of this Agreement be
found to be invalid, illegal, or unenforceable in any respect, the validity,
legality, and enforceability of the remaining sections contained herein shall
not in any way be affected or impaired thereby. In addition, if any section
hereof is found to be partially enforceable, then it shall be enforced to that
extent. A court with jurisdiction over the matters contained in this Agreement
shall have the authority to revise the language hereof to the extent necessary
to make any such section or covenant of this Agreement enforceable to the
fullest extent permitted by law.

 

Employment Agreement

 

Page 15 

 

 

17.          Notices. All notices provided for in this Agreement shall be in
writing and shall be given either (a) by actual delivery of the notice to the
party entitled thereto or (b) by depositing the same with the United States
Postal Service, certified mail, return receipt requested, postage prepaid, to
the address of the party entitled thereto. The notice shall be deemed to have
been received in case (a) on the date of its actual receipt by the party
entitled thereto or in case (b) two (2) days after the date of its deposit with
the United States Postal Service.

 

If to Employer:

 

LMI Aerospace, Inc.

411 Fountain Lakes Blvd.

St. Charles, MO 63301

Attn: General Counsel

 

and, if to the Executive, to:

 

Daniel G. Korte

15 Cedar Crest

Saint Louis, MO 63132

 

or to such other address as may be specified by either of the parties in the
manner provided under this Section.

 

18.          Survival. All of those provisions of this Agreement that require
performance by either party following termination of Employee’s employment shall
survive any termination of this Agreement.

 

19.          General Interpretive Principles. This Agreement shall be construed
without regard to any presumption or rule requiring construction against the
drafting party. For purposes of this Agreement, except as otherwise expressly
provided or unless context otherwise requires:

 

A.          the words “herein,” “hereof” and “hereunder” and other words of
similar import refer to this Agreement as a whole and not to any particular
provision;

 

B.          the terms “include,” “including,” and similar terms shall be
construed as if followed by the phrase “without being limited to;”

 

C.          relative to the determining of any period of time, “from” means
“from and including” and “to” and “through” mean “to and including;”

 

D.          “or,” “either” and “any” are not exclusive;

 

E.          the term “or” has, except where otherwise indicated, the inclusive
meaning represented by the phrase “and/or;” and

 

F.          the headings contained in this Agreement are and shall be without
substantive meaning or content of any kind whatsoever and are not a part of the
agreement between the parties hereto.

 

Employment Agreement

 

Page 16 

 

 

20.          Section 409A.

 

A.          This Agreement shall at all times be administered and the provisions
of this Agreement shall be interpreted consistent with the requirements of
Section 409A. In the event that any provision of this Agreement does not comply
with the requirements of Section 409A, Employer, in exercise of its sole
discretion and without consent of Executive, may amend or modify this Agreement
in any manner to the extent necessary to meet the requirements of Section 409A.

 

B.          This Agreement is intended to comply with Section 409A or an
exemption thereunder, and will be construed and administered in accordance with
Section 409A. Notwithstanding any other provision of this Agreement, payments
provided under this Agreement may only be made upon an event and in a manner
that complies with Section 409A or an applicable exemption. Any payments under
this Agreement that may be excluded from Section 409A either as separation pay
due to an involuntary separation from service or as a short-term deferral will
be excluded from Section 409A to the maximum extent possible. For purposes of
Section 409A, each installment payment provided under this Agreement will be
treated as a separate payment. Any payments to be made under this Agreement upon
a termination of employment will only be made if such termination of employment
constitutes a “separation from service” under Section 409A.

 

C.          Notwithstanding any other provision of this Agreement, if at the
time of Executive’s termination of employment, Executive is a “specified
Executive,” determined in accordance with Section 409A, any payments and
benefits provided under this Agreement that constitute “nonqualified deferred
compensation” subject to Section 409A that are provided to Executive on account
of Executive’ s separation from service will not be paid until the first payroll
date to occur following the six-month anniversary of Executive’s termination
date (“Specified Executive Payment Date”). The aggregate amount of any payments
that would otherwise have been made during such six-month period will be paid in
a lump sum on the Specified Executive Payment Date without interest and,
thereafter, any remaining payments will be paid without delay in accordance with
their original schedule. If Executive dies during the six-month period, any
delayed payments will be paid to Executive’s estate in a lump sum within thirty
(30) calendar days after Executive’s death.

 

D.          Except as otherwise expressly provided herein, to the extent any
expense reimbursement or the provision of any in-kind benefit under this
Agreement or any document contemplated herein is determined to be subject to
Section 409A, the amount of any such expenses eligible for reimbursement, or the
provision of any in-kind benefit, in one calendar year shall not affect the
expenses eligible for reimbursement in any other taxable year (except for any
lifetime or other aggregate limitation applicable to medical expenses), in no
event shall any expenses be reimbursed after the last day of the calendar year
following the calendar year in which the Executive incurred such expenses, and
in no event shall any right to reimbursement or the provision of any in-kind
benefit be subject to liquidation or exchange for another benefit.

 

Employment Agreement

 

Page 17 

 

 

21.          Counterparts. For the purpose of facilitating the execution of this
Agreement and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and such counterparts shall constitute but one and the same
instrument. A signature of a party by facsimile or other electronic transmission
(including a .pdf copy sent by e-mail) shall be deemed to constitute an original
and fully effective signature of such party.

 

22.           Entire Agreement; Amendments. The provisions hereof constitute the
entire and only agreement between the parties with respect to the subject matter
hereof and supersedes all prior agreements, commitments, representations,
understandings, or negotiations, oral or written, and all other communications
relating to the subject matter hereof. No amendment or modification of any
provision of this Agreement will be effective unless set forth in a document
that purports to amend this Agreement and is executed by all parties hereto.

 

Signature page follows.

 

Employment Agreement

Page 18 

 

  

 IN WITNESS WHEREOF, the parties have executed and delivered this Agreement on
this 27th day of June, 2017.

  

EMPLOYER: LMI AEROSPACE, INC.         By: /s/ Jennifer Alfaro         Title:
Chief Human Resources Officer       EXECUTIVE: /s/ Daniel G. Korte   DANIEL G.
KORTE

 

Employment Agreement

 

Page 19