LEGGETT & PLATT, INCORPORATED

FLEXIBLE STOCK PLAN

(Amended and Restated, Effective as of May 4, 2005)

 

TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

 

1.

  

ESTABLISHMENT OF PLAN

  

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1.1

  

Name

  

B-3

 

  

1.2

  

Purpose

  

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1.3

  

Effective Date and Term

  

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2.

  

DEFINITIONS

  

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2.1

  

General Definitions

  

B-3

 

  

 

  

(a)

 

Affiliate

  

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(b)

 

Agreement

  

B-3

 

  

 

  

(c)

 

Award

  

B-3

 

  

 

  

(d)

 

Board

  

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(e)

 

Change in Control

  

B-3

 

  

 

  

(f)

 

Code

  

B-3

 

  

 

  

(g)

 

Company

  

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(h)

 

Committee

  

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(i)

 

Common Stock

  

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(j)

 

Employee

  

B-4

 

  

 

  

(k)

 

Employer

  

B-4

 

  

 

  

(l)

 

Exchange Act

  

B-4

 

  

 

  

(m)

 

Fair Market Value

  

B-4

 

  

 

  

(n)

 

Fiscal Year

  

B-4

 

  

 

  

(o)

 

Parent

  

B-4

 

  

 

  

(p)

 

Participant

  

B-4

 

  

 

  

(q)

 

SEC

  

B-4

 

  

 

  

(r)

 

Share

  

B-4

 

  

 

  

(s)

 

Subsidiary

  

B-4

 

 

 

3.

  

COMMON STOCK

  

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3.1

  

Number of Shares

  

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3.2

  

Reusage

  

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3.3

  

Adjustments

  

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3.4

  

Tax Code Limits

  

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4.

  

PARTICIPANTS AND ELIGIBILITY

  

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4.1

  

Participants

  

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4.2

  

Eligibility

  

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5.

  

ADMINISTRATION

  

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5.1

  

Committee

  

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5.2

  

Authority

  

B-6

 

  

5.3

  

Delegation

  

B-6

 

 

 

6.  

  

OPTIONS

  

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6.1

  

Description

  

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6.2

  

ISOs

  

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6.3

  

NQSOs

  

B-6

 

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7.

  

STOCK APPRECIATION RIGHTS

  

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7.1

  

Description

  

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8.

  

RESTRICTED STOCK

  

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8.1

  

Description

  

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8.2

  

Voting Rights

  

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8.3

  

Dividends

  

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8.4

  

Price of Restricted Stock

  

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8.5

  

Non-Transferability

  

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9.

  

STOCK UNITS

  

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9.1

  

Description

  

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9.2

  

Dividend Equivalents

  

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9.3

  

Price of Stock Units

  

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10.

  

PERFORMANCE AWARDS

  

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10.1

  

Description

  

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11.

  

OTHER STOCK BASED AWARDS AND OTHER AWARDS

  

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11.1

  

Other Stock Based Awards

  

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11.2

  

Other Awards

  

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12.

  

AGREEMENTS AND PROVISIONS OF AWARDS

  

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12.1

  

Grant Evidenced by Agreement

  

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12.2

  

Provisions of Agreement

  

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12.3

  

Performance Conditions

  

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12.4

  

Payment

  

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12.5

  

Deferral

  

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12.6

  

Withholding

  

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12.7

  

Tandem Awards

  

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13.

  

AMENDMENT AND TERMINATION OF PLAN

  

B-9

 

  

13.1

  

Amendment and Termination

  

B-9

 

 

 

14.

  

MODIFICATION OR TERMINATION OF AWARDS

  

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14.1

  

General

  

B-9

 

  

14.2

  

Committee’s Right

  

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14.3

  

Replacement

  

B-9

 

  

14.4

  

No Repricing

  

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15.

  

CHANGE IN CONTROL

  

B-9

 

  

15.1

  

Right of Committee

  

B-9

 

 

 

16.

  

MISCELLANEOUS PROVISIONS

  

B-9

 

  

16.1

  

Headings and Subheadings

  

B-9

 

  

16.2

  

Governing Law

  

B-9

 

  

16.3

  

Purchase for Investment

  

B-10

 

  

16.4

  

No Employment Contract

  

B-10

 

  

16.5

  

No Effect on Other Benefits

  

B-10

 

  

16.6

  

Conflicts in Plan

  

B-10

 

 

 

17.

  

CODE SECTION 162(m) PROVISIONS

  

B-10

 

  

17.1

  

Application to Covered Employee

  

B-10

 

  

17.2

  

Performance Goals

  

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17.3

  

Adjustment of Payment

  

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17.4

  

Other Restrictions

  

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LEGGETT & PLATT, INCORPORATED

FLEXIBLE STOCK PLAN

(Amended and Restated, Effective as of May 4, 2005)

 

1. ESTABLISHMENT OF PLAN

 

1.1 Name. The plan, formerly known as the “Leggett & Platt 1989 Flexible Stock Plan,” will be the “Leggett & Platt, Incorporated Flexible Stock Plan” (the “Plan”) as of the Effective Date.

 

1.2 Purpose. The purpose of the Plan is to advance the Company’s long-term interests by providing awards that allow the Company to attract and retain valuable employees, align the interests of directors, employees and other key individuals with the interests of shareholders, and reward outstanding performance.

 

1.3 Effective Date and Term. This amended and restated Plan (the “2005 Restatement”) will become effective as of May 4, 2005, subject to approval by the Company’s shareholders, and shall continue in full force and effect until the tenth anniversary of the Effective Date.

 

2. DEFINITIONS

 

2.1 General Definitions. Unless otherwise specifically defined or unless the context clearly otherwise requires, the words and phrases used in the Plan are defined as set forth below. In addition to the definitions below, certain words and phrases used in the Plan and any agreement may be defined in other portions of the Plan or agreement.

 

(a) Affiliate. A Parent, Subsidiary, or any directly or indirectly owned partnership or limited liability company of the Company.

 

(b) Agreement. The document that evidences the grant of any Award under the Plan and sets forth the terms, conditions, and restrictions relating to, such Award.

 

(c) Award. Any Option, Stock Appreciation Right, Restricted Stock, Stock Unit, Performance Award, Other Stock Based Award or Other Award granted or acquired pursuant to the Plan.

 

(d) Board. The Board of Directors of the Company.

 

(e) Change in Control. Change in Control shall mean the acquisition, without the approval of the Board, by any person or entity, other than the Company or a Related Entity, of more than 20% of the outstanding Shares through a tender offer, exchange offer or otherwise; the liquidation or dissolution of the Company following the sale or other disposition of all or substantially all of its assets; a merger or consolidation involving the Company which results in the Company not being the surviving parent corporation; or any time during any two-year period in which individuals who constituted the Board at the start of such period (or whose election was approved by at least two-thirds of the then members of the Board who were members at the start of the two-year period) do not constitute at least 50% of the Board for any reason. A Related Entity is a Subsidiary or any employee benefit plan (including a trust forming a part of such a plan) maintained by the Company or a Subsidiary. Notwithstanding the foregoing, to the extent necessary for compliance with Code Section 409A, Change in Control shall mean an event qualifying for a distribution of deferred compensation under Section 409A(a)(2)(A)(v) of the Code.

 

(f) Code. The Internal Revenue Code of 1986, as amended.

 

(g) Company. Leggett & Platt, Incorporated.

 

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(h) Committee. The Committee described in Section 5.1 or, in the absence of the Committee, the Board.

 

(i) Common Stock. The Company’s $.01 par value Common Stock.

 

(j) Employee. Any person employed by the Employer.

 

(k) Employer. The Company and all Affiliates.

 

(l) Exchange Act. The Securities Exchange Act of 1934, as amended.

 

(m) Fair Market Value. The closing price of Shares on the New York Stock Exchange on a given date, or, in the absence of sales on a given date, the closing price on the New York Stock Exchange on the last day on which a sale occurred prior to such date.

 

(n) Fiscal Year. The Company’s taxable year, which is the calendar year.

 

(o) Parent. Any entity (other than the Company or a Subsidiary) in an unbroken chain of entities ending with the Company, if, at the time of the grant of an Option or other Award, each of the entities (other than the Company or a Subsidiary) owns 50% or more of the total combined voting power of all classes of stock or ownership interests in one of the other entities in such chain.

 

(p) Participant. An individual who is granted an Award under the Plan, and any beneficiary or authorized transferee of such individual.

 

(q) SEC. The Securities and Exchange Commission.

 

(r) Share. A share of Common Stock.

 

(s) Subsidiary. Any corporation, other than the Company, in an unbroken chain of corporations beginning with the Company if, at the time of grant of an Option or other Award, each of the corporations, other than the last corporation in the unbroken chain, owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the corporations in such chain.

 

3. COMMON STOCK

 

3.1 Number of Shares. The number of Shares available for grant as an Award pursuant to the Plan after the Effective Date of this 2005 Restatement shall be the sum of (a) all outstanding Awards previously granted under the Plan on the Effective Date, (b) all Shares authorized and available for issuance or grant as Awards immediately prior to the Effective Date and (c) 6,000,000 Shares. Shares may be authorized but unissued Shares, Shares held in the treasury, or both. Notwithstanding the preceding sentence, only Shares held in the treasury may be used to provide an Award to a Participant if the use of authorized but unissued Shares would violate any applicable law, rule or regulation.

 

3.2 Reusage. If an Award is settled in cash, expires, or is terminated, surrendered, cancelled or forfeited before Shares have been issued, or if Shares issued under the Plan are later forfeited and reacquired by the Company, the Shares covered by such Awards shall again be available for use under the Plan. In addition, Shares delivered to the Company by a Participant as payment of the exercise price for any Option, whether by actual delivery or attestation, shall again be available for use under the Plan.

 

3.3 Adjustments. If there is any change in the Common Stock of the Company by reason of any stock dividend, stock split, spin-off, split-off, spin-out, recapitalization, merger, consolidation, reorganization,

 

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combination or exchange of Shares, the total number of Shares reserved for issuance under the Plan, the maximum number of Shares issuable for a given type of Award or to an individual Participant, and any outstanding Awards granted under the Plan and the price thereof, if any, shall be appropriately adjusted by the Committee; provided that the number of Shares subject to an award shall always be a whole number.

 

3.4 Tax Code Limits. The aggregate number of Shares subject to Options or Stock Appreciation Rights granted under this Plan during any calendar year to any one Participant shall not exceed 1,000,000. The aggregate number of Shares subject to Restricted Stock, Performance Awards, or Stock Unit Awards granted under this Plan during any calendar year to any one Participant shall not exceed 1,000,000. Notwithstanding anything to the contrary in this Plan, the foregoing limitations shall be subject to adjustment under Section 3.3, but only to the extent that such adjustment will not affect the status of any Award intended to qualify as “performance-based compensation” under Section 162(m) of the Code.

 

4. PARTICIPANTS AND ELIGIBILITY

 

4.1 Participants. Awards may be granted to:

 

(a) Employees;

 

(b) non-employee directors of the Company;

 

(c) employees and owners of entities that are not Affiliates but that have a direct or indirect ownership interest in an Employer or in which an Employer has a direct or indirect ownership interest;

 

(d) individuals and entities who are customers and suppliers of an Employer or who render services to an Employer; and

 

(e) individuals who have ownership or business affiliations with any individual or entity previously described.

 

4.2 Eligibility. The Participants and the Awards they receive under the Plan shall be determined by the Committee. In making its determinations, the Committee shall consider any factors it deems relevant in selecting Participants and determining the amount and type of their respective Awards. Such factors shall include, but are not limited to, past, present and expected future contributions of Participants and potential Participants to the Employer. No Participant shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Participants under the Plan. The Committee’s grant of an Award to a Participant in any year shall not require the Committee to grant an Award to that Participant in any other year.

 

5. ADMINISTRATION

 

5.1 Committee. The Plan shall be administered by the Committee. The Committee shall consist of two or more members of the Board who are “Non-Employee Directors” as defined in Rule 16b-3 of the Exchange Act and who are “outside directors” as defined in Code section 162(m)(4) and the applicable Treasury Regulations. The members of the Committee shall be appointed by and shall serve at the pleasure of the Board. The Committee may select one of its members as its Chairman and shall hold its meetings at such times and places as it may determine. A majority of its members shall constitute a quorum. All determinations of the Committee shall be made by a majority of its members. Any decision or determination reduced to writing and signed by a majority of the members shall be fully as effective as if it had been made by a majority vote at a meeting duly called and held. All determinations of the Committee shall be final and binding on all persons, including the Company, any Participant, any stockholder and any Employee of the Company or any Affiliate. No member of the Board or any of its Committees shall be liable for any action or determination made in good faith with respect to the Plan or any Award granted under it.

 

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5.2 Authority. Subject to the terms of the Plan and such resolutions as may from time to time be adopted by the Board, the Committee shall have full power and discretion to:

 

(a) determine the Participants to whom Awards may be granted;

 

(b) determine the type of Award to be granted to each Participant;

 

(c) determine the number of Shares to be covered by each Award;

 

(d) determine the terms and conditions of any Award;

 

(e) determine whether, to what extent and under what circumstances Awards may be settled in cash, Shares or other property or cancelled or suspended;

 

(f) determine, in accordance with applicable law, whether, to what extent, and under what circumstances cash, Shares, other property and other amounts payable with respect to an Award made under the Plan shall be deferred either automatically or at the election of the Participant;

 

(g) interpret and administer the terms of the Plan and any instrument or Agreement entered into under the Plan;

 

(h) establish such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and

 

(i) make any other determination and take any other action it deems necessary or desirable for administration of the Plan.

 

5.3 Delegation. The Committee may delegate all or any part of its authority under the Plan to any Employee or committee, except that it may not delegate any action related to grants of Awards to individuals who are subject to Section 16 of the Exchange Act or who are “covered employees” as defined by Code section 162(m)(3).

 

6. OPTIONS

 

6.1 Description. An Option is a right to purchase a number of Shares at a price, at such times, and upon such other terms and conditions specified in the documents evidencing the Award. The Committee may grant Options intended to qualify as incentive stock options (“ISOs”) pursuant to Section 422 of the Code, as well as non-qualified options (“NQSOs”) under the Plan. Except as otherwise provided in Sections 6.2 and 6.3, the terms and conditions of all Options shall be determined by the Committee.

 

6.2 ISOs. The number of shares for which ISOs may be granted on or after the Effective Date shall not exceed 6,000,000 Shares subject to adjustment pursuant to Section 3.3. Each ISO must be granted to an Employee for a term not to exceed ten years from the date of grant. The purchase price for Shares under any ISO shall be no less than the Fair Market Value of the Shares on the date the Option is granted. The terms of an ISO shall meet all requirements of Section 422 of the Code.

 

6.3 NQSOs. The purchase price for Shares under any NQSO shall not be less than the par value of the Common Stock.

 

7. STOCK APPRECIATION RIGHTS

 

7.1 Description. A Stock Appreciation Right (“SAR”) gives a Participant the right to receive, for each SAR exercised, an amount equal to the excess of the Fair Market Value of a Share on the date the SAR is exercised and the Fair Market Value of a Share on the date the SAR was granted. SARs may be settled in cash or in stock, as determined by the Committee, and are subject to the terms and conditions expressed in the document evidencing the Award.

 

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8. RESTRICTED STOCK

 

8.1 Description. A Restricted Stock Award is an award of Shares, the grant, vesting, issuance, or retention of which is subject to certain conditions expressed in the document evidencing the Award. Restricted Stock may be issued in certificate form or held in book entry on the records of the Company’s transfer agent and registrar. If Restricted Stock is issued in certificate form, the Shares may be held by the Company as escrow agent until the restrictions on such Shares have lapsed or the Company may require the certificate to bear a legend stating that such Shares are non-transferable until all restrictions have been satisfied and the legend has been removed.

 

8.2 Voting Rights. Recipients of Restricted Stock shall have full voting rights with respect to such Shares during the restriction period, unless otherwise determined by the Committee.

 

8.3 Dividends. Recipients of Restricted Stock shall be entitled to receive dividends and other distributions with respect to such Shares during the restriction period, unless otherwise determined by the Committee. Dividends may be paid in cash or in stock, at the Committee’s discretion. If paid in stock, the dividend Shares shall be subject to the same restrictions as the Shares of Restricted Stock with respect to which they were paid.

 

8.4 Price of Restricted Stock. As permitted under applicable law, the Committee shall determine the price, if any, at which Restricted Stock shall be sold or awarded to Participants.

 

8.5 Non-Transferability. Shares of Restricted Stock shall not be transferable during the restriction period.

 

9. STOCK UNITS

 

9.1 Description. A Stock Unit Award is the award of a right to receive Shares, the grant, vesting, issuance, or retention of which is subject to certain conditions expressed in the document evidencing the Award. Stock Units may be settled in cash or in stock, as determined by the Committee. Stock Units represent an unfunded and unsecured obligation of the Company. Participants shall have no rights as a shareholder with respect to Stock Units until such Stock Units have been converted to Shares and delivered to the Participant.

 

9.2 Dividend Equivalents. Stock Units may accrue dividend equivalents, as determined by the Committee.

 

9.3 Price of Stock Units. As permitted under applicable law, the Committee shall determine the price, if any, at which Stock Units shall be sold or awarded to Participants.

 

10. PERFORMANCE AWARDS

 

10.1 Description. A Performance Award entitles a Participant to receive a specified number of Shares or cash equal to the Fair Market Value of such Shares at the end of a performance period, as specified in the document evidencing the Award. The ultimate number of Shares distributed or cash paid depends upon the extent to which pre-established performance objectives are met during the applicable performance period.

 

11. OTHER STOCK BASED AWARDS AND OTHER AWARDS

 

11.1 Other Stock Based Awards. The Committee shall have the right to grant Other Stock Based Awards which may include, without limitation, the grant of Shares, the payment of cash based on the performance of the Common Stock, and the grant of securities convertible into Shares.

 

11.2 Other Awards. The Committee shall have the right to provide types of Awards under the Plan in addition to those specifically listed, if the Committee believes that such Awards would further the purposes for which the Plan was established.

 

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12. AGREEMENTS AND PROVISIONS OF AWARDS

 

12.1 Grant Evidenced by Agreement. The grant of any Award under the Plan may be evidenced by an Agreement which shall describe the specific Award granted and the terms and conditions of the Award. If required by the Committee, the granting of any Award may be subject to, and conditioned upon, the recipient’s execution of any Agreement. Except as otherwise provided in an Agreement, all capitalized terms used in the Agreement shall have the same meaning as in the Plan, and the Agreement shall be subject to all of the terms of the Plan in effect on the date of the Award, unless otherwise specified in the Agreement or in any amendment to the Plan or the Agreement.

 

12.2 Provisions of Agreement. Each Agreement shall contain such provisions as the Committee shall determine necessary or appropriate for the Award, which may include: description of the type of Award; the Award’s duration; if an Option, the exercise price, the exercise period and the person or persons who may exercise the Option; the effect upon such Award of the Participant’s death or termination of employment; the Award’s conditions; when, if, and how any Award may be forfeited, converted into another Award, modified, exchanged for another Award, or replaced; and the restrictions on any Shares purchased or granted under the Plan.

 

12.3 Performance Conditions. The Committee may require the satisfaction of certain performance criteria as a condition to the grant or vesting of any Award provided under the Plan.

 

12.4 Payment. Upon the exercise of any Option or in the case of any Award that requires a payment to the Company, the amount due the Company is to be paid:

 

(a) in cash;

 

(b) by the tender to the Company of Shares owned by the optionee and registered in his name having a Fair Market Value equal to the amount due the Company;

 

(c) in other property, rights and credits, including the Participant’s promissory note; or

 

(d) by any combination of the payment methods specified in (a), (b) and (c) above.

 

Notwithstanding the foregoing, any method of payment other than (a) may be used only with the consent of the Committee or to the extent so provided in an Agreement. The proceeds of the sale of Common Stock purchased pursuant to an Option and any payment to the Company for other Awards shall be added to the general funds of the Company or to the Shares held in treasury, as the case may be, and used for the corporate purposes of the Company as the Board shall determine.

 

12.5 Deferral. Subject to the requirements of Code section 409A, the right to receive any Award under the Plan may, at the request of the Participant, be deferred for such period and upon such terms as the Committee shall determine, which may include crediting of interest on deferrals of cash and crediting of dividends or dividend equivalents on deferrals denominated in Shares.

 

12.6 Withholding. The Company may, at the time any distribution is made under the Plan, or at the time any Option is exercised, or at any time required by law, withhold from such distribution or Shares issuable upon the exercise of an Option, any amount (up to such maximum as necessary to avoid a charge to the Company for financial reporting purposes) necessary to satisfy tax withholding requirements with respect to such distribution or exercise of such Options. The Committee or the Company may, at any time, require a Participant to tender the Company cash in the amount necessary to comply with any such withholding requirements.

 

12.7 Tandem Awards. Awards may be granted by the Committee in tandem. However, no Award may be granted in tandem with an ISO except a Stock Appreciation Right.

 

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13. AMENDMENT AND TERMINATION OF PLAN

 

13.1 Amendment and Termination. The Board shall have the sole right and power to amend or terminate the Plan at any time, except that the Board may not amend the Plan, without approval of the shareholders of the Company, in a manner that would cause Options which are intended to qualify as ISOs to fail to qualify or in a manner which would violate applicable law.

 

14. MODIFICATION OR TERMINATION OF AWARDS

 

14.1 General. Subject to the provisions of Section 14.2, the amendment or termination of the Plan shall not adversely affect a Participant’s right to any Award granted prior to such amendment or termination.

 

14.2 Committee’s Right. Any Award granted may be converted, modified, forfeited or cancelled, in whole or in part, by the Committee if and to the extent permitted in the Plan or applicable Agreement or with the consent of the Participant to whom such Award was granted. The Committee shall have the right to cancel any Award issued to a Participant if the Participant violates any confidentiality, non-solicitation or non-compete obligations or terms in his or her individual employment agreement, confidentiality agreement, separation agreement, and/or any other similar agreement; or, if during the period of employment or service, Participant establishes a relationship with a competitor of the Company or engages in activity that is in conflict with or adverse to the interest of the Company, as determined by the Company in its sole discretion.

 

14.3 Replacement. The Committee may permit a Participant to elect to surrender an Award in exchange for a new Award. However, the Committee may not cancel an outstanding Option that is underwater for the purpose of reissuing the Option to the Participant at a lower exercise price or granting a replacement Award of a different type.

 

14.4 No Repricing. Other than as provided in Section 3.3, the exercise price of an Option or SAR may not be reduced without shareholder approval.

 

15. CHANGE IN CONTROL

 

15.1 Right of Committee. To maintain a Participant’s rights in the event of a Change in Control, the Committee may, in any Agreement evidencing an Award, or at any time prior to or simultaneously with or after a Change in Control, provide such protection as it may deem necessary. Without in any way limiting the generality of the foregoing, the Committee may:

 

(a) provide for the acceleration of any time periods relating to the exercise or realization of such Award so that such Award may be exercised or realized in full on or before a date fixed by the Committee;

 

(b) provide for the purchase of such Award, upon the Participant’s request, for an amount of cash equal to the amount which could have been attained upon the exercise or realization of such Award had such Award been currently exercisable or payable;

 

(c) make such adjustments to the Awards then outstanding as the Committee deems appropriate to reflect such transaction or change; and/or

 

(d) cause the Awards then outstanding to be assumed, or new Awards substituted therefore, by the surviving corporation in such change.

 

16. MISCELLANEOUS PROVISIONS

 

16.1 Headings and Subheadings. The headings and subheadings contained in the Plan are included only for convenience and shall not be construed as a part of the Plan or in any respect affecting or modifying its provisions.

 

16.2 Governing Law. This Plan shall be construed and administered in accordance with the laws of the State of Missouri.

 

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16.3 Purchase for Investment. The Committee may require each person purchasing Shares pursuant to an Option or other award under the Plan to represent to and agree with the Company in writing that such person is acquiring the Shares for investment and without a view to distribution or resale. All certificates for Shares delivered under the Plan shall be subject to such stock transfer orders and other restrictions as the Committee may deem advisable under all applicable laws, rules and regulations, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate references to such restrictions.

 

16.4 No Employment Contract. The adoption of the Plan or grant of an Award under the Plan shall not confer upon any Employee any right to continued employment nor shall it interfere in any way with the right of the Employer to terminate the employment of any of its Employees at any time.

 

16.5 No Effect on Other Benefits. The receipt of Awards under the Plan shall have no effect on any benefits to which a Participant may be entitled from the Employer, under another plan or otherwise, or preclude a Participant from receiving any such benefits.

 

16.6 Conflicts in Plan. In the case of any conflict in the terms of the Plan relating to an Award, the provisions in the Section of the Plan which specifically grants such Award shall control those in a different Section.

 

17. CODE SECTION 162(m) PROVISIONS

 

17.1 Application to Covered Employee. Notwithstanding any other provision of the Plan, if the Committee determines at the time an Option, a SAR, Restricted Stock, a Performance Award or a Stock Unit Award is granted to a Participant who is then an officer that such Participant is, or is likely to be as of the end of the tax year in which the Company would claim a tax deduction in connection with such Award, a “covered employee” within the meaning of Section 162(m)(3) of the Code, then the Committee may provide that this Section 17 is applicable to such Award.

 

17.2 Performance Goals. Restricted Stock, Performance Awards and Stock Unit Awards may be made subject to the achievement of performance goals established by the Committee relating to one or more business criteria (the “Performance Criteria”) pursuant to Section 162(m) of the Code. Performance Criteria may be applied to the Company, an Affiliate, a Subsidiary, or any combination thereof and may be measured relative to a peer group, an index or Company performance in a previous period. Performance may be measured annually or cumulatively over a longer period of time. Performance Criteria are: (a) revenue; (b) operating income or net operating income; (c) return on equity; (d) return on assets or net assets; (e) cash flow; (f) share price performance; (g) return on capital; (h) earnings; (i) earnings per share; (j) total shareholder return; (k) economic value added; (l) economic profit; or (m) ratio of operating earnings to capital spending. The Committee may appropriately adjust the evaluation of performance to include or exclude certain items identified in the Company’s quarterly or annual reports, including but not limited to: (i) extraordinary, unusual or non-recurring items; (ii) gains or losses on the disposition of a business; (iii) the effects of changes in tax or accounting regulations; (iv) the effects of mergers or acquisitions; or (v) asset write-downs.

 

17.3 Adjustment of Payment. Notwithstanding any provision of the Plan other than Section 15, with respect to any Restricted Stock, Performance Award or Stock Unit Award that is subject to this Section 17, the Committee may adjust downwards, but not upwards, the amount payable pursuant to such Award, and the Committee may not waive the achievement of the applicable performance goals except in the case of the death or disability of the Participant.

 

17.4 Other Restrictions. The Committee shall have the power to impose such other restrictions on Awards subject to this Section 17 as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements for “performance-based compensation” within the meaning of Section 162(m)(4)(C) of the Code, or any successor provision thereto.

 

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