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Exhibit
10.1
CHANGE IN CONTROL
AGREEMENT
THIS AGREEMENT (the
“Agreement”) is made this
day of
, 20 , by and between H.B. Fuller
Company, a Minnesota corporation (the “Company”) and
[Executive] (the “Executive”).
W I T
N E S S E T H
:
WHEREAS, the Company
considers the recruitment and maintenance of sound and vital
management to be essential to protecting and enhancing its best
interests and those of its shareholders; and
WHEREAS, the Company
recognizes that the potential for a change in control may make it
difficult to hire and retain strong management personnel;
and
WHEREAS, the Company
recognizes that the possibility of a change in control of the
Company may exist and that, in the event negotiations are commenced
to bring about such a change in control, uncertainty and questions
may arise among management that could result in the distraction or
departure of management personnel to the detriment of the Company
and the shareholders; and
WHEREAS, the Company has
determined that appropriate steps should be taken to reinforce and
encourage the Executive’s continued attention and dedication
as an executive officer to his or her assigned duties without
distraction in the face of potentially disruptive circumstances
arising from the possibility of a change in control of the
Company;
NOW, THEREFORE, in
consideration of the premises and the mutual agreements herein
contained, the Company and the Executive hereby agree as
follows:
1. Definitions . For
the purposes of this Agreement:
(a) “Affiliated
Organization” means any corporation that would be a member of
a controlled group of corporations (within the meaning of section
414(b) of the Code) that includes the Company, and any trade or
business (whether or not incorporated) that would be controlled
(within the meaning of section 414(c) of the Code) by the Company,
if the phrase “at least 70%” were substituted for the
phrase “at least 80%” each place it appears in section
1563(a)(1) of the Code and in regulations under section 414(c) of
the Code.
(a) “Cause” means
any act by the Executive that is materially inimical to the best
interests of the Company and that constitutes common law fraud, a
felony or other gross malfeasance of duty on the part of the
Executive.
(b) “Change in
Control” means:
(i) a public announcement
(which, for purposes hereof, shall include, without limitation, a
report filed pursuant to Section 13(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”))
that any individual,
corporation, partnership,
association, trust or other entity becomes the beneficial owner (as
defined in Rule 13(d)(3) promulgated under the Exchange Act),
directly or indirectly, of securities of the Company representing
15% or more of the voting power of the Company then
outstanding;
(ii) the individuals who, as
of the date of this Agreement, are members of the Board of
Directors of the Company (the “Incumbent Board”) cease
for any reason to constitute at least a majority of the Board
(provided, however, that if the election or nomination for election
by the Company’s shareholders of any new director was
approved by a vote of at least a majority of the Incumbent Board,
such new director shall be considered to be a member of the
Incumbent Board);
(iii) the approval of the
shareholders of the Company of: (A) any consolidation, merger
or statutory share exchange of the Company with any person in which
the surviving entity would not have as its directors at least 60%
of the Incumbent Board, and as a result of which those persons who
were shareholders of the Company immediately prior to such
transaction would not hold, immediately after such transaction, at
least 60% of the voting power of the Company then outstanding or
the combined voting power of the surviving entity’s then
outstanding voting securities; (B) any sale, lease, exchange
or other transfer in one transaction or series of related
transactions of substantially all of the assets of the Company; or
(C) the adoption of any plan or proposal for the complete or
partial liquidation or dissolution of the Company; or
(iv) a determination by a
majority of the members of the Incumbent Board, in their sole and
absolute discretion, that there has been a Change in Control of the
Company.
The Company shall notify the
Executive promptly of the occurrence of a Change in
Control.
(c) “Code” means
the Internal Revenue Code of 1986, as amended. Any reference to a
specific provision of the Code will include a reference to such
provision as it may be amended from time to time and to any
successor provision.
(d) “Company”
means the Company as hereinbefore defined and any successor or
assign to its business and/or assets which executes and delivers
the agreement provided for in Section 8 or which otherwise
becomes bound by all the terms and provisions of this Agreement by
operation of law. If at any time during the term of this Agreement
the Executive is employed by an Affiliated Organization, the term
“Company” as used in this Agreement (other than in
Sections 1(b) and 8(a) hereof) shall in addition include such
Affiliated Organization. In such event, the Company agrees that it
shall pay or provide, or shall cause such Affiliated Organization
to pay or provide, any amounts or benefits due the Executive
pursuant to this Agreement.
(e) “Date of
Termination” means the date of the Executive’s
Separation from Service.
(f) “Disability”
or “Disabled” means leaving active employment and
qualifying for and receiving disability benefits under the
Company’s long-term disability plan as in effect from time to
time.
(g) “Good Reason”
means:
(i) a material change in the
Executive’s pay consisting of a 10% or more reduction in
total cash compensation opportunity as in effect immediately prior
to the Change in Control (unless such reduction is part of an
across-the-board uniformly applied reduction affecting all senior
executives of the Company); or
(ii) a significant diminution
in the Executive’s authority and duties as in effect
immediately prior to the Change of Control (excluding an isolated,
insubstantial or inadvertent action not taken in bad faith that is
remedied promptly by the Company after receiving notice); provided,
however, that a change of the individual or officer to whom the
Executive reports, in and of itself, would not constitute
diminution; or
(iii) a change of the
Executive’s principal work location of 50 or more miles from
that immediately prior to the Change in Control.
The Executive shall not be
deemed to have terminated employment for Good Reason unless the
termination occurs within 180 days after the Executive is notified
by the Company of the event constituting Good Reason or, if later,
within 180 days after the occurrence of such event.
(h) “Present
Value” shall be determined based on the actuarial assumptions
in use for the purpose of determining the amount of lump sum
distributions under the H.B. Fuller Company Retirement Plan, as in
effect at the time Present Value is determined for the purposes of
this Agreement.
(i) “Protected
Period” means the 24-month period immediately following each
and every Change in Control.
(j) The Executive shall be
deemed to have had a “Separation from Service,” or to
have “Separated from Service,” when the employment
relationship between the Executive and all of the Affiliated
Organizations has terminated for reasons other than the
Executive’s death. For such purpose, the employment
relationship will be treated as continuing while the Executive is
on military leave, sick leave, or other bona fide leave of absence
(such as temporary employment by the government) if the period of
such leave does not exceed six months, or any longer period during
which the Executive’s right to reemployment is provided for
by statute or contract. If the period of a leave exceeds six months
and the Executive’s right to reemployment is not provided for
by statute or contract, the employment relationship will be deemed
to have terminated on the first date immediately following such six
month period. Notwithstanding the foregoing, if the Executive
ceases to be an employee of any Affiliated Organization, but
continues to perform services for such Affiliated Organization or
another Affiliated Organization that
would cause the termination
of employment not to constitute a separation from service for the
purposes of section 409A of the Code, the later date on which such
a separation from service occurs shall be the date of the
Executive’s Separation from Service. Conversely, if the
Executive continues to be an employee of an Affiliated
Organization, but fails to perform sufficient services to prevent a
separation from service from occurring for the purposes of section
409A of the Code, the earlier date on which such a separation from
service occurs shall be the date of the Executive’s
Separation from Service.
(k) “Termination
Benefits” means those benefits described in Sections 3 and 6
of this Agreement.
2. Term . The
term of this Agreement shall commence on the date hereof and shall
end on the third anniversary of such date; provided, that on each
anniversary of the date on which the term begins, the term shall be
extended for one additional year unless, prior to an anniversary
date, the Company gives written notice to the Executive that the
term shall not be so extended, whereupon the term shall end on the
date which is three years after the date of such notice.
Notwithstanding the foregoing, the expiration of the term shall not
relieve the Company of its obligation to provide any Termination
Benefits that become payable as a result of the Executive’s
Separation from Service during the term.
3. Benefits Upon
Termination of Employment . If, during the term of this
Agreement, the Executive Separates from Service during a Protected
Period because: (A) the Executive’s employment is
terminated by the Company other than for Cause or Disability, or
(B) because the Executive’s employment is terminated by
the Executive for Good Reason, the Executive shall be entitled to
the following payments and benefits:
(a) Base Salary and Bonus
Through Date of Termination . The Company shall promptly pay to
the Executive his or her full base salary through the Date of
Termination at the rate in effect at the time notice of termination
is given. In addition, the Company shall pay to the Executive the
amount of any bonus or incentive for the year in which the Date of
Termination occurs (based on the target bonus for the Executive for
the year) prorated to the Date of Termination (without application
of any denial provisions based on unsatisfactory personal
performance or any other reason). Such bonus or incentive shall be
paid promptly (and in no event more than 2 1 / 2 months) after the Executive’s Date of Termination;
provided, that if the bonus or incentive:
(i) is payable for a
performance period that began before the first day of the calendar
year or the first day of the corporate fiscal year (whichever is
earlier) in which the Date of Termination occurs; or
(ii) was awarded to the
Executive before the first day of the calendar year or the first
day of the corporate fiscal year (whichever is earlier) in which
the Date of Termination occurs;
such payment, together with
interest thereon, shall be made on the earlier of: (A) the
date that is six months after the Executive’s Date of
Termination, or (B) the date of the Executive’s death.
Interest shall be calculated from the Executive’s Date of
Termination to the date of payment at the rate used for the purpose
of determining Present Value.
(b) Severance Pay .
The Company shall pay to the Executive a severance payment in an
amount equal to three times the sum of: (A) the
Executive’s highest base salary, on an annualized basis,
established by the Company during the period commencing three
months prior to the occurrence of the Change in Control and ending
on the Date of Termination; plus (B) the Executive’s
target annual incentive compensation established by the Company and
in effect immediately prior to the Change in Control. Such payment,
together with interest thereon, shall be made in a lump sum on the
earlier of: (i) the date that is six months after the
Executive’s Date of Termination, or (ii) the date of the
Executive’s death. Interest shall be calculated from the
tenth day following the Executive’s Date of Termination to
the date of payment at the rate used for the purpose of determining
Present Value. If the Executive is also entitled to severance
payments which would be made in the absence of a change in control
under any plan or program of, or contract with, the Company, or
under the laws of any federal, state, local or foreign
jurisdiction, the amount payable to the Executive pursuant to this
paragraph (b) (prior to the crediting of interest) shall be
reduced (but not below zero) by the Present Value of such other
severance payments. Payments under this paragraph (b) shall
not be considered in determining the amount of the
Executive’s benefits under any pension, profit sharing, stock
bonus or other employee benefit plan of the Company or any
Affiliated Organization.
(c) Medical and Dental
Coverage . The Executive shall be entitled to continued
coverage under any medical or dental plan (but not under other
Company benefit plans) maintained by the Company in which the
Executive was participating at the time of the Executive’s
termination of employment, for a period of three years following
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