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Leggett & Platt, Incorporated - MRRS Decision
Headnote
MutualReliance Review System - trades made to former employees in accordancewith the provisions of employees compensation plan exempt fromregistration requirements - first trade in shares acquired pursuantto compensation plan not subject to registration requirement providedthat issuer is not a reporting issuer, de minimis Canadiansecurity holders and trade is executed through facilities outsideof Canada - relief granted from the issuer bid requirements uponthe acquisition of shares of the issuer from employees, formeremployees and legal representatives at a price determined underthe compensation planApplicableOntario Statutory Provisions
SecuritiesAct, R.S.O. 1990, c.S.5, as am, ss. 25, 25, 74(1), 95, 96, 97,98, 100, 104(2)(c)OntarioRegulations Cited
Regulationmade under the Securities Act, R.R.O. 1990, Reg. 1015, as am.OntarioRules Cited
Rule45-503 Trades to Employees, Executives and Consultants MultilateralInstrument 45-102 Resale of SecuritiesINTHE MATTER OF
THESECURITIES LEGISLATION OF
ONTARIOAND QUEBEC
AND
INTHE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR
EXEMPTIVERELIEF APPLICATIONS
AND
INTHE MATTER OF
LEGGETT& PLATT, INCORPORATED
MRRSDECISION DOCUMENT
WHEREASthe local securities regulatory authority or regulator (the "DecisionMaker") in each of Ontario and Québec (the "Jurisdictions")has received an application from Leggett & Platt, Incorporated("L&P") for a decision pursuant to the securities legislationof the Jurisdictions (the "Legislation") that: (a)the issuance of options (the "Options") to purchase shares inthe common stock of L&P ("Shares") and certain trades in Sharesmade in connection with L&P's Flexible Stock Plan (the "Plan")shall not be subject to the requirements contained in the Legislationto be registered to trade in a security (the "Registration Requirements")and to file and obtain a receipt for a preliminary prospectusand a prospectus (the "Prospectus Requirements") (collectively,the "Registration and Prospectus Requirements"); and (b)certain transfers of Shares made in accordance with the Plan shallnot be subject to the requirements contained in the Legislationrelating to the delivery of an offer and issuer bid circular andany notices of change or variation thereto, minimum deposit periodsand withdrawal rights, taking up and paying for securities tenderedto an issuer bid, disclosure, restrictions upon purchases of securities,bid financing, identical consideration and collateral benefits(collectively, the "Issuer Bid Requirements"); ANDWHEREAS pursuant to the Mutual Reliance Review Systemfor Exemptive Relief Applications (the "System"), the OntarioSecurities Commission is the principal regulator for this application; ANDWHEREAS L&P has represented to the Decision Makersthat: 1.L&P is a corporation incorporated under the laws of the Stateof Missouri, United States. L&P is not a reporting issuerunder the Legislation and has no present intention of becominga reporting issuer under the Legislation. 2.As at September 30, 2001, there were 198,803,441 Shares issuedand 196,537,679 Shares outstanding. As of the same date, therewere 2,265,762 Shares held in treasury. 3.The Shares are listed and quoted for trading on the New York StockExchange (the "NYSE") and the Pacific Stock Exchange. 4.L&P is currently subject to the reporting requirements ofthe United States Securities Exchange Act of 1934, asamended (the "Exchange Act"). 5.The Plan was established to attract, retain, motivate and rewardemployees of L&P and its subsidiaries worldwide ("Employees"),to encourage ownership of Shares by Employees and to promote andfurther the best interests of L&P by granting cash and otherawards to Employees. 6.Under the Plan, a committee (the "Committee") has the authorityto determine the type of benefits to which Employees are entitled.Current Employees are eligible to receive (i) Options; (ii) stockappreciation awards ("SAAs"), convertible into cash or Shares,or a combination thereof; (iii) restricted stock ("RestrictedStock"); (iv) performance shares ("Performance Shares"); and (v)cash awards and other Share-based benefits. 7.Options granted under the Plan may be either incentive stock options(within the meaning of the United States Internal Revenue Code)or may be non-qualified stock options. Each Option which qualifiesas an incentive stock option must be granted to an Employee fora term that does not exceed ten (10) years from the date of grant.The exercise price of any Option that qualifies as an incentivestock option will not be lower than the closing price of the Shareson the NYSE on the date the Option is granted. The price payableby an Employee upon the exercise of any Option which is a non-qualifiedstock option will not be less than the par value of the Shares.The terms of all Options are generally determined by the Committeeunder the Plan. 8.Under the Plan, SAAs are comprised of units, called "Stock AppreciationUnits", equal to the appreciation value of one Share from thetime the Stock Appreciation Unit is granted until the time thegrantee elects to receive payment. Plan participants who electto receive payment of an SAA will receive cash, Shares or anycombination thereof, as determined by the Committee, equal tosuch appreciation. 9.Restricted Stock are Shares which are subject to forfeiture untila period of time has elapsed or certain conditions have been fulfilled.Under the Plan, the Committee may grant Shares of Restricted Stockat no cost and the grantee is entitled to full voting and dividendrights with respect to all Shares of Restricted Stock. Each certificaterepresenting a share of Restricted Stock bears a legend referringto the terms of the Plan and the risk of forfeiture of such Sharesand stating that such Shares are non-transferable until all restrictionshave been satisfied and the legend has been removed. 10.Performance Shares represent the right of a participant to whomPerformance Shares have been granted to receive Shares or cashequal to the fair market value of such Shares at a future datein accordance with specific terms imposed at the time of grant.Generally, such right is based upon the attainment of targetedprofit and/or performance objectives. 11.Employees, upon exercising an Option, can satisfy the amount duein respect of the exercise price by, among other methods, transferringto L&P Shares they already own, which have a fair market valuewhich equals the amount due to L&P (based on the closing priceof the Shares on the NYSE at the time of the transfer) (a "StockSwap Exercise"). 12.Shares that are transferred by an Employee or former Employeepursuant to a Stock Swap Exercise are not cancelled and will continueto be available for use under the Plan. 13.L&P has a number of Employees resident in Canada, some ofwhom are resident in the Jurisdictions (the "Canadian Employees").As of September 30, 2001, there were approximately 3,117 Employeesresident in Canada of which approximately 3 Canadian Employeesresident in British Columbia, 101 Canadian Employees residentin Ontario and 27 Canadian Employees resident in Quebec held existingOptions under the Plan. 14.As of September 30, 2001, 7,000,000 Shares have been authorizedfor issuance under the Plan. Additionally, as of September 30,2001, the aggregate number of Shares held by holders of recordwith addresses in each of the Jurisdictions represented less than1% of the total number of outstanding Shares and the aggregatenumber of holders of record with addresses in each of the Jurisdictionswas less than 1% of the total number of holders of record. 15.Employees will not be induced to participate in the Plan by expectationof employment or continued employment. 16.Each Employee has or will be provided with an explanatory bookletin respect of the Plan containing a summary and description ofthe Plan and L&P has provided or will provide copies of thePlan to Employees upon request. 17.All disclosure material relating to L&P that L&P is requiredto file with the United States Securities and Exchange Commissionpursuant to the Exchange Act will be made available to the CanadianEmployees who purchase Shares under the Plan at the same time,and in the same manner, as the materials which are made availableto shareholders who are resident in the United States. 18.On September 9, 1999, pursuant to Decision No. 1999-MC-2290 ofthe Commission des valuers mobilières du Québec(the "Québec Commission"), L&P was granted an exemptionfrom the prospectus and registration requirements of the SecuritiesAct (Québec) in connection with the distribution ofOptions to senior executives. Also, on September 9, 1999, pursuantto Decision No. 1999-MC-2291 of the Québec Commission,L&P was granted an exemption from certain provisions of PolicyQ-3 in connection with the distribution of Options to senior executivesemployed by L&P in Quebec. Neither of these decisions coversthe issuance of Options to Canadian Employees in Québecwho are not senior executives nor the resale by such CanadianEmployees of Shares acquired under the Plan. 19.An exemption from the Registration and Prospectus Requirementsis not available in all of the Jurisdictions for the issuanceof Options and for the trades in Shares by (i) Canadian Employees,(ii) individuals who acquired Shares while Canadian Employeesbut who are no longer employed by L&P ("Former Canadian Employees")or (iii) legal representatives of a deceased Canadian Employeeor a Former Canadian Employee ("Legal Representatives"). An exemptionfrom the Registration Requirements is not available in all ofthe Jurisdictions for trades in Shares by a dealer duly registeredin the United States but not registered under the Legislationon behalf of such Canadian Employees, Former Canadian Employeesor Legal Representatives. 20.When the Canadian Employees transfer Shares to L&P pursuantto a Stock Swap Exercise, such transfers may constitute an "issuerbid" as defined under the Legislation of certain Jurisdictions.Exemptions from the issuer bid provisions of the Legislation maynot be available in all Jurisdictions for such transfers by theCanadian Employees since the Plan does not necessarily establisha price for the Shares that is equal to or less than market valueas prescribed under the Legislation. 21.Since there is no market for the Shares in Canada and none isexpected to develop, any resale of the Shares acquired under thePlan will be effected through the facilities of, and in accordancewith the rules applicable to, a stock exchange or market outsideof Canada on which the Shares may be listed or quoted for trading. ANDWHEREAS pursuant to the System, this MRRS Decision Documentevidences the decision of each Decision Maker (collectively, the"Decision"); ANDWHEREAS each of the Decision Makers is satisfied thatthe test contained in the Legislation that provides the DecisionMaker with the jurisdiction to make the Decision has been met; THEDECISION of the Decision Makers pursuant to the Legislationis that the Registration and Prospectus Requirements shall notapply to the issuance of Options or the trades in Shares madein connection with the Plan to, with, or on behalf of, a CanadianEmployee, a Former Canadian Employee or a Legal Representativeprovided that the first trade in, or the resale of, such Shares(including the Shares acquired upon the exercise of an Option)shall be deemed to be a distribution unless: (a)in the case of the first trade of such Shares in Ontario, suchfirst trade is made in compliance with section 2.14 of MultilateralInstrument 45-102 Resale of Securities, or (b)in the case of the resale of such Shares in Québec, suchresale is either made (i) between Canadian Employees, Former CanadianEmployees or Legal Representatives or (ii) outside of Quebec; ANDTHE FURTHER Decision of the Decision Makers pursuantto the Legislation is that the Issuer Bid Requirements of theLegislation shall not apply to the transfer of Shares by CanadianEmployees, Former Canadian Employees or Legal Representatives,as the case may be, pursuant to a Stock Swap Exercise. February28, 2002. "PaulMoore" "Kerry Adams"