Exhibit 10(n)
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DEFERRED COMPENSATION AGREEMENT
This Agreement dated May 5, 1997, is between H.B. Fuller Company, a
Minnesota corporation (the "Company") and Walter Kissling, a citizen of Costa
Rica and as of the date hereof, the President and Chief Operating Officer of the
Company ("Kissling").
WHEREAS, both Kissling and the Company wish to enter an agreement whereby
Kissling may be entitled to the receipt of certain additional compensation after
his expatriate assignment in the United States has ended if he is then living or
in the event he dies prior to the end of such expatriate assignment if his
estate is subject to United States taxes; and
WHEREAS, both Company and Kissling have agreed on an interest rate to
reflect the time value of money;
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, Company and Kissling hereby agree to the following deferred
compensation arrangement:
ARTICLE 1. DEFERRED COMPENSATION ACCOUNT
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1.1 Establishment of Account. The Company shall establish an account
("Account") for Kissling which shall be utilized solely as a device to measure
and determine the amount of deferred compensation to be paid under this
Agreement.
1.2. Property of Company. Any amounts so set aside for benefits payable
under this Agreement are the property of the Company, except, and to the extent,
of any assignment of such assets to an irrevocable grantor trust of the type
commonly referred to as a "rabbi trust".
1.3. Amount of Additional Deferred Compensation. The Account shall be
credited with the amounts determined in accordance with Schedule A hereto as of
the dates set forth in such Schedule provided Kissling is employed by Company as
its President and Chief Operating Officer as of such date.
1.4. Interest Rate. Prior to the distribution of the Account balance, on
the last day of each month, the Company will post to the Account interest on the
Account balance (including previously accrued interest) equal to Wall Street
Prime plus one percent.
ARTICLE 2. DISTRIBUTION OF ACCOUNT BALANCE
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2.1. Payment of Account Balance. Except as hereinafter described, the
entire Account balance shall be paid by the Company to Kissling, or in the event
of Kissling's death to Kissling's beneficiaries, on the earlier of: (i) June 30
of the year immediately following the date on which Kissling first ceases to be
a United States resident for United States income tax
purposes, (ii) sixty days following the death of Kissling, or (iii) January 10,
2001. The earlier of these dates shall be referred to herein as the "Payment
Date." Notwithstanding the foregoing, in the event Kissling dies prior to
payment of the Account, the Company shall deduct an amount from the Account
balance payable to Kissling's beneficiaries equal to the lesser of (a) the
Account Balance, or (b) the difference between (i) the amount payable to
Kissling's beneficiaries under Massachusetts Mutual Life Insurance Company
policy of insurance (Policy No. 0 027 933, face value $3,500,000, and Prudential
policy of insurance Policy No. 77 848666, face value $5,000,000 or any
replacement policy); and (ii) the amount, if any, of estate tax or inheritance
taxes payable to the United States or any state.
2.2. Designation of Beneficiary. Kissling shall have the right to
designate primary and contingent beneficiaries to receive payment of the Account
balance under this Agreement in the event of his death. A beneficiary
designation by Kissling shall be in writing on a form acceptable to the Company
and shall only be effective upon delivery to the Company. A beneficiary
designation may be revoked by Kissling at any time by delivering to the Company
either written notice of revocation or a new beneficiary designation form. The
beneficiary designation form last delivered to the Company prior to the death of
Kissling shall control.
ARTICLE 3. FUNDING
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3.1. Source of Benefits. All benefits under this Agreement shall be paid
pursuant to Section 2.1 hereof out of Company assets, or from a trust of the
type commonly referred to as a "rabbi trust".
3.2. No Claim on Specific Assets. If the Company shall make advance
provisions for payment of its obligations under this Agreement, any amount so
set aside in trust or otherwise, shall nonetheless remain the exclusive property
of the Company and shall in no event be deemed to constitute a segregated fund
for the benefit of Kissling. Kissling shall not be deemed to have by virtue of
this Agreement, any claim on any specific assets of the Company such that
Kissling would be subject to income taxation on his benefits under this
Agreement prior to distribution. The rights of Kissling and his beneficiaries
to benefits to which they are otherwise entitled under this Agreement shall be
those of an unsecured general creditor of the Company, this agreement
constituting a mere promise by the Company to make the benefit payment in the
future.
ARTICLE 4. MISCELLANEOUS
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4.1. Amendment. No amendment to this Agreement shall become effective
unless and until the Compensation Committee of the Board of Directors shall
approve of such amendment and the Company and Kissling shall agree in writing to
such amendment.
4.2. No Guarantee of Employment. This Agreement shall not be deemed to be
a contract of employment between the Company and Kissling.
4.3. Non-Alienation. The rights of Kissling and his beneficiaries to
receive payments under this Agreement are not subject in any manner to
anticipation, alienation, sale, assignment, pledge, encumbrance, attachment or
garnishment by the creditors of Kissling or his beneficiaries.
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4.4. Indemnification. The Company agrees to indemnify and hold Kissling
harmless from (i) any and all federal and/or state income and payroll taxes
which may become due and payable relating to the Account balance, either before
or following distribution of the Account balance, and (ii) foreign income taxes
relating to the Account balance which Kissling is required to pay which would
not have otherwise been payable by Kissling but for this Agreement.
4.5. Change in Control. Notwithstanding anything to the contrary
contained in this Agreement, upon the occurrence of a Change in Control of the
Company, the Account balance shall automatically and simultaneously, without any
further action, determination or notice of any kind, be credited with interest
as ascribed under Section 1.4 hereof, and the aggregate Account balance shall be
paid immediately by the Company to Kissling or, in the event of Kissling's death
to Kissling's beneficiaries, in a single sum. If a Change in Control of the
Company occurs, the entitlement of Kissling to receive such sum from the Company
shall be valid and enforceable by Kissling in any state or federal court having
jurisdiction thereof.
4.6. Definitions Relating to Change in Control. Whenever used in Section
4.5, the following words and phrases shall have the meanings set forth below
unless the context plainly requires a different meaning, and when a defined term
is intended, the term is capitalized.
4.6.1. Change in Control. "Change in Control" shall mean the
occurrence of any one of the following;
(1) a change in control of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Exchange Act, whether or not the Company is
then subject to such reporting requirement; or
(2) the public announcement (which, for the purposes of this
definition, shall include, without limitation, a report filed
pursuant to Section 13(d) of the Exchange Act by the Company or any
"person" (as such term is used in Sections 13(d) and 14(4) of the
Exchange Act) that such person has become the "beneficial owner" (as
defined in Rule 13d-3 promulgated under the Exchange Act), directly
or indirectly, of securities of the Company representing 15% or more
of the combined voting power of the Company's then outstanding
securities; or
(3) the Continuing Directors cease to constitute a majority of
the Company's Board of Directors; or
(4) the shareholders of the Company approve (A) any
consolidation or merger of the Company in which the Company is not
the continuing or surviving corporation or pursuant to which shares
of Company stock would be converted into cash, securities or other
property, other than a merger of the Company in which shareholders
immediately prior to the merger have the same proportionate
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ownership of stock of the surviving corporation immediately after the
merger; (B) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or
substantially all of the assets of the Company; or (C) any plan of
liquidation or dissolution of the Company; or
(5) the majority of the Continuing Directors determine in their
sole and absolute discretion that there has been a change in control
of the Company;
provided, however, that within ten business days following the date of the
Change in Control, a majority of the Continuing Directors, if any,
determines that there shall be no acceleration of vesting with respect to
such Change in Control, then the acceleration provisions will not apply.
4.6.2. Continuing Director "Continuing Director" shall mean any person
who is a member of the Board of Directors of the Company, while such person
is a member of the Board of Directors, who is not an Acquiring Person (as
defined below) or an Affiliate or Associate (as defined below) of an
Acquiring Person, or a representative of an Acquiring Person or any such
Affiliate or Associate, and who (A) was a member of the Board of Directors
on the date of this Agreement as first written above, or (B) subsequently
becomes a member of the Board of Directors, if such person's initial
nomination for election or initial election to the Board of Directors is
recommended or approved by a majority of the Continuing Directors. For
purposes of this sub-paragraph, "Acquiring Person" shall mean any "person"
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act) who
or which, together with all Affiliates and Associates of such person, is
the "beneficial owner" (as defined in Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of securities of the Company
representing 15% or more of the combined voting power of the Company's then
outstanding securities, but shall not include the Company, any subsidiary
of the Company or any employee benefit plan of the Company or of any
subsidiary of the Company or any entity holding shares of the Common Stock
organized, appointed or established for, or pursuant to the terms of, any
such plan, Elmer L. Andersen, alone or together with any of his Affiliates,
or Anthony L. Andersen, alone or together with any of his Affiliates; and
"Affiliate" and "Associate" shall have the respective meanings ascribed to
such terms in Rule 12b-2 promulgated under the Exchange Act.
4.7 Funding. The Company's obligations under this Agreement are intended
to be "unfunded" for purposes of the Internal Revenue Code and Title I of ERISA.
However, nothing herein shall prevent the Company, in its sole discretion, from
establishing a trust, of the type commonly referred to as a "rabbi trust,' to
assist the Company in meeting its obligations under this Agreement.
4.8. Claims Procedure. The Company shall notify Kissling in writing
within ninety (90) days of the Participant's written application for benefits of
his eligibility or noneligibility for benefits under this Agreement. If the
Company determines that Kissling is not eligible for benefits or full benefits,
the notice shall set forth (a) the specific reasons for such denial, (b) a
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specific reference to the provision of this Agreement on which the denial is
based, (c) a description of any additional information or material necessary for
Kissling to perfect his claim, and a description of why it is needed, and (d) an
explanation of this Agreement's claims review procedure and other appropriate
information as to the steps to be taken if Kissling wishes to have his claim
reviewed. If the Company determines that there are special circumstances
requiring additional time to make a decision, the Company shall notify Kissling
of the special circumstances and the date by which a decision is expected to be
made, and may extend the time for up to an additional 90-day period. If Kissling
is determined by the Company to be not eligible for benefits, or if Kissling
believes that he is entitled to greater or different benefits, he shall have the
opportunity to have his claim reviewed by the Company by filing a petition for
review with the Company within sixty (60) days after receipt by him of the
notice issued by the Company. Said petition shall state the specific reasons
Kissling believes he is entitled to benefits or greater or different benefits.
Within sixty (60) days after receipt by the Company of said petition, the
Company shall afford Kissling (and his counsel, if any) an opportunity to
present his position to the Company orally or in writing, and Kissling (or his
counsel) shall have the right to review the pertinent documents, and the Company
shall notify Kissling of its decision in writing within said sixty (60) day
period, stating specifically the basis of said decision written in a manner
calculated to be understood by Kissling and the specific provisions of the Plan
on which the decision is based. If, because of the need for a hearing, the sixty
(60) day period is not sufficient, the decision may be deferred for up to
another sixty (60) day period at the election of the Company, but notice of this
deferral shall be given to Kissling.
4.9. Captions. Article and section headings and captions are provided for
purpose of reference and convenience only and shall not be relied upon in any
way to construe, define, modify, limit, or extend the scope of any provision of
this Agreement.
This Agreement and all rights hereunder shall be governed by and construed
according to the laws of the State of Minnesota, except to the extent such laws
are preempted by the laws of the United States of America.
IN WITNESS WHEREOF, the Company and Kissling have executed this Agreement
as of the 5th day of May, 1997.
H.B. FULLER COMPANY
By /s/ James A. Metts
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Its: Vice President Human Resources
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/s/ Walter Kissling
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Walter Kissling
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Schedule A
May 5, 1997 $ 56,820
May 5, 1998 $ 78,725
May 5, 1999 $106,730
May 5, 2000 $129,545
May 5, 2001 $152,255
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