EXHIBIT 10.2

 

November 1, 2005

 

SEVERANCE BENEFIT AGREEMENT

 

This Severance Benefit Agreement (the “Agreement”) is made as of November 1,
2005 between Leggett & Platt, Incorporated, No. 1 Leggett Road, Carthage,
Missouri 64836 (the “Company”) and Karl G. Glassman (the “Executive”), residing
at 9732 Early Lane, Carthage, Missouri 64836.

 

RECITALS

 

The Executive functions as Executive Vice President of the Company on the date
hereof and is one of the key employees of the Company.

 

The Company considers the maintenance of sound and vital management essential to
protecting and enhancing the best interests of the Company and its shareholders.
In this connection, the Company recognizes that in today’s business environment
the possibility of a change in control of the Company may exist in the future.
The Company further recognizes that such possibility, and the uncertainty which
it may raise among key executives, could result in the departure or distraction
of key executives to the detriment of the Company and its shareholders.
Accordingly, the Board of Directors of the Company (the “Board”) has determined
that appropriate steps should be taken (i) to further induce the Executive to
remain with the Company and (ii) to reinforce and encourage the continued
attention and dedication of the Executive to his assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the Company.

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable
considerations, the receipt of which are hereby acknowledged, the Company and
the Executive agree as follows:

 

1. Change in Control; Employment Agreement

 

1.1 Change in Control. The Company may be required to provide certain benefits
to the Executive under this Agreement following each and every “Change in
Control” of the Company.

 

A “Change in Control” of the Company shall be deemed to have occurred if:

 

  (a) There is any change in control as contemplated by (i) Item 6(e) of
Schedule 14A, Regulation 14A, promulgated under the Securities Exchange Act of
1934, as amended (the “Exchange Act”) or (ii) Item 5.01 of Form 8-K promulgated
by the Securities and Exchange Commission under the Exchange Act; or

 

  (b)

Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the

 

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Exchange Act), directly or indirectly, of 25% or more of the combined voting
power of the Company’s then outstanding voting securities; or

 

  (c) Those persons serving as directors of the Company on the date of this
Agreement (the “Original Directors”) and/or their Successors do not constitute a
majority of the whole Board of Directors of the Company (the term “Successors”
shall mean those directors whose election or nomination for election by the
Company’s shareholders has been approved by the vote of at least two-thirds of
the Original Directors and previously qualified Successors serving as directors
of the Company at the time of such election or nomination for election); or

 

  (d) The Company shall be a party to a merger or consolidation with another
corporation and as a result of such merger or consolidation, less than 75% of
the outstanding voting securities of the surviving or resulting corporation
shall be owned in the aggregate by the former shareholders of the Company as the
same shall have existed immediately prior to such merger or consolidation; or

 

  (e) The Company liquidates, sells, or otherwise transfers all or substantially
all of its assets to a person not controlled by the Company both immediately
prior to and immediately after such sale.

 

1.2 Employment Agreement. Any benefits provided to the Executive under this
Agreement will, unless specifically stated otherwise in this Agreement, be in
addition to and not in lieu of any benefits that may be provided the Executive
under his Employment Agreement with the Company dated November 1, 2005 (this
agreement, as amended, restated or superseded, is called the “Employment
Agreement”).

 

This Agreement shall continue for the term provided in Section 8.6 and shall not
be affected by any termination of the Employment Agreement.

 

2. Termination of Employment Following a Change in Control

 

2.1 General. During the 30 month period immediately following each and every
Change in Control (the “Protected Period”), the Executive and the Company shall
comply with all provisions of this Section 2 regarding termination of the
Executive’s employment.

 

2.2 Termination for Disability. If the Employment Agreement is not in force, the
Company may terminate the Executive’s employment for Disability. If the
Employment Agreement is in force, the Company may terminate the Executive’s
employment for disability only in accordance with the terms of the Employment
Agreement. “Disability” as used in this Agreement, as distinguished from the
Employment Agreement, shall mean the Executive’s absence from, and his inability
to substantially perform, his duties with the Company for a continuous period of
six or more months as a result of physical causes or mental illness. During any
period prior to the termination of his employment that the Executive is absent
from, and is unable to substantially perform, his duties with the Company as a
result of physical causes or mental illness, the Company shall continue to pay
the Executive his full base salary at the rate

 

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then in effect and any bonuses earned by the Executive under Company bonus plans
until such time as the Executive’s employment is terminated by the Company for
Disability. Following termination of employment under this Section 2.2, the
Executive’s benefits shall be determined in accordance with the Company’s long
term disability program as in effect on the date hereof, or any successor
program then in effect.

 

2.3 Termination by Company for “Cause”. If the Employment Agreement is not in
force, the Company may terminate the Executive for Cause as defined in this
Agreement. If the Employment Agreement is in force, the Company may terminate
the Executive for cause only in accordance with the terms of the Employment
Agreement.

 

Termination for “Cause” under this Agreement, as distinguished from the
Employment Agreement, shall be limited to the following:

 

  (a) The Executive’s conviction of any crime involving money or other property
of the Company or any of its affiliates (including entering any plea bargain
admitting criminal guilt), or a conviction of any other crime (whether or not
involving the Company or any of its affiliates) that constitutes a felony in the
jurisdiction involved; or

 

  (b) The Executive’s willful breach of the Company’s Code of Business Conduct
(or any successor policy) which causes material injury to the Company; or

 

  (c) The Executive’s willful act or omission involving fraud, misappropriation,
or dishonesty that (i) causes material injury to the Company or (ii) results in
a material personal enrichment to the Executive at the expense of the Company;
or

 

  (d) The Executive’s willful violation of specific written directions of the
Board or the Company’s Chief Executive Officer provided that such directions are
consistent with this Agreement and the Executive’s duties and do not constitute
Company Action as defined in Section 2.4, and provided that such violation
continues following the Executive’s receipt of written notice by the Board or
the Company’s Chief Executive Officer specifying the specific acts or omissions
alleged to constitute such violation and such violation continues after
affording the Executive reasonable opportunity to remedy such failure after
receipt of such notice; or

 

  (e) The Executive’s continued, repeated, willful failure to substantially
perform his duties; provided, however, that no discharge shall be deemed for
Cause under this subsection (e) unless the Executive first receives written
notice from the Board or the Company’s Chief Executive Officer advising the
Executive of specific acts or omissions alleged to constitute a failure to
perform his duties, and such failure continues after the Executive has had a
reasonable opportunity to correct the acts or omissions so complained of.

 

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No act or failure to act on the Executive’s part shall be considered “willful”
unless done, or omitted to be done, by the Executive in bad faith and without
reasonable belief that his action or omission was in the best interest of the
Company. Moreover, the Executive shall not be terminated for Cause unless and
until there shall have been delivered to the Executive a notice of termination
duly adopted by the affirmative vote of at least a majority of the directors of
the Board at a meeting of the Board (after reasonable notice to the Executive
and an opportunity for the Executive, together with his counsel, to be heard
before the Board), finding that in the good faith opinion of the Board the
Executive was guilty of the conduct set forth in Section 2.3(a), (b), (c),
(d) or (e) and specifying the particulars thereof in detail.

 

A termination shall not be deemed for Cause if, for example, the termination
results from the Company’s determination that the Executive’s position is
redundant or unnecessary or that the Executive’s performance is unsatisfactory
or if the termination stems from the Executive’s refusal to agree to or accept
any Company Action described in Section 2.4.

 

2.4 Termination by Executive for Good Reason. The Executive may, whether or not
his Employment Agreement remains in force, terminate his employment for “Good
Reason” by giving notice of termination to the Company following (i) any action
or omission by the Company described in this Section 2.4 or (ii) receipt of
notice from the Company of the Company’s intention to take any such action or
engage in any such omission. A termination of employment under this Section 2.4
shall be deemed a valid and proper termination of the Employment Agreement if
then in force and, to this extent, the parties agree that the Employment
Agreement is hereby amended.

 

The actions or omissions which may lead to a termination of employment for Good
Reason (herein collectively and severally “Company Actions”) are as follows:

 

  (a) A reduction by the Company in the Executive’s base salary as in effect
immediately prior to the Change in Control or a failure by the Company to
increase the Executive’s base salary each year during the Protected Period by an
amount which at least equals, on a percentage basis, the annual increase in the
Consumer Price Index for Urban Workers (CPI-U) for the applicable year; or

 

  (b) A change in the Executive’s reporting responsibilities, titles or offices
as in effect immediately prior to a Change in Control that results in a material
diminution within the Company of title, status, authority or responsibility; or

 

  (c) The assignment to the Executive of any positions, duties or
responsibilities inconsistent with the Executive’s positions, duties and
responsibilities with the Company immediately prior to the Change in Control or
an expansion of such duties and responsibilities without the Executive’s written
consent; or

 

  (d)

A failure by the Company, without providing substantially similar economic
benefits, to (i) continue any cash bonus or other incentive plans substantially
in the forms in effect immediately prior to the Change in Control, or
(ii) continue the Executive as a participant in such plans on at least the same
basis as the Executive

 

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participated in accordance with the plans immediately prior to the Change in
Control; or

 

  (e) A requirement by the Company that the Executive be based or perform his
duties anywhere other than at the Company’s Corporate Office location
immediately prior to the Change in Control, except for required travel on the
Company’s business to an extent substantially consistent with the Executive’s
business travel obligations immediately prior to the Change in Control or, if
the Executive consents in writing to any relocation, the failure by the Company
to pay (or reimburse the Executive for) all reasonable expenses incurred by him
relating to a change of his principal residence in connection with such
relocation and to indemnify the Executive against any loss realized on the sale
of his principal residence in connection with any such change of residence (loss
is defined as the difference between the actual sale price of such residence and
the higher of (i) the aggregate investment in such residence (including
improvements thereto) or (ii) the fair market value of such as determined by a
real estate appraiser designated by the Executive and reasonably satisfactory to
the Company); or

 

  (f) A failure by the Company to continue in effect any benefit or other
compensation plan (e.g., stock ownership plan, stock purchase plan, stock option
plan, life insurance plan, health and accident plan or disability plan) in which
the Executive is participating at the time of a Change in Control (or plans
providing the Executive with substantially similar economic benefits), or the
taking of any action which would adversely affect the Executive’s participation
in or materially reduce the Executive’s benefits under any of such plans; or

 

  (g) The Company’s failure to provide the Executive with the number of paid
vacation days to which he is entitled in accordance with the Company’s normal
vacation practices with respect to the Executive at the time of the Change in
Control; or

 

  (h) A failure by the Company to obtain the assumption agreement to perform
this Agreement by any successor as contemplated by Section 7 of this Agreement;
or

 

  (i) Any purported termination of the Executive’s employment for Disability or
for Cause that is not carried out (i) pursuant to a notice of termination which
satisfies the requirements of Section 2.5 or (ii) in accordance with
Section 2.3, if applicable; and for purposes of this Agreement, no such
purported termination shall be effective.

 

2.5 Notice of Termination. Any purported termination by the Company of the
Executive’s employment under Section 2.2 (Disability) or 2.3 (for Cause) or by
the Executive under Section 2.4 (for Good Reason) shall be communicated by
notice of termination to the other party. A notice of termination shall mean a
notice which includes the specific termination Section in this Agreement relied
upon and shall set forth, in reasonable detail, the facts and circumstances
claimed to provide a basis for termination of employment under the Section so
indicated.

 

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2.6 Date of Termination. The date the Executive’s employment is terminated under
Section 2 of this Agreement is called the “Date of Termination”. In cases of
Disability, the Date of Termination shall be 30 days after notice of termination
is given (provided that the Executive shall not have returned to the performance
of his duties on a full-time basis during such 30 day period). If the
Executive’s employment is terminated for Cause, the Date of Termination shall be
the date specified in the notice of termination. If the Executive’s employment
is terminated for Good Reason, the Date of Termination shall be the date set out
in the notice of termination.

 

Any dispute by a party hereto regarding a notice of termination delivered to
such party must be conveyed to the other party within 30 days after the notice
of termination is given. If the particulars of the dispute are not conveyed
within the 30 day period, then the disputing party’s claims regarding the
termination shall be forever deemed waived.

 

2.7 Prior Notice Required of Company Actions. During the Protected Period, the
Company shall not terminate the Executive’s employment (except for Disability or
for Cause or pursuant to the Employment Agreement) or take any Company Action as
defined in Section 2.4 without first giving the Executive at least three months’
prior notice of termination or the planned Company Action, as the case may be.

 

3. Benefits upon Termination of Employment

 

3.1 General. If, during the Protected Period following each Change in Control,
the Executive’s employment is terminated either (i) by the Company (other than
for Disability or Cause under this Agreement and other than for disability or
cause under the Employment Agreement) or (ii) by the Executive for Good Reason,
then the Executive, at his election, shall be entitled to the benefits provided
in this Section 3 (collectively and severally “Termination Benefits”). If the
Executive elects to receive Termination Benefits under this Agreement then he
shall automatically forfeit his right, if any, under the Employment Agreement to
render consulting services to the Company on the terms and conditions set out in
the Employment Agreement and shall also automatically forfeit his right to
receive the compensation and benefits provided for in Section 8 of the
Employment Agreement.

 

3.2 Base Salary Through Date of Termination. The Company shall pay the Executive
his full base salary through the Date of Termination under the Company’s regular
payroll procedures and at the rate in effect at the time notice of termination
is given. The Company shall give the Executive credit for any vacation earned
but not taken and pay such amount at the time that any earned but not yet paid
bonus is paid under Section 3.3.

 

3.3 Pro-Rata Bonus for Year of Termination. The Company shall pay the Executive
a pro-rata bonus for the year in which his employment terminates. The pro-rata
bonus shall be equal to “A” divided by “B” with the quotient multiplied by “C”
where:

 

  (a) “A” equals the number of days the Executive is employed by the Company in
the year in which the termination of employment occurs (the “Termination Year”);

 

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  (b) “B” equals 365; and

 

  (c) “C” equals the maximum bonus the Executive would have been eligible for in
the Termination Year under Section 4.2 of his Employment Agreement or under the
Company’s Key Officers Incentive Compensation Plan (or successor plans),
whichever may be applicable.

 

The pro-rata bonus shall be paid by the Company in a lump sum, within 30 days
after the bonus amount is determinable, except that if such payment is required
to be delayed six months to conform to the requirements of Section 409A(a)(2)(B)
of the Internal Revenue Code of 1986 (as amended) (“the Code”), such pro-rata
bonus shall be paid at such later time.

 

3.4 Monthly Severance Payments. The Company shall pay the Executive the
aggregate severance payments equal to (i) 150% of the Executive’s annual base
salary (notwithstanding any deferral of compensation) as of the date of the
Change in Control or as of the Date of Termination, whichever is greater,
multiplied by (ii) 2.5. The 150% figure in this Section shall be appropriately
increased or decreased as the Executive’s target bonus amount (which is
expressed as a percentage of his annual base salary and is currently 50%) is
increased or decreased. Thus, for example, if Executive’s target bonus is later
increased to 60%, the 150% figure would be increased to 160%.

 

The severance payments in this Section 3.4 shall be made in 30 equal,
consecutive monthly installments, with the first installment to be on the first
day of the first month immediately following the Date of Termination, except
that if such payment is required to be delayed six months to conform to the
requirements of Section 409A(a)(2)(B) of the Code, such installments shall be
delayed consistent with those requirements, at which time a single sum shall be
paid equal to any installments that have not been paid and the remainder of the
installment payments shall commence on a monthly basis thereafter.

 

3.5 Welfare Plans and Fringe Benefits.

 

(a) For purposes of this Section 3.5, welfare plans and fringe benefit programs
include health, disability, life, salary continuance prior to disability,
automobile usage, and any other fringe benefit or welfare plan arrangement in
which the Executive was entitled to participate immediately prior to the Date of
Termination.

 

(b) The Company shall maintain in full force, for the continued benefit of the
Executive for 30 months after the Date of Termination, all welfare plans and
fringe benefit programs (including health insurance, disability insurance, and
life insurance ) that may be provided to the to the Executive as a former
employee on a tax-free basis under the Code.

 

(c) To the extent that any other welfare plan or fringe benefit program cannot
be maintained under Section 3.5(b) above on a tax-free basis to the Executive
under the applicable provisions of the Code, such benefits shall be continued
for the period, if any, that is recognized under Code section 409A (including
guidance issued thereunder) as not resulting in a deferral of compensation, but
in no event beyond 30 months.

 

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(d) To the extent any welfare plan or fringe benefits cannot be provided for 30
months from the Date of Termination under Sections 3.5(b) and (c) above,
Executive shall be entitled to a lump sum payment that is reasonably determined
to equal the cost of coverage or the value of benefits, as applicable, that
would have been provided during such 30 month period. Such lump sum payment
shall be delayed for six months to the extent required to conform to the
requirements of Internal Revenue Code Section 409A(a)(2)(B). At the close of the
30 months period, any assignable insurance policy owned by the Company and
relating specifically to the Executive shall be assigned to the Executive.

 

3.6 Retirement Plans.

 

(a) The Company shall pay the Executive an additional retirement benefit as
specified in this Section 3.6. Such benefit shall be the actuarial equivalent of
the additional benefit to which the Executive would have been entitled under the
Company’s Retirement Plans in effect immediately prior to a Change in Control
had the Executive accumulated 30 additional months of continuous service
(following the Date of Termination) under such Retirement Plans both for
purposes of determining eligibility for benefits and for purposes of calculating
the amount of such benefits. If any Retirement Plan requires contributions by
participants, the amount of additional retirement benefit payable under this
Section 3.6 shall be equitably adjusted to reflect the absence of contributions
by the Executive and any matching contribution that would be contingent upon the
Executive’s contributions shall be calculated as if the Executive made the
maximum contribution allowable under the terms of such Retirement Plan.

 

(b) For purposes of this Section 3.6, “Retirement Plans” are (i) any savings or
retirement plan sponsored by the Company that is intended to be tax-qualified
under Internal Revenue Code section 401(a), and any arrangements that make up
benefits that are not provided under such tax-qualified plans because of
compensation or benefit limits under the terms of such plans or the Internal
Revenue Code, (ii) the Executive Stock Unit Program, and (iii) any deferred
compensation program in which the Executive participates that is adopted after
the effective date of this agreement that is intended to provide for retirement
savings and that is designated by the Board or Compensation Committee as a
Retirement Plan.

 

(c) The additional retirement benefit under this Section 3.6 shall be paid in a
cash lump sum as of the date that the Executive receives or commences benefits
under the terms of the Retirement Plan. With respect to the additional
retirement benefit paid with respect to a tax-qualified plan, however, payment
shall be made as of the later of 30 days following the Date of Termination or
the date that the Executive attains normal retirement age under such plan. In
all events, payments shall be delayed for six months to the extent required to
conform to the requirements of Internal Revenue Code Section 409A(a)(2)(B).

 

3.7 Stock Options. Except for stock options not yet vested under the Company’s
Deferred Compensation Program, the Company shall accelerate and make immediately
exercisable in full any unexercised stock options that are not fully exercisable
and that the Executive then holds to acquire securities from the Company. The
Executive may elect to surrender to the Company his rights in outstanding stock
options during the period beginning

 

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with the notice of termination and ending three months after the Date of
Termination (the “Option Election Period”). Upon such surrender, the Company
shall pay to the Executive an amount in cash per optioned share equal to the
difference between (i) the option price of such share and (ii) the closing price
of the Company’s shares on the date the options (or in the case of Section 3.10,
the shares) are surrendered to the Company. If, as of such surrender date the
option price of such share exceeds the closing price, the Company shall pay to
the Executive an amount in cash per optioned share equal to the value of the
option that is determined under the methodology for valuing stock options
adopted pursuant to Section 3.11.

 

If, within six months of the taking of any Company Action under Section 2.4, the
Executive dies while still employed by the Company, the Executive’s estate shall
be entitled, upon notice to the Company within 90 days of the Executive’s death,
to be paid an amount equal to the amount the Executive would have received had
he surrendered all of his stock options under this Section as of the date
preceding his death. Such amount shall be paid in cash by the Company within 45
days after receipt of the notice and the delivery of an instrument surrendering
all rights the Executive’s estate may have held to the stock options.

 

3.8 Purchase of Company Car. The Company shall permit the Executive within 60
days from the Date of Termination, to purchase any Company automobile the
Company was providing for the Executive’s use at the time notice of termination
was given. The purchase price shall be the book or wholesale value at such time,
whichever is lower.

 

3.9 Repurchase of Company Shares Owned by Executive. Any unvested securities of
the Company that the Executive holds shall become fully vested (with the
exception of stock units not yet vested under the Company’s Deferred
Compensation Program). Upon Executive’s request during the Option Election
Period, the Company shall purchase all Company shares owned by the Executive
immediately prior to the Date of Termination. Within 45 days after the request
is made, the Executive’s shares, properly endorsed and free of all claims, shall
be delivered to the Company. Thereupon, the Company shall pay the purchase price
in cash, determined under the method set forth in Section 3.7.

 

3.10 Termination Which Does Not Require Payment of Termination Benefits. No
Termination Benefits shall be provided by the Company to the Executive under
this Section 3 if the Executive’s employment is terminated:

 

  (a) By his death; or

 

  (b) By the Executive other than for Good Reason (e.g., by retirement); or

 

  (c) By the Company for Disability or for Cause under this Agreement or for
disability or cause under the Employment Agreement.

 

As used herein, retirement by the Executive means termination of employment in
accordance with the Company’s normal retirement policy, including early
retirement, generally applicable to the Company’s salaried employees or in
accordance with any special retirement

 

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arrangement jointly established by the Company and the Executive and mutually
agreeable to both.

 

3.11 Gross Up Payment. If any payment or benefit received by the Executive under
this Agreement or any other plan or agreement with the Company (a “Benefit”) is
subject to tax under Section 4999 of the Internal Revenue Code of 1986, as
amended, or any interest or penalties are incurred by the Executive with respect
to such tax (collectively, “Excise Tax”), the Company will pay the Executive an
amount (“Gross Up Payment”) that covers: all Excise Taxes payable by Executive
because of any such Benefit and all income and employment taxes and Excise Taxes
on the Gross Up Payment. It is the Company’s intent that any payment under this
Section 3.11 shall place the Executive in the same position that he would have
been in had the Benefit not been subject to the Excise Tax. Any Gross Up Payment
shall be made no later than the date the Excise Tax is payable by the Executive
or the date it is withheld as provided below.

 

The Company shall determine whether or not any Benefit is subject to the Excise
Tax and withhold the amount of the Excise Tax from any Benefit or other
remuneration payable to the Executive. Any such determination shall be made in
good faith and after consultation with the Company’s independent certified
public accountants or outside tax counsel. The Company shall also have the
right, on behalf of the Executive, at its sole cost and expense, to contest any
claim by the Internal Revenue Service (“Service”) that any Benefit is subject to
the Excise Tax or file and pursue a claim for refund of any Excise Tax
previously paid. The Executive shall cooperate with the Company in any such
proceeding and provide the Company with any notifications received by the
Executive from the Service. If the Executive receives any refund of Excise Tax
for which a Gross Up Payment has been made, the Executive shall pay such refund
to the Company. Provided, however, that the Gross-Up Payment shall be made only
to the extent that the total value of Benefits exceeds by 10 percent or more the
dollar amount that is 3 times the Executive’s “base amount” (as defined in
Section 280G of the Code). If the total value of Benefits exceeds by less than
10 percent the dollar amount that is 3 times the Executive’s “base amount,” then
no Gross-Up Payment shall be made and Benefits shall be capped at the amount
that is $1 less than 3 times the Executive’s “base amount.”

 

4. No Obligation to Mitigate

 

The Termination Benefits provided under Section 3 shall not be treated as
damages, but rather shall be treated as severance compensation to which the
Executive is entitled. The Executive shall not be required to mitigate the
amount of any Termination Benefit provided under Section 3 by seeking other
employment or otherwise; provided, however, any health welfare and fringe
benefits that the Executive may receive from full time employment by a third
person shall be applied against and reduce any such benefits thereafter to be
made available to the Executive under Section 3.5.

 

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5. Voluntary Termination of Employment by Executive After Certain Change in
Control

 

The Executive may voluntarily terminate his employment with the Company for any
reason (including retirement) within one year of any Change in Control. A
termination of employment under this Section 5 shall be deemed a valid and
proper termination of the Employment Agreement if then in force and to this
extent the parties agree that the Employment Agreement is hereby amended. Upon
any such termination of employment the Executive may in his sole discretion
elect to receive, and the Company shall provide, the following benefits and no
others under this Agreement:

 

  (a) The Company shall promptly pay the Executive those salary, bonus and
vacation payments provided for in Section 3.2.

 

  (b) The Company shall promptly pay the Executive the pro-rata bonus provided
for in Section 3.3.

 

  (c) The Company shall promptly pay the Executive a non-forfeitable lump sum
cash termination payment equal to 75% of the Executive’s total cash compensation
for the calendar year immediately preceding the Date of Termination of his
employment.

 

  (d) The Company shall provide the Executive for one year with those benefits
described in Section 3.5. The benefits provided under this subsection (d) shall
be reduced by any such benefits the Executive thereafter receives from full time
employment by a third person.

 

If the Executive does not elect to receive benefits under this Section 5, then
he shall remain eligible to receive Termination Benefits in accordance with the
provisions of Section 3. The benefits payable to the Executive under this
Section 5 are in addition to all benefits provided to him under the Employment
Agreement. However, if the Executive elects to receive benefits under this
Section 5 then he shall automatically forfeit his option, if any, under the
Employment Agreement to render consulting services to the Company on the terms
and conditions set out in the Employment Agreement and shall also automatically
forfeit his right to receive the compensations and benefits provided for in
Section 8 of the Employment Agreement.

 

The only Change in Control that will permit an Executive to make an election
under this Section 5 is a Change in Control that is opposed by a majority vote
of the Board and in connection with such Change in Control or as a result
thereof:

 

  (a) A majority of the whole Board becomes comprised of persons other than
Original Directors or their Successors (as those terms are defined in
Section 1.1(c)); or

 

  (b) Any person (as defined in Section 1.1(b)) becomes the beneficial owner),
directly or indirectly, of 50% or more of the combined voting power of the
Company’s then outstanding voting securities.

 

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6. Termination of Employment Prior to Change in Control

 

Prior to a Change in Control and if there is no Employment Agreement in force,
the Executive shall not voluntarily terminate his employment with the Company
except upon at least three months’ prior notice. Similarly, the Company shall
not terminate the Executive’s employment other than for Cause except upon at
least three months’ prior notice. If the Employment Agreement is in force,
termination of employment by the Executive or the Company shall be governed by
the terms thereof.

 

7. Successor; Binding Agreement

 

The Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place (the assumption
shall be by agreement in form and substance satisfactory to the Executive).
Failure of the Company to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle the
Executive, at his election, to Termination Benefits from the Company in the same
amount and on the same terms as the Executive would be entitled to hereunder if
he terminated his employment for Good Reason, except that for purposes of
implementing the foregoing, the date on which any such election becomes
effective shall be deemed the Date of Termination. As used in the Agreement
“Company” means the Company as previously defined and any successor to its
business and/or assets which executes and delivers the agreement provided for in
this Section 7 or which otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law.

 

This Agreement shall inure to the benefit of and be enforceable by the
Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributes, devisees and legatees. If the Executive should
die while any amount would still be payable to him hereunder if he had continued
to live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to his devisee, legatee or other
designee or, if there be no such designee, to his estate.

 

8. Miscellaneous

 

8.1 Notice. All notices, elections, waivers and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States certified mail, return
receipt requested, postage prepaid, addressed to the respective addresses set
forth on the first page of this Agreement, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notices of change of address shall be effective only upon receipt.

 

8.2 No Waiver. No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing, signed by the Executive and an officer of the Company. No waiver by
either party at any time of any breach by the other party of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral

 

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or otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.

 

8.3 Enforceability. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.

 

8.4 Disputes. Any dispute or controversy arising under or in connection with
this Agreement shall be settled by arbitration in accordance with the Commercial
Arbitration Rules procedures of the American Arbitration Association. If, at any
time after 90 days from the date of the Executive’s Termination of Employment,
the Executive and the Company have not resolved any dispute or controversy
arising under or in connection with this Agreement, either the Executive or the
Company may notify the other of an intent to seek arbitration. Arbitration shall
occur before a single arbitrator in the State of Missouri; provided, however,
that if the parties cannot agree on the selection of such arbitrator within 30
days after the matter is referred to arbitration, each party shall select one
arbitrator and those arbitrators shall jointly designate a third arbitrator to
comprise a panel of three arbitrators. The decision of the arbitrator shall be
rendered in writing, shall be final, and may be entered as a judgment in any
court in the State of Missouri. Company and the Executive each irrevocably
consent to the jurisdiction of the federal and state courts located in the State
of Missouri for this purpose. The Company shall pay all costs and expenses in
connection with any arbitration under this Section 8.4, including without
limitation all reasonable legal fees incurred by Executive in connection with
such arbitration; provided, however, the Company shall not be obligated to pay
unless the Executive prevails on the majority of the dollar amount at issue in
the dispute.

 

8.5 Sections; Captions. All references in this Agreement to Sections refer to
the applicable Sections of this Agreement. References in this Agreement to a
given Section (e.g., Section 3) shall, unless the context requires otherwise,
refer to all parts of such Section (e.g., 3.1 through 3.12).

 

The captions have been placed in this Agreement for ease of reference only. They
shall not be used in the interpretation of this Agreement.

 

8.6 Term of Agreement. This Agreement shall continue in force so long as the
Executive remains employed by the Company or any successor and shall apply to
any Change in Control that occurs while the Executive remains so employed,
except as so modified by the parties from time to time, including modifications
to take into account changes in law.

 

8.7 Limited Right of Offset. Unless the Executive has been terminated for
“Cause” under Section 2.3, effective upon a Change in Control, the Company
waives, and will not assert, any right to set off the amount of any claims,
liabilities, damages or losses the Company may have against the Executive under
this Agreement or otherwise.

 

8.8. Release. The payment of benefits under this Agreement are contingent upon
the Executive’s execution of a release, in a form reasonably acceptable to
Executive’s legal counsel,

 

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waiving all claims against the Company arising in connection with the
Executive’s employment and termination of employment with the Company.

 

8.9 Successive Changes in Control. A separate Change in Control shall be deemed
to have occurred with each occurrence of any event described at subsections
(a) through (e) of Section 1.1. This Agreement pertains to each and every Change
in Control, including successive Changes in Control involving the same
controlling person(s).

 

8.10 Interpretation of Agreement and Application of Code Section 409A. In the
event of any ambiguity, vagueness or other matter involving the interpretation
or meaning of this Agreement, this Agreement shall be liberally construed so as
to provide to the Executive the full benefits set out herein. Nothing in this
Agreement is intended, however, to pay a benefit in a form or manner that would
result in taxation to the Executive under Code section 409A and this Agreement
shall be interpreted accordingly.

 

8.11 Withholding. The Company may withhold all federal, state, and local income
and employment taxes as required under applicable laws and regulations.

 

IN WITNESS WHEREOF, this Agreement has been signed as of the day and year first
above written.

 

EXECUTIVE:       LEGGETT & PLATT, INCORPORATED /s/    KARL G. GLASSMAN          
    By:   /S/    ERNEST C. JETT         Karl G. Glassman       Name:   Ernest C.
Jett             Title:   Senior Vice President, General Counsel and Secretary

 

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