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Exhibit 10.11
CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT (the "Agreement") is made this
day of
, 200 , by and between H.B. Fuller
Company, a Minnesota corporation (the "Company") and [Executive]
(the "Executive").
WITNESSETH :
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:
"Affiliated Organization"
(a) "Affiliated Organization" means a business entity that is
treated as a single employer with the Company under the rules of
section 414(b) and (c) of the Code, including the eighty
percent (80%) standard therein.
(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 30% 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.
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(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
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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.
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(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. 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 the Executive’s Date of Termination. Rules
comparable to those governing the provision of continuation
coverage under section 602 of ERISA shall apply to the coverage
provided under this paragraph, except that:
(i) the coverage may not be discontinued prior to the expiration
of the period specified in this paragraph (c), except for the
Executive’s failure to make a required contribution;
(ii) the contributions required of the Executive for such
coverage may not exceed the contributions required for the sam
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