LEGGETT & PLATT, INCORPORATED STOCK BONUS PLAN AS RESTATED EFFECTIVE, EXCEPT AS OTHERWISE INDICATED, AS OF SEPTEMBER 1, 2006 TABLE OF CONTENTS

Exhibit 4.2

LEGGETT & PLATT, INCORPORATED

STOCK BONUS PLAN

AS RESTATED EFFECTIVE,

EXCEPT AS OTHERWISE INDICATED,

AS OF SEPTEMBER 1, 2006

TABLE OF CONTENTS

TO

LEGGETT & PLATT, INCORPORATED

STOCK BONUS PLAN,

AS RESTATED EFFECTIVE,

EXCEPT AS OTHERWISE INDICATED,

AS OF SEPTEMBER 1, 2006

 

 

(i)

 

(ii)

 

(iii)

 

(iv)

 

(v)

LEGGETT & PLATT, INCORPORATED

STOCK BONUS PLAN

Effective July 1, 1977, Leggett & Platt, Incorporated, a Missouri corporation whose principal offices are located in Carthage, Missouri (hereinafter referred to as the “Sponsoring Employer” or as an “Employer”), adopted the Leggett & Platt, Incorporated Employee Stock Purchase/Stock Bonus Plan for the benefit of its eligible employees, renamed in the January 1, 2002 restatement as the Leggett & Platt, Incorporated Stock Bonus Plan. The Plan was last restated, generally, effective as of January 1, 2004. This restatement of the Plan is effective as of September 1, 2006, except as otherwise indicated.

The purpose of this Plan is to provide an opportunity for eligible employees of the Employers to share in the growth and prosperity of the Employers by acquiring a proprietary interest in the Sponsoring Employer through the acquisition of shares of the Sponsoring Employer’s common stock through the Plan.

This Plan is intended to continue to qualify as a stock bonus plan under Section 401(a) of the Internal Revenue Code and as an employee stock ownership plan under Section 4975(e)(7) of the Internal Revenue Code. It is also intended that this Plan, together with the Trust Agreement, satisfy the requirements of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and the Plan shall be interpreted, wherever possible, to comply with the terms of ERISA and applicable regulations and rulings issued under ERISA.

ARTICLE I

DEFINITIONS

As used in this Plan, the following terms shall have the following meanings unless a different meaning is clearly required by the context in which it is used. Any words herein used in the masculine shall be read and construed in the feminine where they would so apply. Words in the singular shall be read and construed as though used in the plural in all cases where they would so apply.

1.01. Accounting Year. The term “Accounting Year” shall mean the fiscal year of the Sponsoring Employer for federal income tax purposes (which, as of the effective date of this restated Plan document, is the calendar year).

1.02. Accounts. The term “Accounts” shall mean the records maintained for the purpose of accounting for a Participant’s interest in the Plan. “Account” may refer to one, more than one, or all of the following accounts.

“Cash Dividends Holding Account”

“Cash Dividends Reinvestment Account/Diversified Investments”

“Cash Dividends Reinvestment Account/Stock”

“Employee After-Tax Contributions Account/Diversified Investments”

“Employee After-Tax Contributions Account/Stock”

“Employee Pre-Tax Contributions Account/Diversified Investments”

“Employer Pre-Tax Contributions Account/Stock”

“Employer Matching Contributions Account/Diversified Investments”

“Employer Matching Contributions Account/Stock”

“Employer QNEC Account/Diversified Investments”

“Employer QNEC Account/Stock”

“ESOP Transfer Account/Diversified Investments”

“ESOP Transfer Account/Stock”

“Participant Voluntary Deductible Employee Contributions Account/Diversified Investments”

“Participant Voluntary Deductible Employee Contributions Account/Stock”

“Rollover Account/Diversified Investments”

“Rollover Account/Stock”

1.03. Administrative Committee and Investment Committee. The term “Administrative Committee” and the term “Investment Committee” shall mean the Administrative Committee and Investment Committee provided for in Article VI hereof.

 

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1.04. Attained Age. The term “Attained Age” shall mean the age, in years, of an Employee as of the last anniversary of his date of birth.

1.05. Beneficiary. The term “Beneficiary” shall mean the surviving spouse of a deceased Participant, or, in the event that either:

(a) the deceased Participant is not survived by a spouse, or

(b) the deceased Participant’s surviving spouse had consented, in writing, witnessed by a notary public, to the designation of another beneficiary,

the person or persons, including a trust or estate, designated by the Participant in the latest written notice to the Administrative Committee on a form provided by the Administrative Committee. If any nonspouse Beneficiary so designated predeceases the Participant and the Participant has no surviving spouse at his death and had not designated another Beneficiary, the provisions of Section 5.11 hereof shall apply. The Participant shall have the right to change his Beneficiary from time to time in the manner hereinabove described.

Any beneficiary designation made in accordance with the foregoing, shall be automatically revoked on the marriage or divorce and remarriage of a Participant.

Notwithstanding the foregoing requirements that Beneficiary designations be in writing, the Administrative Committee or its delegee, may permit such designations to be made electronically, if made in a manner prescribed by the Administrative Committee or its delegee. Spousal consent to a nonspouse beneficiary designation, however, must, as previously indicated, be in writing in the presence of a notary public.

1.06. Board of Directors. The term “Board of Directors” shall mean the Board of Directors of the Sponsoring Employer, unless in the context in which it is used it clearly means the Board of Directors of an Employer.

1.07. Cash Dividends Holding Account. The term “Cash Dividends Holding Account” shall mean the Account of a Participant to which cash dividends attributable to his Accounts that the Participant has elected to have paid to him, pursuant to Section 4.10, which are received by the Trustee after January 1, 2002 and credited to this Account pursuant to Section 4.10. A Participant’s Cash Dividends Holding Account shall be debited when the cash dividends are distributed to the Participant pursuant to Section 4.10.

1.08. Cash Dividends Reinvestment Account/Diversified Investments. The term Cash Dividends Reinvestment Account/Diversified Investments” shall mean the Account of a Participant which is credited with amounts from his Cash Dividends Reinvestment Account/Stock which are diversified into certain investments elected pursuant to Section 4.08 hereof, credited or debited with adjustments made pursuant to Section 4.02 and debited with benefit payments or transfers from such accounts to the Participant’s Stock or Diversified Investments Accounts. Separate subaccounts shall be maintained for each diversified investment option and may be maintained for the interim investment of contributions or transfers into this Account and/or for the proceeds from the sale of diversified investments.

 

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1.09. Cash Dividends Reinvestment Account/Stock. The term “Cash Dividends Reinvestment Account/Stock” shall mean the Account of a Participant which is credited with his shares of Employer Stock purchased by the Trust Fund from reinvested dividends received by the Trust Fund which are attributable to his Accounts and are credited or debited with adjustments made pursuant to Section 4.03 and transfers into or out of the diversified investments elected pursuant to Section 4.08. While each Participant’s Account/Stock shall record the number of shares credited to the account (expressed in fractional shares to the nearest four (4) places), no allocation of specific shares of Employer Stock held in the Trust Fund shall be made to such account. Separate subaccounts may be maintained for the interim investment of contributions and transfers into this Account and/or for the proceeds from the sale of Employer Stock.

1.10. Compensation. Except as provided below, the term “Compensation” shall mean a Participant’s (i) total salary or wages, including overtime pay, and (ii) bonuses paid on a regular, recurring basis, any other bonus, including a bonus paid on a non-regular recurring basis, except for an extraordinary bonus, and regular incentive awards received under bonus and incentive plans of the Employer. “Compensation” for Participants who are salespersons who regularly incur travel and other expenses which are not separately reimbursed shall mean seventy-five percent (75%) of the items set forth in (i) and (ii) above. “Compensation” shall not include extraordinary forms of remuneration such as living and automobile allowances, imputed or bonus income related to insurance programs, extraordinary bonuses, extraordinary incentive awards and severance pay.

If a Participant is on a military leave during a period of time when his reemployment rights with the Employer are guaranteed by federal law, he shall be deemed to have received Compensation during his period of military service, provided (i) he is reemployed by an Employer within the time required by federal law after the expiration of his active military service and (ii) he makes the pre-tax Employee contributions required by Section 2.02(a) hereof within the time prescribed in Section 5.16 hereof after his reemployment, based on his deemed Compensation, as hereinafter defined, during his military leave. A Participant’s deemed Compensation during a military leave shall be computed on the assumption that his regular rate of pay would have been paid for forty (40) hours a week or eight (8) hours a day during the regular business days from the commencement of his military leave to his reemployment date. Regular rate of pay shall be calculated for this purpose on the basis of his regular hourly rate of pay at the time of the commencement of his military leave, adjusted by the average increases at the facility or principal place of his employment for similarly situated active employees during the period of his military leave.

This Plan does not limit compensation in accordance with the provisions of Section 401(a)(17) of the Internal Revenue Code because the Plan does not benefit any Highly Compensated Employees.

1.11. Compensation Base. The term “Compensation Base” for any Employee who was a Plan Participant on December 31, 1983, shall mean that portion of a Participant’s Compensation in excess of the amount of Social Security Covered Compensation or hourly rate set opposite his year of birth in the appropriate column of the table below (on the basis of either (i) the appropriate hourly rate in the case of an hourly rate Employee or (ii) the frequency of the Participant’s compensation payments in the case of a non-hourly rate Employee):

 

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The term “Compensation Base” for any Employee who was not a Plan Participant on December 31, 1983, but who became a Plan Participant between January 1, 1984 and December 31, 1986, shall mean that portion of a Participant’s Compensation in excess of the amount of Social Security Covered Compensation or hourly rate specified below (on the basis of either (i) the hourly rate in the case of an hourly rate Employee or (ii) on the basis of the frequency of the Participant’s Compensation payments in the case of a non-hourly rate Employee):

 

The term “Compensation Base” for 2006 shall mean $35,695. The term “Compensation Base” for any Accounting Year after 2006 shall mean the Compensation Base for the immediately preceding Accounting Year increased by the merit budget percentage guideline which was approved by the Board of Directors for the immediately preceding Accounting Year for salaried and clerical hourly employees defined as average performers, rounded down to the next whole percentage.

Notwithstanding the foregoing the “Compensation Base” of any Participant shall include the entire amount of any non-regularly recurring bonus, other than an extraordinary bonus.

1.12. Contingent Beneficiary. The term “Contingent Beneficiary” shall mean the person or persons (or a trust) duly designated by the Participant, with the written consent of his spouse, if any, witnessed by a notary public, to receive any death benefit due from the Plan in the event the designated Beneficiary does not survive the Participant. Notwithstanding the foregoing, written consent of the spouse is not required if the spouse is designated as the Beneficiary. Notwithstanding the foregoing requirement that Participant designations be in

 

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writing, the Administrative Committee or its delegee, may permit such designations to be made electronically, provided the primary beneficiary is the Participant’s spouse. If the primary Beneficiary is not the Participant’s spouse, the spouse must consent in writing, in the presence of a notary public to the designation of both the primary and the contingent beneficiary.

1.13. Early Retirement Date. The term “Early Retirement Date” shall mean the date a Participant retires and leaves the employ of the Employers provided he has attained age fifty-five (55) and has at least five (5) years of Vesting Service or attains age sixty (60) on or before January 1, 2005, regardless of the number of the Participant’s years of Vesting Service.

1.14. Effective Date. The effective date on this restated plan is September 1, 2006, except for the changes to Sections 1.11, 2.01, 2.02 and Schedule I-2006, which shall be effective as of January 1, 2006 and Sections 1.18, 5.09 and 5.15, which shall be effective, January 1, 2007.

1.15. Eligible Employee. The term “Eligible Employee” shall mean each Employee who as of any Participation Date satisfies (a), (b), (c) and (d) below:

(a) either (i) his annual Compensation for the Accounting Year immediately preceding the Participation Date was equal to or greater than the applicable Compensation Base, as calculated under Section 1.11 hereof (which is based on the Employee’s compensation during such immediately preceding Accounting Year) or (ii) from and after January 1, 1992, if the Eligible employee is a salaried Employee, regardless of the amount of his Compensation for the Accounting Year immediately preceding the Participation Date;

(b) he is not a Highly Compensated Employee,

(c) he is not eligible for participation in the Leggett & Platt Incorporated Executive Stock Unit Plan,

(d) he has either (i) been credited with at least one thousand (1,000) Hours of Service in his first twelve (12) months of employment, or (ii) been credited with at least one thousand (1,000) Hours of Service in any Accounting Year.

If an Employee ceases to satisfy these eligibility conditions, he shall cease to be an “Eligible Employee” and the provisions of Section 2.05 hereof shall apply.

1.16. Eligible Rollover Distribution. The term “Eligible Rollover Distribution” shall have the meaning specified in Section 5.15.

1.17. Eligible Retirement Plan. The term “Eligible Retirement Plan” shall have the meaning specified in Section 5.15.

1.18. Employee. The term “Employee” shall mean each current or future employee of an Employer, except for all purposes of the Plan, the term “Employee” shall not include any employee who is a member of a collective bargaining unit, the representatives of which have bargained for and/or negotiated retirement benefits (other than those contained herein) and who have been excluded from this Plan as the result of good faith negotiations between the parties

 

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(such exclusion shall be considered to have occurred in the event the matter of participation is not raised by the unit’s collective bargaining representative). Furthermore, the term “Employee” shall not include any “leased employee” as hereinafter defined, nor any other person classified by his Employer as a “leased employee”, or any person classified by his Employer as an “independent contractor”. The Sponsoring Employer shall notify the Administrative Committee, in writing, of the existence and location of any “temporary operations.”

A person classified by an Employer as either a “leased employee” or an “independent contractor” is not an Employee for purposes of this Plan, even if the person is later classified as a common law employee by the Employer or is later classified as a common law employee pursuant to the settlement of a federal employment tax audit with the Internal Revenue Service (in which event such person shall only be considered to be an Employee, for the purpose of this Plan, from and after the date of his classification by the Employer as a common law employee of an Employer (or an employer that is a member of a controlled group of corporations or trades or businesses with an Employer within the meaning of Sections 414(b) or (c) of the Internal Revenue Code).

The term “leased employee” means any person (other than an employee of the recipient) who pursuant to an agreement between the recipient and any other person (“leasing organization”) has performed services for the recipient (or for the recipient and related persons determined in accordance with Section 414(n)(6) of the Internal Revenue Code) on a substantially full-time basis for a period of at least one year, and such services are performed under primary direction or control of the recipient. A leased employee shall not be considered an Employee of the recipient if: (i) such employee is covered by a money purchase pension plan providing: (1) a nonintegrated employer contribution rate of at least 10 percent of compensation, as defined in Section 415(c)(3) of the Internal Revenue Code, but including amounts contributed pursuant to a salary reduction agreement which are excludable from the employee’s gross income under Section 125, Section 132(f) Section 402(e)(3), Section 402(h)(1)(B) or Section 403(b) of the Internal Revenue Code, (2) immediate participation, and (3) full and immediate vesting; and (ii) if leased employees do not constitute more than 20 percent of the recipient’s nonhighly compensated workforce.

1.19. Employee After-Tax Contributions Account/Diversified Investments. The term “Employee After-Tax Contributions Account/Diversified Investments” shall mean the Account of a Participant to which shall be credited amounts from his Participant Contributions Account/Stock which are diversified into certain investments elected pursuant to Section 4.08 hereof, credited or debited pursuant to Section 4.02 and debited with benefit payments or transfers from such accounts to Participant’s Stock or other Diversified Investments Accounts. Separate subaccounts shall be maintained for each diversified investment option and may be maintained for the interim investment of diversified investment transfers into this Account and/or for the proceeds from the sale of diversified investments.

1.20. Employee After-Tax Contributions Account/Stock. The term “Employee After-Tax Contributions Account/Stock” shall mean the Account of a Participant to which is credited with shares of Employer Stock purchased by the Trust Fund from the Participant’s nondeductible contributions made pursuant to Section 2.02(b), credited or debited with the adjustments made pursuant to Section 4.03, and credited or debited with transfers into or out of

 

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diversified investments pursuant to Section 4.08. While such account shall record the number of shares credited to the account (expressed in fractional shares to the nearest four (4) places), no allocation of any specific shares of Employer Stock held in the Trust Fund shall be made to such account. Separate subaccounts may be maintained for the interim investment of contributions and transfers into this Account and/or for the proceeds from the sale of Employer Stock.

1.21. Employer. The term “Employer” shall mean Leggett & Platt, Incorporated, a Missouri corporation whose principal offices are located at Carthage, Missouri, its successors and assigns, and any subsidiary or affiliated companies authorized by the Board of Directors of Leggett & Platt, Incorporated to participate in this Plan with respect to their Employees, and subject to the provisions of Article IX, any corporation into which the Employer may be merged or consolidated or to which all or substantially all of its assets may be transferred. The addition of a participating Employer shall be pursuant to action by the director(s) of the subsidiary or affiliate, which may contain special provisions, including provisions with respect to the recognition by this Plan of Hours of Service and/or Years of Vesting Service prior to the date a subsidiary or affiliate becomes a participating Employer in this Plan (pursuant to Section 2.01 hereof). The Employers participating in this Plan as of January 1, 2006, the branch numbers and locations of such Employers who are covered by this Plan are listed on Schedule I, a copy of which is attached hereto.

1.22. Employer Stock. The term “Employer Stock” shall mean the shares of the common stock of the Sponsoring Employer, with voting rights, which are contributed to or acquired by the Trustee as part of the Trust Fund.

1.23. Employee Pre-Tax Contributions Account/Diversified Investments. The term “Employee Pre-Tax Contributions Account/Diversified Investments” shall mean the Account of a Participant to which shall be credited amounts from his Employee Pre-Tax Contributions Account/Stock which are diversified into certain investments elected pursuant to Section 4.08 hereof, credited or debited pursuant to Section 4.02 and debited with benefit payments or transfers from such accounts to Participant’s Stock or other Diversified Investments Accounts. Separate subaccounts shall be maintained for each diversified investment option and may be maintained for the interim investment of diversified investment contributions or transfers into this Account and/or for the proceeds from the sale of diversified investments.

1.24. Employee Pre-Tax Contributions Account/Stock. The term “Employee Pre-Tax Contributions Account/Stock” shall mean the Account of a Participant which is credited with shares of Employer Stock purchased by the Trust Fund from the Participant’s pre-tax contributions made pursuant to Section 2.02(a), credited or debited with the adjustments made pursuant to Section 4.03 and credited or debited with transfers into or out of diversified investments pursuant to Section 4.08. While such account shall record the number of shares credited to the account (expressed in fractional shares to the nearest four (4) places), no allocation of any specific shares of Employer Stock held in the Trust Fund shall be made to such account. Separate subaccounts may be maintained for the interim investment of contributions and transfers into this Account and/or for the proceeds from the sale of Employer Stock.

1.25. Employer Matching Contributions Account/Diversified Investments. The term “Employer Matching Contributions Account/Diversified Investments” shall mean the

 

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Account of a Participant to which is credited amounts from his Employer Contribution Account/Stock which are diversified into certain investments elected pursuant to Section 4.08 hereof, credited or debited with adjustments made pursuant to Section 4.02 and debited with benefit payments or transfers from such accounts to the Participant’s Stock or other Diversified Investments Accounts. Separate subaccounts shall be maintained for each diversified investment option and may be maintained for the interim investment of diversified investment contributions or transfers into this Account and/or for the proceeds from the sale of diversified investments. Separate subaccounts may also be maintained for the diversified investment of after-tax employee contributions and pre-tax employee contributions.

1.26. Employer Matching Contributions Account/Stock. The term “Employer Matching Contributions Account/Stock” shall mean the Account of a Participant which is credited with his shares of Employer Stock purchased by the Trust Fund from Employer Matching Contributions or contributed to the Trust Fund by the Employer as an Employer Contribution, credited or debited with adjustments made pursuant to Section 4.03 and transfers into or out of the diversified investments elected pursuant to Section 4.08. While each Participant’s Employer Matching Contributions Account/Stock shall record the number of shares credited to the account (expressed in fractional shares to the nearest four (4) places), no allocation of specific shares of Employer Stock held in the Trust Fund shall be made to such account. Separate subaccounts may be maintained for the interim investment of contributions or transfers into this Account and/or for the proceeds from the sale of Employer Stock. Separate subaccounts may also be maintained for Employer Stock investments of after-tax employee contributions and pre-tax employee contributions.

1.27. Employer QNEC Account/Diversified Investments. The term “Employer QNEC Account/Diversified Investments” shall mean the Account of a Participant to which is credited amounts from his Employer QNEC Account/Stock which are diversified into certain investments elected pursuant to Section 4.08 hereof, credited or debited with adjustments made pursuant to Section 4.02 and debited with benefit payments or transfers from such accounts to the Participant’s Stock or other Diversified Investments Accounts. Separate subaccounts shall be maintained for each diversified investment option and may be maintained for the interim investment of diversified investment contributions or transfers into this Account and/or for the proceeds from the sale of diversified investments.

1.28. Employer QNEC Account/Stock. The term “Employer QNEC Account/Stock” shall mean the Qualified Non-Elective Contributions Account of a Participant which is credited with his shares of Employer Stock purchased by the Trust Fund from Employer Matching Contributions or contributed to the Trust Fund by the Employer as an Employer Contribution, credited or debited with adjustments made pursuant to Section 4.03 and credited or debited with transfers into or out of the diversified investments elected pursuant to Section 4.08. While each Participant’s Employer Matching Contributions Account/Stock shall record the number of shares credited to the account (expressed in fractional shares to the nearest four (4) places), no allocation of specific shares of Employer Stock held in the Trust Fund shall be made to such account. Separate subaccounts may be maintained for the interim investment of contributions and transfers into this Account and/or for the proceeds from the sale of Employer Stock.

 

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1.29. ESOP Transfer Account/Diversified Investments. The term “ESOP Transfer Account/Diversified Investments” shall mean the Account of a Participant which is credited with amounts from his ESOP Transfer Account/Stock which are diversified into certain investments pursuant to Section 4.08 hereof, credited or debited with benefit payments or transfers from such accounts to the Participant’s Stock or other Diversified Investment Accounts. Separate subaccounts may be maintained for each diversified investment option and may be maintained for the interim investment of transfers into this Account and/or for the proceeds from the sale of diversified investments.

1.30. ESOP Transfer Account/Stock. The term “ESOP Transfer Account/Stock” shall mean the Account of a Participant which is credited with shares of Employer Stock which the Participant elected to transfer from the Leggett & Platt, Incorporated Employee Stock Ownership Plan pursuant to Section 10.02 of this Plan, credited or debited with benefit payments or transfers from such accounts to the Participant’s Diversified Investment Accounts. Separate subaccounts may be maintained for each diversified investment option and may be maintained for the interim investment of transfers into this Account and/or for the proceeds from the sale of Employer Stock.

1.31. ESOP Transfer Contributions. The “ESOP Transfer Contributions” shall mean the shares of Employer Stock and other amounts which were transferred at the Participant’s election from the Leggett & Platt, Incorporated Employee Stock Ownership Plan pursuant to Section 10.02 of this Plan.

1.32. Forfeitures. The term “Forfeitures” shall mean the nonvested portions of the Employer Matching Contributions Account/Stock or Diversified Investments of each Participant who terminated employment during an Accounting Year and either (a) received a distribution of his Account before the end of such Accounting Year or (b) did not receive a distribution during the Accounting Year and was not reemployed before the end of such Accounting Year. The Forfeiture shall occur as of the earlier of (i) the date the Participant’s vested Accounts are distributed, or (ii) the last day of the Accounting Year in which the Participant terminates employment and is not reemployed by the end of the Accounting Year. Forfeitures shall also include any amounts forfeited pursuant to Section 2.06 hereof. Forfeitures shall be applied as soon as reasonably practicable after the Forfeiture occurs to reduce Employer Matching Contributions under Section 3.01 or additional Employer Matching Contributions under Section 3.02.

1.33. Highly Compensated Employee. The term “Highly Compensated Employee” shall have the same meaning as under Section 414(q) of the Internal Revenue Code and the regulations thereunder; generally, “Highly Compensated Employee” shall mean any employee of the Employers, or any other entity which is a member of a controlled group of corporations with the Sponsoring Employer or which is under common control with the Sponsoring Employer or which is part of an affiliated service group with the Sponsoring Employer within the meaning of Sections 414(b), (c) and (m) of the Internal Revenue Code, who either:

(a) during the Accounting Year immediately preceding the applicable Accounting Year—

 

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(i) was at any time a 5-percent owner of an Employer, or

(ii) received compensation from the Employers in excess of $95,000 or such higher amount as adjusted for such Accounting Year by the Secretary of the Treasury pursuant to Section 414(q) of the Internal Revenue Code.

(b) during the applicable Accounting Year is at any time a five-percent owner of an Employer, or

Compensation for this purpose shall mean compensation as defined in section 414(s) of the Internal Revenue Code and the regulations thereunder (generally, all the compensation from the Employer which is includable in the Employee’s gross income for federal income tax purposes).

1.34. Hour of Service. The term “Hour of Service” shall mean any hour for which an employee is directly or indirectly compensated or entitled to compensation by an Employer; including, for this purpose, any employer that is a member of a controlled group of corporations, commonly controlled group of trades or businesses or affiliated service group with the Sponsoring Employer within the meaning of Sections 414(b), (c) and (m) of the Internal Revenue Code:

(a) for the performance of duties for an Employer;

(b) for other reasons not requiring the performance of duties such as vacation, holiday, illness, incapacity (including disability), jury duty, or a paid leave of absence; and

(c) as a result of a back pay award (irrespective of mitigation of damages) which has been awarded or agreed to by an Employer.

The Hours of Service credited to an employee under item (a) and item (c) above for which duties were performed shall be based upon the actual number of Hours of Service for which he is directly or indirectly compensated as hereinabove provided. The number of Hours of Service to be credited to an employee under items (b) and (c) above for which no duties were performed shall be calculated on the basis of the number of hours regularly scheduled for the performance of duties during the period of time for which he received compensation or a back pay award. If an employee has no regular work schedule, the number of Hours of Service shall be calculated on the basis of an eight (8) hour day and/or forty (40) hour week. If an employee receives direct or indirect compensation under item (b) or item (c) of this Section for which no duties were performed which was not based upon “units of time” the Hours of Service to be credited shall be calculated pursuant to the pertinent governmental regulations.

Hours of Service for the performance of duties shall be credited as of the date the duties were performed; Hours of Service for other reasons not requiring the performance of duties, shall be credited to the period or periods for which the payment was made; Hours of Service resulting from a back pay award, to the extent not previously credited, shall be credited for the period or periods to which the award or agreement pertains.

 

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Notwithstanding the foregoing:

(i) no more than five hundred one (501) Hours of Service shall be credited under item (b) and item (c) above for any single continuous period during which no duties were performed;

(ii) no Hours of Service shall be credited under item (b) above if the indirect compensation was paid pursuant to workers compensation, unemployment compensation, or disability insurance laws; and

(iii) no Hours of Service shall be credited for any payment to an employee which solely reimburses the employee for medical or medically related expenses.

1.35. Limited Participant. The term “Limited Participant” shall mean a Participant who becomes a “Limited Participant” as defined in Sections 2.03 and 2.05 hereof.

1.36. Net Profits. The term “Net Profits” shall mean the net income of the Sponsoring Employer for an Accounting Year calculated in accordance with generally accepted accounting principles before (i) federal or state income taxes or (ii) any additional contributions to this Plan pursuant to Section 3.02.

1.37. Normal Retirement Date. The term “Normal Retirement Date” shall mean a Participant’s sixty-fifth (65th) birthday.

1.38. One Year Break in Service. A “One Year Break in Service” shall occur for any Accounting Year if an Employee is not credited with more than five hundred (500) Hours of Service for such Accounting Year. A “One Year Break in Service” shall not be deemed to have occurred if it is solely caused by either (i) service in the armed forces of the United States while an Employee’s reemployment rights are guaranteed by law, (ii) a leave of absence (without pay) duly granted an Employee by his Employer, or (iii) a “maternity or paternity absence,” as defined in Sections 410(a)(5)(E) and 411(a)(6)(E) of the Internal Revenue Code, i.e., an absence because of—

(i) pregnancy of an Employee;

(ii) birth of a child of an Employee;

(iii) placement of a child for adoption with an Employee; or

(iv) caring for a child during the period immediately following such a birth or placement.

1.39. Participant. The term “Participant” shall mean an Eligible Employee who has met the requirements of Article II for participation hereunder.

1.40. Participant Voluntary Deductible Employee Contributions Account/Diversified Investments. The term “Participant Voluntary Deductible Employee Contributions Account/Diversified Investments” shall mean the Account of a Participant which is credited with

 

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amounts from his Participant Voluntary Deductible Employee Contributions Account/Diversified Investments which is diversified into certain investments pursuant to Section 4.08 hereof, credited or debited with benefit payments or transfers from such accounts to the Participant’s Stock or other Diversified Investment Accounts. Separate subaccounts may be maintained for each diversified investment option and may be maintained for transfers into this Account and/or for the interim investment of the proceeds from the sale of diversified investments.

1.41. Participant Voluntary Deductible Employee Contributions Account/Stock. The term “Participant Voluntary Deductible Employee Contributions Account/Stock” shall mean the Account of a Participant which is credited with shares of Employer Stock purchased by the Trust Fund prior to 1987 with the Participant’s deductible contributions made prior to 1987. While such account shall record the number of shares credited to the account (expressed in fractional shares to the nearest four (4) places), no allocation of any specific shares of Employer Stock held in the Trust Fund shall be made to such account. Separate subaccounts may be maintained for the interim investment of transfers into this Account and/or for the proceeds from the sale of Employer Stock.

1.42. Participation Date. The term “Participation Date” shall mean January 1 and July 1 in each calendar year or any Special “Participation Date” established by the Administrative Committee for newly Eligible Employees as a result of a corporate acquisition.

1.43. Plan. The term “Plan” shall mean the Leggett & Platt, Incorporated Stock Bonus Plan (formerly the Leggett & Platt, Incorporated Employee Stock Purchase/Stock Bonus Plan).

1.44. Rollover Account/Diversified Investments. The term “Rollover Account/ Diversified Investments” shall mean the Account of a Participant which is credited with amounts from his Rollover Account/Stock which is diversified into certain investments pursuant to Section 4.08 hereof, credited or debited with benefit payments or transfers from such accounts to the Participant’s Stock or other Diversified Investment Accounts. Separate subaccounts may be maintained for each diversified investment option and may be maintained for the interim investment of contributions or transfers into this Account and/or for the proceeds from the sale of diversified investments.

1.45. Rollover Account/Stock. The term “Rollover Account/ Stock” shall mean the Account of a Participant which is credited with shares of Employer Stock purchased by the Trust Fund from the Participant’s Rollover Contributions made pursuant to Section 10.01. While such account shall record the number of shares credited to the account (expressed in fractional shares to the nearest four (4) places), no allocation of any specific shares of Employer Stock held in the Trust Fund shall be made to such account. Separate subaccounts may be maintained for the interim investment of contributions and transfers into this Account and/or for the proceeds from the sale of Employer Stock.

1.46. Rollover Contributions. The term “Rollover Contributions” shall mean the Participant’s Rollover Contributions made pursuant to Section 10.01.

1.47. Special Valuation Date. The term “Special Accounting Date” shall have the meaning set forth in Section 4.06 hereof.

 

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1.48. Sponsoring Employer. The term “Sponsoring Employer” shall mean Leggett & Platt, Incorporated.

1.49. Total and Permanent Disability. The term “Total and Permanent Disability” or “Totally and Permanently Disabled” shall mean a physical or mental condition arising after the original date of employment of the Participant which totally and permanently prevents the Participant from engaging in any occupation or employment for remuneration or profits except for the purpose of rehabilitation not incompatible with a finding of total and permanent disability. The determination as to whether a Participant is totally and permanently disabled shall be made (i) on medical evidence by a licensed physician designated by the Administrative Committee, or (ii) on evidence that the Participant is eligible for disability benefits under any long-term disability plan sponsored by the Employer, or (iii) on evidence that the Participant is eligible for disability benefits under the Social Security Act in effect at the date of disability.

1.50. Trust Agreement. The term “Trust Agreement” shall mean the agreement entered into between the Employer and the Trustee contemporaneously with the execution of this Plan as it may subsequently be amended.

1.51. Trustee. The term “Trustee” shall mean the Trustee under the Trust Agreement.

1.52. Trust Fund. The term “Trust Fund” shall mean all cash, Employer Stock, other securities and property held by the Trustee pursuant to the terms of the Trust Agreement, together with income therefrom.

1.53. Valuation Date. The term “Valuation Date” shall mean, effective September 1, 2006, each business day the U.S. securities markets are open.

1.54. Vesting Service. The term “Vesting Service” shall mean the number of Accounting Years during which the Employee is credited with at least one thousand (1,000) Hours of Service, including any Hours of Service with an Employer while the Employer was a member of a controlled group of corporations, commonly controlled group of trades or businesses or affiliated service group with the Sponsoring Employer within the meaning of Sections 414(b), (c) and (m) of the Internal Revenue Code excluding (i) any Hours of Service with an Employer prior to the date the Employer became a part of a controlled group with the Sponsoring Employer and (ii) excluding any Accounting Year ending before January 1, 2002, during which the Employee was eligible to make Employee nondeductible contributions under Section 2.02(a) of the Plan but declined to make any Employee nondeductible contributions hereunder, unless a non-Highly Compensated Employee is a Participant during such Accounting Year in the Executive Stock Purchase program maintained by the Sponsoring Employer. In addition, if a terminated Employee is reemployed, his Vesting Service shall not include any years of employment prior to his earlier termination of employment if (i) he did not have any vested and nonforfeitable interest in his Employer Contribution Accounts upon his earlier termination of employment and (ii) he incurred at least five (5) consecutive One Year Breaks in Service before he was reemployed.

If a Member is on military leave during a period of time when his reemployment rights with an Employer are guaranteed by federal law, he shall be credited with the Hours of Service

 

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during his military leave for vesting, computed on the basis of forty (40) hours a week or eight (8) hours a day for each regular business day from the commencement of his military leave to his reemployment date, provided (i) he is reemployed by an Employer within the time required by federal law after the expiration of his military service, and (ii) he makes the Participant contributions permitted under Section 2.02 within the time prescribed by Section 5.16 after his reemployment, without any interest thereon, based on his deemed Compensation, as defined in Section 1.10 hereof, during his military leave. Any such Employee contributions may be made in a single payment or in installments over a period no longer than the lesser of three (3) times his period of qualified military service, as defined in Section 414(u)(5) of the Internal Revenue Code, or within five (5) years of the date of his reemployment.

 

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ARTICLE II

PARTICIPATION IN THE STOCK BONUS PLAN

AND CONTRIBUTIONS BY THE PARTICIPANTS

2.01. Eligibility. Each Eligible Employee who was a Participant in the Plan on December 31, 2005, shall be entitled to continue to participate in the Plan on and after January 1, 2006, provided he remains an Eligible Employee and he is not a Highly Compensated Employee. No Employee shall be entitled to continue to participate in this Plan for any part of any Accounting Year after 1988 during which he is a Highly Compensated Employee, except as a Limited Participant as provided in Section 2.05 hereof.

As of any Participation Date on or after January 1, 1989, and prior to January 1, 2002, any Eligible Employee who is not a Highly Compensated Employee may become a Participant provided his original date of employment is at least one (1) year prior to such Participation Date and agreed to make (and did make) the Participant after-tax contributions then required.

As of any Participation Date on or after January 1, 2002, and prior to January 1, 2004, any Eligible Employee who is not a Highly Compensated Employee may become a Participant provided his original date of employment is at least one (1) year prior to such Participation Date and agreed to make (and did make) the Participant pre-tax contributions then required in Section 2.02(a).

As of any Participation Date on or after January 1, 2004, any Eligible Employee who is not a Highly Compensated Employee may become a Participant, provided:

(i) his original date of employment is at least one year prior to such Participation Date; and

(ii) he agrees to make (and does make) the Participant pre-tax contributions required in Section 2.02(a); and

(iii) the Eligible Employee is employed by an Employer that is a participating employer and at a branch of an Employer that is a participating group in this Plan, as evidenced by Schedule I to the Plan document (the January 1, 2006 version of which is attached hereto).

The Schedule I to this Plan document, List of Participating Employers and Participating Groups (the January 1, 2006 version of which is attached), shall be maintained by the Sponsoring Employer and updated from time to time by an amendment to this Plan document.

If the employees of a subsidiary or an affiliated company of the Sponsoring Employer become employees of an Employer under the Plan, then in determining eligibility to become a Participant in the Plan, vesting, and early retirement, the Sponsoring Employer shall recognize his Hours of Service for such subsidiary or affiliated company or branch location while the subsidiary or affiliated company or branch location was part of a company that was a member of a controlled group of corporations, commonly controlled group of trades or businesses or affiliated service group with the Sponsoring Employer within the meaning of Sections 414(b), (c)

 

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and (m) of the Internal Revenue Code. In addition, the Sponsoring Employer may credit all such employees with Hours of Service or years of Vesting Service with such subsidiary or affiliated company (the “employing entity”) even though all or part of such employment may have occurred prior to the date the employing entity became a subsidiary or an affiliated company. An Employee who becomes eligible to participate in the Plan under this paragraph shall enter the Plan on the date of his or her transfer to an Employer under the Plan.

If the Sponsoring Employer, either directly or through a subsidiary, acquires a business (“acquired business”) through purchase of all or a substantial part of the assets of the acquired business and if in connection with such acquisition employees of the acquired business are hired by the Sponsoring Employer and/or any of its subsidiaries, then in determining eligibility to become a Participant in the Plan, vesting and early retirement the Sponsoring Employer may, by resolution of its Board of Directors or its delegee, credit all such employees with Hours of Service and years of Vesting Service with such acquired business.

A terminated Participant, who previously made employee contributions to this Plan and who is reemployed after December 31, 2001, shall become a Participant on his reemployment date, provided he is not a Highly Compensated Employee and agrees to resume making (and does resume making) the Employee pre-tax contributions required in Section 2.02(a).

A terminated Employee (who had not become a Participant prior to his termination) who is reemployed by the Employer shall become a Plan Participant on the Participation Date coincident with or immediately following the date he satisfies the requirements set forth in this Section 2.01, counting, for this purpose, his years of Vesting Service prior to his reemployment unless he incurs consecutive One Year Breaks in Service that equal or exceed (i) five (5) years or (ii) his years of Vesting Service as of his earlier termination of employment, in which event he shall be treated the same as a new Employee for the purpose of his eligibility to become a Participant in this Plan.

2.02. Employee Contributions. Each Eligible Employee may make contributions to the Trust Fund in accordance with the following:

2.02(a). Employee Pre-Tax Contributions. For each Accounting Year beginning on or after January 1, 2006, each Eligible Employee whose annual Compensation for the applicable Accounting Year is expected to exceed the Compensation Base (as defined in Section 1.11) for such Accounting Year shall be provided with an enrollment form by the Administrative Committee on which he may authorize that pre-tax Employee contributions be withheld, by payroll deduction, equal to:

two percent (2%); or,

three percent (3%); or,

four percent (4%); or,

five percent (5%); or,

six percent (6%).

 

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of his Compensation for the Accounting Year which is in excess of:

$25,695 annually, or

$988 biweekly, or

$494 weekly, or

$12.35 hourly.

After 2006, the above threshold amounts shall be increased by the same percentage (and pursuant to the same formula) by which the Compensation Base for Employees who become Participants on and after January 1, 2006 is increased in accordance with the provisions of Section 1.11 hereof.

Notwithstanding the foregoing, if an Eligible Employee first became a Participant in this Plan prior to January 1, 1987 and had not elected to have the Compensation Base described above apply, then the Participant shall be entitled to make Employee Pre-Tax Contributions hereunder for any Accounting Year equal to the greater of: (i) the amount determined in accordance with the Compensation Base definition in effect for such Accounting Year, or (ii) the amount the Participant could contribute to this Plan in 1988 as an after-tax employee contribution in accordance with the Participant’s Compensation in 1988 and the Compensation Base definition in effect in 1988 (which is described in Section 1.11 hereof).

Each Eligible Employee whose annual Compensation for the applicable Accounting Year is not expected to exceed the Compensation Base (as defined in Section 1.11) for such Accounting Year (and who is a salaried Employee), shall be provided an enrollment form by the Administrative Committee on which he may authorize that pre-tax Employee contributions be withheld, by payroll deduction, equal to not less than five dollars ($5.00) per biweekly payroll period nor more than twenty dollars ($20.00) per biweekly payroll period; provided that the amount shall be in whole dollars.

Prior to January 1, 2002, this Plan provided that Participant contributions would be made on a nondeductible or after-tax basis. Effective from and after January 1, 2002, Participant nondeductible or after-tax contributions to this Plan are neither required nor permitted.

A Participant may only elect start, change or stop pre-tax contributions under this Plan by a written notice to the Administrative Committee or its delegee on a form prescribed by the Administrative Committee or its delegee. Any such election shall not be effective until receipt and acknowledgment by the Administrative Committee or its duly authorized agent. The election shall be implemented as soon as administratively practicable after receipt of the election by the Corporate Human Resources Department of the Sponsoring Employer.

Notwithstanding the foregoing, the Administrative Committee or its delegee may prescribe electronic enrollment, election and acknowledgement procedures, where feasible, in lieu of written enrollment, election and acknowledgment procedures.

 

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2.02(b). Voluntary Deductible Employee Contributions. From and after January 1, 1982, and prior to January 1, 1987, Participants were permitted to make voluntary deductible contributions in cash to the Trust Fund in accordance with the law in effect at such time. Subject to the provisions of Section 5.07, a Participant may elect at any time to withdraw from his Participant Voluntary Deductible Employee Contributions Account/Stock and/or that portion, if any, of his Participant Voluntary Deductible Employee Contributions Account/Diversified Investments attributable to contributions made pursuant to this Section 2.02(b), all or a part of (i) the balance then credited to such Stock Account, and/or (ii) the amount then constituting such portion of such Diversified Investments Account. If a Participant who has not Attained Age fifty-nine and one-half (59-  ¹ / 2 ) requests a withdrawal from his Participant Voluntary Deductible Employee Contributions Account/Stock (or from the portion of his Participant Voluntary Deductible Employee Contributions Account/Diversified Investments which is attributable to contributions, if any, made pursuant to Section 2.02(b)), such requests shall not be granted unless the Participant acknowledges in writing that he understands that the amount withdrawn

(i) will be subject to a ten percent (10%) federal excise tax penalty;

(ii) will also be taxed as ordinary income for federal income tax purposes;

(iii) will be reported to the Internal Revenue Service for such purposes.

2.03. Suspension of Employee Pre-Tax Contributions. A Participant may, at any time, suspend his Employee pre-tax contributions made pursuant to Section 2.02(a), during which period of time such Participant shall be considered to be participating in the Plan as a “Limited Participant.” A suspension of such contributions may only be accomplished by giving written, or, if made available by the Administrative Committee, or its delegee, electronic, notice to the Employer at least fifteen (15) days before the end of the payroll period during which the suspension is to take effect (on forms or in an electronic manner prescribed by the Administrative Committee or its delegee).

2.04. Resumption of Employee Pre-Tax Contributions. A Participant who has suspended Employee pre-tax contributions may resume them by giving fifteen (15) days’ written, or, if made available by the Administrative Committee or its delegee, electronic, notice to the Employer (on forms or in an electronic manner prescribed by the Administrative Committee or its delegee).

2.05. Limited Participant. If a Participant:

(a) ceases to be an Eligible Employee while remaining in the employ of the Employer; or

(b) becomes a Highly Compensated Employee; or

(c) suspends his Employee pre-tax contributions, as hereinabove provided;

he shall become a “Limited Participant”.

 

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As a Limited Participant he shall continue to participate in the Plan for all purposes (such as vesting and investment earnings), but shall not be entitled to make any Employee pre-tax contributions under the Plan and shall not share in any further Employer Matching Contributions under the Plan for any later Accounting Year or any period of employment during which he is a Limited Participant. Notwithstanding the foregoing, a Limited Participant may be entitled to share in any Additional Matching Employer contribution for the Accounting Year in which he first becomes a Limited Participant.

If a salaried Employee who is a Participant in this Plan becomes an hourly-paid Employee and did not have annual Compensation in the immediately preceding Accounting Year equal to or greater than the then applicable Compensation Base, he shall cease to be an Eligible Employee as of the date of his change of his employment status and the provisions of this Section 2.05 shall apply.

2.06. Correction of the Mistaken Contributions of Highly Compensated Employees or Other Ineligible Employees. Should the Administrative Committee discover that a Highly Compensated Employee or an ineligible Employee for any reason is making Employee pre-tax contributions to this Plan, or prior to January 1, 2002, made Employee after-tax contributions to this Plan while he was not an Eligible Employee, the Administrative Committee shall take the following corrective actions immediately.

(a) The value of the Accounts of the Highly Compensated Employee or other non-Eligible Employee, which are attributable to Accounting Years during which he was either a Highly Compensated Employee or was otherwise not an Eligible Employee, except for a Rollover Account or an ESOP Transfer Account, shall be forfeited immediately.

(b) The Employer of a Highly Compensated Employee or an otherwise non-Eligible Employee shall be made whole with respect to the ineligible Employee contributions only by a special make whole cash compensation payment from the general assets of his Employer. This payment shall be made as soon as reasonably practicable after the Forfeiture occurs, in an amount equal to the value of only his Employee Contribution Accounts that are forfeited pursuant to Section 2.06(a).

(c) Such Employer special make whole employer compensation shall be reported to the U.S. Treasury Department on a Form W-2 for an active Employee or on a Form 1099-Misc for a former employee.

(d) If the Employer special make whole compensation includes an amount intended to return Employee after-tax contributions (net of earnings), such amount shall not be reported to the U.S. Treasury Department as wages, but rather as a return of mistaken after-tax contributions previously reported as wages.

(e) Furthermore, such Employer special make whole compensation shall be subject to federal and state income tax withholding, but shall not be subject to withholding for federal employment taxes.

 

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2.07. Average Deferral Percentage/Average Contribution Percentage Nondiscrimination Tests Do Not Apply to this Plan. The average deferral percentage nondiscrimination test under Section 401(k) of the Internal Revenue Code and the average contribution percentage nondiscrimination test under Section 401(m) of the Internal Revenue Code do not apply to this Plan because this Plan does not benefit Highly Compensated Employees.

2.08. Limitation on Pre-Tax Contributions to this and Other Internal Revenue Code Section 401(k) Plans Apply to this Plan. The Employee pre-tax contributions under this Plan and any other cash or deferred arrangement maintained by the Employer shall not exceed the limitations on pre-tax Employee contributions by Section 402(g) of the Internal Revenue Code, which for calendar years 2006 is $15,000, as indexed thereafter. If a Participant exceeds this limitation in any calendar year because of his participation in an “other cash or deferred arrangement” maintained by the Employer, the Employer shall distribute such excess Employee pre-tax contribution from the “other cash or deferred arrangement” within 60 days after the end of the applicable calendar year. (Under the design of this Plan it is mathematically impossible for a Participant to contribute Employee pre-tax contributions to this Plan in an amount greater than the Internal Revenue Code Section 402(g) limit). If a Participant exceeds this limitation in any calendar year because of his participation in an “other cash or deferred arrangement” or another plan that permits elective deferral contributions to be made that is subject to the Internal Revenue Code section 402(g) limit which, in either event, is maintained by an unrelated employer, the Participant shall advise the Employer by March 1 after the calendar year in which such limit is exceeded of (a) the amount of the excess contribution and (b) the plan from which he will withdraw the excess contributions, plus the investment earnings (or less the investment losses) thereon by the immediately following April 15. If the excess contribution is corrected by a distribution from this Plan the Employer Matching Contributions thereon will be forfeited and applied to reduce future Employer Matching Contributions.

2.09. Plan Controlling. Upon becoming a Participant, a Participant shall be bound then and thereafter by the terms of this Plan and the Trust Agreement, including all amendments to the Plan and the Trust Agreement made in the manner herein authorized.

 

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ARTICLE III

CONTRIBUTIONS BY THE EMPLOYER

3.01. Employer Matching Contributions. As soon as practicable after each payroll period for which Employee pre-tax contributions made pursuant to Section 2.02(a) are withheld from Participants, the Employer will remit such contributions to the Trustee, plus an amount equal to one-half (  ¹ / 2 ) of such Employee pre-tax contributions. The Employer Matching Contributions may either be made (i) in cash or (ii) in shares of Employer Stock, valued at the closing price of the shares on the New York Stock Exchange on the business day of the contribution to the Trust Fund, if the shares are contributed directly to the Trust Fund. The Employer may also in one or more transactions purchase shares of Employer Stock in the open market as treasury stock with instructions to the broker-dealer or other person authorized to execute the transaction to deliver on behalf of the Employer the shares purchased by the Employer upon settlement to the Trustee (or for credit to the Trustee’s account with a depository), in which event the shares purchased shall be valued at the cost of treasury stock purchased, plus commission, if any, and any other out-of-pocket expenses related to the transaction. Alternatively, the Employer may in one or more transactions purchase shares of Employer stock directly from a Participant, employee or other person, other than a Participant, employee or other person to whom the restrictions in Section 16(a) or Section 16(b) of the Securities and Exchange Act of 1934 are applicable, with instructions to the transfer agent of the Employer to deliver the certificates for such shares of treasury stock directly to the Trustee (or for credit to the Trustee’s account with a depository); the purchase price for any such shares of treasury stock shall be based on the closing price of the Employer Stock on the New York Stock Exchange on the business day of the transaction, (and shall not include any out-of-pocket expenses related to such a transaction) which shall be the value of the shares delivered to the Trustee for Plan accounting purposes. Any Forfeitures that are available shall be applied to reduce any Employer Matching Contributions under this Section 3.01 or additional Employer Matching Contributions under Section 3.02.

3.02. Additional Employer Matching Contributions. For each Accounting Year in which the Employer has Net Profits or accumulated Net Profits, the Employer may make an additional contribution from such Net Profits (or accumulated Net Profits) to be allocated to: (i) each active Participant who is employed by the Employer on the last day of the Accounting Year for which such contribution is made, and (ii) each Participant who retired, died or became Totally and Permanently Disabled during such Accounting Year. The amount of any contributions made pursuant to this Section 3.02 shall be determined by the Board of Directors of the Sponsoring Employer and shall not exceed the lesser of (i) one-half (  ¹ / 2 ) of the Employee pre-tax contributions made pursuant to Section 2.02(a) during such Accounting Year by the Participants entitled to share in the allocation, and (ii) the maximum amount deductible under Section 404(a)(3)(A) of the Internal Revenue Code, or any statute or rule of similar import. The amount of such additional contribution may be made (i) in cash, or (ii) in shares of Employer Stock, valued as of the closing price of the shares on the New York Stock Exchange on the business day of the contribution to the Trust Fund, if the shares are contributed directly to the Trust Fund. The Employer may in one or more transactions purchase shares of Employer Stock in the open market as treasury stock with instructions to the broker-dealer or other person authorized to execute the transaction to deliver on behalf of the Employer the shares purchased

 

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by the Employer upon settlement to the Trustee (or for credit to the Trustee’s account with a depository), in which event the shares purchased shall be valued at the cost of treasury stock purchased, plus commissions, if any, and any other out-of-pocket expenses related to the transaction. Alternatively, the Employer may in one or more transactions purchase shares of Employer stock directly from a Participant, employee or other person, other than a Participant employee or other person to whom the restrictions in Section 16(a) or Section 16(b) of the Securities and Exchange Act of 1934 are applicable, with instructions to the transfer agent of the Employer to deliver the certificate(s) for such shares of treasury a stock directly to the Trustee (or for credit to the Trustee’s account with a depository); the purchase price for any such shares of treasury stock shall be based on the closing price of the Employer stock on the New York Stock Exchange on the business day of the transaction, (and shall not include any out-of-pocket expenses related to such a transaction) which shall be the value of the shares delivered to the Trustee for Plan accounting purposes. The additional contribution shall be allocated as of the last day of each Accounting Year for which it is made in the proportion that the Employee pre-tax contributions made pursuant to Section 2.02(a) of each Participant eligible to share in the allocation for such Accounting Year bears to the total contributions of all such Participants.

3.03. Limit on “Annual Additions”. Notwithstanding any provisions contained herein to the contrary, effective as of January 1, 2006, the total “annual addition” to any Participant’s Accounts and to any other “defined contribution plan” maintained by the Employers combined shall not exceed the lesser of (a) Forty Four Thousand Dollars ($44,000) as adjusted pursuant to Section 415(d) of the Internal Revenue Code of 1986, as amended, or (b) one hundred percent (100%) of the Participant’s total annual compensation. For purposes of this Section, the term “annual additions” shall mean the total addition to the Participant’s Accounts in the Accounting Year attributable to:

(i) Employer Matching Contributions under this Article III;

(ii) Any Employer Matching Contributions and forfeitures for such Accounting Year to any other “defined contribution plan” maintained by the Employers;

(iii) All of a Participant’s pre-tax contributions made pursuant to Section 2.02(a) and to any other defined contribution plan maintained by the Employers;

(iv) All of a Participant’s elective deferrals, as defined in Section 402(g)(3) of the Internal Revenue Code to any other plan maintained by the Employer pursuant to Section 401(k) of the Internal Revenue Code;

(v) All amounts allocated, after March 31, 1984, to an individual medical account, as defined in section 415(1)(2) of the Internal Revenue Code, which is part of a pension or annuity plan maintained by the Employers are treated as annual additions to a defined contribution plan. Also amounts derived from contributions paid or accrued after December 31, 1985, in taxable years ending after such date, which are attributable to post-retirement medical benefits, allocated to the separate account of a key employee, as defined in section 419A(d)(3) of the Internal Revenue Code, under a welfare benefit fund, as defined in Section 419(e) of the Internal Revenue Code, maintained by the Employer are treated as annual additions to a defined contribution plan; and

 

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(vi) All allocations under a simplified employee pension.

“Annual Compensation” for the purpose of this Section 3.03 is defined as wages within the meaning of Section 3401(a) of the Internal Revenue Code for the purposes of income tax withholding at the source but determined without regard to any rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Section 3401(a)(2))of the Internal Revenue Code.

For limitation years beginning after December 31, 1997, for purposes of applying the limitations of this Section 3.03 annual compensation paid or made available during such limitation year shall include any pre-tax Employee contribution or elective deferral (as defined in Section 402(g) of the Internal Revenue Code) and any amount which is contributed or deferred by an Employer at the election of the Participant and which is not includable in the gross income of the Participant by reason of Sections 125 or 457 of the Internal Revenue Code.

The compensation limit referred to in Section 3.03(a) shall not apply to any contribution for medical benefits after separation from service (within the meaning of Section 401(h) or Section 419A(f)(2) of the Internal Revenue Code) which is otherwise treated as an annual addition.

3.04. Corrective Adjustments in Annual Additions. In the event that as of the last day of any Accounting Year corrective adjustments in the “annual addition” to any Participant’s accounts are required pursuant to Section 3.03, such adjustments shall be made in the following order of precedence:

(a) By a reduction of his Employee Pre-Tax Contributions Accounts in an amount equal to all or such portion of the Participant’s pre-tax Employee contributions made hereunder during the Accounting Year in question, for which a corrective adjustment is required.

(b) If a further corrective adjustment is necessary, his Employer Matching Contributions Accounts (but not his Employer QNEC Accounts, if any) shall be reduced by Employer Matching Contributions made on behalf of the Participant during the Accounting Year.

The amount of any “corrective adjustments” to Employee Pre-Tax Contributions Accounts pursuant to Section 3.04(a) shall be returned to the Participant as soon as practical after such adjustments are made. The amount of any “corrective adjustments” to a Participant’s Employer Matching Contributions Accounts pursuant to Section 3.04(b) shall be allocated to the appropriate Employer Matching Contributions Accounts of all other Participants eligible to share in the Employer’s contribution pursuant to, and in the same manner as the additional Employer contribution was (or would have been) allocated under Section 3.02. If such reallocation is prohibited because the annual addition to the accounts of all Participants exceeds the limitations specified in Section 3.03, the Sponsoring Employer shall be entitled to apply them to future Employer Matching Contributions for a subsequent Accounting Year.

 

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3.05. Suspension of Participant Contributions Due to the In-service Withdrawals from a Related Employer 401(k) Plan. Notwithstanding any provisions of this Plan to the contrary, if a Participant withdraws elective deferrals from an I.R.C. § 401(k) Plan maintained by the Sponsoring Employer or an Employer that is a member of a controlled group of corporations or controlled group of trades or businesses with the Sponsoring Employer (as defined in I.R.C. § 414(b) and (c) of the Internal Revenue Code), which is conditioned (in part) on a six (6) month suspension of employee contributions to all qualified defined contribution plans maintained by his employer (and related employers), then such Participant shall not be entitled to make Participant contributions to this Plan for such six (6) month period. Such a Participant may elect to resume making Participant contributions immediately following such six (6) month period of suspension.

 

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ARTICLE IV

ACCOUNTS OF PARTICIPANTS

4.01. Determination of Fair Market Value. As of each Valuation Date, the Trustee shall determine the fair market value of the Trust Fund and the fair market value of the Accounts of each Participant.

4.01(a). Determination of Investment Earnings. The investment earnings (or losses, if such computation is negative) of the “Stock” and “Diversified Investments” portions of the Trust Fund shall be calculated by the Trustee. Such investment earnings (or losses) shall be equal to (i) the fair market value of such portions of the Trust Fund as of the current Valuation Date (including income accrued, but uncollected, and excluding expenses incurred, but unpaid), less (ii) the fair market value of such portions of the Trust Fund as of the immediately preceding Valuation Date; plus (iii) benefit payments to Participants or former Participants from such portions of the Trust Fund and any other disbursements from such portions of the Trust Fund on behalf of a particular Participant since the immediately preceding Valuation Date; less (iv) any Employer and Employee Pre-Tax contributions made to said portions of the Trust Fund since the immediately preceding Valuation Date; less (v) any transfers to such portions of the Trust Fund since the immediately preceding Valuation Date for any reason; plus (vi) any transfers from such portions of the Trust Fund since the last preceding Valuation Date for the purchase of Employer Stock.

4.01(b). Valuation of Diversified Investment Accounts. The Diversified Investment Accounts of each Participant as of a Valuation Date shall be equal to the value of such Accounts as of the Valuation Date plus or minus the applicable adjustments set forth in Section 4.02.

4.02. Adjustment of Diversified Investment Accounts. As of each Valuation Date, the Diversified Investments Accounts of each Participant shall be adjusted in the following order and manner:

(a) Reduction of Diversified Investment Accounts. The Diversified Investment Accounts of each Participant as of the Valuation Date shall be reduced by the amount of any benefit payments from such Accounts since the immediately preceding Valuation Date.

(b) Allocation of Investment Earnings. The investment earnings (or losses) determined under Section 4.01(a) shall be allocated to the Diversified Investments Accounts of each act