<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED AUGUST 29, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from........to........
Commission File No. 0-3488
H.B. FULLER COMPANY
(Exact name of registrant as specified in its charter)
MINNESOTA 41-0268370
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1200 WILLOW LAKE BOULEVARD, VADNAIS HEIGHTS, MINNESOTA 55110
(Address of principal executive offices) (Zip Code)
(651) 236-5900
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $1.00 per share
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
The number of shares outstanding of the Registrant's Common Stock, par value
$1.00 per share, was 13,980,837 as of September 30, 1998.
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H.B. FULLER COMPANY AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
(In Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
----------------------- -----------------------
AUGUST 29, AUGUST 30, % AUGUST 29, AUGUST 30, %
1998 1997 CHANGE 1998 1997 CHANGE
---------- ---------- ------ ---------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
NET SALES $333,518 $323,460 3.1% $986,144 $956,423 3.1%
Cost of sales (230,423) (220,700) 4.4% (676,723) (653,462) 3.6%
---------- ---------- ---------- ----------
Gross profit 103,095 102,760 0.3% 309,421 302,961 2.1%
Selling, administrative and other expenses (81,211) (80,814) 0.5% (247,380) (243,419) 1.6%
Non-recurring items (24,003) - * (24,003) - *
---------- ---------- ---------- ----------
Operating earnings (2,119) 21,946 * 38,038 59,542 -36.1%
Interest expense (7,766) (4,856) 59.9% (19,548) (14,755) 32.5%
Other income (expense), net (739) 244 * (1,529) 585 *
---------- ---------- ---------- ----------
Earnings before income taxes and minority interests (10,624) 17,334 * 16,961 45,372 -62.6%
Income taxes (145) (7,072) -97.9% (11,400) (18,511) -38.4%
Net earnings of consolidated subsidiaries
applicable to minority interests 119 407 -70.8% 134 485 -72.4%
Earnings from equity investments 387 94 * 1,257 349 *
---------- ---------- ---------- ----------
Net earnings (10,263) 10,763 * 6,952 27,695 -74.9%
Dividends on preferred stock (4) (4) (12) (12)
---------- ---------- ---------- ----------
NET EARNINGS APPLICABLE TO COMMON STOCK ($10,267) $10,759 * $6,940 $27,683 -74.9%
========== ========== ========== ==========
Average number of common and common
equivalent shares outstanding:
Basic 13,749 13,798 -0.4% 13,710 13,900 -1.4%
========== ========== ========== ==========
Diluted 13,877 13,947 -0.5% 13,848 14,046 -1.4%
========== ========== ========== ==========
NET EARNINGS PER COMMON SHARE:
Basic ($0.75) $0.78 * $0.51 $1.99 -74.4%
========== ========== ========== ==========
Diluted ($0.74) $0.77 * $0.50 $1.97 -74.6%
========== ========== ========== ==========
Cash dividend per common share $0.200 $0.185 8.1% $0.585 $0.535 9.3%
========== ========== ========== ==========
</TABLE>
* Change of 100% or more.
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H.B. FULLER COMPANY AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands)
(Unaudited)
AUGUST 29, NOVEMBER 29,
1998 1997
----------- -----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,294 $ 2,710
Trade receivables 217,572 211,469
Allowance for doubtful accounts (4,869) (5,879)
Inventories 162,846 150,685
Other current assets 59,768 50,171
----------- -----------
TOTAL CURRENT ASSETS 439,611 409,156
Property, plant and equipment, net of
accumulated depreciation of $327,691
in 1998 and $299,356 in 1997 404,550 398,561
Deposits and miscellaneous assets 66,979 62,196
Other intangibles 34,392 13,830
Excess cost 68,614 33,903
----------- -----------
TOTAL ASSETS $ 1,014,146 $ 917,646
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 40,640 $ 39,675
Current installments of long-term debt 7,198 2,551
Accounts payable 107,637 121,883
Accrued expenses 76,277 68,952
Income taxes payable 5,448 4,488
----------- -----------
TOTAL CURRENT LIABILITIES 237,200 237,549
Long-term debt,
excluding current installments 324,463 229,996
Accrued pension cost 80,107 76,694
Deferred income taxes and other liabilities 20,026 18,477
Minority interest 15,727 15,816
STOCKHOLDERS' EQUITY:
Preferred stock 306 306
Common stock 13,980 13,841
Additional paid-in capital 31,085 25,035
Retained earnings 303,780 304,974
Foreign currency translation adjustment (4,045) 341
Unearned compensation (8,483) (5,383)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 336,623 339,114
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,014,146 $ 917,646
=========== ===========
See accompanying Notes to Consolidated Condensed Financial Statements.
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H.B. FULLER COMPANY AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
(In Thousands)
THIRTY-NINE WEEKS ENDED
-----------------------
AUGUST 29, AUGUST 30,
1998 1997
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 6,952 $ 27,695
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 35,246 34,112
Pension costs 4,434 7,994
Deferred income tax 3,714 (9,373)
Non-recurring expenses 17,833 --
Other items (658) (1,824)
Change in current assets and liabilities:
Accounts receivable (360) (7,397)
Inventory (9,775) (8,129)
Prepaid assets (4,684) (6,680)
Accounts payable (19,659) (29)
Accrued expense (227) 7,319
Income taxes payable (2,550) (505)
--------- ---------
NET CASH (USED)PROVIDED BY OPERATING ACTIVITIES 30,266 43,183
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchased property, plant and equipment (41,633) (41,292)
Purchased business, net of cash acquired (87,701) (7,618)
Proceeds from sale of assets 9,019 6,411
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (120,315) (42,499)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in long-term debt 208,309 40,748
Current installments and payments of long-term debt (108,704) (8,746)
Notes payable 4,038 7,811
Dividends paid (8,146) (7,504)
Repurchase common stock -- (15,524)
Other (3,453) (16,424)
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 92,044 361
Effect of exchange rate changes on cash (411) (277)
--------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS 1,584 768
Cash and cash equivalents at beginning of year 2,710 3,515
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,294 $ 4,283
========= =========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest expense (net of amount capitalized) $21,007 $17,708
Income taxes $11,458 $21,127
For purposes of this statement, the Company considers all highly liquid debt
instruments purchased with a maturity of three months or less to be cash
equivalents.
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H.B. FULLER COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Amounts in Thousands)
(Unaudited)
1. In the opinion of the Company, the accompanying unaudited Consolidated
Condensed Financial Statements include all adjustments necessary to
present fairly the financial position as of August 29, 1998 and
November 29, 1997, the results of its operations for the thirty-nine
weeks ended August 29, 1998 and August 30, 1997 and its cash flows for
the thirty-nine weeks ended August 29, 1998 and August 30, 1997.
2. The results of operations for the thirteen week period ended August
29, 1998 are not necessarily indicative of the results to be expected
for the full year.
3. The composition of inventories is presented below:
AUGUST 29, 1998 NOVEMBER 29, 1997
--------------- -----------------
Raw materials $ 71,854 $ 71,234
Finished goods 102,243 90,634
LIFO reserve (11,251) (11,183)
--------- ---------
$ 162,846 $ 150,685
========= =========
4. In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings Per Share" (SFAS No. 128). SFAS No. 128
is effective for financial statements for periods ending after
December 15, 1997. Under SFAS No. 128, the previous presentation of
earnings per share is replaced with dual presentation of basic
earnings per share and diluted earnings per share. Basic earnings per
share includes no dilution and is computed by dividing net earnings
available to common shareholders by the weighted average number of
common shares outstanding for the period. Diluted earnings per share
reflects the potential dilution of stock options and restricted stock
grants that could share in the earnings. The Company adopted SFAS No.
128 for the quarter ended February 28, 1998 and has restated last year
net earnings per share data presented to conform to the provisions of
this statement. The difference between basic and diluted earnings per
share data as presented is due to the dilutive impact of stock options
and restricted stock grants whose exercise price or grant price was
below the average common stock price for the respective period
presented.
5. The Company enters into foreign exchange forward contracts as a hedge
against firm commitment foreign currency intercompany accounts
receivable/payable/debt. Market value gains and losses are recognized,
and the resulting credit or debit offsets foreign exchange gains or
losses on those receivables/payables/debt. At August 29, 1998, the
aggregate contract value of instruments used to sell 5,358 pound
sterling, 4,766 deutsche marks, 4,422 French francs, and $4,362 to buy
foreign currency (primarily 28,210 Dutch guilders and 2,379 deutsche
marks) was $15,587. The contracts mature between September 15, 1998
and November 20, 2000.
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6. The carrying amounts and estimated fair values of the Company's
significant other financial instruments at August 29, 1998, are as
follows:
CARRYING FAIR
AMOUNT VALUE
------ -----
Cash and short-term investments $ 4,294 $ 4,294
Notes payable 40,640 40,640
Long-term debt 331,661 340,883
Fair values of short-term financial instruments approximate their
carrying values due to their short maturity.
The fair value of long-term debt is based on quoted market prices for
the same or similar issues or on the current rates offered to the
Company for debt of similar maturities. The estimates presented above
on long-term financial instruments are not necessarily indicative of
the amounts that would be realized in a current market exchange.
7. During the first and second quarters, the Company acquired two
adhesive companies in the United Kingdom for $87,701 in cash. Assets
acquired include other intangibles of $21,207 and excess of cost over
net assets acquired of $37,490. The acquisitions were accounted for as
purchases and the accompanying Consolidated Financial Statements
include the results of these businesses since the purchase date. The
historical results of operations on a pro forma basis are not
presented as the effects of the acquisitions were not material.
8. On June 2, 1998 the Company completed agreements for the private
placement of senior notes which will partially replace existing
borrowing under the revolving lines of credit. A group of investors,
primarily insurance companies, provided borrowings of $125,000 in
eight to twelve-year senior notes due June 2, 2010 at 6.60% with
interest payable semi-annually. The senior notes contain covenants
which are generally no more restrictive than current debt agreements.
9. The earnings in 1998 were impacted by a $24,003 ($18,689 after tax or
$1.36 basic earnings per share) non-recurring charge.
In the quarter, the Company's Board approved and the Company announced
a restructuring plan that will streamline the organizational structure
worldwide. Over the next six quarters, twelve adhesive manufacturing
facilities will be closed, primarily in Europe, Latin America and
Asia/Pacific, sales offices and warehouses will be consolidated and
layers of management reduced. This plan anticipates a non-recurring
charge of $40 to $45 million (before tax) over the next six quarters,
reduction of employee census by approximately 600 and reduction of
costs in excess of $30 million (before tax) annually, when completed.
Cash requirements of this plan are estimated to be $29 to $30 million
and will primarily be expended in fiscal 1999. The Company has
adequate lines of credit to fund these payments.
During the third quarter of 1998, the Company took non-recurring
charges of $14,245 related to the restructuring plan and a $9,758
charge related to the write-down of previously capitalized computer
software due to the reassessment of system benefits as a result of the
restructuring. The restructuring charges for the quarter were $6,516
for severance (243 employees, $187 cash and $6,329 accrued), $6,281
write-down of assets due to the restructuring plan, $850 accrued for
contract and lease charges impacted by the restructuring and $598 cash
in other restructuring expense.
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<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- ---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- ---------------------------------------------
(Dollars in Thousands)
The following discussion includes comments and data related to the Company's
financial conditions and results of operations during the periods included in
the accompanying Consolidated Condensed Financial Statements.
Results of Operations
- ---------------------
Net sales for the third quarter of 1998 increased $10,058 or 3.1 percent, when
compared to the same quarter in 1997. The sales increase was the result of 1.1
percentage points from increased volume and product mix, a net increase of 4.3
percentage points from acquisitions and divestitures, a negative 0.6 percentage
points from reduced pricing and a negative 1.7 percentage points due to the
strengthening of the U.S. dollar.
A comparison of sales increases by operating area is as follows:
Thirteen Weeks Ended Thirty-Nine Weeks Ended
August 29, 1998 August 29, 1998
August 30, 1997 August 30, 1997
--------------- ---------------
Operating Area
North America ($3,476) (2%) $10,534 2%
Latin America 1,227 3% 4,889 3%
Europe 16,634 29% 21,732 12%
Asia/Pacific (4,327) (18%) (7,434) (11%)
------- -------
Total $10,058 3% $29,721 3%
======= =======
Net earnings for the quarter decreased from $10,763 in 1997 to a loss of $10,263
in 1998. The earnings in 1998 were impacted by a $24,003 ($18,689 after tax)
non-recurring charge.
In the quarter, the Company's Board approved and the Company announced a
restructuring plan that will streamline the organizational structure worldwide.
Over the next six quarters, twelve adhesive manufacturing facilities will be
closed, primarily in Europe, Latin America and Asia/Pacific, sales offices and
warehouses will be consolidated and layers of management reduced. This plan
anticipates a non-recurring charge of $40 to $45 million (before tax) over the
next six quarters, reduction of employee census by approximately 600 and
reduction of costs in excess of $30 million (before tax) annually, when
completed. Cash requirements of this plan are estimated to be $29 to $30 million
and will primarily be expended in fiscal 1999. The Company has adequate lines of
credit to fund these payments.
During the third quarter of 1998, the Company took non-recurring charges of
$14,245 related to the restructuring plan and a $9,758 charge related to the
write-down of previously capitalized computer software due to the reassessment
of system benefits as a result of the restructuring. The restructuring charges
for the quarter were $6,516 for severance (243 employees, $187 cash and $6,329
accrued), $6,281 write-down of assets due to the restructuring plan, $850
accrued for contract and lease charges impacted by the restructuring and $598
cash in other restructuring expense.
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<PAGE>
In North America, the 2 percent third quarter sales decrease was composed of one
percentage point related to decreased volume and changes in product mix and a
negative one percentage point impact from pricing and currency. The Adhesives,
Sealants and Coatings Group had a 2 percent decrease in sales compared to third
quarter 1997 primarily due to a reduction in paper converting sales. The EFTEC
(Automotive) Group had a 12 percent decrease in sales compared to the prior year
with the General Motors strike having a negative 18 percentage point impact. In
the Specialty Group, sales increased 2 percent. In the quarter, strong increases
in TEC Specialty Products, Inc. sales were offset by reduced Linear Products
Corporation sales. North American operating earnings decreased from $17,702 to
$15,312. The primary reasons for this decrease were the impact of the General
Motors strike and the impact of reduced paper converting sales.
For nine months of 1998, North American sales increased 2 percent over the same
period in 1997. The increase was composed of 2 percentage points resulting from
increased volume and changes in product mix, one percentage point resulting from
added sales from a second quarter 1997 joint venture, and a negative one
percentage point from negative pricing and the impact of currency. The
Adhesives, Sealants and Coatings Group had a one percent decrease in 1998 sales,
primarily due to the reduction in paper converting sales. The EFTEC (Automotive)
Group had an 8 percent increase in sales, with a 7 percentage point increase
resulting from adding the sales of our joint venture partner (second quarter
1997 joint venture). The third quarter 1998 General Motors strike had a negative
6 percentage point impact on 1998 sales. The Specialty Group had a 7 percent
increase in sales with the primary growth occurring in TEC Specialty Products,
Inc. and the Foster Products Corporation. North American operating earnings
increased from $42,088 in 1997 to $43,007 for nine months of 1998.
Latin American third quarter 1998 sales increased 3 percent from 1997. The
increase in sales was composed of 4 percentage points relating to increased
volume and changes in product mix partially offset by one percentage point
decrease in pricing. Latin American operating earnings decreased 20 percent when
compared to 1997, decreasing from $2,716 to $2,183. Low volumes and economic
pressures within the region were the primary reason for the reduction in
operating income.
In Europe, the 29 percent third quarter 1998 sales increase was composed of 4
percentage points due to increased volume and changes in product mix, 27
percentage points related to two 1998 UK acquisitions and a negative 2
percentage points from pricing and a strengthening of the U.S. dollar. Operating
earnings increased from $1,633 in third quarter 1997 to $4,774 in 1998 with
operating income from the UK acquisitions being the primary reason for the
increase.
Asia/Pacific sales decreased 18 percent from sales in the third quarter of 1997.
The strengthening of the U.S. dollar, compared to local currencies, caused an 18
percentage point decrease. A positive 8 percentage point increase due to
increased volume and changes in product mix was offset by a negative 8
percentage points resulting from a divestiture in New Zealand. Operating
earnings decreased from ($105) in 1997 to ($385) in 1998 with all of the change
resulting from the New Zealand divestiture.
For nine months of 1998, Latin American sales increased 3% over the same period
in 1997 with 5 percentage points accounted for by increased volume and changes
in product mix, and a negative 2 percentage points resulting from decreased
pricing. Operating earnings decreased from $10,696 in 1997 to $9,681 in 1998.
European sales increased 12 percent from nine month sales in 1997. The net
impact of acquisitions and divestitures was a positive 14 percentage points,
increased volume and changes in product mix 5 percentage points, negative
pricing 2 percentage points and a strengthening of the U.S. dollar a negative 5
percentage points. Operating earnings increased from $6,981 in 1997 to $10,484
in 1998. Nine month Asia/Pacific sales decreased 11 percent with a 16 percentage
point decrease resulting from a strengthened U.S. dollar. A 7 percentage point
increase resulting from volume and changes in product mix was partially offset
by a 2 percentage point decrease resulting from the net impact of an acquisition
and divestiture. Nine month operating earnings decreased from ($223) in 1997 to
($1,131) in 1998.
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Cost of sales for the third quarter increased 4.4 percent ($9,723) over the same
quarter in 1997. Consolidated gross margins, as a percent of sales, decreased
from 31.8% in 1997 to 30.9% in 1998. The decreased margin, as a percent of
sales, in 1998 was primarily the result of low sales volumes and the impact of
the General Motors strike.
Year-to-date cost of sales was up 3.6 percent ($23,261) when compared to the
same period in 1997. Consolidated gross margins, as a percent of sales,
decreased from 31.7% in 1997 to 31.4% in 1998. The decreased margin in 1998 was
primarily the result of low sales volumes and the impact of the General Motors
strike.
Selling, administrative, and other expenses for the quarter, excluding
non-recurring items, were up 0.5 percent ($397) when compared to prior year.
This category of expense, as a percent of sales, decreased from 25.0 percent in
1997 to 24.3 percent in 1998. A previously described 1998 non-recurring charge
of $24,003 was 7.2 percent of sales.
Selling, administrative, and other expenses for nine months of 1998, excluding
non-recurring items, increased 1.6 percent ($3,961) when compared to prior year.
This category of expense, as a percent of sales, decreased from 25.5% in 1997 to
25.1% in 1998. A previously described 1998 non-recurring charge of $24,003 was
2.4% of sales.
Year-to-date other (expense)/income, net decreased from an income of $585 in
1997 to expense of $1,529 in 1998. The income in 1997 was primarily the result
of gains from the sale of the construction business in Germany and the
Automotive joint venture in North America. These gains were partially offset by
expenses incurred in the pursuit of a major acquisition opportunity which was
not successful, currency losses in Asia/Pacific and outside consulting expense.
Other expense in 1998 was generated by the sale of properties in New Zealand,
Honduras and Munich and reduced currency losses, primarily Asia/Pacific, which
was more than offset by costs associated with the change in CEO, write-down of
impaired assets, added goodwill expense and reduced investment income.
Income taxes for the first nine months of 1998 decreased $7,111 (38.4%) when
compared to the first nine months of 1997, primarily as a result of decreased
earnings. The tax rate for the first nine months 1998 excluding the impact of
the non-recurring charge reflects a 40.8% annual effective tax rate equal to
1997. The tax benefit on the non-recurring charge was only $5,314, raising the
year-to-date effective tax rate including the charge to 67.2%.
Net earnings decreased from $27,695 in the first nine months of 1997 to $6,952
in the first nine months of 1998. The impact on net earnings of the
non-recurring charge was $18,689.
Liquidity and Capital Resources
- -------------------------------
The cash flows as presented in this section have been calculated by comparison
of the Consolidated Condensed Balance Sheets at August 29, 1998 and November 29,
1997 and August 30, 1997 and November 30, 1996.
During the first nine months of 1998, the Company generated $30,266 of cash to
finance operations as compared to $43,183 in the first nine months of 1997. The
decreased generation of cash was primarily the result of $21,834 increase in
cash required to fund working capital in the first nine months of 1998 compared
to the same period in 1997.
-9-
<PAGE>
Working capital was $202,411 at August 29, 1998 compared to $171,607 at November
29, 1997. The current ratio at August 29, 1998 was 1.9 compared to a ratio of
1.7 at November 29, 1997. The number of days sales in trade accounts receivable
was 57 days at August 29, 1998 compared to 53 days sales at August 30, 1997. The
average days sales in inventory on hand was 63 days compared to 63 days at
August 30, 1997. Trade accounts payable decreased from 46 days at year-end 1997
to 42 days at August 29, 1998.
The Company's long-term debt to total capitalization ratio was 49.1% at August
29, 1998 compared to 40.4% at November 29, 1997. The primary reason for the
increase in this ratio is increased debt required to purchase businesses,
$87,701 in 1998.
Capital expenditures for property, plant and equipment of $41,633 in the first
nine months of 1998 were primarily for the completion of construction of a
manufacturing facility in Georgia, the investment in Information Technology, for
general improvements in manufacturing productivity and operating efficiency and
for environmental projects. Environmental capital expenditures, less than 10% of
total expenditures, are not a material portion of overall Company expenditures.
Impact of the Year 2000 Issue
- -----------------------------
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. As a result of this
issue, computer programs that have date-sensitive software may recognize a date
using "00" as the year 1900 rather than the year 2000. The Year 2000 issue could
result in system failures or miscalculations causing disruption of operations,
including, among other things, a temporary inability to process transactions
involving the recording of sales, manufacture of products, management of
inventory and distribution, preparation of invoices and collection of accounts
receivable.
The Company's Year 2000 Project Office (consisting of information technology
("IT") personnel) has established a three-phase program to address the Year 2000
issue. The three phases consist of (a) an assessment phase, (b) an analysis and
resolution strategy phase and (c) a remediation and testing phase. The
compliance program focuses on the Company's IT as well as non-IT systems (which
systems contain embedded technology in manufacturing or process control
equipment containing microprocessors or other similar circuitry).
The assessment phase, during which the Year 2000 Project Office attempted to
identify all hardware and software that affect the Company's operations, has
been completed with respect to most of the Company's operations. Based on the
results of the assessment phase, the Company has determined that its primary
hardware and operating system software used in North American operations is Year
2000 compliant. In addition, the Company's internal laboratory and regulatory
systems, as well as the Company's financial and enterprise resource planning
systems for most division locations in North America, England, Australia,
Brazil, Argentina, and Chile are compliant. The Company's Year 2000 Project
Office has determined that the Company will need to update or replace certain
other hardware and software so that its computer systems will properly utilize
dates after December 31, 1999.
The Company is currently in the remediation and testing phase of the program for
most of its North American operations. Outside the United States, the Company is
addressing compliance issues on a region-by-region basis; and the Company is in
the analysis and resolution strategy phase in certain locations and in the
remediation and testing phase in other locations. The Company has a timeline for
completing all internal Year 2000 remediation projects. The Company currently
anticipates these projects will be completed prior to June 30, 1999.
-10-
<PAGE>
The Company has also begun assessing Year 2000 compliance issues relating to
companies with which it has third-party outsourcing relationships in North
America, such as a financial institution administering employee benefit plans,
telecommunications providers and health care providers. The Company has
requested assurances from its significant suppliers that they are addressing the
Year 2000 issue and that products purchased by the Company from such suppliers
will function properly in the Year 2000. The Company will continue to assess
supplier compliance issues. In addition, the Company is communicating with its
major customers regarding the Company's Year 2000 compliance efforts. However,
it is impossible to fully assess the potential consequences in the event service
interruptions from suppliers occur or in the event that there are disruptions in
such infrastructure areas as utilities, communications, transportation, banking
and government.
During October 1998, the Company intends to form a Year 2000 Task Force
(consisting of representatives from its financial, IT, legal and risk management
departments and from its key business units) to address internal and external
Year 2000 issues.
The Company expects to incur Year 2000 compliance costs of approximately
$2.0 million over a two-year period ending late 1998. The current total
estimated cost to complete Year 2000 compliance efforts over the next year is
$1.2 to $1.5 million (will be $2.0 million). Estimates of Year 2000 costs are
based on numerous assumptions, and there can be no assurance that the estimates
are correct or that the actual costs will not be materially greater than
anticipated.
Based on its assessments and current knowledge, the Company believes it will
not, as a result of the Year 2000 issue, experience any material disruptions in
internal manufacturing processes, information processing or interfaces with
major customers, or with processing orders and billing. However, if certain
critical third-party providers, such as providers of electricity, water or
telephone service, experience difficulties resulting in disruption of service to
the Company, a shutdown of the Company's operations at individual facilities
could occur for the duration of the disruption. The Company's Year 2000 Task
Force will establish a contingency plan to provide for continuity of processing
if the Company's Year 2000 compliance efforts fail. Assuming no major disruption
in service from utility companies or other critical third-party providers, the
Company believes that it will be able to manage its total Year 2000 transition
without any material effect on the Company's results of operations or financial
condition.
Safe Harbor Statement under the Private Securities Litigation Act of 1995
- -------------------------------------------------------------------------
Certain statements in this document are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements are subject to various risks and uncertainties, including but not
limited to the following: The Asian economic crisis and other political economic
conditions; product demand and industry capacity; competitive products and
pricing; manufacturing efficiencies; new product development; product mix;
availability and price of raw materials and critical manufacturing equipment,
new plant startups; accounts receivables collection; the Company's relationships
with it major customers and suppliers; changes in tax laws and tariffs; patent
rights that could provide significant advantage to a competitor; foreign
exchange rate fluctuations (particularly with respect to the German mark and the
Japanese yen); the regulatory and trade environment; the year 2000 computer
issue; and other risks as indicated from time to time in the Company's filings
with the Securities and Exchange Commission. All forward-looking information
represents management's best judgment as of this date based on information
currently available that in the future may prove to have been inaccurate.
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PART II. OTHER INFORMATION
ITEM 6.
EXHIBITS AND REPORTS ON FORM 8-K
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(a) Exhibits to Part I
27(a) Financial Data Schedule
27(b) Restated Financial Data Schedule for August 30, 1997
Exhibits to Part II
4(a) Agreement dated as of June 2, 1998 between H.B. Fuller Company
and a group of investors, primarily insurance companies,
including the form of Notes.
10(a) Directors' Stock Plan as Amended and Restated July 16, 1998.
10(b) Separation Agreement dated August 28, 1998 between H.B. Fuller
Company and Jerald L. Scott.
10(c) Separation Agreement dated August 28, 1998 between H.B. Fuller
Company and Rolf Schubert.
(b) Reports on Form 8-K. No reports on Form 8-K were filed for the thirteen
weeks ended August 29, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
H. B. FULLER COMPANY
Dated: October 12, 1998 /S/ Jorge Walter Bolanos
------------------------
Jorge Walter Bolanos
Senior Vice President,
Treasurer and
Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT NUMBER
4(a) Agreement dated as of June 2, 1998 between H.B. Fuller Company and
a group of investors, primarily insurance companies, including
the form of Notes.
10(a) Directors' Stock Plan as Amended and Restated July 16, 1998.
10(b) Separation Agreement dated August 28, 1998 between H.B. Fuller
Company and Jerald L. Scott.
10(c) Separation Agreement dated August 28, 1998 between H.B. Fuller
Company and Rolf Schubert.
27(a) Financial Data Schedule
27(b) Restated Financial Data Schedule for August 30, 1997
<PAGE>
================================================================================
Exhibit 4(a)
H.B. Fuller Company
Note Agreement
Dated as of June 2, 1998
Re:
$125,000,000 6.60% Senior Notes
Due June 2, 2010
================================================================================
<PAGE>
TABLE OF CONTENTS
(Not a part of the Agreement)
SECTION HEADING PAGE
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT........................ 1
Section 1.1. Description of Notes....................................... 1
Section 1.2. Commitment, Closing Date................................... 1
Section 1.3. Other Agreements........................................... 2
SECTION 2. PREPAYMENT OF NOTES........................................ 2
Section 2.1. Required Prepayments....................................... 2
Section 2.2. Optional Prepayment with Premium........................... 2
Section 2.3. Notice of Prepayments...................................... 3
Section 2.4. Allocation of Prepayments.................................. 3
Section 2.5. Direct Payment............................................. 3
SECTION 3. REPRESENTATIONS............................................ 3
Section 3.1. Representations of the Company............................. 3
Section 3.2. Representations of the Purchasers.......................... 4
SECTION 4. CLOSING CONDITIONS......................................... 5
Section 4.1. Closing Certificate........................................ 6
Section 4.2. Legal Opinions............................................. 6
Section 4.3. Related Transactions....................................... 6
Section 4.4. Private Placement Number................................... 6
Section 4.5. Consent of Holders of Other Indebtedness................... 6
Section 4.6. Satisfactory Proceedings................................... 6
Section 4.7. Waiver of Conditions....................................... 6
SECTION 5. COMPANY COVENANTS.......................................... 7
Section 5.1. Corporate Existence, Etc................................... 7
Section 5.2. Insurance.................................................. 7
Section 5.3. Payment of Taxes........................................... 7
Section 5.4. Maintenance of Properties.................................. 8
Section 5.5. Compliance with Law........................................ 8
Section 5.6. Nature of Business......................................... 8
Section 5.7 Consolidated Net Worth..................................... 8
Section 5.8. Consolidated Debt to Consolidated Total Capitalization..... 8
Section 5.9. Limitation on Liens........................................ 8
Section 5.10. Merger, Consolidation, Etc.................................10
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Section 5.11. Guaranties................................................11
Section 5.12. Repurchase of Notes.......................................11
Section 5.13. Transactions with Affiliates..............................11
Section 5.14. Termination of Pension Plans..............................11
Section 5.15. Reports and Rights of Inspection..........................11
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR...................16
Section 6.1. Events of Default.........................................16
Section 6.2. Notice to Holders.........................................17
Section 6.3. Acceleration of Maturities................................17
Section 6.4. Rescission of Acceleration................................18
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS..........................18
Section 7.1. Consent Required..........................................18
Section 7.2. Solicitation of Holders...................................19
Section 7.3. Effect of Amendment or Waiver.............................19
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS..................19
Section 8.1. Definitions...............................................19
Section 8.2. Accounting Principles.....................................26
Section 8.3. Certain Changes in Accounting Principles..................26
Section 8.4. Directly or Indirectly....................................27
SECTION 9. MISCELLANEOUS.............................................27
Section 9.1. Registered Notes..........................................27
Section 9.2. Exchange of Notes.........................................27
Section 9.3. Loss, Theft, Etc. of Notes................................28
Section 9.4. Expenses, Stamp Tax Indemnity.............................28
Section 9.5. Powers and Rights Not Waived; Remedies Cumulative.........28
Section 9.6. Notices...................................................29
Section 9.7. Successors and Assigns....................................29
Section 9.8. Survival of Covenants and Representations.................29
Section 9.9. Severability..............................................29
Section 9.10. Governing Law.............................................29
Section 9.11. Captions..................................................30
Signature.....................................................................31
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ATTACHMENTS TO NOTE AGREEMENT:
Schedule I - Names and Addresses of Purchasers
Schedule II - Liens Securing Funded Debt (including Capitalized Leases) as of
February 28, 1998
Exhibit A - Form of 6.60% Senior Note
Exhibit B - Representations and Warranties of the Company
Exhibit C - Description of Special Counsel's Closing Opinion
Exhibit D - Description of Closing Opinion of Counsel to the Company
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<PAGE>
H.B. FULLER COMPANY
1200 WILLOW LAKE BOULEVARD
ST. PAUL, MINNESOTA 55110-5101
NOTE AGREEMENT
Re:
$125,000,000 6.60% Senior Notes
Due June 2, 2010
Dated as of
June 2, 1998
To the Purchaser listed on
Schedule I hereto which is a
Signatory to this Agreement
Ladies and Gentlemen:
The undersigned, H.B. FULLER COMPANY, a Minnesota corporation (the
"Company"), agrees with you as follows:
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.
Section 1.1. Description of Notes. The Company will authorize the issue
and sale of $125,000,000 aggregate principal amount of its 6.60% Senior Notes to
be dated the date of issue, to bear interest from such date of issue at the rate
of 6.60% per annum, to be expressed to mature on June 2, 2010 (the "Maturity
Date"), and to be substantially in the form attached hereto as Exhibit A (the
"Notes"). Interest on the Notes shall be payable semiannually on the second day
of each June and December in each year (commencing December 2, 1998) and on the
Maturity Date and shall bear interest on overdue principal (including any
overdue required or optional prepayment of principal) and premium, if any, and
(to the extent legally enforceable) on any overdue installment of interest at
the Overdue Rate after the date due, whether by acceleration or otherwise, until
paid. Interest on the Notes shall be computed on the basis of a 360-day year of
twelve 30-day months. The Notes are not subject to prepayment or redemption
prior to the Maturity Date except as set forth in SECTION 2 of this Agreement.
The term "Notes" as used herein shall include each Note delivered pursuant to
this Agreement and the separate agreements with the other purchasers named in
Schedule I. You and the other purchasers named in Schedule I are hereinafter
sometimes referred to as the "Purchasers".
Section 1.2. Commitment, Closing Date. Subject to the terms and
conditions hereof and on the basis of the representations and warranties
hereinafter set forth, the Company agrees to issue and sell to you, and you
agree to purchase from the Company, Notes in the aggregate principal amount set
forth opposite your name in Schedule I hereto, at a price of 100% of the
principal amount thereof on the Closing Date hereafter mentioned.
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Delivery of the Notes on the Closing Date will be made at the offices of
Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, against
payment therefor in Federal or other funds current and immediately available at
the principal office of The First National Bank of Chicago, Account name: H.B.
Fuller Company, account number: 5785510, ABA number: 071 0000 13 in the amount
of the purchase price at 10:00 A.M., Chicago, Illinois time, on June 2, 1998 or
such later date (not later than June 10, 1998) as shall mutually be agreed upon
by the Company and the Purchasers (the "Closing Date"). The Notes delivered to
each Purchaser on the Closing Date will be in the form of a single registered
Note for the full amount of such Purchaser's purchase (unless different
denominations are specified by such Purchaser), registered in such Purchaser's
name or in the name of such nominee as such Purchaser may specify and in
substantially the form attached hereto as Exhibit A, all as such Purchaser may
specify at any time prior to the date fixed for delivery.
Section 1.3. Other Agreements. Simultaneously with the execution and
delivery of this Agreement, the Company is entering into similar agreements with
the other Purchasers under which such other Purchasers agree to purchase from
the Company the principal amount of Notes set opposite such Purchasers' names in
Schedule I, and your obligation and the obligations of the Company hereunder are
subject to the execution and delivery of the similar agreements by the other
Purchasers. The obligations of each Purchaser shall be several and not joint and
no Purchaser shall be liable or responsible for the acts or defaults of any
other Purchaser.
SECTION 2. PREPAYMENT OF NOTES.
Section 2.1. Required Prepayments. The Company agrees that on June 2, in
each year, commencing June 2, 2006 and ending June 2, 2009, both inclusive, it
will prepay and apply and there shall become due and payable on the principal
indebtedness evidenced by the Notes an amount equal to the lesser of (i)
$25,000,000 or (ii) the principal amount of the Notes then outstanding. The
entire remaining principal amount of the Notes shall become due and payable on
June 2, 2010. No premium shall be payable in connection with any required
prepayment made pursuant to this SECTION 2.1.
Section 2.2. Optional Prepayment with Premium. In addition to the
payments required by SECTION 2.1, upon compliance with SECTION 2.3, the Company
shall have the privilege, at any time and from time to time, of prepaying the
outstanding Notes, either in whole or in part (but if in part then in a minimum
principal amount of $100,000) by payment of the principal amount of the Notes,
or portion thereof to be prepaid, and accrued interest thereon to the date of
such prepayment, together with a premium equal to the Make-Whole Amount,
determined for the prepayment date with respect to such principal amount. For
purposes of SECTION 2.1, any prepayment of less than all of the outstanding
Notes pursuant to this SECTION 2.2 shall be deemed to be applied first, to the
amount of principal scheduled to remain unpaid on June 2, 2010, and then to the
remaining scheduled principal payments pursuant to SECTION 2.1 in inverse
chronological order.
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Section 2.3. Notice of Prepayments. The Company will give notice of any
prepayment of the Notes pursuant to SECTION 2.2 to each Holder thereof not less
than 30 days nor more than 60 days before the date fixed for such prepayment
specifying (i) such date, (ii) that a premium may be payable, (iii) the date
when such premium will be calculated, (iv) the estimated premium, and (v) the
accrued interest applicable to the prepayment. Notice of prepayment having been
so given, the aggregate principal amount of the Notes specified in such notice,
together with the Make-Whole Amount, if any, and accrued interest thereon shall
become due and payable on the prepayment date specified in such notice. Two
business days prior to the prepayment date specified in such notice, the Company
shall provide each Holder written notice of the premium, if any, payable in
connection with such prepayment and, whether or not any premium is payable, a
reasonably detailed computation of the Make-Whole Amount.
Section 2.4. Allocation of Prepayments. All partial prepayments of Notes
being prepaid shall be applied on all outstanding Notes ratably in accordance
with the unpaid principal amounts thereof.
Section 2.5. Direct Payment. Notwithstanding anything to the contrary in
this Agreement or the Notes, in the case of any Note owned by a Holder that is a
Purchaser or any other Institutional Holder who has given written notice to the
Company requesting that the provisions of this SECTION 2.5 shall apply, the
Company will promptly and punctually pay when due the principal thereof and
premium, if any, and interest thereon, without any presentment thereof directly
to the Holder at the address of such Holder set forth in Schedule I or at such
other address as such Holder may from time to time designate in writing to the
Company or, if a bank account is designated for such Holder on Schedule I hereto
or in any written notice to the Company from such Holder, the Company will make
such payments in immediately available funds to such bank account, marked for
attention as indicated, or in such other manner or to such other account of such
Holder in any bank in the United States as such Holder may from time to time
direct in writing. The Holder to which this SECTION 2.5 applies agrees that in
the event it shall sell or transfer any such Notes (i) it will, prior to the
delivery of such Notes (unless it has already done so), make a notation thereon
of all principal, if any, prepaid on such Notes and will also note thereon the
date to which interest has been paid on such Notes, and (ii) it will promptly
notify the Company in writing of the name and address of the transferee of any
Notes so transferred. With respect to Notes to which this SECTION 2.5 applies,
the Company shall be entitled to presume conclusively that any Institutional
Holder as shall have requested the provisions hereof to apply to its Notes
remains the Holder of such Notes until (y) the Company shall have received the
notice of the transfer of such Notes referred to above, and of the name and
address of the transferee, or (z) such Notes shall have been presented to the
Company as evidence of the transfer. Any such notice of transfer by a Holder
shall constitute conclusive evidence that the transfer of the Notes referred to
in such notice is regular and proper and the Company shall be entitled to rely
thereon.
SECTION 3. REPRESENTATIONS.
Section 3.1. Representations of the Company. The Company represents and
warrants that all representations set forth in the form of certificate attached
hereto as
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Exhibit B are true and correct as of the date hereof and are incorporated herein
by reference with the same force and effect as though herein set forth in full.
Section 3.2. Representations of the Purchasers.
(a) Purchase for Investment. You represent that you are purchasing the
Notes for your own account or for one or more separate accounts maintained by
you or for the account of one or more pension or trust funds and not with a view
to the distribution thereof, provided that the disposition of your or their
property shall at all times be within your or their control. You understand
that the Notes have not been registered under the Securities Act or any state
securities laws and may be resold only if registered pursuant to the provisions
of the Securities Act and any applicable state securities laws or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law, and that the
Company is not required to register the Notes.
(b) Sources of Funds. You represent that at least one of the following
statements is an accurate representation as to each source of funds (a "Source")
to be used by you to pay the purchase price of the Notes to be purchased by you
hereunder:
(i) the Source is an "insurance company general account" within
the meaning of Department of Labor Prohibited Transaction Exemption
("PTE") 95- 60 (issued July 12, 1995) and there is no employee benefit
plan, treating as a single plan all plans maintained by the same employer
or employee organization, with respect to which the amount of the general
account reserves and liabilities for all contracts held by or on behalf
of such plan, exceeds ten percent (10%) of the total reserves and
liabilities of such general account (exclusive of separate account
liabilities) plus surplus, as set forth in the NAIC Annual Statement
filed with your state of domicile, all within the meaning of Section I(a)
of PTE 95-60; or
(ii) the Source is either (A) an insurance company pooled separate
account, within the meaning of PTE 90-1 (issued January 29, 1990), or (B)
a bank collective investment fund, within the meaning of the PTE 91-38
(issued July 12, 1991) and, except as you have disclosed to the Company
in writing pursuant to this paragraph (ii), no employee benefit plan or
group of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled
separate account or collective investment fund; or
(iii) the Source constitutes assets of an "investment fund"
(within the meaning of Part V of PTE 84-14 (the "QPAM Exemption"))
managed by a "qualified professional asset manager" or "QPAM" (within the
meaning of Part V of the QPAM Exemption), no employee benefit plan's
assets that are included in such investment fund, when combined with the
assets of all other employee benefit plans established or maintained by
the same employer or by an affiliate (within the meaning of Section
V(c)(1) of the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, the conditions of Part l(c) and (g) of the
QPAM Exemption are satisfied, neither the QPAM nor a person controlling
or
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<PAGE>
controlled by the QPAM (applying the definition of "control" in Section
V(e) of the QPAM Exemption) owns a 5% or more interest in the Company and
(A) the identity of such QPAM and (B) the names of all employee benefit
plans whose assets are included in such investment fund have been
disclosed to the Company in writing pursuant to this paragraph (iii); or
(iv) the Source is a governmental plan; or
(v) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee benefit
plans, each of which has been identified to the Company in writing
pursuant to this paragraph (v); or
(vi) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA.
Notwithstanding the foregoing, if any Purchaser is an insurance company
organized under the laws of a jurisdiction other than the United States or any
political subdivision thereof, such Purchaser represents that either (i) at
least one of the foregoing statements is an accurate representation as to each
Source to be used by such Purchaser to pay the purchase price of the Notes to be
purchased by such Purchaser hereunder or (ii) in any event, the execution and
delivery of this Agreement by such Purchaser and the purchase of the Notes
hereunder will not involve any transaction that is subject to the prohibitions
of section 406 of ERISA or in connection with which a tax could be imposed
pursuant to section 4975(c)(1)(A)-(D) of the Code.
If you or any subsequent transferee of the Notes indicates in writing no
less than 10 days prior to the Closing Date, or in the case of any transfer, the
date of such applicable transfer, that you or such transferee are relying on any
representation contained in paragraph (ii), (iii) or (v) above, the Company
shall deliver on the Closing Date and on the date of any applicable transfer a
certificate, which shall either state that (A) it is neither a party in interest
nor a "disqualified person" (as defined in Section 4975(e)(2) of the Internal
Revenue Code of 1986, as amended), with respect to any plan identified pursuant
to paragraphs (ii) or (v) above, or (B) with respect to any plan, identified
pursuant to paragraph (iii) above, neither it nor any "affiliate" (as defined in
Section V(c) of the QPAM Exemption) has at such time, and during the immediately
preceding one year, exercised the authority to appoint or terminate said QPAM as
manager of any plan identified in writing pursuant to paragraph (iii) above or
to negotiate the terms of said QPAM's management agreement on behalf of any such
identified plan. As used in this SECTION 3.2, the terms "employee benefit plan",
"governmental plan", "party in interest" and "separate account" shall have the
respective meanings assigned to such terms in Section 3 of ERISA.
SECTION 4. CLOSING CONDITIONS.
Your obligation to purchase the Notes on the Closing Date shall be
subject to the performance by the Company of its agreements hereunder which by
the terms hereof are
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to be performed at or prior to the time of delivery of the Notes and to the
following further conditions precedent:
Section 4.1. Closing Certificate. You shall have received a certificate
dated the Closing Date, signed by the President or a Vice President of the
Company and addressed to the Purchasers, the truth and accuracy of which shall
be a condition to your obligation to purchase the Notes proposed to be sold to
you and to the effect that (i) the representations and warranties of the Company
set forth in Exhibit B hereto are true and correct on and with respect to the
Closing Date, (ii) the Company has performed all of its obligations hereunder
which are to be performed on or prior to the Closing Date and (iii) no Default
or Event of Default has occurred and is continuing.
Section 4.2. Legal Opinions. You shall have received from Chapman and
Cutler, who are acting as your special counsel in this transaction, and from
Richard C. Baker, Vice President and General Counsel to the Company, their
respective opinions dated the Closing Date and addressed to the Purchasers, in
form and substance satisfactory to you, and covering the matters set forth in
Exhibits C and D, respectively, hereto.
Section 4.3. Related Transactions. Prior to or concurrently with the
issuance and sale of Notes to you, the Company shall have consummated the sale
of the entire principal amount of the Notes scheduled to be sold on the Closing
Date pursuant to this Agreement and the other Agreements referred to in SECTION
1.3.
Section 4.4. Private Placement Number. A Private Placement Number issued
by Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities
Valuation Office of the National Association of Insurance Commissioners) shall
have been obtained for the Notes.
Section 4.5. Consent of Holders of Other Indebtedness. Any notice,
consent or approval required to be obtained from any holder or holders of any
outstanding Indebtedness of the Company and any amendments of agreements
pursuant to which any Indebtedness may have been issued which shall be necessary
to permit the consummation of the transactions contemplated hereby shall have
been obtained and all such notices, consents or amendments shall be reasonably
satisfactory in form and substance to you and your special counsel.
Section 4.6. Satisfactory Proceedings. All proceedings taken in
connection with the transactions contemplated by this Agreement, and all
documents necessary to the consummation thereof, shall be reasonably
satisfactory in form and substance to you and your special counsel, and you
shall have received a copy (executed or certified as may be appropriate) of all
legal documents or proceedings taken in connection with the consummation of said
transactions.
Section 4.7. Waiver of Conditions. If on the Closing Date the Company
fails to tender to you the Notes to be issued to you on such date or if the
conditions specified in this SECTION 4 have not been fulfilled, you may
thereupon elect to be relieved of all further obligations under this Agreement.
Without limiting the foregoing, if the
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<PAGE>
conditions specified in this SECTION 4 have not been fulfilled, you may waive
compliance by the Company with any such condition to such extent as you may in
your solediscretion determine. Nothing in this SECTION 4.7 shall operate to
relieve the Company of any of its obligations hereunder or to waive any of your
rights against the Company except those which are expressly waived by you
pursuant to the terms of this SECTION 4.7.
SECTION 5. COMPANY COVENANTS.
From and after the Closing Date and continuing so long as any amount
remains unpaid on any Note:
Section 5.1. Corporate Existence, Etc. The Company will at all times
preserve and keep in full force and effect its corporate existence. Subject to
SECTION 5.10, the Company will at all times preserve and keep in full force and
effect the corporate existence of each of its Subsidiaries (unless merged into
the Company or a Subsidiary) and all rights and franchises of the Company and
its Subsidiaries unless, in the good faith judgment of the Company, the
termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise would not, individually or in the
aggregate, have a materially adverse effect on the business, operations,
affairs, financial condition, properties or assets of the Company and its
Subsidiaries taken as a whole.
Section 5.2. Insurance. The Company will and will cause each of its
Subsidiaries to maintain, with financially sound and reputable insurers,
insurance with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a similar business
and similarly situated; provided, however, that this SECTION 5.2 shall not
require the Company or any Subsidiary to maintain such insurance if, in the good
faith judgment of the Company, the failure to maintain such insurance and any
potential uninsured loss in connection therewith would not, individually or in
the aggregate, have a materially adverse effect on the business, operations,
affairs, financial condition, properties or assets of the Company and its
Subsidiaries taken as a whole.
Section 5.3. Payment of Taxes. The Company will and will cause each of
its Subsidiaries to file all income tax or similar tax returns required to be
filed in any jurisdiction and to pay and discharge all taxes shown to be due and
payable on such returns and all other taxes, assessments, governmental charges,
or levies payable by any of them, to the extent such taxes and assessments have
become due and payable and before they have become delinquent, provided, that
neither the Company nor any Subsidiary need pay any such tax or assessment if
(i) the amount, applicability or validity thereof is contested by the Company or
such Subsidiary on a timely basis in good faith and in appropriate proceedings,
and the Company or a Subsidiary has established adequate reserves therefor in
accordance with GAAP on the books of the Company or such Subsidiary or (ii) the
nonpayment of all such taxes and assessments in the aggregate would not
reasonably be expected to have a materially adverse effect on the business,
operations, affairs, financial condition, properties or assets of the Company
and its Subsidiaries taken as a whole.
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Section 5.4. Maintenance of Properties. The Company will and will cause
each of its Subsidiaries to maintain and keep, or cause to be maintained and
kept, their respective properties in good repair, working order and condition
(other than ordinary wear and tear), so that the business carried on in
connection therewith may be properly conducted at all times, provided that this
SECTION 5.4 shall not prevent the Company or any Subsidiary from discontinuing
the operation and the maintenance of any of its properties if such
discontinuance is desirable in the conduct of its business and the Company has
concluded that such discontinuance would not, individually or in the aggregate,
have a materially adverse effect on the business, operations, affairs, financial
condition, properties or assets of the Company and its Subsidiaries taken as a
whole.
Section 5.5. Compliance with Law. The Company will and will cause each of
its Subsidiaries to comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including, without limitation,
Environmental Laws, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to the conduct of
their respective businesses, in each case to the extent necessary to ensure that
non-compliance with such laws, ordinances or governmental rules or regulations
or failures to obtain or maintain in effect such licenses, certificates,
permits, franchises and other governmental authorizations would not reasonably
be expected, individually or in the aggregate, to have a materially adverse
effect on the business, operations, affairs, financial condition, properties or
assets of the Company and its Subsidiaries taken as a whole.
Section 5.6. Nature of Business. Neither the Company nor any Subsidiary
will engage in any business if, as a result, the general nature of the business
of the Company and its Subsidiaries, taken as a whole, which would then be
engaged in by the Company and its Subsidiaries, would be substantially changed
from the general nature of the business engaged in by the Company and its
Subsidiaries on the date of this Agreement.
Section 5.7. Consolidated Net Worth. The Company will at all times keep
and maintain Consolidated Net Worth at an amount not less than $200,000,000.
Section 5.8. Consolidated Debt to Consolidated Total Capitalization. The
Company will not at any time permit the aggregate amount of Consolidated Debt to
exceed 70% of Consolidated Total Capitalization.
Section 5.9. Limitation on Liens. The Company will not, and will not
permit any Subsidiary to, create or incur, or suffer to be incurred or to exist,
any mortgage, pledge, security interest, encumbrance, lien or charge of any kind
on its or their property or assets, whether now owned or hereafter acquired, or
upon any income or profits therefrom, or transfer any property for the purpose
of subjecting the same to the payment of obligations in priority to the payment
of its or their general creditors, or acquire or agree to acquire, or permit any
Subsidiary to acquire, any property or assets upon conditional sales agreements
or other title retention devices, except:
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(a) (i) liens for property taxes and assessments or governmental
charges or levies, provided that payment thereof is not at the time
required by SECTION 5.3 and (ii) liens securing claims or demands of
mechanics and materialmen;
(b) liens of or resulting from any judgment or award, the time for
the appeal or petition for rehearing of which shall not have expired, or
in respect of which the Company or a Subsidiary shall at any time in good
faith be prosecuting an appeal or proceeding for a review and in respect
of which a stay of execution pending such appeal or proceeding for review
shall have been secured;
(c) liens, charges, encumbrances and priority claims incidental to
the conduct of business or the ownership of properties and assets
(including warehousemen's and attorneys' liens and statutory landlords'
liens) and deposits, pledges or liens to secure the performance of bids,
tenders or trade contracts, or to secure statutory obligations, surety or
appeal bonds or other liens of like general nature incurred in the
ordinary course of business and not in connection with the borrowing of
money, provided in each case, the obligation secured, if material, is not
overdue or, if overdue, is being contested in good faith by appropriate
actions or proceedings;
(d) survey exceptions or encumbrances, easements or reservations,
or rights of others for rights-of-way, utilities and other similar
purposes, or zoning or other restrictions as to the use of real
properties, which are necessary for the conduct of the activities of the
Company and its Subsidiaries or which customarily exist on properties of
corporations engaged in similar activities and similarly situated and
which do not in any event materially impair their use in the operation of
the business of the Company and its Subsidiaries;
(e) mortgages, liens or security interests securing Indebtedness
of a Subsidiary to the Company or to another Subsidiary;
(f) mortgages, conditional sale contracts, security interests or
other arrangements for the retention of title (including Capitalized
Leases) existing as of February 28, 1998, securing Current Debt or Funded
Debt of the Company or any Subsidiary outstanding on such date and
reflected in Schedule II hereto;
(g) mortgages, conditional sale contracts, security interests or
other arrangements for the retention of title (including Capitalized
Leases) incurred after the Closing Date given to secure the payment of
the purchase price incurred in connection with the acquisition of fixed
assets useful and intended to be used in carrying on the business of the
Company or a Subsidiary, including liens existing on such fixed assets at
the time of acquisition thereof or at the time of acquisition by the
Company or a Subsidiary of any business entity then owning such fixed
assets, whether or not such existing liens were given to secure the
payment of the purchase price of the fixed assets to which they attach,
provided that (i) the lien or charge shall attach solely to the property
acquired or purchased, (ii) at the time of acquisition of such fixed
assets, the aggregate amount remaining unpaid on all Indebtedness secured
by liens on such fixed assets whether or not assumed by the
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Company or a Subsidiary shall not exceed an amount equal to 75% (or 100%
in the case of Capitalized Leases) of the lesser of the total purchase
price or fair market value at the time of acquisition of such fixed
assets (as determined in good faith by the Board of Directors of the
Company) and (iii) at the time of the incurrence of such Indebtedness and
after giving effect thereto, no Default or Event of Default would exist
under SECTION 5.8;
(h) mortgages, conditional sale contracts, security interests or
other arrangements for the retention of title (including Capitalized
Leases) created or extended in connection with renewing, extending or
refinancing Indebtedness secured by liens permitted by the preceding
paragraphs (F) and (G), provided (i) the principal amount of the
Indebtedness so secured shall not be increased over the principal amount
thereof outstanding immediately prior to such extension or renewal, (ii)
such lien or charge shall not attach to any property other than property
encumbered immediately prior to such renewal, extension or refinancing
and (iii) at the time of the incurrence of such Indebtedness and after
giving effect thereto, no Default or Event of Default would exist under
SECTION 5.8; and
(i) mortgages, conditional sales contracts, security interests,
liens, encumbrances or other arrangements for the retention of title in
addition to those described in clauses (A) through (H) above incurred
after February 28, 1998 and given to secure Indebtedness for borrowed
money of the Company or any Subsidiary; provided that (x) all
Indebtedness for borrowed money secured by liens permitted by this
SECTION 5.9(I) at any one time outstanding shall not exceed an amount
equal to 25% of Consolidated Net Tangible Assets and (y) at the time of
the incurrence of such Indebtedness and after giving effect thereto, no
Default or Event of Default would exist under SECTION 5.8.
Section 5.10. Merger, Consolidation, Etc. The Company shall not
consolidate with or merge with any other corporation or convey, transfer or
lease substantially all of its assets in a single transaction or series of
transactions to any Person unless:
(a) the successor formed by such consolidation or the survivor of
such merger or the Person that acquires by conveyance, transfer or lease
substantially all of the assets of the Company as an entirety, as the
case may be, shall be a solvent corporation organized and existing under
the laws of the United States or any State thereof (including the
District of Columbia), and, if the Company is not such corporation, such
corporation shall have executed and delivered to each Holder of any Notes
its assumption of the due and punctual performance and observance of each
covenant and condition of this Agreement and the Notes; and
(b) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing.
No such conveyance, transfer or lease of substantially all of the assets of the
Company shall have the effect of releasing the Company or any successor
corporation that shall theretofore have become such in the manner prescribed in
this SECTION 5.10 from its liability under this Agreement or the Notes.
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Section 5.11. Guaranties. The Company will not and will not permit any
Subsidiary to become or be liable in respect of any Guaranty except Guaranties
which are limited in amount to a stated maximum dollar exposure and included in
Consolidated Debt.
Section 5.12. Repurchase of Notes. Neither the Company nor any Subsidiary
or Affiliate, directly or indirectly, may repurchase or make any offer to
repurchase any Notes unless the offer has been made to repurchase Notes, pro
rata, from all Holders of the Notes at the same time and upon the same terms. In
case the Company or any Subsidiary or Affiliate repurchases any Notes, such
Notes shall thereafter be cancelled and no Notes shall be issued in substitution
therefor. Without limiting the foregoing, upon the repurchase or other
acquisition of any Notes by the Company, any Subsidiary or any Affiliate (or
upon the agreement of the Company, any Subsidiary or any Affiliate to purchase
or otherwise acquire any Notes), such Notes shall no longer be outstanding for
purposes of any section of this Agreement relating to the taking by the Holders
of any actions with respect hereto, including, without limitation, SECTION 6.3,
SECTION 6.4 and SECTION 7.1.
Section 5.13. Transactions with Affiliates. The Company will not, and
will not permit any Subsidiary to, enter into or be a party to, any Material
transaction, Material group of related transactions or Material arrangement with
any Affiliate (including without limitation, the purchase from, lease, sale to
or exchange of property with, or the rendering of any service by or for, any
Affiliate), except in the ordinary course of and pursuant to the reasonable
requirements of the Company's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Company or such Subsidiary than would
obtain in a comparable arm's-length transaction with a Person other than an
Affiliate.
Section 5.14. Termination of Pension Plans. The Company will not and will
not permit any Subsidiary to withdraw from any Multiemployer Plan or permit any
employee benefit plan maintained by it to be terminated if such withdrawal or
termination could result in withdrawal liability (as described in Part 1 of
Subtitle E of Title IV of ERISA) which could reasonably be expected to have a
materially adverse effect on the business, operations, affairs, financial
condition, properties or assets of the Company and its Subsidiaries taken as a
whole. Neither the Company nor any Subsidiary will permit any employee benefit
plan maintained by it to be terminated if such termination could reasonably be
expected to result in the imposition of a Material lien on any property of the
Company or any Subsidiary pursuant to Section 4068 of ERISA.
Section 5.15. Reports and Rights of Inspection. The Company will keep,
and will cause each Subsidiary to keep, proper books of record and account in
which full and correct entries will be made of all dealings or transactions of,
or in relation to, the business and affairs of the Company or such Subsidiary,
in accordance with GAAP consistently applied (except for changes disclosed in
the financial statements furnished to Holders pursuant to this SECTION 5.15 and
concurred in by the independent public accountants referred to in SECTION
5.15(B) hereof), and will furnish to each Institutional Holder (in duplicate if
so specified below or otherwise requested):
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(a) Quarterly Statements. As soon as available and in any event
within 60 days after the end of each quarterly fiscal period (except the
last) of each fiscal year of the Company, duplicate copies of:
(1) consolidated balance sheets of the Company and its
Subsidiaries as of the close of such quarter setting forth in
comparative form the consolidated figures for the fiscal year most
recently ended,
(2) consolidated statements of earnings and shareholders'
equity of the Company and its Subsidiaries for such quarterly
fiscal period and for the portion of the fiscal year ending with
such quarterly fiscal period, in each case, setting forth in
comparative form the figures for the corresponding periods of the
preceding fiscal year, and
(3) consolidated statements of cash flows of the Company
and its Subsidiaries for the portion of the fiscal year ending
with such quarterly fiscal period, setting forth in comparative
form the figures for the corresponding period of the preceding
fiscal year,
all in reasonable detail, prepared in accordance with GAAP applicable to
quarterly financial statements generally, and certified by a Senior
Financial Officer as fairly presenting, in all material respects, the
financial position of the companies being reported on and their results
of operations and cash flows, subject to changes resulting from year-end
adjustments, provided that delivery within the time period specified
above of copies of the Company's Quarterly Report on Form 10-Q prepared
in compliance with the requirements therefor and filed with the
Securities and Exchange Commission shall be deemed to satisfy the
requirements of this SECTION 5.15(A);
(b) Annual Statements. As soon as available and in any event
within 105 days after the close of each fiscal year of the Company,
duplicate copies of:
(1) consolidated balance sheets of the Company and its
Subsidiaries as of the close of such fiscal year, and
(2) consolidated statements of earnings and shareholders'
equity and cash flows of the Company and its Subsidiaries for such
fiscal year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP, and accompanied by an opinion thereon of independent certified
public accountants of recognized national standing, which opinion shall
state that such financial statements present fairly, in all material
respects, the financial position of the companies being reported upon and
their results of operations and cash flows and have been prepared in
conformity with GAAP, and that the examination of such accountants in
connection with such financial statements has been made in accordance
with generally accepted auditing standards, and that such audit
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provides a reasonable basis for such opinion in the circumstances,
provided that the delivery within the time period specified above of the
Company's Annual Report on Form 10-K for such fiscal year (together with
the Company's annual report to shareholders, if any, prepared pursuant to
Rule 14a-3 under the Exchange Act) prepared in accordance with the
requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this SECTION
5.15(B);
(c) SEC and Other Reports. Promptly upon their becoming available,
one copy of (i) each financial statement, report, notice or proxy
statement sent by the Company or any Subsidiary to public securities
holders generally, (ii) each Form 10-K, 10-Q and 8-K (and, in each case,
any successor form thereto) filed by the Company or any Subsidiary with
the Securities and Exchange Commission pursuant to Section 13 or 15(d) of
the Exchange Act, and (iii) each other regular or periodic report, each
registration statement that shall have become effective (without exhibits
except as expressly requested by such Holder), and each final prospectus
and all amendments thereto filed by the Company or any Subsidiary with
the Securities and Exchange Commission which in any such case is
Material;
(d) ERISA Matters. Promptly, and in any event within five days
after a Responsible Officer becoming aware of any of the following, a
written notice setting forth the nature thereof and the action, if any,
that the Company or an ERISA Affiliate proposes to take with respect
thereto:
(i) with respect to any Plan, any reportable event, as
defined in section 4043(b) of ERISA and the regulations
thereunder, for which notice thereof has not been waived pursuant
to such regulations as in effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan, or the receipt by the
Company or any ERISA Affiliate of a notice from a Multiemployer
Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan; or
(iii) any event, transaction or condition that could result
in the incurrence of any liability by the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit
plans, or in the imposition of any lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or such penalty or excise tax
provisions, if such liability or lien, taken together with any
other such liabilities or liens then existing, would reasonably be
expected to have a Material Adverse Effect;
(e) Officers' Certificates. Within the periods provided in
paragraphs (A) and (B) above, a certificate of a Senior Financial Officer
stating that he has
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reviewed the provisions of this Agreement and setting forth: (i) the
information and computations (in sufficient detail) required in order to
establish whether the Company was in compliance with the requirements of
SECTION 5.7 through SECTION 5.9, inclusive, at the end of the period
covered by the financial statements then being furnished, and (ii)
whether there existed as of the date of such financial statements and
whether, to the best of his knowledge, there exists on the date of the
certificate or existed at any time during the period covered by such
financial statements any Default or Event of Default and, if any such
condition or event exists on the date of the certificate, specifying the
nature and period of existence thereof and the action the Company is
taking and proposes to take with respect thereto; and
(f) Requested Information. With reasonable promptness, such other
data and information relating to the business, operations, affairs,
financial condition, assets or properties of the Company or any of its
Subsidiaries or relating to the ability of the Company to perform its
obligations hereunder and under the Notes as from time to time may be
reasonably requested by any such holder of Notes.
For the purposes of this paragraph, "Confidential Information" means
information delivered to you by or on behalf of the Company or any Subsidiary in
connection with the transactions contemplated by or otherwise pursuant to this
Agreement that is proprietary in nature that was clearly marked or labeled or
otherwise adequately identified when received by you as being confidential
information of the Company or such Subsidiary, provided that such term does not
include information that (a) was publicly known or otherwise known to you prior
to the time of such disclosure, (b) subsequently becomes publicly known through
no act or omission by you or any Person acting on your behalf, (c) otherwise
becomes known to you other than through disclosure by the Company or any
Subsidiary or (d) constitutes financial statements delivered to you under this
SECTION 5.15 that are otherwise publicly available. You will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by you in good faith to protect confidential information of third
parties delivered to you, provided that you may deliver or disclose Confidential
Information to (i) your directors, officers, employees, agents, attorneys and
affiliates (to the extent such disclosure reasonably relates to the
administration of the investment represented by your Notes), (ii) your financial
advisors and other professional advisors who agree to hold confidential the
Confidential Information substantially in accordance with the terms of this
paragraph, (iii) any other Holder (other than a Holder which the Company shall
have notified the Holders is a Competitor), (iv) any Institutional Investor to
which you sell or offer to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing prior to its receipt
of such Confidential Information to be bound by the provisions of this
paragraph), (v) any Person from which you offer to purchase any security of the
Company (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this paragraph), (vi)
any federal or state regulatory authority having jurisdiction over you, (vii)
the National Association of Insurance Commissioners or any similar organization,
or any nationally recognized rating agency that requires access to information
about your investment portfolio or (viii) any other Person to which such
delivery or disclosure may be necessary or appropriate (w) to
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effect compliance with any law, rule, regulation or order applicable to you, (x)
in response to any subpoena or other legal process, (y) in connection with any
litigation to which you are a party or (z) if an Event of Default has occurred
and is continuing, to the extent you may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this Agreement. Each
Holder, by its acceptance of a Note, will be deemed to have agreed to be bound
by and to be entitled to the benefits of this paragraph as though it were a
party to this Agreement. On reasonable request by the Company in connection with
the delivery to any Holder of information required to be delivered to such
Holder under this Agreement or requested by such Holder (other than a Holder
that is a party to this Agreement or its nominee), such Holder will enter into
an agreement with the Company embodying the provisions of this paragraph.
Without limiting the foregoing, the Company shall permit you and the
representatives of each Institutional Holder:
(i) if no Default or Event of Default then exists, at the expense
of such Holder and upon reasonable prior notice to the Company, to visit
the principal executive office of the Company, to discuss the affairs,
finances and accounts of the Company and its Subsidiaries with the
Company's officers, and, with the consent of the Company (which consent
will not be unreasonably withheld) to visit the other offices and
properties of the Company and each Subsidiary, all at such reasonable
times and as often as may be reasonably requested in writing; and
(ii) if a Default or Event of Default then exists, at the expense
of the Company to visit and inspect any of the offices or properties of
the Company or any Subsidiary, to examine all their respective books of
account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and accounts
with their respective officers and independent public accountants (and by
this provision the Company authorizes said accountants to discuss the
affairs, finances and accounts of the Company and its Subsidiaries), all
at such times and as often as may be requested;
provided, however, that (x) such right of visitation or inspection shall not
extend to any Purchaser or other Institutional Holder which is a Competitor and
(y) the Company shall not be required to provide you or any other Institutional
Holder information about the Company and its Subsidiaries pursuant to this
paragraph except to the extent relevant to determine the Company's
creditworthiness or its ability to meet, or to cause a Subsidiary to meet, its
obligations under this Agreement.
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
Section 6.1. Events of Default. Any one or more of the following shall
constitute an "Event of Default" as the term is used herein:
(a) Default shall occur in the payment of interest on any Note
when the same shall have become due and such default shall continue for
more than 10 days; or
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(b) Default shall occur in the making of any payment of the
principal of any Note or the premium thereon at the expressed or any
accelerated maturity date or at any date fixed for prepayment; or
(c) Default shall be made in the payment of the principal of or
interest on any Indebtedness of the Company or any Significant Subsidiary
for borrowed money aggregating in excess of $20,000,000, as and when the
same shall become due and payable by the lapse of time, by declaration,
by call for redemption or otherwise, and such default shall continue
beyond the period of grace, if any, allowed with respect thereto; or
(d) Default or the happening of any event shall occur under any
indenture, agreement, or other instrument under which any Indebtedness of
the Company or any Significant Subsidiary for borrowed money aggregating
in excess of $20,000,000 principal amount outstanding and as a
consequence of such default or event such Indebtedness has become or has
been declared due and payable before its stated maturity or before its
regularly scheduled dates of payment; or
(e) Default shall occur in the observance or performance of any
covenant or agreement contained in SECTION 5.7 through SECTION 5.10
hereof and such default shall continue for more than 30 days; or
(f) Default shall occur in the observance or performance of any
other provision of this Agreement which is not remedied within 30 days
after the earlier of (i) the day on which a Responsible Officer first
obtains knowledge of such default, or (ii) the day on which written
notice thereof is given to the Company by any Holder; or
(g) Any representation or warranty made by the Company herein, or
made by the Company in any statement or certificate furnished by the
Company in connection with the consummation of the issuance and delivery
of the Notes or furnished by the Company pursuant hereto, is untrue in
any material respect as of the date of the issuance or making thereof; or
(h) Final judgment or judgments for the payment of money
aggregating in excess of $2,500,000 is or are outstanding against the
Company or any Significant Subsidiary or against any property or assets
of either and any one of such judgments has remained unpaid, unvacated,
unbonded or unstayed by appeal or otherwise for a period of
60 days from the date of its entry; or
(i) The Company or any Significant Subsidiary (i) is generally not
paying, or admits in writing its inability to pay, its debts as they
become due, (ii) files, or consents by answer or otherwise to the filing
against it of, a petition for relief or reorganization or arrangement or
any other petition in bankruptcy, for liquidation or to take advantage of
any bankruptcy, insolvency, reorganization, moratorium or other similar
law of any jurisdiction, (iii) makes an assignment for
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the benefit of its creditors, (iv) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property,
(v) is adjudicated as insolvent or to be liquidated, or (vi) takes
corporate action for the purpose of any of the foregoing; or
(j) A court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Company or any of its
Significant Subsidiaries, a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any substantial
part of its property, or constituting an order for relief or approving a
petition for relief or reorganization or any other petition in bankruptcy
or for liquidation or to take advantage of any bankruptcy or insolvency
law of any jurisdiction, or ordering the dissolution, winding-up or
liquidation of the Company or any of its Significant Subsidiaries, or any
such petition shall be filed against the Company or any of its
Significant Subsidiaries and such petition shall not be dismissed within
60 days.
Section 6.2. Notice to Holders. When any Default or Event of Default
described in the foregoing SECTION 6.1 has occurred, or if any Holder or the
holder of any other evidence of Indebtedness of the Company gives any notice or
takes any other action with respect to a claimed default, the Company agrees to
give notice within 10 business days of such event to all Holders.
Section 6.3. Acceleration of Maturities. If an Event of Default with
respect to the Company described in SECTION 6.1(I) or (J) (other than an Event
of Default described in clause (i) of SECTION 6.1(I) or described in clause (vi)
of SECTION 6.1(I) by virtue of the fact that such clause encompasses clause (i)
of SECTION 6.1(I)) has occurred, all the Notes then outstanding shall
automatically become immediately due and payable, without presentment, demand or
notice of any kind.
If any Event of Default described in SECTION 6.1(A) or (B) has occurred
and is continuing, any Holder or Holders of Notes at the time outstanding
affected by such Event of Default may at any time, at its or their option, by
notice or notices to the Company, declare all the Notes held by it or them to
be, and all such Notes shall thereupon become, immediately due and payable,
without any presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived.
If any Event of Default (other than an Event of Default described in the
first paragraph of this SECTION 6.3) has occurred and is continuing, any Holder
or Holders of more than 25% in principal amount of the Notes at the time
outstanding may at any time at its or their option, by notice or notices to the
Company, declare the entire principal and all interest accrued on all the Notes
then outstanding to be, and all Notes shall thereupon become, immediately due
and payable, without any presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived.
Upon the Notes becoming due and payable as a result of any Event of
Default as aforesaid, the Company will forthwith pay to the Holders the entire
principal and interest accrued on the Notes and, to the extent not prohibited by
applicable law, an amount as
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liquidated damages for the loss of the bargain evidenced hereby (and not as a
penalty) equal to the Make-Whole Amount. No course of dealing on the part of any
Holder or Holders nor any delay or failure on the part of any Holder or Holders
to exercise any right shall operate as a waiver of such right or otherwise
prejudice such Holder's rights, powers and remedies. The Company further agrees,
to the extent permitted by law, to pay to the Holder or Holders all costs and
expenses incurred by them in the collection of any Notes upon any default
hereunder or thereon, including reasonable compensation to such Holder's or
Holders' attorneys for all services rendered in connection therewith.
Section 6.4. Rescission of Acceleration. The provisions of SECTION 6.3
are subject to the condition that if the principal of and accrued interest on
all or any outstanding Notes have been declared immediately due and payable
pursuant to either the second or third paragraph of SECTION 6.3, the Holders
holding 66-2/3% in aggregate principal amount of the Notes then outstanding may,
by written instrument filed with the Company, rescind and annul such declaration
and the consequences thereof, provided that at the time such declaration is
annulled and rescinded:
(a) no judgment or decree has been entered for the payment of any
monies due pursuant to the Notes or this Agreement;
(b) all arrears of interest upon all the Notes and all other sums
payable under the Notes and under this Agreement (except any principal,
interest or premium on the Notes which has become due and payable solely
by reason of such declaration under SECTION 6.3) shall have been duly
paid; and
(c) each and every other Default and Event of Default shall have
been made good, cured or waived pursuant to SECTION 7.1;
and provided further, that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right consequent
thereto.
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS.
Section 7.1. Consent Required. Any term, covenant, agreement or condition
of this Agreement may, with the consent of the Company, be amended or compliance
therewith may be waived (either generally or in a particular instance and either
retroactively or prospectively), if the Company shall have obtained the consent
in writing of the Holders holding at least 66-2/3% in aggregate principal amount
of outstanding Notes; provided that in the case of any waiver, modification,
alteration or amendment which will (i) change the time of payment of the
principal of or the interest on any Note or change the principal amount thereof
or change the rate of interest thereon, or (ii) change any of the provisions
with respect to optional prepayment, or (iii) change the percentage of Holders
required to consent to any such amendment, alteration or modification or any of
the provisions of this SECTION 7 or SECTION 6, the Company shall have obtained
the consent in writing of the Holders holding 100% in aggregate principal amount
of the Notes.
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Section 7.2. Solicitation of Holders. The Company will provide each
Holder of the Notes (irrespective of the amount of Notes then owned by it) with
sufficient information, sufficiently far in advance of the date a decision is
required, to enable such Holder to make an informed and considered decision with
respect to any proposed amendment, waiver or consent in respect of any of the
provisions hereof or of the Notes. The Company will deliver executed or true and
correct copies of each amendment, waiver or consent effected pursuant to the
provisions of this SECTION 7.2 to each Holder of outstanding Notes promptly
following the date on which it is executed and delivered by, or receives the
consent or approval of, the requisite Holders of Notes. The Company will not
directly or indirectly pay or cause to be paid any remuneration, whether by way
of supplemental or additional interest, fee or otherwise, or grant any security,
to any Holder as consideration for or as an inducement to the entering into by
any Holder of any waiver or amendment of any of the terms and provisions hereof
or of the Notes unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to each Holder of Notes then
outstanding even if such Holder did not consent to such waiver or amendment.
Section 7.3. Effect of Amendment or Waiver. Any such amendment or waiver
shall apply equally to all of the Holders and shall be binding upon them, upon
each future Holder and upon the Company, whether or not such Note shall have
been marked to indicate such amendment or waiver. No such amendment or waiver
shall extend to or affect any obligation not expressly amended or waived or
impair any right consequent thereon.
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS.
Section 8.1. Definitions. Unless the context otherwise requires, the
terms hereinafter set forth when used herein shall have the following meanings
and the following definitions shall be equally applicable to both the singular
and plural forms of any of the terms herein defined:
"Affiliate" shall mean any Person (other than a Subsidiary) (i) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Company, (ii) which
beneficially owns or holds 5% or more of any class of the Voting Stock of the
Company or (iii) 5% or more of the Voting Stock (or in the case of a Person
which is not a corporation, 5% or more of the equity interest) of which is
beneficially owned or held by the Company or a Subsidiary. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of Voting Stock, by contract or otherwise.
"Agreement" shall mean this Note Agreement.
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"Capitalized Lease" shall mean any lease the obligation for Rentals with
respect to which is required to be capitalized on a consolidated balance sheet
of the lessee in accordance with GAAP.
"Capitalized Rentals" of any Person shall mean as of the date of any
determination the amount at which the aggregate Rentals due and to become due
under all Capitalized Leases under which such Person is a lessee would be
reflected as a liability on a consolidated balance sheet of such Person.
"Closing Date" shall have the meaning set forth in SECTION 1.2.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall mean H.B. Fuller Company, a Minnesota corporation, and
any Person who suceeds to all, or substantially all, of the assets and business
of H.B. Fuller Company.
"Competitor" shall mean any Person which, at the time of any proposed
visitation or inspection described in the final paragraph of SECTION 5.15 is at
such time or was at any time within five years immediately preceding the date of
such visitation or inspection, is or which controls, is controlled by or is
under common control with, a Person competing against the Company or any
Subsidiary as a developer, manufacturer or distributor of specialty chemicals
and related products, provided that an Institutional Holder shall not be deemed
to be competing against the Company or any Subsidiary as a manufacturer or
distributor of specialty chemicals and related products solely by reason of a
passive investment (including, but not limited to, the ownership of nonvoting
equity securities) or the exercise of rights or influence in connection with the
workout of any troubled passive investment in Persons engaged in such business.
For purposes of this definition, the term "control" (including the correlative
meanings of the terms "controlled by" and "under common control with"), as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
such Person or influence such management or policies to a significant degree,
whether through the ownership of Voting Stock or by contract or otherwise and
without regard to whether such power is exercised.
"Consolidated" when used as a prefix to any Current Debt or Funded Debt
shall mean the aggregate amount of all such Current Debt or Funded Debt of the
Company and its Subsidiaries, determined on a consolidated basis eliminating
intercompany items.
"Consolidated Debt" shall mean, as of the date of any determination
thereof, the sum of all Consolidated Funded Debt and all Consolidated Current
Debt.
"Consolidated Net Tangible Assets" shall mean, as of the date of any
determination thereof, the total amount of all Tangible Assets of the Company
and its Subsidiaries after deducting all items which in accordance with GAAP
would be included on the liability and equity side of a consolidated balance
sheet, except deferred income taxes, deferred investment tax credits, capital
stock of any class, surplus, retained earnings and Consolidated Funded Debt.
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"Consolidated Net Worth" shall mean, as of the date of any determination
thereof, the amount of capital stock accounts plus (or minus in the case of a
deficit) the sum of capital, surplus, retained earnings, unearned compensation,
currency translation adjustment and other items which in accordance with GAAP
would be included in the shareholders' equity portion of a consolidated balance
sheet, all of the Company and its Subsidiaries computed on a consolidated basis.
"Consolidated Total Capitalization" shall mean, as of the date of any
determination thereof, the sum of Consolidated Debt plus Consolidated Net Worth.
"Current Debt" of any Person shall mean, as of the date of any
determination thereof, (i) all Indebtedness of such Person for money borrowed
other than Funded Debt of such Person and (ii) Guaranties by such Person of
Current Debt of others.
"Default" shall mean any event or condition, the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default as defined in SECTION 6.1.
"Environmental Laws" means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed to also refer to any successor sections.
"ERISA Affiliate" shall mean any corporation, trade or business that is,
along with the Company, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in section 414(b) and
414(c), respectively, of the Code or Section 4001 of ERISA.
"Event of Default" shall have the meaning set forth in SECTION 6.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Funded Debt" of any Person shall mean (i) all Indebtedness for borrowed
money or which has been incurred in connection with the acquisition of assets in
each case having a final maturity of one or more than one year from the date of
origin thereof (or which is renewable or extendible at the option of the obligor
for a period or periods more than one year from the date of origin), including
all payments in respect thereof that are required to be made within one year
from the date of any determination of Funded Debt, whether or not the obligation
to make such payments shall constitute a current liability of
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the obligor under GAAP, (ii) all Capitalized Rentals of such Person, and (iii)
all Guaranties by such Person of Funded Debt of others.
"GAAP" shall mean generally accepted accounting principles at the time in
the United States.
"Guaranties" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
Indebtedness, dividend or other obligation of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person: (i) to purchase such Indebtedness or obligation or
any property or assets constituting security therefor, (ii) to advance or supply
funds (x) for the purchase or payment of such Indebtedness or obligation, (y) to
maintain working capital or other balance sheet condition or otherwise to
advance or make available funds for the purchase or payment of such Indebtedness
or obligation, or (iii) to lease property or to purchase Securities or other
property or services primarily for the purpose of assuring the owner of such
Indebtedness or obligation of the ability of the primary obligor to make payment
of the Indebtedness or obligation, or (iv) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations made under this Agreement, a
Guaranty in respect of any Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the principal amount of such Indebtedness for borrowed
money which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness equal
to the maximum aggregate amount of such obligation, liability or dividend.
"Holder" shall mean, with respect to any Note, the Person in whose name,
at the time of reference, such Note is registered in the register maintained by
the Company pursuant to SECTION 9.1.
"Indebtedness" of any Person shall mean and include all obligations of
such Person which in accordance with GAAP shall be classified upon a balance
sheet of such Person as liabilities of such Person, and in any event shall
include all (i) obligations of such Person for borrowed money or which has been
incurred in connection with the acquisition of property or assets, (ii)
obligations secured by any lien or other charge upon property or assets owned by
such Person, even though such Person has not assumed or become liable for the
payment of such obligations, (iii) obligations created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person, notwithstanding the fact that the rights and remedies
of the seller, lender or lessor under such agreement in the event of default are
limited to repossession or sale of property, (iv) Capitalized Rentals and (v)
Guaranties of obligations of others of the character referred to in this
definition.
"Institutional Holder" shall mean any Holder which is a Purchaser or an
insurance company, bank, savings and loan association, trust company, investment
company, charitable foundation, employee benefit plan (as defined in ERISA) or
other institutional
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investor or financial institution and, for purposes of the direct payment
provisions of this Agreement, shall include any nominee of any such Holder.
"Institutional Investor" means any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"Make-Whole Amount" means, with respect to any Note, an amount equal to
the excess, if any, of the Discounted Value of the Remaining Scheduled Payments
with respect to the Called Principal of such Note over the amount of such Called
Principal, provided that the Make-Whole Amount may in no event be less than
zero. For the purposes of determining the Make-Whole Amount, the following terms
have the following meanings:
"Called Principal" means, with respect to any Note, the principal
of such Note that is to be prepaid pursuant to SECTION 2.2 or has become
or is declared to be immediately due and payable pursuant to SECTION 6.3,
as the context requires.
"Discounted Value" means, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with
respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called Principal
of any Note, 0.50% over the yield to maturity implied by (i) the yields
reported, as of 10:00 A.M. (New York City time) on the second Business
Day preceding the Settlement Date with respect to such Called Principal,
on the display designated as "Screen PX" on the Bloomberg Financial
Markets Service Screen (or such other display as may replace "Screen PX"
on the Bloomberg Financial Markets Service Screen) for actively traded
U.S. Treasury securities having a maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date, or (ii) if such
yields are not reported as of such time or the yields reported as of such
time are not ascertainable, the Treasury Constant Maturity Series Yields
reported, for the latest day for which such yields have been so reported
as of the second Business Day preceding the Settlement Date with respect
to such Called Principal, in Federal Reserve Statistical Release H.15
(519) (or any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the Remaining
Average Life of such Called Principal as of such Settlement Date. Such
implied yield will be determined, if necessary, by (a) converting U.S.
Treasury bill quotations to bond-equivalent yields in accordance with
accepted financial practice and (b) interpolating linearly between (1)
the actively traded U.S. Treasury security with the maturity closest to
and greater than the Remaining Average Life and (2) the actively traded
U.S. Treasury security with the maturity closest to and less than the
Remaining Average Life.
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"Remaining Average Life" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (i) such Called Principal into (ii) the sum of
the products obtained by multiplying (a) the principal component of each
Remaining Scheduled Payment with respect to such Called Principal by (b)
the number of years (calculated to the nearest one-twelfth year) that
will elapse between the Settlement Date with respect to such Called
Principal and the scheduled due date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior
to its scheduled due date, provided that if such Settlement Date is not a
date on which interest payments are due to be made under the terms of the
Notes, then the amount of the next succeeding scheduled interest payment
will be reduced by the amount of interest accrued to such Settlement Date
and required to be paid on such Settlement Date pursuant to SECTION 2.2
or SECTION 6.3.
"Settlement Date" means, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid
pursuant to SECTION 2.2 or has become or is declared to be immediately
due and payable pursuant to SECTION 6.3, as the context requires.
"Material" means material in relation to the business, operations,
affairs, financial condition, assets, or properties of the Company and its
Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries taken as a whole, or (b) the ability of the Company
to perform its obligations under this Agreement and the Notes, or (c) the
validity or enforceability of this Agreement or the Notes.
"Maturity Date" shall have the meaning set forth in SECTION 1.1.
"Multiemployer Plan" shall have the same meaning as in ERISA.
"Overdue Rate" shall mean with respect to the Notes, the lesser of (i)
the maximum interest rate permitted by law and (ii) 8.60% per annum.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, and a government or agency or political subdivision
thereof.
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"Plan" means a "pension plan," as such term is defined in, or governed
by, ERISA, established or maintained by the Company or any ERISA Affiliate or as
to which the Company or any ERISA Affiliate contributed or is a member or
otherwise may have any liability.
"Purchaser" shall have the meaning set forth in SECTION 1.1.
"Rentals" shall mean and include as of the date of any determination
thereof all fixed payments (including as such all payments which the lessee is
obligated to make to the lessor on termination of the lease or surrender of the
property) payable by the Company or a Subsidiary, as lessee or sublessee under a
lease of real or personal property, but shall be exclusive of any amounts
required to be paid by the Company or a Subsidiary (whether or not designated as
rents or additional rents) on account of maintenance, repairs, insurance, taxes
and similar charges. Fixed rents under any so-called "percentage leases" shall
be computed solely on the basis of the minimum rents, if any, required to be
paid by the lessee regardless of sales volume or gross revenues.
"Responsible Officer" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Security" shall have the same meaning as in Section 2(1) of the
Securities Act.
"Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or assistant treasurer of the Company.
"Significant Subsidiary" means at any time any Subsidiary that would at
such time constitute a "significant subsidiary" (as such term is defined in
Regulation S-X of the Securities and Exchange Commission as in effect on the
Closing Date) of the Company.
The term "subsidiary" shall mean, as to any particular parent
corporation, any corporation of which more than 50% (by number of votes) of the
Voting Stock shall be beneficially owned, directly or indirectly, by such parent
corporation. The term "Subsidiary" shall mean a subsidiary of the Company.
"Tangible Assets" shall mean as of the date of any determination thereof,
the total amount of all assets of the Company and its Subsidiaries (less
depreciation, depletion and other properly deductible valuation reserves) after
deducting such assets as are properly classified as "intangible assets" in
accordance with GAAP.
"Voting Stock" shall mean Securities of any class or classes, the holders
of which are ordinarily, in the absence of contingencies, entitled to elect a
majority of the corporate directors (or Persons performing similar functions).
Section 8.2. Accounting Principles. Where the character or amount of any
asset or liability or item of income or expense is required to be determined or
any consolidation
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or other accounting computation is required to be made for the purposes of this
Agreement, the same shall be done in accordance with GAAP, to the extent
applicable, except where such principles are inconsistent with the requirements
of this Agreement.
Section 8.3. Certain Changes in Accounting Principles. Notwithstanding
the provisions of SECTION 8.2, it is understood and agreed that in the event a
change after the date of this Agreement in GAAP affects the classification of
items on the balance sheet or statements of earnings of the Company or a
Subsidiary or the principles of consolidation of such balance sheets or
statements for the purpose of any computation or definition (the "Affected
Computation") under this Agreement which is governed by GAAP from time to time
in effect in such manner and to such an extent that, in the good faith judgment
of the chief financial officer of the Company compliance by the Company with any
covenant or covenants contained in this Agreement is unreasonable or inequitable
as a result of the application of the change in GAAP to the Affected
Computation, then and in any such event:
(a) the Company shall give written notice of such determination to
the Holders not later than 60 days after the date on which the change in
GAAP becomes effective (the "Effective Date"), which notice shall be
accompanied by a certificate of the President or a Vice President and the
Treasurer or an Assistant Treasurer of the Company:
(i) describing the change in GAAP in question and the
particular covenant or covenants which will be affected by such
change;
(ii) setting forth in reasonable detail (including detailed
calculations) the manner and extent to which the covenant or
covenants listed in the certificate are affected by the change in
GAAP;
(iii) setting forth in reasonable detail (including
detailed calculations) the information required in order to
establish that the Company would be in compliance with the
requirements of the covenant or covenants listed in the
certificate if the change in GAAP were not effective and if GAAP
in force and effect as of the date of this Agreement governed the
Affected Computation; and
(iv) confirming the determination by the chief financial
officer of the Company that compliance with the covenant or
covenants is unreasonable or inequitable as a result of the
application of the change in GAAP to the Affected Computation;
(b) you will enter into good faith negotiations with the Company
for an equitable amendment of such covenant or covenants pursuant to
SECTION 7 so as to place the parties, insofar as possible, in the same
relative position as if the change in accounting principles had not
occurred; and
(c) for the period from the Effective Date to the first to occur
of (i) the effective date of an amendment to this Agreement pursuant to
SECTION 7 that addresses the change in GAAP, or (ii) 90 days after the
notice referred to in
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SECTION 8.3(A), the Company shall be deemed to be in compliance with the
covenant or covenants listed in the certificate if and so long as the
Company would be in compliance with such covenant if GAAP in force and
effect immediately prior to the Effective Date governed the Affected
Computation.
Section 8.4. Directly or Indirectly. Where any provision in this
Agreement refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether the action in
question is taken directly or indirectly by such Person.
SECTION 9. MISCELLANEOUS.
Section 9.1. Registered Notes. The Company shall cause to be kept at its
principal office a register for the registration and transfer of the Notes
(hereinafter called the "Note Register"), and the Company will register or
transfer or cause to be registered or transferred, as hereinafter provided and
under such reasonable regulations as it may prescribe, any Note issued pursuant
to this Agreement.
At any time and from time to time any Holder which has been duly
registered as hereinabove provided may transfer such Note upon surrender thereof
at the principal office of the Company duly endorsed or accompanied by a written
instrument of transfer duly executed by the Holder or its attorney duly
authorized in writing.
The Person in whose name any Note shall be registered shall be deemed and
treated as the owner and holder thereof and a Holder for all purposes of this
Agreement. Payment of or on account of the principal, premium, if any, and
interest on any registered Note shall be made to or upon the written order of
such Holder.
Section 9.2. Exchange of Notes. At any time, and from time to time, upon
not less than ten days' notice to that effect given by the Holder of any Note
initially delivered or of any Note substituted therefor pursuant to SECTION 9.1,
this SECTION 9.2 or SECTION 9.3, and, upon surrender of such Note at its office,
the Company will deliver in exchange therefor, without expense to such Holder,
except as set forth below, Notes for the same aggregate principal amount as the
then unpaid principal amount of the Note so surrendered, in the denomination of
$100,000 or any amount in excess thereof as such Holder shall specify, dated as
of the date to which interest has been paid on the Note so surrendered or, if
such surrender is prior to the payment of any interest thereon, then dated as of
the date of issue, payable to such Person or Persons, or order, as may be
designated by such Holder, and otherwise of the same form and tenor as the Notes
so surrendered for exchange. The Company may require the payment of a sum
sufficient to cover any stamp tax or governmental charge imposed upon such
exchange or transfer.
Section 9.3. Loss, Theft, Etc. of Notes. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of any
Note, and in the case of any such loss, theft or destruction upon delivery of a
bond of indemnity in such form and amount as shall be reasonably satisfactory to
the Company, or in the event of such
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mutilation upon surrender and cancellation of the Note, the Company will make
and deliver without expense to the Holder thereof, a new Note, of like tenor, in
lieu of such lost, stolen, destroyed or mutilated Note. If an Institutional
Holder is the owner of any such lost, stolen or destroyed Note, then the
affidavit of an authorized officer of such owner, setting forth the fact of
loss, theft or destruction and of its ownership of the Note at the time of such
loss, theft or destruction shall be accepted as satisfactory evidence thereof
and no further indemnity shall be required as a condition to the execution and
delivery of a new Note other than the written agreement of such owner,
substantially in the form used by Institutional Holders generally, to indemnify
the Company. The Company may require the Holder to pay any stamp tax or
governmental charge imposed in connection with the issuance of any new Note.
Section 9.4. Expenses, Stamp Tax Indemnity. Whether or not the
transactions herein contemplated shall be consummated, the Company agrees to pay
directly all of your reasonable out-of-pocket expenses in connection with the
preparation, execution and delivery of this Agreement and the transactions
contemplated hereby, including but not limited to the reasonable charges and
disbursements of Chapman and Cutler, your special counsel, duplicating and
printing costs and charges for shipping the Notes, adequately insured to you at
your home office or at such other place as you may designate, and all such
expenses of the Holders relating to any amendment, waivers or consents pursuant
to the provisions hereof including, without limitation, any amendments, waivers
or consents resulting from any work-out, renegotiation or restructuring relating
to the performance by the Company of its obligations under this Agreement and
the Notes. The Company also agrees that it will pay and save you harmless
against any and all liability with respect to stamp and other taxes, if any,
which may be payable or which may be determined to be payable in connection with
the original execution and delivery of this Agreement or the Notes, whether or
not any Notes are then outstanding. The Company agrees to protect and indemnify
you against any liability for any and all brokerage fees and commissions payable
or claimed to be payable to any Person (including without limitation Chase
Securities, Inc. or J.P. Morgan Securities Inc.) in connection with the
transactions contemplated by this Agreement. You represent that you have not
engaged any broker in connection with the transactions contemplated by this
Agreement.
Section 9.5. Powers and Rights Not Waived; Remedies Cumulative. No delay
or failure on the part of the Holder in the exercise of any power or right shall
operate as a waiver thereof; nor shall any single or partial exercise of the
same preclude any other or further exercise thereof, or the exercise of any
other power or right, and the rights and remedies of the Holder are cumulative
to and are not exclusive of any rights or remedies any such Holder would
otherwise have, and no waiver or consent, given or extended pursuant to SECTION
7 hereof, shall extend to or affect any obligation or right not expressly waived
or consented to.
Section 9.6. Notices. All communications provided for hereunder shall be
in writing and, if to a Holder, delivered or mailed prepaid by registered or
certified mail or overnight air courier, or by facsimile communication, in each
case addressed to such Holder at its address appearing on Schedule I hereto or
such other address as any Holder may designate to the Company in writing, and if
to the Company, delivered or mailed by registered or certified mail or overnight
air courier, or by facsimile communication, to the
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Company at 1200 County Road "E" West, Arden Hills, Minnesota 55112-3792
Attention: Director of Treasury (facsimile: (612) 236-4659) or to such other
address as the Company may in writing designate to the Holders; provided,
however, that a notice to a Holder by overnight air courier shall only be
effective if delivered to such Holder at a street address designated for such
purpose in accordance with this SECTION 9.6, and a notice to such Holder by
facsimile communication shall only be effective if made by confirmed
transmission to such Holder at a telephone number designated for such purpose in
accordance with this SECTION 9.6 and promptly followed by the delivery of such
notice by registered or certified mail or overnight air courier, as set forth
above.
Section 9.7. Successors and Assigns. This Agreement shall be binding
upon, and shall inure to the benefit of, the Company and you and the Company's
and your successors and assigns, respectively, including each successive Holder.
Section 9.8. Survival of Covenants and Representations. All covenants,
representations and warranties made by the Company herein and in any
certificates delivered pursuant hereto, whether or not in connection with the
Closing Date or any Funding Date, shall survive the closing and the delivery of
this Agreement and the Notes.
Section 9.9. Severability. Should any part of this Agreement for any
reason be declared invalid or unenforceable, such decision shall not affect the
validity or enforceability of any remaining portion, which remaining portion
shall remain in force and effect as if this Agreement had been executed with the
invalid or unenforceable portion thereof eliminated and it is hereby declared
the intention of the parties hereto that they would have executed the remaining
portion of this Agreement without including therein any such part, parts, or
portion which may, for any reason, be hereafter declared invalid or
unenforceable.
Section 9.10. Governing Law. This Agreement and the Notes issued and sold
hereunder shall be governed by and construed in accordance with Minnesota law.
Section 9.11. Captions. The descriptive headings of the various Sections
or parts of this Agreement are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.
The execution hereof by you shall constitute a contract between us for
the uses and purposes hereinabove set forth, and this Agreement may be executed
in any number of counterparts, each executed counterpart constituting an
original but all together only one agreement.
H.B. FULLER COMPANY
By /s/ Jorge Walter Bolanos
Its Senior Vice President, Chief
Financial Officer and Treasurer
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Accepted as of June 2, 1998:
ALLSTATE LIFE INSURANCE
COMPANY
By /s/ Patricia W. Wilson
By /s/ Ronald A. Mendel
Authorized Signatories
Accepted as of June 2, 1998:
ALLSTATE LIFE INSURANCE
COMPANY OF NEW YORK
By /s/ Patricia W. Wilson
By /s/ Ronald A. Mendel
Authorized Signatories
Accepted as of June 2, 1998:
JEFFERSON-PILOT LIFE
INSURANCE COMPANY
By /s/ E. J. Yelton
Its Executive Vice President
Accepted as of June 2, 1998:
ALEXANDER HAMILTON LIFE
INSURANCE COMPANY OF
AMERICA
By /s/ E. J. Yelton
Its Executive Vice President
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Accepted as of June 2, 1998:
THE CATHOLIC AID ASSOCIATION
By Advantus Capital Management,
Inc.
By /s/ Loren A. Haugland
Its Vice President
Accepted as of June 2, 1998:
COLORADO BANKERS LIFE
INSURANCE COMPANY
By Advantus Capital Management,
Inc.
By /s/ Loren A. Haugland
Its Vice President
Accepted as of June 2, 1998:
GREAT WESTERN INSURANCE
COMPANY
By Advantus Capital Management,
Inc.
By /s/ Loren A. Haugland
Its Vice President
Accepted as of June 2, 1998:
GUARANTEE RESERVE LIFE
INSURANCE COMPANY
By Advantus Capital Management,
Inc.
By /s/ Loren A. Haugland
Its Vice President
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Accepted as of June 2, 1998:
THE MINNESOTA MUTUAL LIFE
INSURANCE COMPANY
By Advantus Capital Management,
Inc.
By /s/ Loren A. Haugland
Its Vice President
Accepted as of June 2, 1998:
NATIONAL FARM LIFE INSURANCE
COMPANY
By Advantus Capital Management,
Inc.
By /s/ Loren A. Haugland
Its Vice President
Accepted as of June 2, 1998:
NATIONAL TRAVELERS LIFE
COMPANY
By Advantus Capital Management,
Inc.
By /s/ Loren A. Haugland
Its Vice President
Accepted as of June 2, 1998:
PIONEER MUTUAL LIFE
INSURANCE COMPANY
By Advantus Capital Management,
Inc.
By /s/ Loren A. Haugland
Its Vice President
-32-
<PAGE>
Accepted as of June 2, 1998:
PROTECTED HOME MUTUAL LIFE
INSURANCE COMPANY
By Advantus Capital Management,
Inc.
By /s/ Loren A. Haugland
Its Vice President
Accepted as of June 2, 1998:
UNITY MUTUAL LIFE INSURANCE
COMPANY
By Advantus Capital Management,
Inc.
By /s/ Loren A. Haugland
Its Vice President
Accepted as of June 2, 1998: JACKSON NATIONAL LIFE
INSURANCE COMPANY
By: PPM America, Inc., as
Attorney-in-Fact on behalf of
Jackson National Life Insurance
Company
By /s/ David Brett
Its Vice President
-33-
<PAGE>
Accepted as of June 2, 1998:
THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY
By Lincoln Investment Management,
Inc., Its Attorney-In-Fact
By /s/ David C. Patch
Its Vice President
Accepted as of June 2, 1998:
LINCOLN NATIONAL HEALTH &
CASUALTY INSURANCE
COMPANY
By Lincoln Investment Management,
Inc., Its Attorney-In-Fact
By /s/ David C. Patch
Its Vice President
Accepted as of June 2, 1998:
LINCOLN LIFE & ANNUITY
COMPANY OF NEW YORK
By Lincoln Investment Management,
Inc., Its Attorney-In-Fact
By /s/ David C. Patch
Its Vice President
-34-
<PAGE>
Accepted as of June 2, 1998:
LINCOLN NATIONAL
REINSURANCE COMPANY
(BARBADOS) LIMITED
By Lincoln Investment Management,
Inc., Its Attorney-In-Fact
By /s/ David C. Patch
Its Vice President
Accepted as of June 2, 1998:
ALLIED LIFE INSURANCE
COMPANY
By Lincoln Investment Management,
Inc., Its Attorney-In-Fact
By /s/ David C. Patch
Its Vice President
Accepted as of June 2, 1998:
FIRST PENN-PACIFIC LIFE
INSURANCE COMPANY
By Lincoln Investment Management,
Inc., Its Attorney-In-Fact
By /s/ David C. Patch
Its Vice President
-35-
<PAGE>
Accepted as of June 2, 1998:
SONS OF NORWAY
By Lincoln Investment Management,
Inc., Its Attorney-In-Fact
By /s/ David C. Patch
Its Vice President
Accepted as of June 2, 1998:
KNIGHTS OF COLUMBUS
By /s/ Robert J. Lane
Its Assistant Supreme Secretary
Accepted as of June 2, 1998:
AMERICAN FAMILY LIFE
INSURANCE COMPANY
By /s/ Phillip Hannifan
Its Investment Director
Accepted as of June 2, 1998:
LUTHERAN BROTHERHOOD, a
Minnesota corporation
By /s/ Mark O. Swenson
Title: Assistant Vice President
-36-
<PAGE>
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
ALLSTATE LIFE INSURANCE COMPANY $10,000,000
3075 Sanders Road, STE G3A
Northbrook, Illinois 60062-7127
Attention: Private Placements Department
Telephone Number: (847) 402-4394
Telecopier Number: (847) 402-3092
Payments
All payments on or in respect of the Notes to be made by Fedwire transfer of
immediately available funds (identifying each payment with name of the Issuer
(and the Credit, if any), the Private Placement Number preceded by "DPP" and the
payment as principal, interest or premium) in the exact format as follows:
BBK = Harris Trust and Savings Bank
ABA #071000288
BNF = Allstate Life Insurance Company
Collection Account #168-117-0
ORG = H.B. Fuller Company
OBI = DPP - [Insert Private Placement Number] --
Payment Due Date (MM/DD/YY) --
P ______ (enter "P" and the amount of principal being remitted,
for example, P5000000.00) --
I ______ (enter "I" and the amount of interest being remitted,
for example, I225000.00)
Notices
All notices of scheduled payments and written confirmation of each such payment,
to be addressed:
Allstate Insurance Company
Investment Operations--Private Placements
3075 Sanders Road, STE G4A
Northbrook, Illinois 60062-7127
Telephone: (847) 402-2769
Telecopy: (847) 402-5040
All financial reports, compliance certificates and all other written
communications, including notice of prepayments to be addressed as first
provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 36-2554642
SCHEDULE I
(to Note Agreement)
<PAGE>
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
ALLSTATE LIFE INSURANCE COMPANY $10,000,000
OF NEW YORK
3075 Sanders Road, STE G3A
Northbrook, Illinois 60062-7127
Attention: Private Placements Department
Telephone Number: (847) 402-4394
Telecopier Number: (847) 402-3092
Payments
All payments on or in respect of the Notes to be made by Fedwire transfer of
immediately available funds (identifying each payment with name of the Issuer
(and the Credit, if any), the Private Placement Number preceded by "DPP" and the
payment as principal, interest or premium) in the exact format as follows:
BBK = Harris Trust and Savings Bank
ABA #071000288
BNF = Allstate Life Insurance Company of New
York Collection Account #168-120-4
ORG = H.B. Fuller Company
OBI = DPP - [Enter Private Placement Number] --
Payment Due Date (MM/DD/YY) --
P ______ (enter "P" and the amount of
principal being remitted, for
example, P5000000.00) --
I ______ (enter "I" and the amount of
interest being remitted, for example,
I225000.00)
Notices
All notices of scheduled payments and written confirmation of each such payment,
to be addressed:
Allstate Insurance Company
Investment Operations--Private Placements
3075 Sanders Road, STE G4A
Northbrook, Illinois 60062-7127
Telephone: (847) 402-2769
Telecopy: (847) 326-5040
All financial reports, compliance certificates and all other written
communications, including notice of prepayments to be addressed as first
provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 36-2608394
I-2
<PAGE>
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
JEFFERSON-PILOT LIFE INSURANCE $7,500,000
COMPANY
P. O. Box 21008
Greensboro, North Carolina 27420
Attention: Securities Administration - 3630
Telefacsimile: (336) 691-3025
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "H.B.
Fuller Company, 6.60% Senior Notes due 2010, PPN 359694 C# 1, principal,
interest or premium") to:
Jefferson-Pilot Life Insurance Company
c/o The Bank of New York
ABA #021 000 018 BNF: IOC566
Attention: P&I Department
Notices
All notices of payment on or in respect of the Notes and written confirmation of
each such payment, to be addressed to:
Jefferson-Pilot Life Insurance Company
c/o The Bank of New York
P. O. Box 19266
Newark, NJ 07195
Attention: P&I Department
with duplicate notice to Jefferson-Pilot Life Insurance Company at the address
first provided above.
All notices and communications other than those in respect to payments to be
addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 56-0359860
I-3
<PAGE>
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
ALEXANDER HAMILTON LIFE INSURANCE $7,500,000
COMPANY OF AMERICA
P. O. Box 21008
Greensboro, North Carolina 27420
Attention: Securities Administration - 3630
Telefacsimile: (336) 691-3025
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "H.B.
Fuller Company, 6.60% Senior Notes due 2010, PPN 359694 C# 1, principal,
interest or premium") to:
Alexander Hamilton Life Insurance Company of America
c/o The Bank of New York
ABA #021 000 018 BNF: IOC566
Attention: P&I Department
Notices
All notices of payment on or in respect of the Notes and written confirmation of
each such payment, to be addressed to:
Alexander Hamilton Life Insurance Company of America
c/o The Bank of New York
P. O. Box 19266
Newark, NJ 07195
Attention: P&I Department
with duplicate notice to Alexander Hamilton Life Insurance Company of America at
the address first provided above.
All notices and communications other than those in respect to payments to be
addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 56-1311063
I-4
<PAGE>
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
THE CATHOLIC AID ASSOCIATION $1,000,000
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, Minnesota 55101
Attention: Client Administrator
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "H.B.
Fuller Company, 6.60% Senior Notes due 2010, PPN 359694 C# 1, principal,
interest or premium") to:
U.S. Bank, N.A.
Minneapolis, Minnesota
ABA #091-000-022
for credit to: U.S. Bank Trust, N.A.
Account Number 180121167365, TSU: 050
For further credit to: The Catholic Aid Association
Account Number 12614950
Attention: Doug O'Ryan (612) 244-5958
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: Var & Co.
Taxpayer I.D. Number: 41-0182070
I-5
<PAGE>
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
COLORADO BANKERS LIFE INSURANCE COMPANY $500,000
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, Minnesota 55101
Attention: Client Administrator
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "H.B.
Fuller Company, 6.60% Senior Notes due 2010, PPN 359694 C# 1, principal,
interest or premium") to:
Bankers Trust Company (ABA #021-001-033)
New York, New York
for credit to Account Number 99-911145
for further credit to: Colorado Bankers Life Insurance Company
Account Number 098125
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: Salkeld & Co.
Taxpayer I.D. Number: 84-0674027
I-6
<PAGE>
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
GREAT WESTERN INSURANCE COMPANY $500,000
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, Minnesota 55101
Attention: Client Administrator
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "H.B.
Fuller Company, 6.60% Senior Notes due 2010, PPN 359694 C# 1, principal,
interest or premium") to:
Zions First National Bank
Salt Lake City, Utah
ABA #124-0000-54
For credit to: Great Western Insurance Company
Account Number 80-00005-2
Any checks (in lieu of wire transfer) should be sent to the following:
Zions First National - Bank Trust Department
P. O. Box 30880
Salt Lake City, Utah 84130
Ref: Great Western Insurance Company
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: Zions First National Bank for
Great Western Insurance Company
Taxpayer I.D. Number: 87-0395954
I-7
<PAGE>
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
GUARANTEE RESERVE LIFE INSURANCE $500,000
COMPANY
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, Minnesota 55101
Attention: Client Administrator
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "H.B.
Fuller Company, 6.60% Senior Notes due 2010, PPN 359694 C# 1, principal,
interest or premium") to:
Mercantile National Bank of Indiana
Hammond, Indiana
ABA #071-912-813
For credit to: Guarantee Reserve Life Insurance Company
Attention: Trust Department, Geneva DeVine
Account Number: 287000
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: Gant & Co.
Taxpayer I.D. Number: 35-0815760
I-8
<PAGE>
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
THE MINNESOTA MUTUAL LIFE INSURANCE $10,000,000
COMPANY
400 Robert Street North
St. Paul, Minnesota 55101
Attention: Advantus Capital Management, Inc.
Facsimile: (612) 223-5959
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "H.B.
Fuller Company, 6.60% Senior Notes due 2010, PPN 359694 C# 1, principal,
interest or premium") to:
U.S. Bank Trust N.A.
Minneapolis, Minnesota
ABA #091000022
BNF The Minnesota Mutual Life Insurance Company
Account Number 1801-10-00600-4
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 41-0417830
I-9
<PAGE>
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
NATIONAL FARM LIFE INSURANCE COMPANY $500,000
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, Minnesota 55101
Attention: Client Administrator
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "H.B.
Fuller Company, 6.60% Senior Notes due 2010, PPN 359694 C# 1, principal,
interest or premium") to:
Texas Commerce Bank N.A.
Fort Worth, TX 76102
ABA #113-000-609
For credit to: National Farm Life Insurance Company
Account Number: 07303034907
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 75-0708826
I-10
<PAGE>
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
NATIONAL TRAVELERS LIFE COMPANY $1,000,000
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, Minnesota 55101
Attention: Client Administrator
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "H.B.
Fuller Company, 6.60% Senior Notes due 2010, PPN 359694 C# 1, principal,
interest or premium") to:
U.S. Bank, N.A.
Minneapolis, Minnesota
ABA #091-000-022
for credit to: U.S. Bank Trust, N.A.
Account Number 180121167365, TSU: 47300050
for further credit to: National Travelers Life Company
Account Number 12609110
Attention: Doug O'Ryan (612) 244-5958
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: Var & Co.
Taxpayer I.D. Number: 42-0432940
I-11
<PAGE>
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
PIONEER MUTUAL LIFE INSURANCE COMPANY $1,000,000
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, Minnesota 55101
Attention: Client Administrator
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "H.B.
Fuller Company, 6.60% Senior Notes due 2010, PPN 359694 C# 1, principal,
interest or premium") to:
The Bank of New York
ABA #021-000-018
for credit to: Pioneer Mutual Life Insurance Company/NCT & Co. Fargo
Account Number 270576
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: Polly & Co.
Taxpayer I.D. Number: 45-0220640
I-12
<PAGE>
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
PROTECTED HOME MUTUAL LIFE INSURANCE $500,000
COMPANY
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, Minnesota 55101
Attention: Client Administrator
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "H.B.
Fuller Company, 6.60% Senior Notes due 2010, PPN 359694 C# 1, principal,
interest or premium") to:
Norwest Bank Minnesota, N.A.
ABA No. 091-000-019
BNF=Norwest Trust Clearing Mpls
BNFA=0840245
OBI=FFC to: Norwest Client Acct No. 13371700
Norwest Client Account Name: Protected Home Mutual Life Insurance Company
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: Norwest Bank MN as Custodian
for Protected Home Mutual Life Insurance Co.
Taxpayer I.D. Number: 25-0740310
I-13
<PAGE>
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
UNITY MUTUAL LIFE INSURANCE COMPANY $1,000,000
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, Minnesota 55101
Attention: Client Administrator
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "H.B.
Fuller Company, 6.60% Senior Notes due 2010, PPN 359694 C# 1, principal,
interest or premium") to:
Chase NYC
ABA #021-000-021
For credit to: Chase Rochester, DDA# 0000400044
Attention: Ms. Roni Norkus (716) 258-7784
For further credit to: Unity Mutual Life Insurance Company - MMLIC -
611002310
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: TRULIN & CO
Tax I.D. Number: 15-0475585
I-14
<PAGE>
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
JACKSON NATIONAL LIFE INSURANCE $30,000,000
COMPANY
5901 Executive Drive
Lansing, Michigan 48909
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "H.B.
Fuller Company, 6.60% Senior Notes due 2010, PPN 359694 C# 1, principal,
interest or premium") to:
NORTHERN TRUST CHGO
ABA #0710-0015-2
Credit Account Number 5186041000
For Further Credit to: 2691241/Jackson National Life Insurance Company
Ref: (Name of Company) PVTPL, date of payment, principal and interest
breakdown.
Attn: Oscell Owens/Marilyn Calpe
Notices
All notices and communications with respect to payment/rate notices, to be faxed
to (Operations Contact):
Oscell Owens Portfolio Admin, - Susan Perrino Danette Ponce
Northern Trust PPM America Inc. Jackson National Life
801 S. Canal, Floor C1N 225 West Wacker Drive PPM America Inc.
Chicago, IL 60607 Suite 1200 225 West Wacker Drive
Tel: (312) 444-5754 Chicago, IL 60606 Suite 1200
Fax: (312) 630-8179 Tel: (312) 634-1205 Chicago, IL 60606
Fax: (312) 634-0054 Tel: (312) 634-5809
Fax: (312) 634-0050
All notices, waivers amendments, consents, financial information and COPIES of
all original notes and credit documents should be sent to (Credit Contact):
PPM America, Inc.
225 West Wacker Drive, Suite 1200
Chicago, Illinois 60606-1228
Attention: Private Placements-Investment Grade
Telephone Number: (312) 634-2509/2561
Facsimile Number: (312) 634-0054
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 38-1659835
I-15
<PAGE>
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
THE LINCOLN NATIONAL LIFE INSURANCE $4,800,000*
COMPANY
c/o Lincoln Investment Management, Inc.
200 East Berry Street
Renaissance Square
Fort Wayne, Indiana 46802
Attention: Investments/Private Placements
Facsimile: (219) 455-5499 Private Placements
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "H.B.
Fuller Company, 6.60% Senior Notes due 2010, PPN 359694 C# 1, principal,
interest or premium") to:
Bankers Trust Company (ABA #021001033)
Private Placement Processing
New York, New York
Account Number 99-911-145
FURTHER CREDIT TO: The Lincoln National Life Insurance Company
Custodial Account Numbers Listed Below
*PRINCIPAL ACCOUNT NAME BANK CUSTODY
AMOUNT NUMBER
OF NOTES
$1,600,000 The Lincoln National Life 98185
Insurance Company (LFP)
$2,000,000 The Lincoln National Life 98264
Insurance Company (UNM)
$1,200,000 The Lincoln National Life 98194
Insurance Company (IAL)
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above with duplicate notices with respect to payments to:
Bankers Trust Company
P. O. Box 998
Bowling Green Station
New York, New York 10274
Attention: Private Placement Unit
Facsimile: (615) 385-2493 Crystal Jones, Private Placements
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 35-0472300
I-16
<PAGE>
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
THE LINCOLN NATIONAL LIFE INSURANCE $10,000,000*
COMPANY
c/o Lincoln Investment Management, Inc.
200 East Berry Street
Renaissance Square
Fort Wayne, Indiana 46802
Attention: Investments/Private Placements
Facsimile: (219) 455-5499 Private Placements
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "H.B.
Fuller Company, 6.60% Senior Notes due 2010, PPN 359694 C# 1, principal,
interest or premium") to:
Chase Manhattan Bank
New York, New York
ABA #: 021 00 0021
CHASE NYC/CTR/BNF
A/C #900-9-000200
FURTHER CREDIT TO: The Lincoln National Life Insurance Company
Custodial Account Numbers Listed Below
*PRINCIPAL ACCOUNT NAME BANK CUSTODY
AMOUNT NUMBER
OF NOTES
$5,000,000 The Lincoln National Life G07173
Insurance Company (CIDP)
$5,000,000 The Lincoln National Life G07174
Insurance Company (CIND)
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above with duplicate notices with respect to payments to:
Chase Manhattan Bank, N.A.
Private Placement Servicing
P.O. Box 1508
Bowling Green Station
New York, New York 10081
Fax: (212) 623-6422 Private Placements
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 35-0472300
I-17
<PAGE>
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
LINCOLN NATIONAL HEALTH & CASUALTY $1,600,000
INSURANCE COMPANY
c/o Lincoln Investment Management, Inc.
200 East Berry Street
Renaissance Square
Fort Wayne, Indiana 46802
Attention: Investments/Private Placements
Facsimile: (219) 455-5499 Private Placements
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "H.B.
Fuller Company, 6.60% Senior Notes due 2010, PPN 359694 C# 1, principal,
interest or premium") to:
Chase Manhattan Bank
New York, New York
ABA #: 021 00 0021
CHASE NYC/ CTR / BNF
A/C #900-9-000200
FURTHER CREDIT: Lincoln National Health & Casualty Insurance Company
Custody Account Number G06323
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed to:
Chase Manhattan Bank, N.A.
Private Placement Servicing
P.O. Box 1508
Bowling Green Station
New York, New York 10081
Fax: (212) 623-6422 Private Placements
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 35-1495207
I-18
<PAGE>
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
LINCOLN LIFE & ANNUITY COMPANY $1,000,000
OF NEW YORK
c/o Lincoln Investment Management, Inc.
200 East Berry Street
Renaissance Square
Fort Wayne, Indiana 46802
Attention: Investments/Private Placements
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "H.B.
Fuller Company, 6.60% Senior Notes due 2010, PPN 359694 C# 1, principal,
interest or premium") to:
Bankers Trust Company
ABA #021001033
Private Placement Processing
New York, New York
Account Number 99-911-145
for the account of: Lincoln Life & Annuity Company of New York
Custody Account Number 98440
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above with duplicate notices with respect to payments to:
Bankers Trust Company
P. O. Box 998
Bowling Green Station
New York, New York 10274
Attention: Private Placement Unit
Facsimile: (615) 385-2493 Crystal Jones, Private Placements
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 16-1505436
I-19
<PAGE>
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
LINCOLN NATIONAL REINSURANCE COMPANY $1,000,000
(BARBADOS) LTD.
c/o Lincoln Investment Management, Inc.
200 East Berry Street
Renaissance Square
Fort Wayne, Indiana 46802
Attention: Investments/Private Placements
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "H.B.
Fuller Company, 6.60% Senior Notes due 2010, PPN 359694 C# 1, principal,
interest or premium") to:
Chase Manhattan Bank
New York, New York
ABA #: 021 00 0021
CHASE NYC/ CTR / BNF
A/C #900-9-000200
FURTHER CREDIT TO: Lincoln National Reinsurance Company (Barbados) Ltd.
Custody Account Number G06492
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed to:
Chase Manhattan Bank, N.A.
Private Placement Servicing
P.O. Box 1508
Bowling Green Station
New York, New York 10081
Fax: (212) 623-6422 Private Placements
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 35-1716060
I-20
<PAGE>
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
ALLIED LIFE INSURANCE COMPANY "B" $1,000,000
c/o Lincoln Investment Management, Inc.
200 East Berry Street
Renaissance Square
Fort Wayne, Indiana 46802
Attention: Investments/Private Placements
Facsimile: (219) 455-5499 Private Placements
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "H.B.
Fuller Company, 6.60% Senior Notes due 2010, PPN 359694 C# 1, principal,
interest or premium") to:
Citibank N.A. (ABA #021-000-089)
New York, New York
Concentration A/C: 36112805
For further credit: Allied Life Insurance Company "B"
Custody Account No.: 846591
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above with duplicate notice with respect to payments to:
Citicorp
1410 N. Westshore Blvd.
Tampa, FL 33607
Attention: P&I Department; Ramona Jones
For Account: 846591 Allied Life Insurance Company "B"
P&I Department Fax: (813) 207-1701
Name of Nominee in which Notes are to be issued: GERLACH & CO
TAXPAYER I.D. NUMBER: 42-0921353
I-21
<PAGE>
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
FIRST PENN-PACIFIC LIFE INSURANCE $1,600,000
COMPANY
c/o Lincoln Investment Management, Inc.
200 East Berry Street
Renaissance Square
Fort Wayne, Indiana 46802
Attention: Investments/Private Placements
Facsimile: (219) 455-5499 Private Placements
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "H.B.
Fuller Company, 6.60% Senior Notes due 2010, PPN 359694 C# 1, principal,
interest or premium") to:
Chase Manhattan Bank (ABA #021000021)
New York, New York
A/C 900-9-000200
Further credit to A/C: G-05996 First Penn-Pacific Life Insurance Company
Notices
All notices and communications, including notices with respect to payments, and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: CUDD & CO
Taxpayer I.D. Number for First Penn-Pacific: 23-2044248
I-22
<PAGE>
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
SONS OF NORWAY $500,000
c/o Lincoln Investment Management, Inc.
200 East Berry Street
Renaissance Square
Fort Wayne, Indiana 46802
Attention: Investments/Private Placements
Facsimile: (219) 455-5499 Private Placements
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "H.B.
Fuller Company, 6.60% Senior Notes due 2010, PPN 359694 C# 1, principal,
interest or premium") to:
U.S. Bank Trust National Association
Minneapolis, MN
ABA #091 0000 22
A/C: 180121167365
BNF: U.S. Bank Institutional Financial Services
A/C: 47300020
OBI: Attention Sons of Norway 12601910
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above with duplicate notice with respect to payments to:
U.S. Bank National Association
180 E. 5th Street
P.O. Box 64190
St. Paul, MN 55164-0190
Attention: Ms. Nancy Bonanno (612) 224-0642
Mail Code: SPEN0502
Name of Nominee in which Notes are to be issued: VAR & CO
TAXPAYER I.D. NUMBER: 41-0547795
I-23
<PAGE>
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
KNIGHTS OF COLUMBUS $10,000,000
One Columbus Plaza
New Haven, Connecticut 06510-3326
Attention: Investment Department
Telecopier Number: (203) 772-0037
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "H.B.
Fuller Company, 6.60% Senior Notes due 2010, PPN 359694 C# 1, principal,
interest or premium") to:
Bank of New York (ABA #021-000-018)
One Wall Street
New York, New York 10286
for credit to: Knights of Columbus
General Account #8900300825
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payments and written confirmation of each such payment,
to be addressed:
Knights of Columbus
P. O. Box 2016
New Haven, Connecticut 06521-2016
Attention: Accounting Department
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 06-0416470
I-24
<PAGE>
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
AMERICAN FAMILY LIFE INSURANCE $5,000,000
COMPANY
6000 American Parkway
Madison, Wisconsin 53783-0001
Attention: Investment Division - Private Placements
Telecopier Number: (608) 243-4923
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "H.B.
Fuller Company, 6.60% Senior Notes due 2010, PPN 359694 C# 1, principal,
interest or premium") to:
Firstar Bank Milwaukee, N.A.
Account of Firstar Trust Company
(ABA #075-000-022)
for credit to Account Number 112 950 027
For further credit to Trust Account Number 000018012500 for
AFLIC-Traditional Portfolio
Attention: Accounting Department
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment as well as quarterly and annual
financial statements, to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: BAND & CO
Taxpayer I.D. Number: 39-6040365
I-25
<PAGE>
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
LUTHERAN BROTHERHOOD $7,000,000
625 Fourth Avenue South
Minneapolis, Minnesota 55415
Attention: Investment Division
Payments
All payments of principal, interest and premium on the account of the Notes
shall be made by bank wire transfer (in immediately available funds) to:
Norwest Bank Minnesota, N.A.
ABA #091000019
For Credit to Trust Clearing Account #08-40-245
Attention: Sarah Corcoran
For credit to: Lutheran Brotherhood
Account Number 12651300
All payments must include the following information:
A/C Lutheran Brotherhood
Account No.: 12561300
Security Description
PPN Number
Reference Purpose of Payment
Interest and/or Principal Breakdown
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payments and written confirmation of each such payment,
to be addressed:
Lutheran Brotherhood
625 Fourth Avenue South, 10th Floor
Minneapolis, Minnesota 55415
Attention: Investment Accounting/Trading Administrator
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 41-0385700
I-26
<PAGE>
LIENS SECURING FUNDED DEBT
(INCLUDING CAPITALIZED LEASES)
AS OF FEBRUARY 28, 1998
PRINCIPAL AMOUNT
OF INDEBTEDNESS
OBLIGOR SUBJECT OF LIEN SECURED
H.B. Fuller, Costa Rica Machinery and Equipment $40,771
Schedule II
(to Note Agreement)
<PAGE>
H.B. FULLER COMPANY
6.60% Senior Note
Due June 2, 2010
PPN: 359694 C# 1
No. R-
______________, 19____
$
H.B. Fuller Company, a Minnesota corporation (the "Company"), for value
received, hereby promises to pay to
or registered assigns,
on the second day of June, 2010
the principal amount of
DOLLARS ($ )
and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid hereon at the
rate of 6.60% per annum from the date hereof until maturity, payable
semiannually on the second day of each June and December in each year commencing
December 2, 1998, and at maturity. The Company agrees to pay interest on
overdue principal (including any overdue optional prepayment of principal) and
premium, if any, and (to the extent legally enforceable) on any overdue
installment of interest, at the Overdue Rate after maturity, whether by
acceleration or otherwise, until paid. Both the principal hereof and interest
hereon are payable at the principal office of the Company in St. Paul, Minnesota
in coin or currency of the United States of America which at the time of payment
shall be legal tender for the payment of public and private debts.
This Note is one of the 6.60% Senior Notes due June 2, 2010 (the "Notes")
of the Company in the aggregate principal amount of $125,000,000 issued or to be
issued under and pursuant to the terms and provisions of separate and several
Note Agreements each dated as of June 2, 1998, entered into by the Company with
the original purchasers therein referred to and this Note and the holder hereof
are entitled equally and ratably with the holders of all other Notes outstanding
under the Note Agreements, to all the benefits, security and obligations
provided for thereby or referred to therein, to which Note Agreements reference
is hereby made for the statement thereof.
This Note and the other Notes outstanding under the Note Agreements may be
declared due prior to their expressed maturity dates, all in the events, on the
terms and in the manner and amounts as provided in the Note Agreements.
The Notes are not subject to prepayment or redemption at the option of the
Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Note Agreements.
EXHIBIT A
(to Note Agreement)
<PAGE>
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly endorsed
or accompanied by a written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly authorized in writing.
Payment of or on account of principal, premium, if any, and interest on this
Note shall be made only to or upon the order in writing of the registered
holder.
H.B. Fuller Company
By
Its
A-2
<PAGE>
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Purchasers as follows:
1. Subsidiaries. Annex A attached hereto states the name of each of the
Company's Subsidiaries incorporated under the laws of the United States or a
jurisdiction thereof ("Domestic Subsidiaries") and Significant Subsidiaries
organized under the laws of a jurisdiction outside the United States
("Significant Foreign Subsidiaries"), its jurisdiction of incorporation and the
percentage of its Voting Stock owned by the Company and/or its Significant
Subsidiaries. The Company, each Domestic Subsidiary and each Significant
Foreign Subsidiary has good title to all of the shares it purports to own of the
stock of each Domestic Subsidiary and Significant Foreign Subsidiary, free and
clear in each case of any lien. All such shares have been duly issued and are
fully paid and non-assessable.
2. Corporate Organization and Authority. The Company and each
Significant Subsidiary,
(a) is a corporation duly organized, validly existing and in good
standing (or its equivalent) under the laws of its jurisdiction of
incorporation;
(b) has all requisite power and authority and all necessary licenses
and permits to own and operate its properties and to carry on its business
as now conducted and as presently proposed to be conducted, except to the
extent the failure to have such power and authority and such licenses or
permits would not individually or in the aggregate reasonably be expected
to have a Material Adverse Effect; and
(c) is duly licensed or qualified and is in good standing as a
foreign corporation in each jurisdiction wherein the nature of the business
transacted by it or the nature of the property owned or leased by it makes
such licensing or qualification necessary, other than those jurisdictions
as to which the failure to have such license or be so qualified would not
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect.
3. Business and Property. The Private Placement Memorandum dated May,
1998 (the "Memorandum") prepared by Chase Securities, Inc. and J.P. Morgan
Securities, Inc. generally sets forth the business conducted by the Company and
its Subsidiaries and the principal properties of the Company and its
Subsidiaries.
4. Financial Statements. (a) The consolidated balance sheets of the
Company and its consolidated Subsidiaries as of November 30 in each of the years
1993 to 1997, both inclusive, and the statements of earnings, shareholders'
equity and changes in financial position or cash flows for the fiscal years
ended on said dates accompanied by a report thereon containing an opinion
unqualified as to scope limitations imposed by the Company and otherwise without
qualification except as therein noted, by Price Waterhouse, have been prepared
in accordance with GAAP consistently applied except as therein noted, are
correct and complete and present fairly the financial position of the
EXHIBIT B
(to Note Agreement)
<PAGE>
Company and its Subsidiaries as of such dates and the results of their
operations and changes in their financial position or cash flows for such
periods. The unaudited consolidated balance sheets of the Company and its
consolidated Subsidiaries as of February 28, 1998, and the unaudited statements
of income and retained earnings and cash flows for the three-month period ended
on said date prepared by the Company have been prepared in accordance with GAAP
consistently applied, are correct and complete and present fairly the financial
position of the Company and its consolidated Subsidiaries as of said date and
the results of their operations and changes in their financial position or cash
flows for such period.
(b) Since November 29, 1997, there has been no change in the condition,
financial or otherwise, of the Company and its consolidated Subsidiaries as
shown on the consolidated balance sheet as of such date except changes in the
ordinary course of business, none of which individually or in the aggregate has
been materially adverse to the Company and its Subsidiaries taken as a whole.
5. Indebtedness. Annex B attached hereto correctly describes all Current
Debt, Funded Debt and Capitalized Leases of the Company and its Significant
Subsidiaries outstanding on February 28, 1998.
6. Full Disclosure. Neither the financial statements referred to in
paragraph 4 nor the Agreements, the Memorandum or any other written statement
identified in Annex C hereto and furnished by the Company to you in connection
with the negotiation of the sale of the Notes, contains any untrue statement of
a material fact or omits a material fact necessary to make the statements
contained therein or herein not misleading. There is no fact peculiar to the
Company or its Subsidiaries which the Company has not disclosed to you in
writing which has a Material Adverse Effect nor, so far as the Company can now
foresee, could reasonably be expected to have a Material Adverse Effect.
7. Pending Litigation. There are no proceedings pending or, to the
knowledge of the Company threatened, against or affecting the Company, any
Domestic Subsidiary or any Significant Foreign Subsidiary in any court or before
any governmental authority or arbitration board or tribunal which individually
or in the aggregate could reasonably be expected to have a Material Adverse
Effect. Neither the Company, any Domestic Subsidiary nor, to the best of the
Company's knowledge, any Significant Foreign Subsidiary is in default with
respect to any order of any court or governmental authority or arbitration board
or tribunal.
8. Title to Property; Leases. The Company and its Subsidiaries have good
and sufficient title to their respective Material properties, including all such
properties reflected in the most recent audited balance sheet referred to in
paragraph 4 or purported to have been acquired by the Company or any Subsidiary
after said date (except as sold or otherwise disposed of in the ordinary course
of business), in each case free and clear of liens prohibited by the Agreements,
except for those defects in title and liens that, individually or in the
aggregate, would not have a Material Adverse Effect. All Material leases are
valid and subsisting and are in full force and effect in all material respects.
9. Licenses, Permits, etc. The Company and its Subsidiaries own or
possess all licenses, permits, franchises, authorizations, patents, copyrights,
service marks,
B-2
<PAGE>
trademarks and trade names, or rights thereto, that are Material, without known
conflict with the rights of others, except for those conflicts that,
individually or in the aggregate, would not have a Material Adverse Effect.
10. Sale is Legal and Authorized. The sale of the Notes and compliance
by the Company with all of the provisions of the Agreements and the Notes--
(a) are within the corporate powers of the Company;
(b) have been duly authorized by proper corporate action on the part
of the Company (no action by the shareholders of the Company being required
by law, by the Articles of Incorporation or By-laws of the Company or
otherwise), executed and delivered by the Company and the Agreements and
the Notes constitute the legal, valid and binding obligations, contracts
and agreements of the Company enforceable in accordance with their
respective terms; and
(c) will not violate any provisions of any law or any order of any
court or governmental authority or agency applicable to the Company and
will not conflict with or result in any breach of any of the terms,
conditions or provisions of, or constitute a default under the Articles of
Incorporation or By-laws of the Company or any indenture or other agreement
or instrument to which the Company is a party or by which it is bound or
result in the imposition of any liens or encumbrances on any property of
the Company.
11. No Defaults. No Default or Event of Default as defined in the
Agreements has occurred and is continuing. Neither the Company nor any
Significant Subsidiary is in default in the payment of principal or interest on
any Indebtedness for borrowed money and is not in default under any instrument
or instruments or agreements under and subject to which any Indebtedness for
borrowed money has been issued and no event has occurred and is continuing under
the provisions of any such instrument or agreement which with the lapse of time
or the giving of notice, or both, would constitute an event of default
thereunder.
12. Governmental Consent. No approval, consent or withholding of
objection on the part of any regulatory body, state, Federal or local, is
necessary in connection with the execution and delivery by the Company of the
Agreements or the Notes or compliance by the Company with any of the provisions
of the Agreements or the Notes.
13. Taxes. The Company and its Subsidiaries have filed all income tax
returns that are required to have been filed in any jurisdiction, and have paid
all taxes shown to be due and payable on such returns and all other taxes and
assessments payable by them, to the extent such taxes and assessments have
become due and payable and before they have become delinquent, except for any
taxes and assessments (i) the amount of which is not individually or in the
aggregate Material or (ii) the amount, applicability or validity of which is
currently being contested in good faith by appropriate proceedings and with
respect to which the Company or a Subsidiary, as the case may be, has
established adequate reserves in accordance with GAAP. The Federal income tax
liabilities of the Company and its Subsidiaries have been determined by the
Internal Revenue Service and paid for all fiscal years up to and including the
fiscal year ended November 30, 1991.
B-3
<PAGE>
14. Use of Proceeds. The net proceeds from the sale of the Notes will
be used to refinance existing Indebtedness and for other general corporate
purposes. None of the transactions contemplated in the Agreements (including,
without limitation thereof, the use of proceeds from the issuance of the Notes)
will violate or result in a violation of Section 7 of the Exchange Act or any
regulation issued pursuant thereto, including, without limitation, Regulations
U, T and X of the Board of Governors of the Federal Reserve System, 12 C.F.R.,
Chapter II. None of the proceeds from the sale of the Notes will be used to
purchase, or refinance any borrowing, the proceeds of which were used to
purchase any "margin stock" within the meaning of the Exchange Act. Margin
stock does not constitute more than 1% of the value of the consolidated assets
of the Company and its Subsidiaries and the Company does not have any present
intention that margin stock will constitute more than 1% of the value of such
assets.
15. Private Offering. Neither the Company, directly or indirectly, nor
any agent on its behalf has offered or will offer the Notes or any similar
Security or has solicited or will solicit an offer to acquire the Notes or any
similar Security from or has otherwise approached or negotiated or will approach
or negotiate in respect of the Notes or any similar Security with any Person
other than you and not more than 50 other institutional investors, each of whom
was offered a portion of the Notes at private sale for investment. Neither the
Company, directly or indirectly, nor any agent on its behalf has offered or will
offer the Notes or any similar Security or has solicited or will solicit an
offer to acquire the Notes or any similar Security from any Person so as to
bring the issuance and sale of the Notes within the provisions of Section 5 of
the Securities Act.
16. Compliance with ERISA. (a) The Company and each ERISA Affiliate
have operated and administered each Plan in compliance with all applicable laws
except for such instances of noncompliance as have not resulted in and could not
reasonably be expected to result in a Material Adverse Effect. Neither the
Company nor any ERISA Affiliate has incurred any liability pursuant to Title I
or IV of ERISA or the penalty or excise tax provisions of the Code relating to
employee benefit plans (as defined in Section 3 of ERISA), and no event,
transaction or condition has occurred or exists that would reasonably be
expected to result in the incurrence of any such liability by the Company or any
ERISA Affiliate, or in the imposition of any lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate, in either case
pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions
or to Section 401(a)(29) or 412 of the Code, other than such liabilities or
liens as would not be individually or in the aggregate Material.
(b) The present value of the aggregate benefit liabilities under each of
the Plans (other than Multiemployer Plans), determined as of the end of such
Plan's most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities. The term "benefit liabilities" has the
meaning specified in Section 4001 of ERISA and the terms "current value" and
"present value" have the meaning specified in Section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.
B-4
<PAGE>
(d) The expected postretirement benefit obligation (determined as of the
last day of the Company's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company and its Subsidiaries is Material, as described in the
Form 10-K of the Company for the fiscal year ending November 29, 1997.
(e) The execution and delivery of the Agreements and the issuance and
sale of the Notes hereunder will not involve any transaction that is subject to
the prohibitions of section 406 of ERISA or in connection with which a tax could
be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The
representation by the Company in the first sentence of this paragraph (e) is
made in reliance upon and subject to the accuracy of your representation in
Section 3.2(b) of the Agreements.
17. Compliance with Law. Neither the Company nor any Subsidiary (a) is
in violation of any law, ordinance, franchise, governmental rule or regulation
to which it is subject; or (b) has failed to obtain any license, permit,
franchise or other governmental authorization necessary to the ownership of its
property or to the conduct of its business, which violation or failure to obtain
individually or in the aggregate could reasonably be expected to have a Material
Adverse Effect.
18. Compliance with Environmental Laws. None of the Company or any
Domestic Subsidiary or any Significant Foreign Subsidiary is in violation of any
applicable Federal, state, or local laws, statutes, rules, regulations or
ordinances relating to public health, safety or the environment, including,
without limitation, relating to releases, discharges, emissions or disposals to
air, water, land or ground water, to the withdrawal or use of ground water, to
the use, handling or disposal of polychlorinated biphenyls (PCB's), asbestos or
urea formaldehyde, to the treatment, storage, disposal or management of
hazardous substances (including, without limitation, petroleum, its derivatives,
by-products or other hydrocarbons), to exposure to toxic, hazardous or other
controlled, prohibited or regulated substances, which violation or violations,
individually or in the aggregate, could reasonably be expected to have a
material adverse effect on the business, operations, affairs, financial
condition or properties of the Company and its Subsidiaries, taken as a whole.
The Company does not know of any liability or class of liabilities of the
Company or any Subsidiary under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986 (42 U.S.C. Section 9601 et seq.) or the Resource
Conservation and Recovery Act of 1976, as amended (42 U.S.C. Section 6901 et
seq.), which liability or class of liabilities, individually or in the
aggregate, could reasonably be expected to have a material adverse effect on the
business, operations, affairs, financial condition or properties of the Company
and its Subsidiaries, taken as a whole.
B-5
<PAGE>
DOMESTIC SUBSIDIARIES AND SIGNIFICANT
FOREIGN SUBSIDIARIES OF THE COMPANY
1. DOMESTIC SUBSIDIARIES:
<TABLE>
<CAPTION>
PERCENTAGE OF VOTING
STOCK OWNED BY COMPANY
JURISDICTION OF AND EACH OTHER DOMESTIC
NAME OF SUBSIDIARY INCORPORATION OR SIGNIFICANT SUBSIDIARY
<S> <C> <C>
ChemEquity, Inc. U.S. (Minnesota) 100.0%
F.A.I. Trading Company U.S. (Delaware) 100.0%
Fiber-Resin Corp. U.S. (Minnesota) 100.0%
Foster Products Corporation U.S. (Minnesota) 100.0%
H.B. Fuller Automotive Company U.S. (Kansas) 100.0%
H.B. Fuller Company Puerto Rico U.S. (Delaware) 100.0%
H.B. Fuller International, Inc. U.S. (Delaware) 100.0%
H.B. Fuller Licensing & Financing, U.S. (Delaware) 100.0%
Inc.
TEC Incorporated U.S. (Minnesota) 100.0%
Linear Products, Inc. U.S. (Washington) 100.0%
EFTEC North America, LLC U.S. (Michigan) 70%
</TABLE>
2. SIGNIFICANT FOREIGN SUBSIDIARIES:
<TABLE>
<CAPTION>
PERCENTAGE OF VOTING STOCK
JURISDICTION OF OWNED BY COMPANY AND EACH
NAME OF SUBSIDIARY INCORPORATION OTHER SIGNIFICANT SUBSIDIARY
<S> <C> <C>
Kativo Chemical Industries, S.A. Panama 99.70%
</TABLE>
ANNEX A
(to Representations and Warranties)
<PAGE>
DESCRIPTION OF DEBT AND CAPITALIZED LEASES
1. Current Debt of the Company and its Significant Subsidiaries outstanding on
February 28, 1998 is as follows:
Kativo Chemical Industries, S.A. $13,380,521
H.B. Fuller Co. $30,306,395
2. Funded Debt of the Company and its Significant Subsidiaries outstanding on
February 28, 1998 is as follows:
H.B. Fuller Co. $207,349,680
Kativo Chemical Industries, S.A. $ 5,978,679
3. Capitalized Leases of the Company and its Significant Subsidiaries
outstanding on February 28, 1998 are as follows:
None
ANNEX B
(to Representations and Warranties)
<PAGE>
DISCLOSURE SCHEDULE
None
ANNEX C
(to Representations and Warranties)
<PAGE>
DESCRIPTION OF SPECIAL COUNSEL'S CLOSING OPINIONS
The respective closing opinions of Chapman and Cutler, special counsel to
the Purchasers, called for by SECTION 4.2 of the Note Agreements, shall be dated
the Closing Date and addressed to the Purchasers, shall be satisfactory in form
and substance to the Purchasers on the Closing Date and shall be to the effect
that:
(1) The Company is a corporation, validly existing and in good
standing under the laws of the State of Minnesota, has corporate power and
corporate authority to execute and deliver the Agreements and to issue the
Notes.
(2) The Note Agreements have been duly authorized by all necessary
corporate action on the part of the Company, have been duly executed and
delivered by the Company and constitute the legal, valid and binding
contracts of the Company enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent conveyance and similar laws
affecting creditors' rights generally, and general principles of equity
(regardless of whether the application of such principles is considered in
a proceeding in equity or at law).
(3) The Notes have been duly authorized by all necessary corporate
action on the part of the Company, and the Notes being delivered on the
date hereof have been duly executed and delivered by the Company and
constitute the legal, valid and binding obligations of the Company
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance and similar laws affecting creditors'
rights generally, and general principles of equity (regardless of whether
the application of such principles is considered in a proceeding in equity
or at law).
(4) The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Agreements do not, under existing
law, require the registration of the Notes under the Securities Act or the
qualification of an indenture under the Trust Indenture Act of 1939, as
amended.
The opinions of Chapman and Cutler shall also state that the opinions of
Richard C. Baker, Vice President and General Counsel to the Company, are
satisfactory in scope and form to Chapman and Cutler and that, in their opinion,
the Purchasers are justified in relying thereon.
In rendering the opinion set forth in paragraph 1 above, Chapman and Cutler
may rely, as to matters referred to in paragraph 1, solely upon an examination
of the Articles of Incorporation certified by, and a certificate of good
standing of the Company from, the Secretary of State of the State of Minnesota,
the By-laws of the Company and the general business corporation law of the State
of Minnesota. The opinion of Chapman and Cutler is limited to the laws of the
State of Illinois, the general business corporation law of the State of
Minnesota and the Federal laws of the United States.
With respect to matters of fact upon which such opinion is based, Chapman
and Cutler may rely on appropriate certificates of public officials and officers
of the Company and upon representations of the Company and the Purchasers
delivered in connection with the issuance and sale of the Notes.
Exhibit C
(to Note Agreement)
<PAGE>
DESCRIPTION OF CLOSING OPINION OF COUNSEL TO THE COMPANY TO BE
DELIVERED ON THE CLOSING DATE
The closing opinion of Richard C. Baker, Vice President and General Counsel
to the Company to be delivered on the Closing Date, which is called for by
SECTION 4.2 of the Note Agreements, shall be dated the Closing Date and
addressed to the Purchasers, and shall be satisfactory in scope and form to the
Purchasers and shall be to the effect that:
(1) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Minnesota and has the
corporate power and the corporate authority to execute and perform the Note
Agreements and to issue the Notes and has the corporate power and the
corporate authority to conduct the activities in which it is now engaged,
and is duly licensed or qualified and is in good standing as a foreign
corporation in each jurisdiction in which the character of the properties
owned or leased by it or the nature of the business transacted by it makes
such licensing or qualification necessary except such jurisdictions as to
which the failure to be so licensed or qualified would not have a Material
Adverse Effect.
(2) Each Significant Subsidiary is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and is duly licensed or qualified and is in good standing as
a foreign corporation in each jurisdiction wherein the nature of the
business transacted by it or the character of the properties owned or
leased by it makes such licensing or qualification necessary except such
jurisdictions as to which the failure to be so licensed or qualified would
not have a Material Adverse Effect.
(3) The Company and each Significant Subsidiary has marketable title
to the capital stock of each Significant Subsidiary it purports to own and
all such shares have been duly issued and are fully paid and non-
assessable.
(4) The Note Agreements have been duly authorized by all necessary
corporate action on the part of the Company, have been duly executed and
delivered by the Company and constitute the legal, valid and binding
contracts of the Company enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent conveyance and similar laws
affecting creditors' rights generally, and general principles of equity
(regardless of whether the application of such principles is considered in
a proceeding in equity or at law).
(5) The Notes have been duly authorized by all necessary corporate
action on the part of the Company, and the Notes being delivered on the
date hereof have been duly executed and delivered by the Company and
constitute the legal, valid and binding obligations of the Company
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance and similar laws affecting creditors'
rights generally, and general principles of equity (regardless of whether
the application of such principles is considered in a proceeding in equity
or at law).
(6) The issuance and sale of the Notes being delivered on the date
hereof and the execution, delivery and performance by the Company of the
Note Agreements do not conflict with or result in any breach of any of the
provisions of or constitute a default under or result in the creation or
imposition of any lien or
Exhibit D
(to Note Agreement)
<PAGE>
encumbrance upon any of the property of the Company pursuant to the
provisions of the Articles of Incorporation or By laws of the Company or
any agreement or other instrument known to such counsel to which the
Company is a party or by which the Company may be bound.
(7) No approval, consent or withholding of objection on the part of,
or filing, registration or qualification with, any governmental body,
Federal, state or local, is necessary in connection with the execution and
delivery of the Note Agreements or the Notes.
(8) (a) There are, to the knowledge of such counsel, no actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of the Company or a Subsidiary) pending or threatened against or affecting
the Company or any Subsidiary, or the business or properties of the Company
or any Subsidiary, in any court or before or by any governmental
department, commission, board, agency or instrumentality, domestic or
foreign, or any arbitrator, which could reasonably be expected to result in
any Material Adverse Effect; and (b) neither the Company nor any Subsidiary
is, to the knowledge of such counsel, in default with respect to any order,
writ, injunction or decree of any court or arbitrator, or any order or
demand of any governmental agency.
(9) The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Agreements do not under existing law
require the registration of the Notes under the Securities Act or the
qualification of an indenture in respect thereof under the Trust Indenture
Act of 1939, as amended.
Such opinion of Richard C. Baker, Vice President and General Counsel of the
Company, shall cover such other matters relating to the sale of the Notes as the
Purchasers may reasonably request. With respect to matters of fact on which
such opinion is based, such counsel shall be entitled to rely on appropriate
certificates of public officials and officers of the Company. Such opinion of
such counsel may be limited to the laws of the State of Minnesota and the
Federal laws of the United States.
D-2
<PAGE>
EXHIBIT 10(A)
H.B. FULLER COMPANY
DIRECTORS' STOCK PLAN
AS AMENDED AND RESTATED JULY 16, 1998
Section 1. ESTABLISHMENT. H.B. Fuller Company hereby establishes the "H.B.
FULLER COMPANY DIRECTORS' STOCK PLAN" for Eligible Directors of the Company.
Section 2. EFFECTIVE DATE. This Plan was originally approved by the Board
of Directors on December 1, 1988. The Plan was approved by shareholders on April
20, 1989. The Plan was most recently amended on July 16, 1998.
Section 3. PURPOSE. The purpose of the Plan is to provide Eligible
Directors with a means of expressing their commitment to the Company by
subjecting their deferred retainer fees and meeting fees to the stock market
performance of the Company's Stock.
Section 4. DEFINITIONS.
(a) BOOKKEEPING RESERVE ACCOUNT. The term "Bookkeeping Reserve
Account" shall have the meaning given in Section 6 of the Plan.
(b) CHANGE IN CONTROL. The term "Change in Control" shall mean any of
the following events:
(i) a change in the control of the Company of a nature that would
be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under Securities Exchange Act of 1934 (the
"Exchange Act"), whether or not the Company is then subject to such
reporting requirement;
(ii) the public announcement (which, for purposes of this
definition, 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 has
become the "beneficial owner" (as defined in Rule 13(d)(3) promulgated
under the Exchange Act), directly or indirectly, of securities of the
Company representing 19% or more of the Voting Power of the Company
then outstanding;
(iii) 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);
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<PAGE>
(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 the surviving entity's then
outstanding voting securities; (B) any sale, lease, exchange or other
transfer in one transaction or series of related transactions
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
(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.
(c) COMPANY. The term "Company" shall mean H.B. Fuller Company, a
Minnesota corporation, and its successors and assigns.
(d) ELECTION AGREEMENT. The term "Election Agreement" shall mean each
and every "Election Agreement" executed by an Eligible Director and
delivered to the Company hereunder, the form of which is attached to the
Plan as EXHIBIT A and is incorporated by reference herein.
(e) ELIGIBLE DIRECTOR. The term "Eligible Director" shall mean any
present or future director of the Company who is not an employee of the
Company or any subsidiary of the Company.
(f) MARKET PRICE. The term "Market Price" shall mean the average of
the highest and lowest prices per share of the Stock as reported on the day
of the required calculation or, if there were no Stock transactions on such
day, on the next preceding day on which there were Stock transactions.
(g) MEETING FEE. The term "Meeting Fee" shall mean any amounts that
would have been paid to an Eligible Director during a calendar year with
respect to attendance at a meeting of the Company's Board of Directors or a
committee thereof had deferral for such year not been timely elected. In no
event does the term "Meeting Fee," include any per diem amounts paid with
respect to Board or committee meeting attendance.
(h) PARTICIPATING DIRECTOR. The term "Participating Director" shall
mean an Eligible Director who has executed and delivered an Election
Agreement to the Company.
(i) PAYMENT DATE. The term "Payment Date" shall mean the earliest to
occur of the following dates:
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<PAGE>
(i) the later of the date of the Participating Director's
Retirement or the date (if any) specified in the Participating
Director's Election Agreement; or
(ii) the Participating Director's death; or
(iii) the Participating Director's total and permanent
disability; or
(iv) the date of a Change in Control.
(j) PLAN. The term "Plan" shall mean the Company's Directors' Stock
Plan as it may be amended from time to time.
(k) RETAINER FEE. The term "Retainer Fee" shall mean any of the
following amounts with respect to a calendar year: (i) two-thirds of the
retainer fee amount that would be paid to a Participating Director in March
of the calendar year in question had deferral for such year not been timely
elected, such two-thirds 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 Participating Director in June, September and December
of the calendar year in question had deferral for such year not been timely
elected; and (iii) one-third of the retainer fee amount that would be paid
to a Participating Director in March of the next calendar year had deferral
for the previous calendar year not been timely elected, such one-third
amount representing the retainer fee amount earned in December of such
previous calendar year.
(l) RETIREMENT. The term "Retirement" shall mean 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 shareholders of the Company to a succeeding
term.
(m) STOCK. The term "Stock" shall mean the par value of $1.00 Common
Stock of the Company.
(n) VOTING POWER. The term "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 preferred stock, $6.6667 par value,
outstanding as of July 16, 1998.
Section 5. DIRECTORS' ELECTIONS. Each Eligible Director shall be given an
opportunity by the Company on an annual basis to defer receipt of all or a
percentage of the Retainer Fee and Meeting Fees which such Eligible Director has
the opportunity to earn during the next succeeding calendar year through service
as a director of the Company.
-3-
<PAGE>
In order to participate in the Plan for a particular calendar year, an
Eligible Director must elect in writing to participate and such election must be
effective before the beginning of the calendar year to which the election
relates. To make an effective election, a properly completed and executed
Election Agreement must be received by the Company at its principal executive
office, addressed to the attention of the Company's Corporate Secretary.
Section 6. BOOKKEEPING RESERVE ACCOUNT.
(a) ESTABLISHMENT OF ACCOUNT. The Company shall establish and maintain
a Bookkeeping Reserve Account for each Participating Director. The
Bookkeeping Reserve Account shall reflect all entries required to be made
pursuant to the terms and conditions of the Participating Director's
Election Agreement. There shall be a separate accounting for each Election
Agreement made by each Participating Director.
(b) CREDITS TO ACCOUNT. The Company shall credit to a Participating
Director's Bookkeeping Reserve Account a number (to four decimal places) of
units that is equal to 110% of the amount of the Participating Director's
Retainer Fee and Meeting Fees deferred pursuant to an Election Agreement as
periodically earned by the Participating Director divided by the Market
Price on the day upon which such amounts are earned. For this purpose, the
amounts of a Participating Director's Retainer Fee are deemed 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 earned when they would have otherwise been paid if a deferral had
not been elected.
The Company shall credit to the Bookkeeping Reserve Account, on each
day that the Company declares a cash dividend to holders of the Stock, that
number (to four decimal places) of units that is equal to the total number
of units in the Participating Director's Bookkeeping Reserve Account on the
declaration date for such dividend multiplied by the cash dividend per
share of Stock divided by the Market Price on the declaration date for such
dividend. The number of units credited to a Bookkeeping Reserve Account
shall be adjusted appropriately by the Company in the event of any change
in Stock by reason of stock dividends, split-ups, recapitalizations,
combinations, exchanges of shares and other like capital changes, but no
adjustment shall be required by reason of any sales of shares of Stock by
the Company at any price, whether below, at or above Market Price, and
whether by or pursuant to warrant, option, right, conversion right or
privilege or otherwise, and a Participating Director shall have no rights
as a holder of Stock unless and until a certificate for shares of stock is
issued by the Company.
-4-
<PAGE>
Section 7. PAYMENT OF ACCOUNT VALUE.
(a) GENERAL. The Company shall, with respect to each Bookkeeping
Reserve Account for each Participating Director, cause to be issued and
delivered to such Participating Director (or any applicable alternate
payee, as determined under the Plan or the applicable Election Agreement)
on or promptly after the applicable Payment Date a certificate or
certificates for that number of shares of Stock equal to the whole number
of units credited to the Participating Director's Bookkeeping Reserve
Account. The value of any fractional unit (based on the Market Price of a
share of Stock on the Payment Date) in the Participating Director's
Bookkeeping Reserve Account shall be paid in cash at the time the
certificate or certificates are delivered to the Participating Director (or
any applicable alternate payee).
(b) DISABILITY. If a Payment Date occurs by reason of a determination
by the Company that the Participating Director has become totally and
permanently disabled, and if the disability is due to mental incapacity,
the shares of Stock deliverable under the Plan and the applicable Election
Agreement shall be issued in the name of and delivered to the Participating
Director's legally appointed personal representative. If no such
representative has been appointed, then delivery shall be in the name of
and to the Participating Director's spouse, or if the Participating
Director is then unmarried, then such shares of Stock shall be held until
the persons who would be entitled thereto if the Participating Director
were then to die intestate make proper claim to the Company for such shares
of Stock.
(c) DEATH. If a Payment Date occurs because the Participating Director
shall die, the shares of Stock required to be delivered under the Plan and
the applicable Election Agreement shall be promptly issued in the name of
and delivered to the Participating Director's beneficiary (or
beneficiaries) as designated in the applicable Election Agreement or, if
none are so designated, in the name of and to the legally appointed
personal representative of the Participating Director's estate. If no legal
proceedings for such appointment have been instituted within sixty days
after receipt by the Company of notice of the Participating Director's
death, such delivery shall be in accordance with the last sentence of
Section 7(b) above.
Section 8. ADMINISTRATION. Directors of the Company who are not Eligible
Directors shall be solely responsible for the administration of the Plan but may
delegate any portion of such responsibility that they determine to be
appropriate. To the extent consistent with the terms of the Plan, such directors
shall have the power to interpret any Plan provision, to prescribe, amend and
rescind rules and regulations relating to the Plan and make all other
determinations that it deems necessary or advisable to administer the Plan. Such
directors shall be called the Directors' Stock Plan Committee.
-5-
<PAGE>
Section 9. OTHER BENEFITS. Except to the extent specifically provided in
the Company's Retirement Plan for Directors or any other plan or arrangement
maintained or sponsored by the Company, the Plan benefits to Eligible Directors
(other than Retainer Fees and Meeting Fees) shall not be deemed to be
compensation for the purpose of computing benefits under such Retirement Plan
for Directors or other plan or arrangement.
Section 10. STATUS OF ACCOUNT. The Company shall have full and unrestricted
use of all property or amounts payable pursuant to the Plan, and title to and
beneficial ownership of any assets which the Company may earmark to pay the
amounts hereunder shall at all times remain in the Company and no Eligible
Director shall have any property interest whatsoever in any specific assets of
the Company. The Bookkeeping Reserve Account is not intended to be a trust
account or escrow account for the benefit of a Participating Director or any
other person or an asset segregation for the benefit of a Participating Director
or any other person. The sole right of a Participating Director, or a
Participating Director's heirs or personal representatives, is a right as an
unsecured general creditor of the Company to claim any shares of Stock to which
the Participating Director becomes entitled pursuant to the terms and conditions
of the Participating Director's Election Agreement and the Plan. The Company
shall provide each Participating Director with an annual report of his or her
Bookkeeping Reserve Account balance.
Section 11. AMENDMENT OR TERMINATION. The Company may, at any time and from
time to time, terminate the Plan or make such amendments as it deems advisable;
provided, however, that no such termination or amendment shall adversely affect
or impair the contract rights of a Participating Director with respect to an
effective Election Agreement unless such Participating Director shall consent in
writing to such termination or amendment; and provided further, that no such
amendment, without the approval of the Company's shareholders, may materially
increase the benefits accruing to the Eligible Directors under the Plan,
increase the number of shares of Stock distributed under the Plan, or materially
modify the requirements as to eligibility under the Plan.
Section 12. STOCK SUBJECT TO PLAN. The maximum number of shares of Stock
that shall be reserved for issuance under the Plan shall be 75,000 shares,
subject to adjustment upon changes in the capitalization of the Company as
provided in Section 6 of the Plan.
Section 13. NON-PAYMENT DEFERRAL ARRANGEMENTS. The Company does not intend
that this Plan replace or supersede any presently existing retainer deferral
arrangements or preclude the Company from implementing additional deferral
arrangements.
Section 14. FUTURE DIRECTOR TERMS. Nothing in this Plan or in any Election
Agreement shall obligate a director to continue as such 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 a future term as a
director of the Company.
-6-
<PAGE>
Section 15. NO ALIENATION. The units credited to a Participating Director's
Bookkeeping Reserve Account pursuant to Section 6 of the Plan shall not be
transferable other than by will or by the laws of descent and distribution. No
stock certificates shall be issued to a Participating Director prior to the
applicable Payment Date, in accordance with Section 7 hereof.
Section 16. WITHHOLDING. The Company is entitled to withhold and deduct
from any amounts due from the Company to a Participating Director all legally
required amounts necessary to satisfy any federal, state or local withholding
and employment-related taxes arising directly or indirectly in connection with
the Plan or any Election Agreement, and the Company may require the
Participating Director to remit promptly to the Company the amount of such taxes
before taking any future actions with respect to the Participating Director's
Bookkeeping Reserve Account or Election Agreement.
-7-
<PAGE>
H.B. FULLER COMPANY DIRECTORS' STOCK PLAN
EXHIBIT A
AS AMENDED JULY 16, 1998
ELECTION AGREEMENT
This Election Agreement is by and between H.B. FULLER COMPANY (the "Company"), a
Minnesota corporation, and the undersigned director of the Company ("Director").
The Company and Director, in consideration of the mutual promises stated herein,
agree as follows:
1. Definitions: Reference to the Plan. All terms not specifically defined in
this Election Agreement shall have the meanings set forth in the Company's
Directors' Stock Plan (the "Plan"), unless the context clearly requires
otherwise. This Election Agreement has been executed under, and is subject to
the terms of, the Plan. The terms of the Plan are hereby incorporated herein by
reference in their entirety. Director, by execution hereof, acknowledges having
received a copy of the Plan. This Election Agreement shall be interpreted to be
consistent with the Plan and any ambiguities herein shall be interpreted by
reference to the Plan. In the event that any provision hereof is inconsistent
with the terms of the Plan, then the terms of the Plan shall prevail.
2. Deferral Election.
Director hereby irrevocably elects to defer receipt of the following
percentage of the total Retainer Fee and/or Meeting Fees for the calendar
year ______ pursuant to the terms of the Plan and this Election Agreement:
______% Both Retainer and Meeting Fees
______% Retainer Fee Only
______% Meeting Fees Only
Director hereby irrevocably elects the following optional Payment Date
(Director should initial only one; if no selection is made, then Date of
Retirement will be deemed selected):
______ Date of Retirement; or
______ First Anniversary of Retirement; or
______ Second Anniversary of Retirement; or
______ Third Anniversary of Retirement; or
______ Fourth Anniversary of Retirement; or
______ Fifth Anniversary of Retirement; or
______ Date of Death.
-8-
<PAGE>
3. Beneficiary Designation. (To be completed in all cases.)
Director hereby designates the following beneficiary or beneficiaries:
--------------------------------------------------------
--------------------------------------------------------
4. Stock Certificate Issuance. A certificate or certificates for that number of
shares of Stock equal to the whole number of units in Director's Bookkeeping
Reserve Account shall be issued and delivered to the Participating Director (or
to certain other persons as provided in the Plan or in this Election Agreement)
by the Company on the applicable Payment Date. The value of any fractional unit
shall be paid in cash in accordance with the terms of the Plan.
5. Binding Effect. This Election Agreement shall be binding upon and inure to
the benefit of Director and Director's heirs and personal representatives. It
shall also be binding upon the Company and its successors and assigns.
6. Governing Law. This Election Agreement shall be interpreted and governed by
reference to the laws of the State of Minnesota.
7. No Amendments. This Election Agreement may not be amended or modified in any
respect, except that Director may change the beneficiary designation at any
time.
8. Entire Agreement. This Election Agreement (as the beneficiary designation may
be changed) constitutes the entire agreement of the Company and Director on the
subject matter hereof.
IN WITNESS WHEREOF, the Company and Director have signed this Election
Agreement on the dates stated below.
H.B. FULLER COMPANY DIRECTOR
BY
-------------------------------- -----------------------------------
(SIGNATURE)
TITLE
----------------------------- -----------------------------------
(PRINT NAME)
DATE DATE
------------------------------ -------------------------------
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<PAGE>
EXHIBIT 10(B)
SEPARATION AGREEMENT
This Separation Agreement ("Agreement") is made and entered into this 28th
day of August, 1998, by and between Jerald L. Scott ("I", "Me", or "My" as the
case may be) and H.B. Fuller Company, a Minnesota corporation, with offices at
1200 Willow Lake Boulevard, P.O. Box 64683, St. Paul, Minnesota 55164-0683 and
all of its divisions, subsidiaries, affiliates, and all of its agents, officers,
employees, directors, and shareholders (hereinafter collectively "Fuller"):
WHEREAS, Fuller and I have determined that it would be in our mutual best
interests if I voluntarily resigned from My employment.
NOW, THEREFORE, in consideration of the promises, agreements and covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby expressly acknowledged, the undersigned hereby
agree and promise as follows:
1. RECITALS. The foregoing recitals are hereby incorporated as if fully set
forth herein.
2. LEAVE OF ABSENCE. On or before December 31, 1998, I will resign from My
position as Senior Vice President Operations, and I will commence a paid Leave
of Absence, during which time I will perform consulting duties for Fuller, as
requested. The Leave of Absence shall continue until October 31, 2000, at which
time I agree to voluntarily resign from My employment with Fuller. I understand
and acknowledge, however, that My employment with Fuller may be earlier
terminated by reason of My death, or for willful misconduct detrimental to the
interests of Fuller, including but not limited to, any violation of the
obligations I have undertaken in Paragraphs 10, 11, 12 or 13 of this Agreement.
During the Leave of Absence, I am free to work outside of Fuller, provided I do
not violate paragraphs 10, 11, 12, or 13 of this Agreement and provided such
work does not conflict with my obligation hereunder to perform consulting
duties. During the Leave of Absence, I agree to keep Fuller informed of any
position I accept outside of Fuller and My eligibility for employment benefits.
I freely and knowingly enter into this Agreement.
3. SALARY CONTINUATION. I will continue to be paid at My current salary
rate of $12,447.98 (less state and federal taxes and other legal standard
deductions) on a semi-monthly basis until termination of My employment.
4. BENEFITS CONTINUATION. Except as otherwise stated herein, Fuller agrees
to continue to provide coverage under the employment benefits programs in which
I am currently enrolled, but only to the extent such benefits continue in
existence, until termination of My employment. I further understand and agree
that benefits may be
<PAGE>
continued only to the extent permitted by the terms of the applicable plan or as
permitted by applicable law, and may, at Fuller's election, be discontinued to
the extent I become eligible to received other similar or conflicting benefits
from an employer other than Fuller. I am not waiving any rights to vested
employee benefits extended under Fuller plans.
5. RETIREMENT BENEFITS. The last date of My credited service with Fuller
will be the date of termination of My employment. I understand that My rights to
benefits under Fuller's Retirement Plan, Supplemental Executive Retirement Plan
And Retiree Medical Plan are governed and determined by the rules of said plans.
Pursuant to the terms of the Supplemental Executive Retirement Plan, Fuller
agrees to make, to Me, additional, supplemental, semi-monthly payments, of
$706.25 (less state and federal taxes and other legal standard deductions) until
such time as I reach age 62. Thereafter, and until My death, Fuller agrees to
make, to Me, additional, supplemental, semi-monthly payments under the
Supplemental Executive Retirement Plan in the amount of $161.90 (less state and
federal taxes and other legal standard deductions). These supplemental payments
shall be in addition to, and not in substitution for, the ordinary benefits
which I am to receive under the Supplemental Executive Retirement Plan by virtue
of My credited service with Fuller.
6. PAID TIME OFF BENEFIT. I hereby agree to waive and forfeit the value of
all Paid Time Off benefit which I have accrued through the date of this
Agreement. I further agree that I will accrue no additional Paid Time Off
benefit during the Leave of Absence.
7. BONUS PAYMENT. I understand and agree that My 1998 bonus to paid January
15, 1999 will be in the amount of $83,650.43, and that I am not eligible to
receive, and will not be paid, any bonus for fiscal year 1999 or any period
thereafter.
8. STOCK RETENTION WAIVER. Any retention requirements on the restricted
stock I have received to date, pursuant to Fuller's stock grant program will be
waived effective the date of termination of My employment, as permitted by law.
However, in the event My employment is terminated for any reason other than
death or voluntary resignation, the retention requirements will not be waived
until I have executed a second release, in the form set forth in paragraph 13,
reaffirming My release of all claims through the date of termination, and until
the applicable recision period has expired.
9. COMPANY CAR. The title to the automobile currently provided to Me by
Fuller shall be transferred to My name, without cost to Me, on the date of
termination of My employment or upon My acceptance of a position outside of
Fuller, whichever occurs sooner. However, I understand that I am solely
responsible for paying any income and other taxes as a result of this transfer.
2
<PAGE>
10. CONFIDENTIAL INFORMATION.
a. EMPLOYEE OBLIGATION. I agree that, from and after the date this
Agreement is executed by both parties, I will hold in strict confidence and will
not reveal or disclose to anyone other than family members, spouse or
significant other, attorneys, accountants, tax consultants, or as may be
required by law or court process, any information, facts or occurrences relating
to the negotiations leading to this Agreement, the existence of this Agreement,
or the contents of this Agreement. Furthermore, I agree that, from and after the
date this Agreement is executed by both parties, all the information, facts, or
occurrences relating to formulas, processes, customer lists, computer user
identifiers and passwords, and all purchasing, engineering, accounting,
marketing and other information, not generally known and proprietary to Fuller,
relating to research, development, manufacturing, marketing or sale of Fuller's
products shall be and are hereby deemed to be confidential information
("Confidential Information") of the parties to this Agreement. I agree, from and
after the date this Agreement is executed by both parties, not to use or
disclose any Confidential Information at any time during or after My employment
by Fuller, except in the performance of My duties on behalf of Fuller, or by
written consent of Fuller or as may be required by law or court process. From
and after the date this Agreement is executed by both parties, I agree that all
Confidential Information, including all copies, excerpts and summaries in My
possession or control (whether prepared by Fuller, Myself or others), as well as
all other Fuller property not transferred herein, shall be immediately returned
to Fuller.
b. EMPLOYER OBLIGATION. Fuller agrees that, from and after the date this
Agreement is executed by both parties, it will hold in strict confidence and
will not reveal to anyone other than Fuller executive management personnel,
human resources personnel, attorneys, accountants, tax consultants, or as may be
required by law or court process, any information, facts or occurrences relating
to the negotiations leading to this Agreement, the existence of this Agreement,
or the contents of this Agreement. I recognize that Fuller may be required, by
law, to disclose some or all of the terms of this Agreement in one or more
annual proxy statements to shareholders
11. NON-COMPETITION. For the period of January 1, 1999 through December 31,
2000, I will not serve, directly or indirectly (individually) or as an officer,
director, employee, consultant, partner or co-venturer, or as a stockholder or
other proprietor owning a beneficial interest of more than five percent (5%)) in
any enterprise which is competitive in any manner with any business at the time
carried on by Fuller, without the written consent of Fuller. This means, by way
of illustration but not limitation, that I will not sell or solicit orders for
any "Conflicting Product" to or from any customer whose account I supervised or
serviced for Fuller, and that I will not serve any organization or person
engaged in the development, production or sale of "Conflicting Product." For the
purposes of this illustration, "Conflicting Product" means any product, process,
equipment, concept or service (in existence or under development) of any person
or
3
<PAGE>
organization which resembles or competes with a product, process, equipment,
concept or service upon which I may have worked or concerning which I acquired
confidential information at any time through My work with Fuller.
I understand that this covenant is not intended to limit My subsequent
employment in any industry or for any employer producing a product or service
different from Fuller's. I acknowledge and represent that I have substantial
experience and knowledge such that I can readily obtain employment which does
not violate this covenant.
12. NON-SOLICITATION. For the period of January 1, 1999 through December
31, 2000. I agree that I will not induce, attempt to induce, or in any way
assist or act in concert with any other person or organization in inducing or
attempting to induce any employee or agent of Fuller to terminate such employee
or agent's relationship with Fuller. During such period of time, I agree that I
will not make any offers of employment or assist or act in concert with any
other person or organization in making offers of employment to any person who,
at the time of such offer, is currently in an employment or agency relationship
with Fuller. This Agreement shall not be construed to restrict Me from hiring or
offering employment or work to any individual who was an employee or agent of
Fuller prior to the time I hire or offer employment or work to such individual.
13. RELEASE. In consideration of the promises, agreements and covenants
contained herein, I, on behalf of Myself, My heirs, assigns, spouses,
representatives, and agents do hereby fully release and forever discharge
Fuller, from any and all liability, remedies, claims for relief, demands,
actions, causes of action, suits, grievances, arbitrations and administrative
proceedings under every local, state, or federal law, statute, ordinance or
common-law, and any and all other claims of any kind or nature whatsoever
occurring as of the date of this Agreement, whether in law or in equity,
contract or tort, known or unknown, asserted or unasserted, suspected or
unsuspected, of any kind or nature whatsoever which I may now have or hereafter
have or claim to have against Fuller for, upon, or by reason of any matter,
event, cause or thing occurring prior to the date of this Agreement, including
without limitation, any and all claims of any kind arising out of or in anyway
relating to My employment with Fuller, and further including without limitation:
(i) Any claims, demands, or causes of action arising under, or any claim
for relief on the basis of, an alleged violation of the Civil Rights Act of
1991, Title VII of the Civil Rights Act of 1964, the Age Discrimination In
Employment Act of 1967, as amended, the Employee Retirement Income Security Act,
Title 42 U.S. Section 1985, the Americans With Disabilities Act, the Older
Workers Benefit Protection Act, the Minnesota Human Rights Act, and/or any other
federal, state or local statute, ordinance, or regulation dealing in any way
with employment or employment discrimination;
(ii) Any claims, demands, or causes of action on the basis of any breach of
an express or implied employment contract under the common-law of the State of
Minnesota, or any other state, or on the basis of any claim of defamation,
wrongful
4
<PAGE>
discharge and/or any other common-law, statute or tort or any other claim
whatsoever arising out of or in any way relating to My employment with Fuller or
any other occurrence prior to the date of this Agreement, but excluding claims
which I cannot by law waive and claims for breach of this Agreement.
I warrant that I am legally competent to execute this Release and accept full
responsibility therefore. I also agree that I am signing this Release
voluntarily and with full knowledge of its significance and legal consequence. I
ALSO AGREE THAT I HAVE BEEN ADVISED TO CONSULT WITH ANY ATTORNEY BEFORE SIGNING
THIS AGREEMENT AND THAT FULLER HAS GIVEN ME A FULL TWENTY-ONE (21) DAYS WITHIN
WHICH TO CONSIDER THIS AGREEMENT, BEFORE SIGNING BELOW, IF I SO DESIRE.
I have read and understand Minnesota Statutes Section 363.031 (copy attached). I
understand that I may rescind (that is, cancel) this Agreement within seven (7)
calendar days of signing it to reinstate claims under the Age Discrimination In
Employment Act of 1967 and within fifteen (15) calendar days to reinstate claims
under the Minnesota Human Rights Act. To be effective, My rescission must be in
writing and delivered to Fuller in care of the Vice President of Human
Resources, 1200 Willow Lake Boulevard, P.O. Box 64683, St. Paul, Minnesota
55164-0683. If delivered by mail, such rescission may be postmarked within the
seven (7) or fifteen (15) day period, respectively, and sent by Certified Mail,
Return Receipt Requested to H.B. Fuller Company at 1200 Willow Lake Boulevard,
P.O. Box 64683, St. Paul, Minnesota 55164-068, attention Vice President of Human
Resources.
I UNDERSTAND THAT TIMELY RESCISSION OF ANY PORTION OF THIS AGREEMENT AS PROVIDED
HEREIN, SHALL CONSTITUTE A MATERIAL BREACH OF THIS AGREEMENT RESULTING IN
IMMEDIATE WITHDRAWAL AND RESCISSION OF ALL PROMISES, AGREEMENTS AND COVENANTS
CONTAINED HEREIN.
14. REMEDIES. I acknowledge that the provisions of this Agreement are
reasonable and necessary for the protection of Fuller and that My violation of
this Agreement will cause Fuller irreparable harm for which it will be entitled
to temporary and permanent injunctive relief, money damages insofar as they can
be determined and all related costs and reasonable attorneys' fees.
15. JURISDICTION AND VENUE. This Agreement shall be governed by the laws of
the State of Minnesota and I hereby consent to the jurisdiction and venue of the
courts of the State of Minnesota for the resolution of any disputes arising out
of, or related to, this Agreement, including breach and formation (fraud), to
the exclusion of the courts of any other state.
16. INTEGRATION AND MODIFICATION. Except as provided herein, this Agreement
represents the entire Agreement between Me or anyone who has or obtains any
legal rights or claims through Me and Fuller with respect to the subject matter
covered herein. It replaces any other oral or written agreements,
representations,
5
<PAGE>
promises or discussions between Me and Fuller. This Agreement may not be changed
orally. To be valid, any waiver or modification must be in writing and signed by
all of the parties hereto. If any part of this Agreement is declared by a court
of competent jurisdiction to be illegal, invalid or unlawful, in whole or in
part, then said part shall be modified or suspended, as the case may require,
but only to the extent necessary and all other parts will remain valid and in
full force and effect. This Agreement may be executed in any number of
counterparts which, taken together, shall constitute but one Agreement. A copy
of this Agreement is as valid as the original.
THIS IS A FINAL AGREEMENT AND RELEASE. READ BEFORE SIGNING.
Dated: August 28, 1998 H.B. FULLER COMPANY
By: /s/ James C. Metts
--------------------------------
Its: Vice President-Human Resources
Dated: August 28, 1998 /s/ Jerald L. Scott
--------------------------------
Jerald L. Scott
6958 West Shadow Lake Drive
Lino Lakes, MN 55014
6
<PAGE>
EXHIBIT 10(C)
SEPARATION AGREEMENT
This Separation Agreement ("Agreement") is made and entered into this 28th
day of August, 1998, by and between Rolf Schubert ("I", "Me", or "My" as the
case may be) and H.B. Fuller Company, a Minnesota corporation, with offices at
1200 Willow Lake Boulevard, P.O. Box 64683, St. Paul, Minnesota 55164-0683 and
all of its divisions, subsidiaries, affiliates, and all of its agents, officers,
employees, directors, and shareholders (hereinafter collectively "Fuller"):
WHEREAS, Fuller and I have determined that it would be in our mutual best
interests if I voluntarily resigned from My employment.
NOW, THEREFORE, in consideration of the promises, agreements and covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby expressly acknowledged, the undersigned hereby
agree and promise as follows:
1. RECITALS. The foregoing recitals are hereby incorporated as if fully set
forth herein.
2. LEAVE OF ABSENCE. Effective December 31, 1998, I will resign from My
position as Vice President and Chief Technology Officer, and I will commence a
paid Leave of Absence, during which time I will perform consulting duties for
Fuller, as requested. The Leave of Absence shall continue until July 31, 2000,
at which time I agree to voluntarily resign from My employment with Fuller. I
understand and acknowledge, however, that My employment with Fuller may be
earlier terminated by reason of My death, or for willful misconduct detrimental
to the interests of Fuller, including but not limited to, any violation of the
obligations I have undertaken in Paragraphs 11, 12, 13 or 14 of this Agreement.
During the Leave of Absence, I am free to work outside of Fuller, provided I do
not violate paragraphs 11, 12, 13, or 14 of this Agreement and provided such
work does not conflict with my obligation hereunder to perform consulting
duties. During the Leave of Absence, I agree to keep Fuller informed of any
position I accept outside of Fuller and My eligibility for employment benefits.
I freely and knowingly enter into this Agreement.
3. SALARY CONTINUATION. I will continue to be paid at My current salary
rate of $10,149.92 (less state and federal taxes and other legal standard
deductions) on a semi-monthly basis through July 31, 2000.
<PAGE>
4. BENEFITS CONTINUATION. Except as otherwise stated herein, Fuller agrees
to continue to provide coverage under the employment benefits programs in which
I am currently enrolled, but only to the extent such benefits continue in
existence, until termination of My employment. I further understand and agree
that benefits may be continued only to the extent permitted by the terms of the
applicable plan or as permitted by applicable law, and may, at Fuller's
election, be discontinued to the extent I become eligible to receive other
similar or conflicting benefits from an employer other than Fuller. I am not
waiving any rights to vested employee benefits extended under Fuller plans.
5. RETIREMENT BENEFITS. The last date of My credited service with Fuller
will be the date of termination of My employment. I understand that My rights to
benefits under Fuller's Retirement Plan, Supplemental Executive Retirement Plan
And Retiree Medical Plan are governed and determined by the rules of said plans.
6. PAID TIME OFF BENEFIT. I will be paid for the Paid Time Off benefit
which I have accrued through the date of this Agreement, which amount, it is
agreed, totals sixty-one (61) days. This Paid Time Off benefit will be paid to
Me, in the ordinary course, following termination of My employment. I further
agree that I will accrue no additional Paid Time Off through the date of
termination of My employment.
7. BONUS PAYMENT. I understand and agree that My 1998 bonus to be paid
January 15, 1999 will be in the amount of $70,643.42, and that I am not eligible
to receive, and will not be paid, any bonus for fiscal year 1999 or any period
thereafter.
8. STOCK RETENTION WAIVER. Any retention requirements on the restricted
stock I have received to date, pursuant to Fuller's stock grant program will be
waived effective the date of termination of My employment, as permitted by law.
However, in the event My employment is terminated for any reason other than
death or voluntary resignation, the retention requirements will not be waived
until I have executed a second release, in the form set forth in paragraph 13,
reaffirming My release of all claims through the date of termination, and until
the applicable recision period has expired.
9. COMPANY CAR. The title to the automobile currently provided to Me by
Fuller shall be transferred to My name, without cost to Me, on the date of
termination of My employment or upon My acceptance of a position outside of
Fuller, whichever occurs sooner. However, I understand that I am solely
responsible for paying any income and other taxes as a result of this transfer.
10. OFFICE FURNITURE. The title to the office furniture currently provided
to Me by Fuller shall be transferred to My name, without cost to Me, on January
1, 1999. I understand that I am solely responsible for paying any income and
other taxes as a result of this transfer.
2
<PAGE>
11. CONFIDENTIAL INFORMATION.
a. EMPLOYEE OBLIGATION. I agree that, from and after the date this
Agreement is executed by both parties, I will hold in strict confidence and will
not reveal or disclose to anyone other than family members, spouse or
significant other, attorneys, accountants, tax consultants, or as may be
required by law or court process, any information, facts or occurrences relating
to the negotiations leading to this Agreement, the existence of this Agreement,
or the contents of this Agreement. Furthermore, I agree that, from and after the
date this Agreement is executed by both parties, all the information, facts, or
occurrences relating to formulas, processes, customer lists, computer user
identifiers and passwords, and all purchasing, engineering, accounting,
marketing and other information, not generally known and proprietary to Fuller,
relating to research, development, manufacturing, marketing or sale of Fuller's
products shall be and are hereby deemed to be confidential information
("Confidential Information") of the parties to this Agreement. I agree, from and
after the date this Agreement is executed by both parties, not to use or
disclose any Confidential Information at any time during or after My employment
by Fuller, except in the performance of My duties on behalf of Fuller, or by
written consent of Fuller or as may be required by law or court process. Except
as necessary for the continuing performance of My duties on behalf of Fuller, I
agree that all Confidential Information, including all copies, excerpts and
summaries in My possession or control (whether prepared by Fuller, Myself or
others), as well as all other Fuller property not transferred herein, shall be
returned to Fuller on or before December 31, 1998.
b. EMPLOYER OBLIGATION. Fuller agrees that, from and after the date this
Agreement is executed by both parties, it will hold in strict confidence and
will not reveal to anyone other than Fuller executive management personnel,
human resources personnel, attorneys, accountants, tax consultants, or as may be
required by law or court process, any information, facts or occurrences relating
to the negotiations leading to this Agreement, the existence of this Agreement,
or the contents of this Agreement. I recognize that Fuller may be required, by
law, to disclose some or all of the terms of this Agreement in one or more
annual proxy statements to shareholders.
12. NON-COMPETITION. For the period of January 1, 1999 through December 31,
2000, I will not serve, directly or indirectly (individually) or as an officer,
director, employee, consultant, partner or co-venturer, or as a stockholder or
other proprietor owning a beneficial interest of more than five percent (5%)) in
any enterprise which is competitive in any manner with any business at the time
carried on by Fuller, without the written consent of Fuller. This means, by way
of illustration but not limitation, that I will not sell or solicit orders for
any "Conflicting Product" to or from any customer whose account I supervised or
serviced for Fuller, and that I will not serve any organization or person
engaged in the development, production or sale of "Conflicting Product." For the
purposes of this illustration, "Conflicting Product" means any product, process,
equipment, concept or service (in existence or under development) of any person
or
3
<PAGE>
organization which resembles or competes with a product, process, equipment,
concept or service upon which I may have worked or concerning which I acquired
confidential information at any time through My work with Fuller.
I understand that this covenant is not intended to limit My subsequent
employment in any industry or for any employer producing a product or service
different from Fuller's. I acknowledge and represent that I have substantial
experience and knowledge such that I can readily obtain employment which does
not violate this covenant.
13. NON-SOLICITATION. For the period of January 1, 1999 through December
31, 2000. I agree that I will not induce, attempt to induce, or in any way
assist or act in concert with any other person or organization in inducing or
attempting to induce any employee or agent of Fuller to terminate such employee
or agent's relationship with Fuller. During such period of time, I agree that I
will not make any offers of employment or assist or act in concert with any
other person or organization in making offers of employment to any person who,
at the time of such offer, is currently in an employment or agency relationship
with Fuller. This Agreement shall not be construed to restrict Me from hiring or
offering employment or work to any individual who was an employee or agent of
Fuller prior to the time I hire or offer employment or work to such individual.
14. RELEASE. In consideration of the promises, agreements and covenants
contained herein, I, on behalf of Myself, My heirs, assigns, spouses,
representatives, and agents do hereby fully release and forever discharge
Fuller, from any and all liability, remedies, claims for relief, demands,
actions, causes of action, suits, grievances, arbitrations and administrative
proceedings under every local, state, or federal law, statute, ordinance or
common-law, and any and all other claims of any kind or nature whatsoever
occurring as of the date of this Agreement, whether in law or in equity,
contract or tort, known or unknown, asserted or unasserted, suspected or
unsuspected, of any kind or nature whatsoever which I may now have or hereafter
have or claim to have against Fuller for, upon, or by reason of any matter,
event, cause or thing occurring prior to the date of this Agreement, including
without limitation, any and all claims of any kind arising out of or in anyway
relating to My employment with Fuller, and further including without limitation:
(i) Any claims, demands, or causes of action arising under, or any claim
for relief on the basis of, an alleged violation of the Civil Rights Act of
1991, Title VII of the Civil Rights Act of 1964, the Age Discrimination In
Employment Act of 1967, as amended, the Employee Retirement Income Security Act,
Title 42 U.S. Section 1985, the Americans With Disabilities Act, the Older
Workers Benefit Protection Act, the Minnesota Human Rights Act, and/or any other
federal, state or local statute, ordinance, or regulation dealing in any way
with employment or employment discrimination;
(ii) Any claims, demands, or causes of action on the basis of any breach of
an express or implied employment contract under the common-law of the State of
Minnesota, or any other state, or on the basis of any claim of defamation,
wrongful
4
<PAGE>
discharge and/or any other common-law, statute or tort or any other claim
whatsoever arising out of or in any way relating to My employment with Fuller or
any other occurrence prior to the date of this Agreement, but excluding claims
which I cannot by law waive and claims for breach of this Agreement.
I warrant that I am legally competent to execute this Release and accept full
responsibility therefore. I also agree that I am signing this Release
voluntarily and with full knowledge of its significance and legal consequence. I
ALSO AGREE THAT I HAVE BEEN ADVISED TO CONSULT WITH ANY ATTORNEY BEFORE SIGNING
THIS AGREEMENT AND THAT FULLER HAS GIVEN ME A FULL TWENTY-ONE (21) DAYS WITHIN
WHICH TO CONSIDER THIS AGREEMENT, BEFORE SIGNING BELOW, IF I SO DESIRE.
I have read and understand Minnesota Statutes Section 363.031 (copy attached). I
understand that I may rescind (that is, cancel) this Agreement within seven (7)
calendar days of signing it to reinstate claims under the Age Discrimination In
Employment Act of 1967 and within fifteen (15) calendar days to reinstate claims
under the Minnesota Human Rights Act. To be effective, My rescission must be in
writing and delivered to Fuller in care of the Vice President of Human
Resources, 1200 Willow Lake Boulevard, P.O. Box 64683, St. Paul, Minnesota
55164-0683. If delivered by mail, such rescission may be postmarked within the
seven (7) or fifteen (15) day period, respectively, and sent by Certified Mail,
Return Receipt Requested to H.B. Fuller Company at 1200 Willow Lake Boulevard,
P.O. Box 64683, St. Paul, Minnesota 55164-068, attention Vice President of Human
Resources.
I UNDERSTAND THAT TIMELY RESCISSION OF ANY PORTION OF THIS AGREEMENT AS PROVIDED
HEREIN, SHALL CONSTITUTE A MATERIAL BREACH OF THIS AGREEMENT RESULTING IN
IMMEDIATE WITHDRAWAL AND RESCISSION OF ALL PROMISES, AGREEMENTS AND COVENANTS
CONTAINED HEREIN.
15. REMEDIES. I acknowledge that the provisions of this Agreement are
reasonable and necessary for My protection and the protection of Fuller and that
any violation of this Agreement will cause irreparable harm for which the
non-violating party will be entitled to temporary and permanent injunctive
relief, money damages insofar as they can be determined and all related costs
and reasonable attorneys' fees.
16. JURISDICTION AND VENUE. This Agreement shall be governed by the laws of
the State of Minnesota and I hereby consent to the jurisdiction and venue of the
courts of the State of Minnesota for the resolution of any disputes arising out
of, or related to, this Agreement, including breach and formation (fraud), to
the exclusion of the courts of any other state.
17. INTEGRATION AND MODIFICATION. Except as provided herein, this Agreement
represents the entire Agreement between Me or anyone who has or obtains any
legal rights or claims through Me and Fuller with respect to the subject matter
covered herein. It replaces any other oral or written agreements,
representations,
5
<PAGE>
promises or discussions between Me and Fuller. This Agreement may not be changed
orally. To be valid, any waiver or modification must be in writing and signed by
all of the parties hereto. If any part of this Agreement is declared by a court
of competent jurisdiction to be illegal, invalid or unlawful, in whole or in
part, then said part shall be modified or suspended, as the case may require,
but only to the extent necessary and all other parts will remain valid and in
full force and effect. This Agreement may be executed in any number of
counterparts which, taken together, shall constitute but one Agreement. A copy
of this Agreement is as valid as the original.
THIS IS A FINAL AGREEMENT AND RELEASE. READ BEFORE SIGNING.
Dated: August 31, 1998 H.B. FULLER COMPANY
By: /s/ Richard C. Baker
--------------------------------
Its: Vice President
Dated: August 31, 1998 /s/ Rolf Schubert
-----------------------------------
Rolf Schubert
5222 Keats Avenue North
Lake Elmo, MN 55042
6
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET, INCOME STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL DOCUMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-28-1998
<PERIOD-START> NOV-30-1997
<PERIOD-END> AUG-29-1998
<CASH> 4,294
<SECURITIES> 0
<RECEIVABLES> 217,572
<ALLOWANCES> 4,869
<INVENTORY> 162,846
<CURRENT-ASSETS> 439,611
<PP&E> 732,241
<DEPRECIATION> 327,691
<TOTAL-ASSETS> 1,014,146
<CURRENT-LIABILITIES> 237,200
<BONDS> 324,463
0
306
<COMMON> 13,980
<OTHER-SE> 322,337
<TOTAL-LIABILITY-AND-EQUITY> 1,014,146
<SALES> 986,144
<TOTAL-REVENUES> 986,144
<CGS> 676,723
<TOTAL-COSTS> 271,383
<OTHER-EXPENSES> 1,529
<LOSS-PROVISION> 1,084
<INTEREST-EXPENSE> 19,548
<INCOME-PRETAX> 16,961
<INCOME-TAX> 11,400
<INCOME-CONTINUING> 6,952
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,952
<EPS-PRIMARY> .51
<EPS-DILUTED> .50
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BLANCE
SHEET, INCOME STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-29-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> AUG-30-1997
<CASH> 4,283
<SECURITIES> 0
<RECEIVABLES> 198,520
<ALLOWANCES> 6,412
<INVENTORY> 156,539
<CURRENT-ASSETS> 410,943
<PP&E> 686,201
<DEPRECIATION> 293,851
<TOTAL-ASSETS> 906,992
<CURRENT-LIABILITIES> 251,485
<BONDS> 200,618
0
306
<COMMON> 13,840
<OTHER-SE> 320,747
<TOTAL-LIABILITY-AND-EQUITY> 906,992
<SALES> 956,423
<TOTAL-REVENUES> 956,423
<CGS> 653,462
<TOTAL-COSTS> 243,419
<OTHER-EXPENSES> (585)
<LOSS-PROVISION> 428
<INTEREST-EXPENSE> 14,755
<INCOME-PRETAX> 45,372
<INCOME-TAX> 18,511
<INCOME-CONTINUING> 27,695
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,695
<EPS-PRIMARY> 1.99
<EPS-DILUTED> 1.97
</TABLE>
