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Leggett & Platt - Employment & Severance Benefit Agreement
EXHIBIT 10
EMPLOYMENT AGREEMENT
BETWEEN
DAVID S. HAFFNER AND
LEGGETT & PLATT, INCORPORATED
1. Employment........................................................ 1
2. Term.............................................................. 1
2.1 Term..................................................... 1
2.2 Early Termination........................................ 1
3. Duties and Authority.............................................. 2
4. Compensation...................................................... 2
4.1 Base Salary.............................................. 2
4.2 Annual Cash Bonus........................................ 3
4.3 Vacations; Other Benefits................................ 3
5. Expenses.......................................................... 4
6. Disability........................................................ 4
6.1 Definition of "Total Disability.......................... 4
6.2 Offset Payments.......................................... 4
7. Executive's Option to Terminate Agreement......................... 4
8. Termination by the Company........................................ 5
8.1 Termination For Cause.................................... 5
8.2 Termination Without Cause................................ 6
9. Confidential Information.......................................... 6
10. Nonassignability.................................................. 6
11. Miscellaneous..................................................... 6
11.1 Waivers.................................................. 6
11.2 Notices.................................................. 6
11.3 Survival of Provisions................................... 7
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made as of July 30, 2001 between Leggett & Platt, Incorporated, a Missouri corporation (the "Company"), and David S. Haffner (the "Executive").
RECITALS
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The Company desires that the Executive remain in the employment of the Company. Accordingly, the Compensation Committee (the "Compensation Committee") of the Board of Directors of the Company (the "Board") has recommended the execution of this Agreement and the Board has authorized the execution of the same.
AGREEMENT
NOW THEREFORE, for good and valuable consideration, the Company and the Executive agree as follows:
1. Employment
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The Company hereby reaffirms its employment of the Executive as its Executive Vice President and Chief Operating Officer, and the Executive hereby confirms his employment in that capacity.
The Executive's employment under this Agreement is subject to the terms and conditions set out below and will be carried out in Carthage, Missouri, at the Company's principal executive offices. However, the Executive acknowledges that the nature of his employment may require reasonable domestic and international travel from time to time.
2. Term
----
2.1 Term
----
The term of this Agreement shall commence on July 30, 2001 and shall end five years after such date, unless terminated earlier in accordance with the provisions of this Agreement.
2.2 Early Termination
-----------------
The term of this Agreement may be terminated prior to expiration by reason of any of the following:
(a) by the Executive upon 12 months prior written notice;
(b) in accordance with the Severance Benefit Agreement dated
as of July 30, 2001, as amended from time to time (the
"Severance Benefit
1
Agreement"), a copy of which is attached as Exhibit A for
information purposes only;
(c) in accordance with Section 6 hereof, upon the Executive's
Total Disability (as defined below);
(d) by the Executive pursuant to Section 7 hereof;
(e) by the Company pursuant to Section 8 hereof; or
(f) for other causes as provided elsewhere in this Agreement.
3. Duties and Authority
--------------------
The Executive shall devote his full business time to the affairs of the Company. However, this shall not be deemed to prevent the Executive from devoting such time (which shall not be substantial in the aggregate) to personal business interests that do not unreasonably interfere with the performance of the Executive's duties hereunder.
The Executive shall use his best efforts, skills and abilities to promote the Company's interests. The Executive shall serve as director (if so elected by the shareholders of the Company) and shall perform such duties at the Executive Vice President level or above assigned to him by the Board or the Chief Executive Officer. The Executive shall report to the Chief Executive Officer of the Company.
4. Compensation
------------
4.1 Base Salary
-----------
The Executive shall be paid a base salary at an annual rate of $495,000. Beginning on or about April 1, 2002 and April 1 of each successive year during the term of this Agreement, the Compensation Committee shall appraise the Executive's performance during the previous calendar year, taking into account such factors as it deems appropriate. As a result of such appraisal, the then annual base salary of the Executive may be increased (but shall not be decreased) by such amount as the Compensation Committee determines is fair, just and equitable; provided, however, the percentage increase in the Executive's base salary shall be at least equal to the then latest percentage increase over the previous year in the aggregate annual base salaries of the Company's five highest paid executive officers other than the Executive. In computing this percentage increase, the Compensation Committee shall disregard that part of any base salary increase attributable in the Committee's reasonable judgment to additional responsibilities assumed or to be assumed by any of such five highest paid executive officers. Further, in computing the percentage increase, the Compensation Committee shall make equitable adjustments in its computations so that the Executive will not be prejudiced by any reduction in the responsibilities of any of such five highest paid executive officers implemented during the immediately preceding year or to be implemented in the immediately following year.
The Executive's base salary shall be paid in equal bi-weekly installments.
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All salary increases under this section will be made as of the beginning of the first payroll period in which the Company's other salaried employees generally receive merit related annual salary adjustments.
4.2 Annual Cash Bonus
-----------------
During the term of this Agreement, the Executive shall be entitled to earn a cash bonus computed in accordance with the 1999 Key Officers Incentive Plan, as amended from time to time (the "Incentive Plan"). The amount of the Executive's bonus shall be determined by applying a bonus formula approved by the Compensation Committee to a percentage of Executive's annual salary on December 31 of each year ("target percentage"). The Executive's target percentage is 55%. The Compensation Committee shall be entitled to amend or supplement the guidelines from time to time whenever the Committee deems this to be in the best interests of the shareholders of the Company.
If the Executive's employment under this Agreement is terminated before December 31 of any year, the Executive shall receive a prorated bonus for the year of termination. This prorated bonus shall bear the same ratio to the actual bonus the Executive would have earned with respect to the year under the Incentive Plan as the number of days this Agreement is in force during such year bears to 365.
4.3 Vacations; Other Benefits
-------------------------
The Executive shall be entitled to a reasonable annual vacation (not less than an aggregate of four weeks in any calendar year) with full pay, benefits and allowances.
In addition to the salary, bonus and other payments to be made under this Agreement, the Executive shall be entitled to participate (to the extent legally permitted) in any insurance, pension, profit sharing, stock bonus, stock option, stock purchase or other benefit plan of the Company now existing or hereafter adopted for the benefit of executive officers of the Company or the employees of the Company generally.
At the Company's expense, the Company shall provide office space, secretarial assistance, supplies and equipment fully adequate to enable the Executive to perform the services contemplated by this Agreement and at least comparable to that being provided to the Executive on the date hereof.
The Company shall provide the Executive with appropriate perquisites at least comparable to those provided to the Executive on the date hereof and, in all events, equal to such perquisites as may be made available from time to time to the Company's other executive officers.
In addition to the payments provided for in this Section 4 and elsewhere in this Agreement, the Company may from time to time pay the Executive as a salary increase, a bonus or otherwise, such additional amounts as the Compensation Committee shall, in its discretion, determine.
Except as may be provided otherwise in this Agreement or to the extent required
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by law, no benefits referred to in this section or provided for in other sections of this Agreement shall be reduced by the Company as to the Executive without first securing his consent.
5. Expenses
--------
The Company shall pay or reimburse the Executive for all transportation, hotel, living and related expenses incurred by the Executive on business trips away from the Company's principal office and for all other business and entertainment expenses reasonably incurred by him in connection with the business of the Company and its subsidiaries or affiliates.
6. Disability
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6.1 Definition of "Total Disability"
-------------------------------
The Executive shall be deemed to have a "Total Disability" if he is unable, for a continuous period of four or more months, to perform substantially all of the material personal services to be rendered by him under this Agreement.
During the continuance of any Total Disability, the Board may elect to relieve the Executive of all of his duties hereunder by Board resolution delivered to the Executive, or the Executive may elect to cease performing all of his duties hereunder by notice delivered to the Company. Thereupon, Executive's duties and responsibilities under this Agreement shall cease 60 days following delivery of the Board resolution or the Executive's notice, as the case may be; provided, however, that all other provisions of this Agreement, including the Executive's cash compensation and other benefits, shall continue in full force until 14 months from the first day of the four month or longer continuous period that culminated in the Total Disability ("Disability Termination Date"). If Executive continues to have a Total Disability on the Disability Termination Date, his employment under this Agreement shall be terminated.
6.2 Offset Payments
---------------
The Company's obligation to continue the Executive's cash compensation from the date of a Total Disability to the Disability Termination Date shall be reduced by (a) all amounts paid to Executive under disability income insurance policies made available to the Executive by the Company and (b) by all amounts received by the Executive from Social Security disability benefits.
7. Executive's Option to Terminate Agreement
-----------------------------------------
Not later than six months after the occurrence of any of the following events the Executive may elect to terminate his employment under this Agreement by sending notice of termination to the Company:
(a) The Executive shall not be elected and continue as director of the
Company;
(b) The Company is merged or consolidated with another corporation and
the
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Company is not the survivor;
(c) The Company is dissolved;
(d) Substantially all of the assets of the Company are sold to any
other person;
(e) A public tender offer is made for the shares of the Company and
the offeror acquires at least 40% of the outstanding common shares
of the Company; or
(f) A proxy contest is waged and the person waging the contest
acquires working control of the Company.
The Executive's employment obligations under this Agreement shall terminate on the date of termination specified in the Executive's notice to the Company, which date must be within 60 days of the date of the notice.
8. Termination by the Company
--------------------------
8.1 Termination For Cause
---------------------
The Company may terminate the Executive's employment pursuant to this Agreement by discharging the Executive for cause. The term "for cause" shall be limited to the following events:
(a) The Executive's conviction of any crime involving money or
other property of the Company or any of its affiliates or 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 continuing, repeated, willful violation of
specific written directions of the Board (or the board of any
affiliate of the Company of which the Executive is an
officer) which directions are consistent with this Agreement
and which violation continues following the Executive's
receipt of such written directions; or
(c) The Executive's continuing, repeated, willful failure to
perform his duties hereunder; provided, however, that no
discharge shall be deemed for cause under this subsection (c)
unless the Executive first receives written notice from the
Board (or of the board of any affiliate of the Company of
which the Executive is an officer) advising the Executive of
the specific acts or omissions alleged to constitute a
failure to perform his duties, and such failure continues
after the Executive shall have had a reasonable opportunity
to correct the acts or omissions so complained of.
In no event shall the alleged incompetence of the Executive in the performance of his duties under this Agreement be deemed grounds for discharge for cause.
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8.2 Termination Without Cause
-------------------------
The Board, at any time and without cause, may relieve the Executive of his duties under this Agreement upon three months prior written notice to the Executive; provided that such action by the Board pursuant to this Section shall not be deemed a termination of the Executive's employment and shall not relieve the Company of any of its financial obligations to the Executive as set forth in this Agreement. Notwithstanding the foregoing sentence, if the Executive's duties are terminated pursuant to this Section, the Executive's employment shall thereafter be terminated upon the earlier of (i) Executive's death or (ii) the Disability Termination Date (as defined in Section 6.1).
9. Confidential Information
------------------------
The Executive shall not at any time (whether during the term of this Agreement or thereafter) disclose to any person any confidential information or trade secrets of the Company.
If any of the restrictions contained in this section or elsewhere in this Agreement shall be deemed unenforceable then the Executive and the Company contemplate that the appropriate court will enforce such restrictions in their reduced form.
10. Nonassignability
----------------
This Agreement and the benefits hereunder are personal to the Company and are not assignable by it; provided, however, this Agreement and the benefits hereunder may be assigned by the Company to any person acquiring all or substantially all of the assets of the Company or to any corporation into which the Company may be merged or consolidated. In the event of an assignment of this Agreement to any person acquiring all or substantially all of the assets of the Company or to any corporation into which the Company may be merged or consolidated, the title, responsibilities and duties assigned to the Executive by such successor person or corporation shall be the title, responsibilities and duties of a senior executive officer of such successor person or corporation.
The provisions of this Agreement shall be binding on and inure to the benefit of the Executive, his assignees, executors, and administrators.
11. Miscellaneous
-------------
11.1 Waivers
-------
No waiver by either party of any breach or nonperformance of any provision of this Agreement shall be deemed to be a waiver of any preceding or succeeding breach or nonperformance of the same or any other provision hereof.
11.2 Notices
-------
All notices, waivers, designations or other communications (collectively "notices") that either party is required or permitted to give hereunder shall be in writing and
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delivered as follows:
If to the Executive: If to the Company:
David S. Haffner Leggett & Platt, Incorporated 2018 Morgan Heights Road No. 1 Leggett Road Carthage, Missouri 64836 Carthage, Missouri 64836
Attention: Secretary
subject to the right of either party at any time to designate a different location for the delivery of notices.
11.3 Survival of Provisions
----------------------
Section 9 shall survive the expiration or termination of this Agreement, as shall all other provisions hereof which provide for or contemplate performance by either the Executive or the Company following the termination hereof.
IN WITNESS WHEREOF, the Company and the Executive have signed this Agreement as of the day and year first above written.
"EXECUTIVE" "COMPANY"
LEGGETT & PLATT, INCORPORATED
/s/ David S. Haffner By /s/ Ernest C. Jett -------------------- --------------------------------- David S. Haffner Name: Ernest C. Jett
--------------------------
Title: Vice President
--------------------------
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Severance Benefit Agreement
David S. Haffner
Table of Contents
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Page
---- 1. Change in Control; Employment Agreement 1
1.1 Change in Control 1
1.2 Employment Agreement 2
2. Termination of Employment Following a Change in Control 2
2.1 General 2
2.2 Termination for Disability 2
2.3 Termination by Company for "Cause" 3
2.4 Termination by Executive for Good Reason 4
2.5 Notice of Termination 5
2.6 Date of Termination 6
2.7 Prior Notice Required of Company Actions 6
3. Benefits upon Termination of Employment 6
3.1 General 6
3.2 Base Salary Through Date of Termination; Previously
Earned Bonus 6
3.3 Pro-Rata Bonus for Year of Termination 7
3.4 Monthly Severance Payments 7
3.5 Fringe Benefits (General) 7
3.6 Retirement Plans 7
3.7 Stock Options 8
3.8 Purchase of Company Car 8
3.9 Job Search Assistance; Legal Fees; etc. 9
3.10 Repurchase of Company Shares Owned by Executive 9
3.11 Termination Which Does Not Require Payment of
Termination Benefits 9
3.12 Gross-Up Payment 10
4. New Employment; Reduction of Termination Benefits 10
5. Voluntary Termination of Employment By Executive 10
6. Termination of Employment Prior to Change in Control 11
7. Successor; Binding Agreement 12
8. Miscellaneous 13
8.1 Notice 13
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8.2 No Waiver 13
8.3 Enforceability 13
8.4 Disputes 13
8.5 Sections; Captions 13
8.6 Term of Agreement 13
8.7 No Right of Offset 13
8.8 Successive Changes in Control 13
8.9 Interpretation of Agreement 14
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Severance Benefit Agreement
---------------------------
This Severance Benefit Agreement (the "Agreement") is made as of July 30, 2001 between Leggett & Platt, Incorporated, No. 1 Leggett Road, Carthage, Missouri 64836 (the "Company") and David S. Haffner (the "Executive"), residing at 2018 W. Morgan Heights Road, Carthage, Missouri 64836.
RECITALS
--------
The Executive functions as Executive Vice President and Chief Operating Officer 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 1
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 Exchange Act), directly or indirectly, of 25% or more
of
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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 July 30, 2001 (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 36 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
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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 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 subsidiaries or of any other
crime (whether or not involving the Company or any of its
subsidiaries) that constitutes a felony in the jurisdiction involved;
or
(b) The Executive's continued, repeated, willful violations of specific
written directions of the Board or the Company's Chief Executive
Officer, which directions are consistent with this Agreement and the
Executive's duties and do not constitute Company Action as defined in
Section 2.4 and which violations continue following the Executive's
receipt of such written directions; or
(c) The Executive's continued, repeated, willful failure to perform his
duties; provided, however, that no discharge shall be deemed for Cause
under this subsection (c) 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 con...
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