Exhibit 10.4
H.B. FULLER COMPANY
AMENDED AND RESTATED DIRECTORS' DEFERRED COMPENSATION PLAN
H.B. Fuller Company, a Minnesota corporation, maintains the H.B. Fuller
Company Directors' Deferred Compensation Plan (originally known as the H.B.
Fuller Company Directors' Stock Plan), effective as of April 20, 1989, and as
amended from time to time. The Plan is hereby amended and restated in its
entirety effective December 1, 2001 to provide investment options in addition to
Company Common Stock and improved administrative capabilities.
ARTICLE I
DEFINITIONS
-----------
Section 1.1 - Definitions. When used in this document with initial capital
letters, the following terms have the meanings indicated unless a different
meaning is plainly required by the context:
(a) "Account" or "Accounts" means the account or accounts established and
maintained for a Participant pursuant to Article III of the Plan. A
Participant's Accounts shall consist of the Participant's Deferred Compensation
Account and the Participant's Company Stock Account.
(b) "Allocation Request Form" means such form or forms as may be approved
by the Company from time to time for use by a Participant to request: (i) an
allocation of certain deferred compensation and/or an allocation or reallocation
of a Participant's Deferred Compensation Account among available investment
options pursuant to Section 6.2(c), and (ii) that certain deferred compensation
be allocated to the Participant's Company Stock Account pursuant to Section 6.1.
(c) "Board of Directors" means the Board of Directors of H.B. Fuller
Company.
(d) "Change in Control" means:
(i) a change in the control of the Company of a nature that would be
required to be reported in accordance with Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), whether or not the Company is then subject to such reporting
requirement; or
(ii) a public announcement (which, for purposes hereof, shall include,
without limitation, a report filed pursuant to section 13(d) of 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; or
(iii) the individuals who, as of the effective date of this amendment and
restatement, 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); or
(iv) 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
1
Company; or (C) the adoption of any plan or proposal for the complete
or partial liquidation or dissolution of the Company; or
(v) 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.
For purposes of this definition, "Voting Power" when used with reference to the
Company shall mean the voting power of all classes and series of capital stock
of the Company now or hereafter authorized other than the voting power of any of
the shares of Series A Preferred Stock outstanding as of the date of this
amendment and restatement of the Plan.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Common Stock" means the Common Stock, par value $1.00 per share, of
the Company as such stock may be reclassified, converted or exchanged by
reorganization, merger or otherwise.
(g) "Company" means the H.B. Fuller Company, a Minnesota corporation.
(h) "Company Stock Account" means the Account established and maintained
for a Participant as a record of the Participant's hypothetical investments in
units of Company Common Stock.
(i) "Compensation Committee" means the Compensation Committee of the Board
of Directors, or such other persons or committee as may be designated by the
Board of Directors.
(j) "Deferral Election Form" means such form or forms as may be approved by
the Company from time to time for use by a Participant to elect to defer
compensation under the Plan.
(k) "Deferred Compensation Account" means the Account established and
maintained for a Participant as a record of the amounts deferred by the
Participant under the Plan and the Participant's hypothetical investments in
available investment options.
(l) "Director" means a member of the Board of Directors of Company.
(m) "Disability" means that, based on evidence reasonably satisfactory to
the Compensation Committee, the Participant is totally and permanently disabled.
(n) "Distributable Event" means an event identified as such in Section 5.1.
(o) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
(p) "Meeting Fees" means any amounts that would have been paid to a
Director during a calendar year with respect to attendance at a meeting of the
Board of Directors or a committee thereof had deferral for such year not been
timely elected. In no event does the term "Meeting Fees" include any per diem
amounts paid with respect to attendance at any meeting of the Board of Directors
(including any committee thereof).
(q) "Participant" means an individual identified as such under Article II
of the Plan.
(r) "Plan" means the H.B. Fuller Company Amended and Restated Directors'
Deferred Compensation Plan, as of its original effective date, including any
amendments thereto, which is unfunded and maintained by H.B. Fuller Company
primarily for the purpose of providing Directors with a means of deferring their
Meeting Fees and Retainer Fees.
(s) "Retainer Fees" means any of the following amounts with respect to a
calendar year: (i) two-thirds (2/3) of the retainer fee amount that would be
paid to a Participant in March of the calendar year in question had deferral for
such year not been timely elected such two-thirds (2/3) amount representing
retainer fee amounts earned in January and February of such year; (ii) the
entire retainer fee amount that would be paid to a Participant in June,
September, and December of the calendar year in question had deferral for such
year not
2
been elected; and (iii) one-third (1/3) of the retainer fee amount that would be
paid to a Participant in March of the next calendar year had deferral for the
previous calendar year not been timely elected, such one-third (1/3) amount
representing the retainer fee amount earned in December of such previous
calendar year.
(t) "Retirement" means the voluntary or involuntary resignation of a
Director, the removal of a Director with or without cause, or the conclusion of
a Director's term of office where the Director is not reelected by the
shareholders of the Company to a succeeding term.
(u) "Rollover Amount" means the amount determined in accordance with
Section 3.4.
(v) "Trust" means the Trust or Trusts described in Section 11.4. Any such
Trust shall constitute an unfunded arrangement and shall not affect the status
of the Plan as an unfunded plan. Participants and their beneficiaries shall have
no beneficial ownership interest in any assets of any such Trust.
(w) "Trustee" means the corporation or person or persons selected by the
Company to serve as Trustee for a Trust or Trusts.
(x) "Vested" means an interest in the benefit described under the Plan
which may be payable to or on behalf of the Participant in accordance with the
terms of the Plan.
ARTICLE II
ELIGIBILITY AND PARTICIPATION
-----------------------------
Section 2.1 - Eligibility. Any present or future Director who is not an
employee of the Company or any of its affiliates shall be eligible to
participate in the Plan.
Section 2.2 - Participation. An individual eligible to participate in the
Plan shall become a Participant upon the filing with the Compensation Committee
of a completed Deferral Election Form and acceptance of such form by the
Compensation Committee. The name of each individual eligible to participate in
the Plan and the date on which such individual becomes a Participant in the Plan
shall be recorded on Exhibit A, which exhibit is attached hereto and
incorporated herein by reference and which shall be revised by the Compensation
Committee from time to time to reflect the operation of the Plan. Once an
individual becomes a Participant in the Plan, the individual shall remain a
Participant until the benefits which may be payable to the individual under the
Plan have been distributed to or on behalf of the individual.
Section 2.3 - Suspension of Eligibility. The Compensation Committee may in
its discretion determine that a Participant will no longer be eligible to
participate in the Plan and in such event, the Participant's compensation
deferral election made in accordance with Article III will immediately terminate
and no additional amounts shall be credited to his or her Accounts under
Sections 6.1(a), 6.1(b) or 6.2(a) until such time as the individual is again
determined to be eligible to participate in the Plan by the Compensation
Committee and makes a new election under Article III. However, the Accounts of
such Participant shall continue to be adjusted by the other provisions of
Sections 6.1 and 6.2 until fully distributed.
ARTICLE III
BENEFITS
--------
Section 3.1 - Deferred Compensation. A Participant may elect to defer
receipt of part or all of any one or more of the following items of
compensation:
(a) Retainer Fees; and
(b) Meeting Fees.
A Participant may defer an item of compensation only to the extent that the
Participant is entitled to receive such item of compensation. Upon such
deferral, the Participant will have no further right to such deferred
compensation other than as provided under the Plan. Such deferred compensation
shall be the record of the value of such deferred compensation credited to a
Participant's Account and shall be used solely for accounting purposes.
3
Section 3.2 - Form and Effectiveness of Deferral Elections.
(a) Each year a Participant may elect to defer all or any percentage of the
Retainer Fees and Meeting Fees which the Participant has the opportunity to earn
during the next succeeding calendar year through service as a Director of
Company. The Participant is required to file his or her deferral election before
December 31 specifying the portion of the Retainer Fees and Meeting Fees to be
earned in the succeeding calendar year that is to be deferred.
(b) An election by a Participant to defer a portion of his or her Retainer
Fees and Meeting Fees pursuant to subsection (a) must be made by the Participant
for the calendar year beginning after the calendar year in which occurs the date
of said election and the amounts so deferred shall be paid only as provided in
the Plan. Such an election must be irrevocable and must be made in the form and
manner prescribed by the Compensation Committee and shall not be effective
unless accepted by the Compensation Committee. The Participant may change the
amount of, or suspend, future deferrals with respect to Retainer Fees and
Meeting Fees otherwise payable to him or her for calendar years beginning after
the date of change or suspension, as he or she may specify by written notice to
the Compensation Committee. If a Participant elects to change the amount of, or
suspend, deferrals, the Participant may make a new deferral election provided
that any new election to defer payment of Retainer Fees and Meeting Fees must be
made before the beginning of the period of service for which such compensation
is payable, which period is the calendar year. The election to defer shall be
irrevocable as to the deferred Retainer Fees and Meeting Fees for the period for
which the election is made and shall not be effective unless accepted by the
Compensation Committee.
Section 3.3 - Matching Amounts. If for any year a Participant makes an
election under Section 3.2 to defer all or any percentage of his or her Retainer
Fees and Meeting Fees and to have a portion or all of such deferred compensation
allocated to his or her Company Stock Account and measured by the value of
Company Common Stock, then the Company will credit the Participant's Company
Stock Account with a number of units (including fractions thereof) that is equal
to 10% of the number of units (including fractions thereof) that were deferred
to the Participant's Company Stock Account.
Section 3.4 - Rollover Amount. With respect to Participants who
participated in the Plan prior to this amendment and restatement, an amount
equal to their "Account" as set forth in the Plan prior to this amendment and
restatement, valued as of the effective date of this amendment and restatement,
shall be the Rollover Amount. The Rollover Amount, which is comprised of
elective deferrals and Company matching contributions accumulated under the
Plan, shall be credited to the Participant's Company Stock Account on the
effective date of this amendment and restatement and shall be subject to the
terms and conditions of the Plan as amended and restated. Any Participant with a
Rollover Amount shall have no right to demand distribution of such amounts other
than as specifically provided for herein.
Section 3.5 - Participant Accounts. A Company Stock Account and a Deferred
Compensation Account shall be established and maintained for each Participant.
The Company Stock Account shall be credited with units which shall be measured
by the value of the shares of Common Stock. The Deferred Compensation Account
shall be credited with amounts which shall be measured in dollars. The Company
Stock Account shall be credited with (i) the Rollover Amount; (ii) deferred
amounts attributable to Retainer Fees and Meeting Fees as may be allocated to
the Company Stock Account pursuant to Section 6.1; and (iii) the matching
amounts determined under Section 6.1. The Deferred Compensation Account shall be
credited as described in Section 6.2 for any deferred amounts attributable to
such amounts of Retainer Fees and Meeting Fees as may be allocated to the
Deferred Compensation Account pursuant to Section 6.2.
ARTICLE IV
VESTING
-------
Section 4.1 - Vested Benefit. A Participant shall be considered to be 100%
Vested in the units and amounts credited to his or her Accounts under the Plan.
Section 4.2 - Limitation on Benefits. The benefits that may be payable to
or on behalf of a Participant under the Plan shall not exceed a cash payment
equal to the value of the amounts credited to the Participant's Deferred
Compensation Account and a distribution of that number of shares of Common Stock
equal to the number of units credited to the Participant's Company Stock Account
(with any fractional unit being rounded to the next highest whole unit).
4
ARTICLE V
DISTRIBUTIONS
-------------
Section 5.1 - Distributable Events. A Participant's Distributable Event
shall be the first to occur of the following events:
(a) The later of the date of the Participant's Retirement or such other
date as elected and specified by the Participant in a Distribution of Benefits
Form, which election is subject to approval by the Compensation Committee and
which shall be made only at the time of the Participant's initial elections on
such form and if the election is approved, it shall be irrevocable;
(b) Disability (as defined in Section 1.1(m);
(c) The Participant's death;
(d) A Change in Control; or
(e) The effective date of the termination of the Plan pursuant to Section
13.1.
Section 5.2 - Distribution of Benefits.
(a) Distribution Commencement Date. Distribution of a Participant's Plan
benefit shall commence as of the first day of the second calendar month
immediately following the calendar month in which the Participant's applicable
Distributable Event occurs.
(b) Form of Distribution. Benefits attributable to the value of the
Deferred Compensation Account shall be delivered to the Participant in dollars.
Benefits attributable to the Company Stock Account shall be delivered to the
Participant in the form of shares of Common Stock. To the extent that the
distribution is in the form of shares of Common Stock, such delivery shall be
subject to all federal or state securities laws or other rules and regulations
as determined by the Company to be applicable.
(c) Payment Options. In the event a Participant becomes eligible to receive
a payment of benefits under the Plan, the benefits payable to the Participant
or, in the event of the Participant's death, to the Participant's designated
beneficiary under the Plan shall be paid in accordance with one of the payment
options available under the Plan as elected by the Participant on the
Participant's Deferral Election Form. The Participant may not elect separate
payment options with respect to the Deferred Compensation Account and the
Company Stock Account. A Participant may change payment options by electing
another payment option available under the Plan on a subsequent Deferral
Election Form, but such change in payment option will not be effective until the
lapse of a period of twelve (12) months following the date on which the Deferral
Election Form was accepted by the Compensation Committee. Further, in no event
will any such change in payment option be effective if such change is elected
during the calendar year in which the Distributable Event occurs and no further
elections may be made once a Distributable Event occurs. The payment options
include installment payments over a period certain, a lump sum payment, and such
other payment method as may be specified by the Participant and accepted by the
Compensation Committee. The Compensation Committee may, in its sole discretion,
reduce the payment period over which payments would have been made pursuant to
the payment option elected by the Participant (including consolidation into a
lump sum); provided, that in the event of a Change in Control, no reduction of a
payment period may be made prior to the fifth anniversary of such Change in
Control. Absent a payment option election, the Compensation Committee shall
direct the payment of any benefits payable under the Plan to or on behalf of the
Participant in eleven (11) annual installment payments to the Participant, or in
the event of the Participant's death, to the Participant's designated
beneficiary under the Plan.
(d) Application for Distribution. A Participant shall not be required to
make application to receive payment. Distribution shall not be made to any
beneficiary, however, until such beneficiary shall have filed a written
application for benefits in a form acceptable to the Compensation Committee and
such application shall have been approved by the Compensation Committee.
5
Section 5.3 - Distributions As a Result of Tax Determination.
Notwithstanding any provision in the Plan to the contrary, if, at any time, a
court or the Internal Revenue Service determines that any amounts or units
credited to a Participant's Accounts under the Plan are includable in the gross
income of the Participant and subject to tax, the Compensation Committee may, in
its sole discretion, permit a lump sum distribution of an amount equal to the
amounts or units determined to be includable in the Participant's gross income.
Section 5.4 - Early Withdrawals. Notwithstanding any provision in the Plan
to the contrary, a Participant may request, by providing a written request to
the Compensation Committee, a withdrawal prior to the distribution date under
the Plan of all or any portion of his or her benefits from any of his or her
Accounts under the Plan in increments of twenty-five (25) percent (of aggregate
Account value). If such a request is approved by the Compensation Committee,
which decision by the Compensation Committee shall be made in its sole
discretion on a case by case basis, a distribution of such benefits may be made
to the Participant subject to a penalty for such an early withdrawal at any
point equal to a six month period of nonparticipation (during which no
additional amounts will be credited to the Participant's Accounts under Sections
6.1(a), 6.1(b) or 6.2(a) of the Plan) for each twenty-five (25) percent
increment withdrawn. The nonparticipation period would begin as of the date on
which the request made by the Participant is approved by the Compensation
Committee. As a result, a Participant withdrawing his or her entire benefit from
all of his or her Accounts would be excluded from eligibility to participate in
the Plan for a twenty-four (24) month period beginning as of the date of such
approval by the Compensation Committee. In addition, a penalty of ten (10)
percent of the amount withdrawn will be imposed on any withdrawal made pursuant
to this Section 5.4.
ARTICLE VI
VALUATION OF BENEFITS
---------------------
Section 6.1 - Company Stock Account.
(a) Deferred Amounts. If a Participant elects to defer compensation in
accordance with Section 3.2, the Participant may make an irrevocable election
pursuant to this Section 6.1(a) to have a portion or all of such deferred
compensation allocated to the Company Stock Account and measured by the value of
Company Common Stock. This irrevocable election must be made at the time the
deferral elections are made under Section 3.2 in the form and manner prescribed
by the Compensation Committee, and will not be effective unless accepted by the
Compensation Committee. If the Participant makes an election pursuant to this
Section 6.1(a) to have a portion or all of such deferred compensation allocated
to the Company Stock Account and measured by the value of Common Stock, the
Participant's Company Stock Account shall be credited with the number of units
(including fractions thereof) equal to the number of shares (including fractions
thereof) of Common Stock that could have been purchased with the dollar amount
of such deferred compensation determined as of the date on which such
compensation is earned, based on the last sale price as reported on the NASDAQ
Stock Market (or such other registered securities exchange or market as the
Common Stock may be traded on in the future) on such date. For this purpose, a
Participant's Retainer Fees are deemed to be earned on March 1 (January and
February amounts), June 1 (March through May amounts), September 1 (June through
August amounts), December 1 (September through November amounts) and the next
March 1 (December amount). Meeting Fees are deemed to be earned when they would
have otherwise been paid if a deferral had not been elected. Each unit credited
to the Company Stock Account shall be measured by the value of one share of
Common Stock and treated as though invested in a share of Common Stock. Subject
to subsection (e) of this Section 6.1, the liability of the Company under the
Plan with respect to the units credited to the Company Stock Account shall be
satisfied only in shares of Company Common Stock.
(b) Matching Amounts.
(i) When a Participant's Company Stock Account is to be credited with
matching units pursuant to Section 3.3, said Account shall be credited
with that number of units (including fractions thereof) that shall be
equal to ten percent (10%) of the number of units (including fractions
thereof) that were credited to the Participant's Company Stock Account
under Section 6.1(a) determined as of the date on which such
compensation is earned, based on the last sale price as reported on
the NASDAQ Stock Market (or such other registered securities exchange
or market as the Common Stock may be traded on in the future) on such
date.
6
(ii) Each unit credited to the Company Stock Account shall be measured by
the value of one share of Common Stock and treated as though invested
in a share of Common Stock. Subject to subsection (e) of this Section
6.1, the liability of the Company under the Plan with respect to the
units credited to the Company Stock Account shall be satisfied only in
shares of Company Common Stock.
(c) Dividends. A Participant's Company Stock Account shall be credited on
each Common Stock dividend payment date with that number of units equal to the
number of shares which would have been acquired based upon the dividends paid by
the Company on shares of Common Stock equal to the number of units credited to
the Company Stock Account as of the record date for such dividend.
(d) Stock Dividends. The number of units credited to the Company Stock
Account shall be adjusted to reflect any change in the outstanding Common Stock
by reason of any stock dividend or split, recapitalization, merger,
consolidation, combination or exchange of shares or other similar corporate
change.
(e) Transfer Upon Change in Control. In the event of a Change in Control,
effective as of the close of business on the date of the Change in Control, each
Participant's Deferred Compensation Account shall be credited with an amount
measured in dollars equal to the value of such Participant's Company Stock
Account based upon the fair market value of the Company Common Stock on such
date and the Participant's Company Stock Account shall be closed and the
Participant shall have no further interest in the said Account.
Section 6.2 - Deferred Compensation Account.
(a) Deferred Amounts. When a Participant's Deferred Compensation Account is
to be credited with a deferred amount, that amount measured in dollars equal to
such deferred amount shall be credited to the Deferred Compensation Account as
of the close of business on the date that such amount would have been earned.
For this purpose, a Participant's Retainer Fees are deemed to be earned on March
1 (January and February amounts), June 1 (March through May amounts), September
1 (June through August amounts), December 1 (September through November amounts)
and the next March 1 (December amount). Meeting Fees are deemed to be earned
when they would have otherwise been paid if a deferral had not been elected.
(b) Interest. Subject to Section 6.2(c), as of the close of each business
day, each Participant's Deferred Compensation Account shall be valued by
calculating the product of (i) the average daily balance in such Deferred
Compensation Account for the quarter, multiplied by (ii) one-twelfth (1/12) of
the annual prime rate for corporate borrowers quoted at the beginning of the
month by the Wall Street Journal (or such other comparable interest rate as the
Compensation Committee may designate from time to time).
(c) Investment Options. The Compensation Committee may permit a Participant
to allocate the Participant's Deferred Compensation Account among one or more
investment options for purposes of measuring the value of the benefit. To the
extent that the Deferred Compensation Account is allocated to an investment
option, it shall not be credited with interest under Section 6.2(b). That
portion of the Deferred Compensation Account allocated to an investment option
shall be deemed to be invested in such investment option and shall be valued as
if so invested, reflecting all earnings, losses and other distributions or
charges and changes in value which would have been incurred through such an
investment. The determination of which investment options, if any to make
available, and the continued availability of selected investment options rests
in the Compensation Committee's sole discretion; provided, that subsequent to a
Change in Control, the Company shall maintain the availability of those
investment options in place at the time of the Change in Control (or
substantially equivalent investment options).
(d) Participant Allocation Request. A Participant's request to allocate or
reallocate among investment options must be in writing on an Allocation Request
Form in such increments as the Compensation Committee may require. All such
requests are subject to acceptance by the Compensation Committee at its
discretion. If accepted by the Compensation Committee, an allocation request
will be effective as of the close of business on the allocation date (as defined
in Section 6.3).
7
Section 6.3 - Allocation Date. Upon acceptance of an allocation request
pursuant to Section 6.2, the Compensation Committee will process the request as
soon as reasonably administratively practicable. The request shall be
implemented and reflected in the Participant's Account as of the close of
business on such date as may be determined by the Compensation Committee in its
reasonable discretion (the "allocation date").
Section 6.4 - Hypothetical Accounts. The Accounts established under the
Plan shall be hypothetical in nature and shall be maintained for bookkeeping
purposes only. Neither the Plan nor any of the Accounts (or sub-accounts) shall
hold or be required to hold any actual funds or assets.
ARTICLE VII
NONTRANSFERABILITY
------------------
Section 7.1 - Anti-Alienation of Benefits. Any benefits which may be
credited to a Participant's Accounts under the Plan, and any rights or
privileges pertaining thereto, may not be anticipated, alienated, sold,
transferred, assigned, pledged, encumbered, or subjected to any charge or legal
process; and no interest or right to receive a benefit may be taken, either
voluntarily or involuntarily, for the satisfaction of the debts of, or other
obligations or claims against, such person or entity, including claims for
alimony, support, separate maintenance and claims in bankruptcy proceedings.
Section 7.2 - Incompetent Participants. If any person who may be eligible
to receive a payment under the Plan has been legally declared incompetent and a
conservator or other person legally charged with the care of such person or of
his or her estate has been appointed, any payment under the Plan to which the
person is eligible to receive shall be paid to such conservator or other person
legally charged with the care of the person or his or her estate. Any such
payment shall be a payment for the account of such person and a complete
discharge of any liability of the Company and the Plan therefor.
Section 7.3 - Designated Beneficiary. In the event of a Participant's death
prior to the payment of all or a portion of any benefits which may be payable
with respect to the Participant under the Plan, the payment of any benefits
payable on behalf of the Participant under the Plan shall be made to the
Participant's beneficiary designated on a "Beneficiary Designation Form," which
form shall be approved by the Compensation Committee. If no such beneficiary has
been designated, payment shall be made as required under the Participant's will;
or, in the event that there shall be no functioning will under applicable state
law, then to such persons as, at the date of the Participant's death, would be
entitled to share in the distribution of such deceased Participant's personal
estate under the provisions of the applicable statute then in force governing
the decedent's intestate property, in the proportions specified in such statute.
ARTICLE VIII
WITHHOLDING
-----------
Section 8.1 - Withholding. The amounts payable pursuant to the Plan may be
reduced by the amount of any federal, state or local taxes required by law to be
withheld with respect to such payments.
ARTICLE IX
VOTING
------
Section 9.1 - Voting of Company Stock. No Participant shall be entitled to
any voting rights with respect to any units credited to his or her Company Stock
Account.
ARTICLE X
ADMINISTRATION OF THE PLAN
--------------------------
Section 10.1 - Administrator. The administrator of the Plan shall be the
Company. However, the Compensation Committee shall act on behalf of the Company
with respect to the administration of the Plan and may delegate authority with
respect to the administration of the Plan to such other committee, person or
persons as it deems necessary or appropriate for the administration and
operation of the Plan.
Section 10.2 - Authority of Administrator. The Compensation Committee shall
have the authority, duty and power to interpret and construe the provisions of
the Plan as it deems appropriate, to adopt, establish and revise rules,
procedures and regulations relating to the Plan, to determine the conditions
subject to which any benefits may be payable, to resolve all questions
concerning the status and rights of the Participants and others under the Plan,
including, but not limited to, eligibility for benefits and to make any other
determinations
8
which it believes necessary or advisable for the administration of the Plan. The
Compensation Committee shall have the duty and responsibility of maintaining
records, making the requisite calculations and disbursing payments hereunder.
The determinations, interpretations, regulations and calculations of the
Compensation Committee shall be final and binding on all persons and parties
concerned. The Secretary of the Company shall be the agent of the Plan for the
service of legal process in accordance with section 502 of ERISA.
Section 10.3 - Operation of Plan and Claims Procedures. The Compensation
Committee shall be responsible for the general operation and administration of
the Plan and for carrying out the provisions thereof. The Company shall be
responsible for the expenses incurred in the administration of the Plan. The
Compensation Committee shall be responsible for determining eligibility for
payments and the amounts payable pursuant to the Plan. The Compensation
Committee shall be entitled to rely conclusively upon all tables, valuations,
certificates, opinions and reports furnished by any actuary, accountant,
controller, counsel or other person employed or engaged by the Compensation
Committee with respect to the Plan. The procedures for filing claims for
payments under the Plan are described below. For claims procedures purposes, the
"Claims Manager" shall be the Company.
(a) Claims Forms. It is the intent of the Company to make payments under
the Plan without the Participant having to complete or submit any claims forms.
However, a Participant who believes he or she is entitled to a payment under the
Plan may submit a claim for payments in writing to the Claims Manager. Any claim
for payments under the Plan must be made by the Participant or his or her
beneficiary in writing and state the claimant's name and the nature of benefits
payable under the Plan on a form acceptable to the Claims Manager. If for any
reason a claim for payments under the Plan is denied by the Compensation
Committee, the Claims Manager shall deliver to the claimant a written
explanation setting forth the specific reasons for the denial, specific
references to the pertinent provisions of the Plan on which the denial is based,
a description of any additional material or information necessary for the
claimant to perfect the claim and an explanation of why such material or
information is necessary, and information on the procedures to be followed by
the claimant in obtaining a review of his or her claim, all written in a manner
calculated to be understood by the claimant. For this purpose:
(i) The claimant's claim shall be deemed to be filed when presented orally
or in writing to the Claims Manager.
(ii) The Claims Manager's explanation shall be in writing delivered to the
claimant within ninety (90) days of the date the claim is filed.
(b) Review. The claimant shall have sixty (60) days following his or her
receipt of the denial of the claim to file with the Claims Manager a written
request for review of the denial. For such review, the claimant or the
claimant's representative may review pertinent documents and submit written
issues and comments.
(c) Decision on Review. The Compensation Committee shall decide the issue
on review and furnish the claimant with a copy within sixty (60) days of receipt
of the claimant's request for review of the claimant's claim. The decision on
review shall be in writing and shall include specific reasons for the decision,
written in a manner calculated to be understood by the claimant, as well as
specific references to the pertinent provisions in the Plan on which the
decision is based. If a copy of the decision is not so furnished to the claimant
within such sixty (60) days, the claim shall be deemed denied on review. In no
event may a claimant commence legal action for benefits the claimant believes
are due the claimant until the claimant has exhausted all of the remedies and
procedures afforded the claimant by this Section 10.3.
(d) Deadline to File Claim. To be considered timely under the Plan's claim
and review procedure, a claim must be filed with the Claims Manager within one
(1) year after the claimant knew or reasonably should have known of the
principal facts upon which the claim is based.
(e) Exhaustion of Administrative Remedies. The exhaustion of the claim and
review procedure is mandatory for resolving every claim and dispute arising
under the Plan. As to such claims and disputes:
(j) no claimant shall be permitted to commence any legal action to recover
Plan benefits or to enforce or clarify rights under the Plan under
section 502 or section 510 of ERISA or under
9
any other provision of law, whether or not statutory, until the claim
and review procedures set forth herein have been exhausted in their
entirety; and
(ii) in any such legal action all explicit and all implicit determinations
by the Compensation Committee (including, but not limited to,
determinations as to whether the claim, or a request for a review of a
denied claim, was timely filed) shall be afforded the maximum
deference permitted by law.
(f) Deadline to File Legal Action. No legal action to recover Plan benefits
or to enforce or clarify rights under the Plan under Section 502 or section 510
of ERISA or under any other provision of law, whether or not statutory, may be
brought by any claimant on any matter pertaining to the Plan unless the legal
action is commenced in the proper forum before the earlier of:
(i) thirty (30) months after the claimant knew or reasonably should have
known of the principal facts on which the claim is based, or
(ii) six (6) months after the claimant has exhausted the claim and review
procedure.
(g) Knowledge of Facts by Participant Imputed to Beneficiary. Knowledge of
all facts that a Participant knew or reasonably should have known shall be
imputed to every claimant who is or claims to be a beneficiary of the
Participant or otherwise claims to derive an entitlement by reference to the
Participant for purpose of applying the previously specified periods.
Section 10.4 - Participant's Address. Each Participant shall keep the
Company informed of his or her current address and the current address of his or
her beneficiary. The Company shall not be obligated to search for any person. If
the location of a Participant is not made known to the Company within three (3)
years after the date on which payment of the Participant's benefits payable
under the Plan may be made, payment may be made as though the Participant had
died at the end of the three-year period. If, within one (1) additional year
after such three-year period has elapsed, or, within three (3) years after the
actual death of a Participant, the Company is unable to locate any designated
beneficiary of the Participant, then Company shall not have any further
obligation to pay any benefit under the Plan to or on behalf of such Participant
or designated beneficiary and such benefit shall be irrevocably forfeited.
ARTICLE XI
MISCELLANEOUS PROVISIONS
------------------------
Section 11.1 - No Future Director Terms. Nothing in the Plan nor any action
taken under the Plan shall obligate a Participant to continue as a Director or
to accept any nomination for a future term as a Director of the Company or
require the Company to nominate or cause the nomination of the Director for
future term as a Director.
Section 11.2 - Participants Should Consult Advisors. Neither the Company,
nor its Directors, officers, employees or agents makes any representation or
warranty with respect to the federal, state or other tax, financial, estate
planning, or the securities or other legal implications of participation in the
Plan. Participants should consult with their own tax, financial and legal
advisors with respect to their participation in the Plan.
Section 11.3 - Unfunded and Unsecured. The Plan shall at all times be
considered entirely unfunded both for tax purposes and for purposes of Title I
of the ERISA and no provision shall at any time be made with respect to
segregating assets of the Company for payment of any amounts under the Plan. Any
funds invested under the Plan allocable to the Company shall continue for all
purposes to be part of the respective general assets of the Company and
available to the general creditors of the Company in the event of a bankruptcy
(involvement in a pending proceeding under the Federal Bankruptcy Code) or
insolvency (inability to pay debts as they mature) of the Company. The Company
shall promptly notify the Trustee and the applicable Participants of such
bankruptcy or insolvency. No Participant or any other person shall have any
interests in any particular assets of the Company by reason of the right to
receive a benefit under the Plan and to the extent the Participant or any other
person acquires a right to receive benefits under the Plan, such right shall be
no greater than the right of any general unsecured creditor of the Company. The
Plan constitutes a mere promise by the Company to make payments to the
Participants in the future. Nothing contained in the Plan shall constitute a
guaranty by
10
the Company or any other person or entity that any funds in any
trust or the assets of the Company will be sufficient to pay any benefit under
the Plan. Furthermore, no Participant shall have any right to a benefit under
the Plan except in accordance with the terms of the Plan.
Section 11.4 - The Trust.
(a) Establishment of Trust. In order to provide assets from which to
fulfill the obligations to the Participants and their beneficiaries under the
Plan, the Company may establish a Trust by a trust agreement with a third party,
the Trustee, to which the Company may, in its discretion, contribute cash or
other property, including securities issued by the Company, to provide for the
benefit payments under the Plan. The Trustee for the Trust will have the duty to
invest the Trust assets and funds in accordance with the terms of the Trust. The
Company shall be entitled at any time, and from time to time, in its sole
discretion, to substitute assets of at least equal fair market value for any
assets held in the Trust established by the Company. All rights associated with
the assets of each the Trust will be exercised by the Trustee of the Trust or
the person designated by the Trustee, and will in no event be exercisable by or
rest with Participants or their beneficiaries. The Trust shall provide that in
the event of the insolvency of the Company, the Trustee shall hold the assets
for the benefit of the general creditors of the Company. The Trust shall be
based on the model trust contained in Internal Revenue Service Revenue Procedure
92-64.
(b) Contribution Upon Change in Control. If as of the close of business on
the date of a Change in Control, the aggregate value of the Participant Accounts
exceeds the value of the assets held in the Trust established under subsection
(a), then within thirty (30) days of such Change in Control, the Company if it
has established a Trust shall contribute to the Trust assets having a value at
least equal to the amount of such excess.
Section 11.5 - Plan Provisions. Except when otherwise required by the
context, any singular terminology shall include the plural.
Section 11.6 - Severability. If a provision of the Plan shall be held to be
illegal or invalid, the illegality or invalidity shall not affect the remaining
parts of the Plan and the Plan shall be construed and enforced as if the illegal
or invalid provision had not been included.
Section 11.7 - Applicable Law. To the extent not preempted by the laws of
the United States, the laws of the State of Minnesota shall apply with respect
to the Plan.
Section 11.8 - Stock Subject to Plan. Subject to and in accordance with the
terms of the Plan, the maximum number of shares of Common Stock that shall be
made available for purposes of satisfying the obligations of the Company under
the Plan is 75,000 shares, subject to adjustment by reason of any stock dividend
or split, recapitalization, merger, consolidation, combination or exchange of
shares or other similar corporate change.
ARTICLE XII
AMENDMENTS
----------
Section 12.1 - Amendment of the Plan. The Company reserves the power to
alter, amend or wholly revise the Plan at any time and from time to time by the
action of the Compensation Committee and the interest of each Participant is
subject to the powers so reserved; provided, however, that no amendment made
subsequent to a Change in Control shall be effective to the extent that it would
have a materially adverse impact on a Participant's reasonably expected economic
benefit attributable to compensation deferred by the Participant prior to the
Change in Control. An amendment shall be authorized by the Compensation
Committee and shall be stated in an instrument in writing signed in the name of
the Company by a person or persons authorized by the Compensation Committee.
After the instrument has been so executed, the Plan shall be deemed to have been
amended in the manner therein set forth, and all parties interested herein shall
be bound thereby. No amendment to the Plan may alter, impair, or reduce the
benefits credited to any Accounts prior to the effective date of such amendment
without the written consent of any affected Participant.
11
ARTICLE XIII
TERM OF PLAN
------------
Section 13.1 - Term of the Plan. The Company may at any time terminate the
Plan by action of the Compensation Committee with such termination being
effective as of the date that all Participant Accounts have been distributed to
Participants in accordance with and subject to the provisions of Article V.
Effective as of the date of the Compensation Committee action (or such later
date as may be specified therein) all compensation deferral elections will
terminate and no further amounts shall be credited to any Accounts of any
Participant under Sections 6.1(a), 6.1(b) and 6.2(a) after such date. However,
the Participants' Accounts shall continue to be adjusted by the other provisions
of Sections 6.1 and 6.2 until all benefits are distributed to the Participants
or to the Participants' beneficiaries.
Dated as of this 27 day of September, 2001.
-- ---------
H.B. FULLER COMPANY
By: /s/ Norbert R. Berg
---------------------------------
Title: Chair - Compensation Committee
-------------------------------
12