Exhibit 10.1

 

H.B. FULLER COMPANY

YEAR 2000 STOCK INCENTIVE PLAN

 

Section 1. Purpose; Effect on Prior Plans

.

(a) Purpose. The purpose of the H.B. Fuller Company Year 2000 Stock Incentive
Plan (the "Plan") is to promote the interests of H.B. Fuller Company (the
"Company") and its shareholders by aiding the Company in attracting and
retaining employees, officers, consultants and independent contractors capable
of assuring the future success of the Company, to provide such persons with
opportunities for stock ownership in the Company and to offer such persons other
incentives to put forth maximum efforts for the success of the Company's
business.

(b) Effect on Prior Plans. From and after the date of shareholder approval of
the Plan, no awards shall be granted under the Company's 1992 Stock Incentive
Plan, but all outstanding awards previously granted under the 1992 Stock
Incentive Plan shall remain outstanding in accordance with the terms thereof.
The Company's 1998 Directors' Stock Incentive Plan and the Directors' Deferred
Compensation Plan shall remain in effect, and grants and awards will continue to
be made thereunder.

Section 2. Definitions

.

As used in the Plan, the following terms shall have the meanings set forth
below:

(a) "Affiliate" shall mean (i) any entity that, directly or indirectly through
one or more intermediaries, is controlled by the Company and (ii) any entity in
which the Company has a significant equity interest, in each case as determined
by the Committee.

(b) "Award" shall mean any Option, Stock Appreciation Right, Restricted Stock,
Restricted Stock Unit, Performance Award, Dividend Equivalent or Other
Stock-Based Award granted under the Plan.

(c) "Award Agreement" shall mean any written agreement, contract or other
instrument or document evidencing an Award granted under the Plan. Each Award
Agreement shall be subject to the applicable terms and conditions of the Plan
and any other terms and conditions (not inconsistent with the Plan) determined
by the Committee.

(d) "Board" shall mean the Board of Directors of the Company.

(e) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time, and any regulations promulgated thereunder.

 

(f) "Committee" shall mean the Compensation Committee or such other committee of
Directors designated by the Board to administer the Plan. The Committee shall be
comprised of not less than such number of Directors as shall be required to
permit Awards granted under the Plan to qualify under Rule 16b-3, and each
member of the Committee shall be a "Non-Employee Director" within the meaning of
Rule 16b-3 and an "outside director" within the meaning of Section 162(m) of the
Code. The Company expects to have the Plan administered in accordance with the
requirements for the award of "qualified performance-based compensation" within
the meaning of Section 162(m) of the Code.

(g) "Company" shall mean H.B. Fuller Company, a Minnesota corporation, and any
successor corporation.

(h) "Director" shall mean a member of the Board.

(i) "Dividend Equivalent" shall mean any right granted under Section 6(e) of the
Plan.

(j) "Eligible Person" shall mean any employee, officer, consultant or
independent contractor providing services to the Company or any Affiliate whom
the Committee determines to be an Eligible Person, but shall not include any
non-employee Director.

(k) "Fair Market Value" shall mean, with respect to any property (including,
without limitation, any Shares or other securities), the fair market value of
such property determined by such methods or procedures as shall be established
from time to time by the Committee. Notwithstanding the foregoing, the Fair
Market Value of Shares as of a given date shall be (i) the last sale price of
the Shares as reported on the Nasdaq National Market on such date, if the Shares
are then quoted on the Nasdaq National Market, or (ii) the closing price of the
Shares on such date on a national securities exchange, if the Shares are then
being traded on a national securities exchange.

(l) "Incentive Stock Option" shall mean an option granted under Section 6(a) of
the Plan that is intended to meet the requirements of Section 422 of the Code or
any successor provision.

(m) "Non-Qualified Stock Option" shall mean an option granted under Section 6(a)
of the Plan that is not intended to be an Incentive Stock Option.

(n) "Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option, and shall include Reload Options.

(o) "Other Stock-Based Award" shall mean any right granted under Section 6(f) of
the Plan.

(p) "Participant" shall mean an Eligible Person designated to be granted an
Award under the Plan.

(q) "Performance Award" shall mean any right granted under Section 6(d) of the
Plan.

(r) "Person" shall mean any individual, corporation, partnership, association or
trust.

(s) "Plan" shall mean the H.B. Fuller Company Year 2000 Stock Incentive Plan, as
amended from time to time, the provisions of which are set forth herein.

(t) "Reload Option" shall mean any Option granted under Section 6(a)(iv) of the
Plan.

(u) "Restricted Stock" shall mean any Shares granted under Section 6(c) of the
Plan.

(v) "Restricted Stock Unit" shall mean any unit granted under Section 6(c) of
the Plan evidencing the right to receive a Share (or a cash payment equal to the
Fair Market Value of a Share) at some future date.

(w) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended, or
any successor rule or regulation.

(x) "Shares" shall mean shares of Common Stock, par value $1.00 per share, of
the Company or such other securities or property as may become subject to Awards
pursuant to an adjustment made under Section 4(c) of the Plan.

(y) "Stock Appreciation Right" shall mean any right granted under Section 6(b)
of the Plan.

Section 3. Administration

.

(a) Power and Authority of the Committee. The Plan shall be administered by the
Committee. Subject to the express provisions of the Plan and to applicable law,
the Committee shall have full power and authority to: (i) designate
Participants; (ii) determine the type or types of Awards to be granted to each
Participant under the Plan; (iii) determine the number of Shares to be covered
by (or the method by which payments or other rights are to be calculated in
connection with) each Award; (iv) determine the terms and conditions of any
Award or Award Agreement; (v) amend the terms and conditions of any Award or
Award Agreement, provided, however, that, except as otherwise provided in
Section 4(c) hereof, the Committee shall not adjust or amend the exercise price
of Options or Stock Appreciation Rights previously awarded to any Participant,
whether through amendment, cancellation and replacement grant, or any other
means; (vi) accelerate the exercisability of any Award or the lapse of
restrictions relating to any Award; (vii) determine whether, to what extent and
under what circumstances Awards may be exercised in cash, Shares, other
securities, other Awards or other property, or canceled, forfeited or suspended;
(viii) determine whether, to what extent and under what circumstances cash,
Shares, promissory notes, other securities, other Awards, other property and
other amounts payable with respect to an Award under the Plan shall be deferred
either automatically or at the election of the holder thereof or the Committee;
(ix) interpret and administer the Plan and any instrument or agreement,
including an Award Agreement, relating to the Plan; (x) establish, amend,
suspend or waive such rules and regulations and appoint such agents as it shall
deem appropriate for the proper administration of the Plan; and (xi) make any
other determination and take any other action that the Committee deems necessary
or desirable for the administration of the Plan. Unless otherwise expressly
provided in the Plan, all designations, determinations, interpretations and
other decisions under or with respect to the Plan or any Award shall be within
the sole discretion of the Committee, may be made at any time and shall be
final, conclusive and binding upon any Participant, any holder or beneficiary of
any Award and any employee of the Company or any Affiliate.

(b) Delegation. The Committee may delegate its powers and duties under the Plan
to one or more Directors or a committee of Directors, subject to such terms,
conditions and limitations as the Committee may establish in its sole
discretion.

(c) Power and Authority of the Board of Directors. Notwithstanding anything to
the contrary contained herein, the Board may, at any time and from time to time,
without any further action of the Committee, exercise the powers and duties of
the Committee under the Plan.

Section 4. Shares Available for Awards

.

(a) Shares Available. Subject to adjustment as provided in Section 4(c) of the
Plan, the aggregate number of Shares that may be issued under all Awards under
the Plan shall be 1,500,000; provided, however, that a maximum of 300,000 Shares
shall be available for issuance pursuant to Awards of Restricted Stock and
Restricted Stock Units. Shares to be issued under the Plan may be either
authorized but unissued Shares or Shares acquired in the open market or
otherwise. Any Shares that are used by a Participant as full or partial payment
to the Company of the purchase price relating to an Award, or in connection with
the satisfaction of tax obligations relating to an Award, shall again be
available for granting Awards (other than Incentive Stock Options) under the
Plan. In addition, if any Shares covered by an Award or to which an Award
relates are not purchased or are forfeited, or if an Award otherwise terminates
without delivery of any Shares, then the number of Shares counted against the
aggregate number of Shares available under the Plan with respect to such Award,
to the extent of any such forfeiture or termination, shall again be available
for granting Awards under the Plan. Notwithstanding the foregoing, the number of
Shares available for granting Incentive Stock Options under the Plan shall not
exceed 1,500,000, subject to adjustment as provided in the Plan and subject to
the provisions of Section 422 or 424 of the Code or any successor provision.

(b) Accounting for Awards. For purposes of this Section 4, if an Award entitles
the holder thereof to receive or purchase Shares, the number of Shares covered
by such Award or to which such Award relates shall be counted on the date of
grant of such Award against the aggregate number of Shares available for
granting Awards under the Plan.

(c) Adjustments. In the event that the Committee shall determine that any
dividend or other distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of Shares or other securities of the Company, issuance of
warrants or other rights to purchase Shares or other securities of the Company
or other similar corporate transaction or event affects the Shares such that an
adjustment is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan, then the Committee shall, in such manner as it
may deem equitable, adjust any or all of (i) the number and type of Shares (or
other securities or other property) that thereafter may be made the subject of
Awards, (ii) the number and type of Shares (or other securities or other
property) subject to outstanding Awards and (iii) the purchase or exercise price
with respect to any Award; provided, however, that the number of Shares covered
by any Award or to which such Award relates shall always be a whole number.

(d) Award Limitations Under the Plan. No Eligible Person may be granted any
Award or Awards under the Plan, the value of which Award or Awards is based
solely on an increase in the value of the Shares after the date of grant of such
Award or Awards, for more than Shares (subject to adjustment as provided for in
Section 4(c) of the Plan) in the aggregate in any calendar year. The foregoing
annual limitation specifically includes the grant of any Award or Awards
representing "qualified performance-based compensation" within the meaning of
Section 162(m) of the Code.

Section 5. Eligibility

.

Any Eligible Person shall be eligible to be designated a Participant. In
determining which Eligible Persons shall receive an Award and the terms of any
Award, the Committee may take into account the nature of the services rendered
by the respective Eligible Persons, their present and potential contributions to
the success of the Company or such other factors as the Committee, in its
discretion, shall deem relevant. Notwithstanding the foregoing, an Incentive
Stock Option may only be granted to full-time or part-time employees (which term
as used herein includes, without limitation, officers and Directors who are also
employees), and an Incentive Stock Option shall not be granted to an employee of
an Affiliate unless such Affiliate is also a "subsidiary corporation" of the
Company within the meaning of Section 424(f) of the Code or any successor
provision.

Section 6. Awards

.

(a) Options. The Committee is hereby authorized to grant Options to Eligible
Persons with the following terms and conditions and with such additional terms
and conditions not inconsistent with the provisions of the Plan as the Committee
shall determine:

(i) Exercise Price. The purchase price per Share purchasable under an Option
shall be determined by the Committee; provided, however, that such purchase
price shall not be less than 100% of the Fair Market Value of a Share on the
date of grant of such Option.

(ii) Option Term. The term of each Option shall be fixed by the Committee.

(iii) Time and Method of Exercise. The Committee shall determine the time or
times at which an Option may be exercised in whole or in part and the method or
methods by which, and the form or forms (including, without limitation, cash,
Shares, promissory notes, other securities, other Awards or other property, or
any combination thereof, having a Fair Market Value on the exercise date equal
to the applicable exercise price) in which, payment of the exercise price with
respect thereto may be made or deemed to have been made.

(iv) Reload Options. The Committee may grant Reload Options, separately or
together with another Option, pursuant to which, subject to the terms and
conditions established by the Committee, the Participant would be granted a new
Option when the payment of the exercise price of a previously granted option is
made by the delivery of Shares owned by the Participant pursuant to Section
6(a)(iii) of the Plan or the relevant provisions of another plan of the Company,
and/or when Shares are tendered or withheld as payment of the amount to be
withheld under applicable income tax laws in connection with the exercise of an
Option, which new Option would be an Option to purchase the number of Shares not
exceeding the sum of (A) the number of Shares so provided as consideration upon
the exercise of the previously granted option to which such Reload Option
relates and (B) the number of Shares, if any, tendered or withheld as payment of
the amount to be withheld under applicable tax laws in connection with the
exercise of the option to which such Reload Option relates pursuant to the
relevant provisions of the plan or agreement relating to such option. Reload
Options may be granted with respect to Options previously granted under the Plan
or any other stock option plan of the Company or may be granted in connection
with any Option granted under the Plan or any other stock option plan of the
Company at the time of such grant. Such Reload Options shall have a per share
exercise price equal to the Fair Market Value of one Share as of the date of
grant of the new Option. Any Reload Option shall be subject to availability of
sufficient Shares for grant under the Plan.

(b) Stock Appreciation Rights. The Committee is hereby authorized to grant Stock
Appreciation Rights to Eligible Persons subject to the terms of the Plan and any
applicable Award Agreement. A Stock Appreciation Right granted under the Plan
shall confer on the holder thereof a right to receive upon exercise thereof the
excess of (i) the Fair Market Value of one Share on the date of exercise (or, if
the Committee shall so determine, at any time during a specified period before
or after the date of exercise) over (ii) the grant price of the Stock
Appreciation Right as specified by the Committee, which price shall not be less
than 100% of the Fair Market Value of one Share on the date of grant of the
Stock Appreciation Right. Subject to the terms of the Plan and any applicable
Award Agreement, the grant price, term, methods of exercise, dates of exercise,
methods of settlement and any other terms and conditions of any Stock
Appreciation Right shall be as determined by the Committee. The Committee may
impose such conditions or restrictions on the exercise of any Stock Appreciation
Right as it may deem appropriate.

(c) Restricted Stock and Restricted Stock Units. The Committee is hereby
authorized to grant Restricted Stock and Restricted Stock Units to Eligible
Persons with the following terms and conditions and with such additional terms
and conditions not inconsistent with the provisions of the Plan as the Committee
shall determine:

(i) Restrictions. Shares of Restricted Stock and Restricted Stock Units shall be
subject to such restrictions as the Committee may impose (including, without
limitation, a waiver by the Participant of the right to vote or to receive any
dividend or other right or property with respect thereto), which restrictions
may lapse separately or in combination at such time or times, in such
installments or otherwise as the Committee may deem appropriate.

(ii) Stock Certificates; Delivery of Shares. Any Restricted Stock granted under
the Plan shall be issued and held by the Company or held in nominee name by the
stock transfer agent or brokerage service selected by the Company to provide
such services for the Plan. No stock certificates evidencing such Restricted
Stock shall be issued to the Participant prior to the lapse or waiver of
restrictions applicable to such Restricted Stock. Stock certificates registered
in the name of the Participant shall be delivered to the Participant promptly
after the applicable restrictions lapse or are waived. In the case of Restricted
Stock Units, no Shares shall be issued at the time such Awards are granted. Upon
the lapse or waiver of restrictions and the restricted period relating to
Restricted Stock Units evidencing the right to receive Shares, such Shares shall
be issued and delivered to the holder of the Restricted Stock Units.

(iii) Forfeiture. Except as otherwise determined by the Committee, upon a
Participant's termination of employment (as determined under criteria
established by the Committee) during the applicable restriction period, all
Shares of Restricted Stock and all Restricted Stock Units held by the
Participant at such time shall be forfeited and reacquired by the Company;
provided, however, that the Committee may, when it finds that a waiver would be
in the best interest of the Company, waive in whole or in part any or all
remaining restrictions with respect to Shares of Restricted Stock or Restricted
Stock Units.

(d) Performance Awards. The Committee is hereby authorized to grant Performance
Awards to Eligible Persons subject to the terms of the Plan and any applicable
Award Agreement. A Performance Award granted under the Plan (i) may be
denominated or payable in cash, Shares (including, without limitation,
Restricted Stock and Restricted Stock Units), other securities, other Awards or
other property and (ii) shall confer on the holder thereof the right to receive
payments, in whole or in part, upon the achievement of such performance goals
during such performance periods as the Committee shall establish. Subject to the
terms of the Plan and any applicable Award Agreement, the performance goals to
be achieved during any performance period, the length of any performance period,
the amount of any Performance Award granted, the amount of any payment or
transfer to be made pursuant to any Performance Award and any other terms and
conditions of any Performance Award shall be determined by the Committee.

(e) Dividend Equivalents. The Committee is hereby authorized to grant to
Eligible Persons Dividend Equivalents under which the Participant shall be
entitled to receive payments (in cash, Shares, other securities, other Awards or
other property as determined in the discretion of the Committee) equivalent to
the amount of cash dividends paid by the Company to holders of Shares with
respect to a number of Shares determined by the Committee. Subject to the terms
of the Plan and any applicable Award Agreement, such Dividend Equivalents may
have such terms and conditions as the Committee shall determine.

(f) Other Stock-Based Awards. The Committee is hereby authorized to grant to
Eligible Persons, subject to the terms of the Plan and any applicable Award
Agreement, such other Awards that are denominated or payable in, valued in whole
or in part by reference to, or otherwise based on or related to, Shares
(including, without limitation, securities convertible into Shares), as are
deemed by the Committee to be consistent with the purpose of the Plan. Shares or
other securities delivered pursuant to a purchase right granted under this
Section 6(f) shall be purchased for such consideration, which may be paid by
such method or methods and in such form or forms (including, without limitation,
cash, Shares, promissory notes, other securities, other Awards or other
property, or any combination thereof), as the Committee shall determine, the
value of which consideration, as established by the Committee, shall not be less
than 100% of the Fair Market Value of such Shares or other securities as of the
date such purchase right is granted.

(g) General.

(i) No Cash Consideration for Awards. Awards shall be granted for no cash
consideration or for such minimal cash consideration as may be required by
applicable law.

(ii) Awards May Be Granted Separately or Together. Awards may, in the discretion
of the Committee, be granted either alone or in addition to, in tandem with or
in substitution for any other Award or any award granted under any plan of the
Company or any Affiliate other than the Plan. Awards granted in addition to or
in tandem with other Awards or in addition to or in tandem with awards granted
under any such other plan of the Company or any Affiliate may be granted either
at the same time as or at a different time from the grant of such other Awards
or awards.

(iii) Forms of Payment under Awards. Subject to the terms of the Plan and any
applicable Award Agreement, payments or transfers to be made by the Company or
an Affiliate upon the grant, exercise or payment of an Award may be made in such
form or forms as the Committee shall determine (including, without limitation,
cash, Shares, promissory notes, other securities, other Awards or other
property, or any combination thereof) and may be made in a single payment or
transfer, in installments or on a deferred basis, in each case in accordance
with rules and procedures established by the Committee. Such rules and
procedures may include, without limitation, provisions for the payment or
crediting of reasonable interest on installment or deferred payments or the
grant or crediting of Dividend Equivalents with respect to installment or
deferred payments.

(iv) Limits on Transfer of Awards. No Award and no right under any such Award
shall be transferable by a Participant other than by will or by the laws of
descent and distribution; provided, however, that, if so determined by the
Committee, a Participant may, in the manner established by the Committee,
transfer Options (other than Incentive Stock Options) or designate a beneficiary
or beneficiaries to exercise the rights of the Participant and receive any
property distributable with respect to any Award upon the death of the
Participant. Each Award or right under any Award shall be exercisable during the
Participant's lifetime only by the Participant (except as otherwise provided in
an Award Agreement or amendment thereto relating to a Non-Qualified Stock Option
pursuant to terms determined by the Committee) or, if permissible under
applicable law, by the Participant's guardian or legal representative. No Award
or right under any such Award may be pledged, alienated, attached or otherwise
encumbered, and any purported pledge, alienation, attachment or encumbrance
thereof shall be void and unenforceable against the Company or any Affiliate.

(v) Term of Awards. The term of each Award shall be for such period as may be
determined by the Committee.

(vi) Restrictions; Securities Exchange Listing. All Shares or other securities
delivered under the Plan pursuant to any Award or the exercise thereof shall be
subject to such restrictions as the Committee may deem advisable under the Plan,
applicable federal or state securities laws and regulatory requirements, and the
Committee may cause appropriate entries to be made or legends to be placed on
the certificates for such Shares or other securities to reflect such
restrictions. If the Shares or other securities of the Company are traded on a
securities exchange, the Company shall not be required to deliver any Shares or
other securities covered by an Award unless and until such Shares or other
securities have been admitted for trading on such securities exchange.

Section 7. Amendment and Termination; Adjustments

.

(a) Amendments to the Plan. The Board of Directors of the Company may amend,
alter, suspend, discontinue or terminate the Plan; provided, however, that,
notwithstanding any other provision of the Plan or any Award Agreement, prior
approval of the shareholders of the Company shall be required for any amendment
to the Plan that:

(i) requires shareholder approval under the rules or regulations of the National
Association of Securities Dealers, Inc. or any securities exchange that are
applicable to the Company;

(ii) permits repricing of Options or Stock Appreciation Rights which is
prohibited by Section 3(a)(v) of the Plan;

(iii) increases the number of shares authorized under the Plan as specified in
Section 4(a); or

(iv) permits the award of Options or Stock Appreciation Rights at a price less
than 100% of the Fair Market Value of a Share on the date of grant of such
Option or Stock Appreciation Right, as prohibited by Sections 6(a)(i), 6(a)(iv)
and 6(b)(ii) of the Plan.

(b) Amendments to Awards. Subject to the provisions of the Plan, the Committee
may waive any conditions of or rights of the Company under any outstanding
Award, prospectively or retroactively. Except as otherwise provided herein or in
an Award Agreement, the Committee may not amend, alter, suspend, discontinue or
terminate any outstanding Award, prospectively or retroactively, if such action
would adversely affect the rights of the holder of such Award, without the
consent of the Participant or holder or beneficiary thereof.

(c) Correction of Defects, Omissions and Inconsistencies. The Committee may
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or any Award in the manner and to the extent it shall deem desirable to
carry the Plan into effect.

Section 8. Income Tax Withholding

.

In order to comply with all applicable federal, state or local income tax laws
or regulations, the Company may take such action as it deems appropriate to
ensure that all applicable federal, state or local payroll, withholding, income
or other taxes, which are the sole and absolute responsibility of a Participant,
are withheld or collected from such Participant. In order to assist a
Participant in paying all or a portion of the federal and state taxes to be
withheld or collected upon exercise or receipt of (or the lapse of restrictions
relating to) an Award, the Committee, in its discretion and subject to such
additional terms and conditions as it may adopt, may permit the Participant to
satisfy such tax obligation by (a) electing to have the Company withhold a
portion of the Shares otherwise to be delivered upon exercise or receipt of (or
the lapse of restrictions relating to) such Award with a Fair Market Value equal
to the amount of such taxes or (b) delivering to the Company Shares other than
Shares issuable upon exercise or receipt of (or the lapse of restrictions
relating to) such Award with a Fair Market Value equal to the amount of such
taxes. The election, if any, must be made on or before the date that the amount
of tax to be withheld is determined.

Section 9. General Provisions

.

(a) No Rights to Awards. No Eligible Person, Participant or other Person shall
have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Eligible Persons, Participants or
holders or beneficiaries of Awards under the Plan. The terms and conditions of
Awards need not be the same with respect to any Participant or with respect to
different Participants.

(b) Award Agreements. No Participant shall have rights under an Award granted to
such Participant unless and until an Award Agreement shall have been duly
executed on behalf of the Company and, if requested by the Company, signed by
the Participant.

(c) No Rights of Shareholders. Except with respect to Restricted Stock, neither
a Participant nor the Participant's legal representative shall be, or have any
of the rights and privileges of, a shareholder of the Company in respect of any
Shares issuable upon the exercise or payment of any Award, in whole or in part,
unless and until the Shares have been issued.

(d) No Limit on Other Compensation Plans or Arrangements. Nothing contained in
the Plan shall prevent the Company or any Affiliate from adopting or continuing
in effect other or additional compensation plans or arrangements, and such plans
or arrangements may be either generally applicable or applicable only in
specific cases.

(e) No Right to Employment. The grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ of the Company or
any Affiliate, nor will it affect in any way the right of the Company or an
Affiliate to terminate such employment at any time, with or without cause. In
addition, the Company or an Affiliate may at any time dismiss a Participant from
employment free from any liability or any claim under the Plan or any Award,
unless otherwise expressly provided in the Plan or in any Award Agreement.

(f) Governing Law. The internal law, and not the law of conflicts, of the State
of Minnesota shall govern all questions concerning the validity, construction
and effect of the Plan and any rules and regulations relating to the Plan or any
Award.

(g) Severability. If any provision of the Plan or any Award is or becomes or is
deemed to be invalid, illegal or unenforceable in any jurisdiction or would
disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended without, in
the determination of the Committee, materially altering the purpose or intent of
the Plan or the Award, such provision shall be stricken as to such jurisdiction
or Award, and the remainder of the Plan or any such Award shall remain in full
force and effect.

(h) No Trust or Fund Created. Neither the Plan nor any Award shall create or be
construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of the Company or any
Affiliate.

(i) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash shall be paid in lieu of any fractional Share or whether such fractional
Share and any rights thereto shall be canceled, terminated or otherwise
eliminated.

(j) Headings. Headings are given to the Sections and subsections of the Plan
solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.

Section 10. Effective Date of the Plan

.

The Plan shall be effective as of October 14, 1999, subject to approval by the
shareholders of the Company at the Annual Meeting of Shareholders of the Company
to be held in 2000.

Section 11. Term of the Plan

.

No Award shall be granted under the Plan after October 14, 2009 or any earlier
date of discontinuation or termination established pursuant to Section 7(a) of
the Plan. However, unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, any Award theretofore granted may extend beyond such
date, and the authority of the Committee provided for hereunder with respect to
the Plan and any Awards, and the authority of the Board of Directors of the
Company to amend the Plan, shall extend beyond that date.

Exhibit A

[Form of Stock Option Agreement]

H.B. FULLER COMPANY

NON-QUALIFIED STOCK OPTION AGREEMENT

(Under the Year 2000 Stock Incentive Plan)

THIS AGREEMENT, dated as of                            , 200  , is entered into
between H.B. Fuller Company, a Minnesota corporation (the "Company"), and
______________, an officer or other employee of the Company or an Affiliate of
the Company ("Participant").

The Company, pursuant to the H.B. Fuller Company Year 2000 Stock Incentive Plan
(the "Plan"), wishes to grant stock options for the purchase of Common Stock,
par value $1.00 per share, of the Company ("Common Stock"), to Participant on
the terms and conditions contained in this Agreement and the Plan.

Capitalized terms used herein and not otherwise defined shall have the meaning
given such terms in the Plan.

Accordingly, in consideration of the premises and agreements set forth herein,
the parties hereto hereby agree as follows:

1. Grant of Option.

The Company, effective as of the date of this Agreement, hereby grants to
Participant, as a matter of separate agreement and not in lieu of salary or
other compensation for services rendered, the right and option (the "Option") to
purchase all or any part of an aggregate of ____________ shares of Common Stock
(the "Shares") at the price of $______ per share on the terms and conditions set
forth in this Agreement. The Option is not intended to be an incentive stock
option within the meaning of the Internal Revenue Code of 1986, as amended.

2. Vesting and Term of Option.

(a) The Option may not be exercised prior to                          , 20   .
Commencing on                        , 20   , the Option may be exercised by
Participant prior to its termination in cumulative annual installments as
follows:

Percentage of Shares as to

Date

which Option is Exercisable

 

 

 

 

 

The Option shall in all events terminate on                           , 20    or
such earlier date as prescribed herein.

(b) Notwithstanding the vesting provision contained in Section 2(a) above, but
subject to the other terms and conditions set forth herein, the Option may be
exercised, in whole or in part, at any time, or from time to time, following the
occurrence of a Change in Control of the Company.

(c) For the purposes of this Agreement, a "Change in Control" shall be deemed to
have occurred upon any of the following events:

(i) a public announcement (which, for purposes hereof, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) that
any individual, corporation, partnership, association, trust or other entity
becomes the beneficial owner (as defined in Rule 13(d)(3) promulgated under the
Exchange Act), directly or indirectly, of securities of the Company representing
15% or more of the Voting Power of the Company then outstanding;

(ii) the individuals who, as of the date of this Agreement, are members of the
Board of Directors of the Company (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board (provided, however, that if the
election or nomination for election by the Company's shareholders of any new
director was approved by a vote of at least a majority of the Incumbent Board,
such new director shall be considered to be a member of the Incumbent Board);

(iii) the approval of the shareholders of the Company of (A) any consolidation,
merger or statutory share exchange of the Company with any person in which the
surviving entity would not have as its directors at least 60% of the Incumbent
Board and as a result of which those persons who were shareholders of the
Company immediately prior to such transaction would not hold, immediately after
such transaction, at least 60% of the Voting Power of the Company then
outstanding or the combined voting power of the surviving entity's then
outstanding voting securities; (B) any sale, lease, exchange or other transfer
in one transaction or series of related transactions substantially all of the
assets of the Company; or (C) the adoption of any plan or proposal for the
complete or partial liquidation or dissolution of the Company; or

(iv) a determination by a majority of the members of the Incumbent Board, in
their sole and absolute discretion, that there has been a Change in Control of
the Company.

For purposes of this Section 2(c), "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.

3. Effect of Termination of Employment.

The Option shall terminate and may no longer be exercised if Participant ceases
to be employed by the Company or an Affiliate of the Company, except that:

(a) If the Company or an Affiliate of the Company terminates Participant's
employment for any reason other than gross and willful misconduct, disability,
retirement or death, Participant may exercise the Option at any time within
three months after such termination of employment to the extent that the Option
was exercisable by Participant on the date of such termination, but not after
the expiration of the term of the Option.

(b) If the Company or an Affiliate of the Company terminates Participant's
employment by reason of gross and willful misconduct during the course of
employment, including, but not limited to, wrongful appropriation of funds or
the commission of a gross misdemeanor or felony, the Option shall be terminated
as of the date of the misconduct.

(c) If Participant's employment is terminated by reason of disability or
retirement, the restrictions on Participant's ability to exercise any percentage
of the Option as set forth in Section 2(a), shall lift and the Option shall vest
in full. Participant may exercise the Option at any time within three years
after such termination of employment, but not after the expiration of the term
of the Option. If Participant shall die following any such termination, the
Option may be exercised at any time within 12 months after the date of
Participant's death by the personal representatives or administrators of
Participant or by any person or persons to whom the Option has been transferred
by will or the applicable laws of descent and distribution, subject to the
condition that the Option shall not be exercisable after the expiration of the
term of the Option.

(d) If Participant shall die while in the employ of the Company or an Affiliate
of the Company, the restrictions on Participant's (or his or her heirs') ability
to exercise any percentage of the Option as set forth in Section 2(a), shall
lift and the Option shall vest in full. The Option may be exercised at any time
within 12 months after the date of Participant's death by the personal
representatives or administrators of Participant or by any person or persons to
whom the Option has been transferred by will or the applicable laws of descent
and distribution, subject to the condition that the Option shall not be
exercisable after the expiration of the term of the Option.

For purposes of this Section 3, "retirement" shall mean the voluntary or
involuntary termination of Participant's employment for any reason other than
gross and willful misconduct, disability or death, after the Participant has
completed at least ten years of service as an employee of the Company and/or an
Affiliate of the Company and has attained age 55.

4. Method of Exercising Option.

(a) Subject to the terms and conditions of this Agreement, the Option may be
exercised by written notice to the Company, to the attention of the Secretary.
Such notice shall state the election to exercise the Option, the number of
Shares as to which the Option is being exercised and the manner of payment and
shall be signed by the person or persons so exercising the Option. The notice
shall be accompanied by payment in full of the exercise price for all Shares
designated in the notice. To the extent that the Option is exercised after
Participant's death, the notice of exercise shall also be accompanied by
appropriate proof of the right of such person or persons to exercise the Option.

(b) Payment of the exercise price shall be made to the Company through one or a
combination of the following methods:

(i) delivery of a check payable to the Company or cash, in United States
currency; or

(ii) delivery of shares of Common Stock acquired by Participant more than six
months prior to the date of exercise having a Fair Market Value on the date of
exercise equal to the Option exercise price. Participant shall duly endorse all
certificates delivered to the Company in blank and shall represent and warrant
in writing that Participant is the owner of the shares so delivered, free and
clear of all liens, encumbrances, security interests and restrictions.

5. Income Tax Withholding.

In order to provide the Company with the opportunity to claim the benefit of any
income tax deduction which may be available to it upon the exercise of the
Option, and in order to comply with all applicable federal or state income tax
laws or regulations, the Company may take such action as it deems appropriate to
ensure that all applicable federal or state income, withholding, social, payroll
or other taxes, which are the sole and absolute responsibility of Participant,
are withheld or collected from Participant. Participant may, at Participant's
election (the "Tax Election"), satisfy applicable tax withholding obligations by
(a) electing to have the Company withhold a portion of the Shares of Common
Stock otherwise to be delivered upon exercise of the Option having a Fair Market
Value equal to the amount of such taxes or (b) delivering to the Company shares
of Common Stock having a Fair Market Value equal to the amount of such taxes.
The Tax Election must be made on or before the date that the amount of tax to be
withheld is determined.

6. Adjustments.

In the event that the Committee shall determine that any dividend or other
distribution (whether in the form of cash, shares, other securities or other
property), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase or exchange
of shares or other securities of the Company, issuance of warrants or other
rights to purchase shares or other securities of the Company or other similar
corporate transaction or event affects the Shares covered by the Option such
that an adjustment is determined by the Committee to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under this Agreement, then the Committee shall, in such
manner as it may deem equitable, in its sole discretion, adjust any or all of
the number and type of the Shares covered by the Option and the exercise price
of the Option.

7. Securities Matters.

No Shares shall be issued hereunder prior to such time as counsel to the Company
shall have determined that the issuance of the Shares will not violate any
federal or state securities or other laws, rules or regulations. The Company
shall not be required to deliver any Shares until the requirements of any
federal or state securities or other laws, rules or regulations (including the
rules of any securities exchange) as may be determined by the Company to be
applicable are satisfied.

8. General Provisions.

(a) Interpretations. This Agreement is subject in all respects to the terms of
the Plan. Terms used herein which are defined in the Plan shall have the
respective meanings given to such terms in the Plan, unless otherwise defined
herein. In the event that any provision of this Agreement is inconsistent with
the terms of the Plan, the terms of the Plan shall govern. Any question of
administration or interpretation arising under this Agreement shall be
determined by the Committee, and such determination shall be final, conclusive
and binding upon all parties in interest.

(b) No Rights as a Shareholder. Neither Participant nor Participant's legal
representatives shall have any of the rights and privileges of a shareholder of
the Company with respect to the Shares of Common Stock subject to the Option
unless and until certificates for such Shares shall have been issued upon
exercise of the Option.

(c) No Right to Employment. Nothing in this Agreement or the Plan shall be
construed as giving Participant the right to be retained as an employee of the
Company or any Affiliate. In addition, the Company or an Affiliate may at any
time dismiss Participant from employment, free from any liability or any claim
under this Agreement, unless otherwise expressly provided in this Agreement.

(d) Option Not Transferable. The Option shall not be transferable other than by
will or by the laws of descent and distribution. During Participant's lifetime
the Option shall be exercisable only by Participant or, if permissible under
applicable law, by Participant's guardian or legal representative. The Option
may not be pledged, alienated, attached or otherwise encumbered, and any
purported pledge, alienation, attachment or encumbrance of the Option shall be
void and unenforceable against the Company.

(e) Reservation of Shares. The Company shall at all times during the term of the
Option reserve and keep available such number of shares of Common Stock as will
be sufficient to satisfy the requirements of this Agreement.

(f) Headings. Headings are given to the sections and subsections of this
Agreement solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of this Agreement or any provision hereof.

(g) Governing Law. The internal law, and not the law of conflicts, of the State
of Minnesota will govern all questions concerning the validity, construction and
effect of this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the date first set forth above.

H.B. FULLER COMPANY

By ________________________________

 

[employee]

 

Exhibit B

[Form of Restricted Stock Award Agreement]

H.B. FULLER COMPANY

RESTRICTED STOCK AWARD AGREEMENT

(Under the Year 2000 Stock Incentive Plan)

THIS AGREEMENT

, dated as of                         , 20   , is entered into between H.B.
Fuller Company, a Minnesota corporation (the "Company"), and _____________, an
employee of the Company or an affiliate of the Company ("Participant").

WHEREAS

, the Company, pursuant to the H.B. Fuller Company Year 2000 Stock Incentive
Plan (the "Plan"), wishes to award to Participant shares of common stock, par
value $1.00 per share, of the Company ("Common Stock"), subject to certain
restrictions and on the terms and conditions contained in this Agreement and the
Plan;

NOW, THEREFORE

, in consideration of the premises and agreements set forth herein, the parties
hereto hereby agree as follows:

1. Award of Restricted Stock.

The Company, effective as of the date of this Agreement, hereby grants to
Participant a restricted stock award of ______ shares of Common Stock (the
"Shares"), subject to the terms and conditions set forth in this Agreement.

2. Rights of Participant with Respect to the Shares.

(a) Shareholder Rights. With respect to the Shares, Participant shall be
entitled at all times on and after the date of issuance of the Shares to
exercise all rights of a shareholder of Common Stock of the Company, including
the right to vote the Shares and the right to receive dividends thereon as
provided in Section 2(b) hereof, unless and until the Shares are forfeited
pursuant to Section 3 hereof. The rights of Participant with respect to the
Shares shall remain forfeitable at all times prior to the date on which such
rights become vested, and the restrictions with respect to the Shares lapse, in
accordance with Section 3 hereof.

(b) Reinvestment of Dividends. As a condition to receiving the Shares under the
Plan, Participant hereby elects to defer the receipt of dividends paid on the
Shares. Participant agrees that all cash dividends otherwise payable on and with
respect to the Shares shall be reinvested in additional shares of restricted
Common Stock at the Fair Market Value of such shares ("Additional Shares"). A
report showing the number of Additional Shares so purchased with reinvested
dividends shall be sent to Participant within 30 days following the applicable
dividend payment date. The Additional Shares so purchased shall be subject to
the same terms and conditions as the Shares granted pursuant to this Agreement
and the Additional Shares shall be forfeited in the event that the Shares with
respect to which the reinvested dividends were paid are forfeited.

(c) Issuance of Shares. The Company shall cause to be issued, in either
certificated or uncertificated form, the Shares and any Additional Shares. The
Shares and any Additional Shares shall be issued and held in nominee name by the
stock transfer agent or brokerage service selected by the Company to provide
such services for the Plan. No certificates or other evidence of the Shares or
Additional Shares shall be issued to Participant prior to the date on which the
Shares vest, and the restrictions with respect to the Shares lapse, in
accordance with Section 3 hereof. Neither this Section 2(c) nor any action taken
pursuant to or in accordance with this Section 2(c) shall be construed to create
a trust of any kind. After any Shares vest pursuant to Section 3 hereof, the
Company shall promptly cause to be issued either evidence of uncertificated
Shares or a certificate or certificates, registered in Participant's name or in
the name of Participant's legal representatives, beneficiaries or heirs, as the
case may be, evidencing such vested whole Shares and any Additional Shares and
shall cause such certificated or uncertificated Shares and any Additional Shares
to be delivered to Participant or Participant's legal representatives,
beneficiaries or heirs, as the case may be. The value of any fractional Share
shall be paid in cash at the time certificated or uncertificated Shares and any
Additional Shares are delivered to Participant.

3. Vesting; Forfeiture.

(a) Vesting. Subject to the terms and conditions of this Agreement, the Shares
shall vest in full and the restrictions with respect to the Shares shall lapse
if Participant remains continuously employed by the Company or an Affiliate of
the Company until                           , 20   .

(b) Early Vesting. Notwithstanding the vesting provision contained in Section
3(a) above, but subject to the other terms and conditions set forth herein, upon
the occurrence of a "Change in Control" (as defined below) or in the event of
Participant's death, permanent disability, or normal retirement at age 65 or
older, Participant or Participant's legal representatives, beneficiaries or
heirs, as the case may be, shall become immediately vested in all of the Shares,
and the restrictions with respect to the Shares shall lapse, as of the date of
such Change in Control, death, permanent disability, or retirement.

(c) For the purposes of this Agreement, a "Change in Control" shall be deemed to
have occurred upon any of the following events:

(1) a public announcement (which, for purposes hereof, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) that any individual, corporation,
partnership, association, trust or other entity becomes the beneficial owner (as
defined in Rule 13(d)(3) promulgated under the Exchange Act), directly or
indirectly, of securities of the Company representing 15% or more of the voting
power of the Company then outstanding;

(2) 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);

(3) the approval of the shareholders of the Company of (i) any consolidation,
merger or statutory share exchange of the Company with any person in which the
surviving entity would not have as its directors at least 60% of the Incumbent
Board and as a result of which those persons who were shareholders of the
Company immediately prior to such transaction would not hold, immediately after
such transaction, at least 60% of the voting power of the Company then
outstanding or the combined voting power of the surviving entity's then
outstanding voting securities; (ii) any sale, lease, exchange or other transfer
in one transaction or series of related transactions substantially all of the
assets of the Company; or (iii) the adoption of any plan or proposal for the
complete or partial liquidation or dissolution of the Company; or

(4) 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.

(d) Forfeiture. If Participant ceases to be employed by the Company or an
Affiliate of the Company for any reason other than those specified in Section
3(b) hereof prior to the vesting of the Shares pursuant to Section 3(a) hereof,
Participant's rights to all of the Shares shall be immediately and irrevocably
forfeited, including the right to vote the Shares and the right to receive
dividends and any Additional Shares.

4. Restrictions on Transfer.

Until the Shares vest pursuant to Section 3 hereof, neither the Shares, nor any
right with respect to the Shares under this Agreement, may be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of by Participant and
any purported sale, assignment, transfer, pledge, hypothecation or other
disposition shall be void and unenforceable against the Company. Notwithstanding
the foregoing, Participant may, in the manner established by the Committee,
designate a beneficiary or beneficiaries to exercise the rights of Participant
and receive any property distributable with respect to the Shares upon the death
of Participant. Each right under this Agreement shall be exercisable during
Participant's lifetime only by Participant or, if permissible under applicable
law, by Participant's legal representative.

5. Income Tax Matters.

In order to comply with all applicable income, social, payroll or other tax laws
or regulations, the Company may take such action as it deems appropriate to
ensure that all applicable income, social, payroll or other taxes, which are the
sole and absolute responsibility of Participant, are withheld or collected from
such Participant. Upon vesting of the Shares and the lapse of the restrictions
with respect to the Shares under the terms of this Award Agreement, Participant
shall be obligated to pay any applicable withholding taxes arising from such
vesting and lapse of restrictions, assuming Participant has not made an election
pursuant to Section 83(b) of the Code. Unless the Company receives an
irrevocable written instruction, addressed to the attention of the Secretary of
the Company, from Participant prior to the date that the Shares vest and the
restrictions lapse, the Company shall automatically withhold as payment the
number of shares of Common Stock, determined by the Fair Market Value at the
date of such vesting and lapse of restrictions, required to pay the applicable
withholding taxes. The Company shall not be required to deliver any fractional
share of Common Stock but will pay, in lieu thereof, the Fair Market Value (as
of the date the shares vest and the restrictions lapse) of such fractional
share.

6. Securities Matters.

No Shares shall be issued hereunder prior to such time as counsel to the Company
shall have determined that the issuance of the Shares will not violate any
federal or state securities or other laws, rules or regulations. The Company
shall not be required to deliver any Shares until the requirements of any
federal or state securities or other laws, rules or regulations (including the
rules of any securities exchange) as may be determined by the Company to be
applicable are satisfied.

7. Adjustments.

In the event that the Committee shall determine that any dividend or other
distribution (whether in the form of cash, shares, other securities or other
property), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase or exchange
of shares or other securities of the Company, issuance of warrants or other
rights to purchase shares or other securities of the Company or other similar
corporate transaction or event affects the Shares such that an adjustment is
determined by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under this Agreement, then the Committee shall, in such manner as it may deem
equitable, in its sole discretion, adjust any or all of the number and type of
the Shares.

8. General Provisions.

(a) Interpretations. This Agreement is subject in all respects to the terms of
the Plan. Terms used herein which are defined in the Plan shall have the
respective meanings ascribed to such terms in the Plan, unless otherwise defined
herein. In the event that any provision of this Agreement is inconsistent with
the terms of the Plan, the terms of the Plan shall govern. Any question of
administration or interpretation arising under this Agreement shall be
determined by the Committee, and such determination shall be final and
conclusive upon all parties in interest.

(b) No Right to Employment. The grant of the Shares shall not be construed as
giving Participant the right to be retained as an employee of the Company or any
Affiliate. In addition, the Company or an Affiliate may at any time dismiss
Participant from employment, free from any liability or any claim under this
Agreement, unless otherwise expressly provided in this Agreement.

(c) Headings. Headings are given to the sections and subsections of this
Agreement solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of this Agreement or any provision thereof.

(d) Governing Law. The internal law, and not the law of conflicts, of the State
of Minnesota will govern all questions concerning the validity, construction and
effect of this Agreement.

 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first set forth above.

 

H.B. FULLER COMPANY

 

By:

 

 

 

 

 

 

 

 

 

 

 

Exhibit C

[Form of Restricted Stock Unit Award Agreement]

H.B. FULLER COMPANY

RESTRICTED STOCK UNIT AWARD AGREEMENT
(Under the Year 2000 Stock Incentive Plan)

THIS AGREEMENT

, dated as of                             , 20   , is entered into between H.B.
Fuller Company, a Minnesota corporation (the "Company"), and _____________, an
employee of the Company or an affiliate of the Company ("Participant").

WHEREAS

, the Company, pursuant to the H.B. Fuller Company Year 2000 Stock Incentive
Plan (the "Plan"), wishes to award to Participant Restricted Stock Units,
representing the right to receive shares of common stock, par value $1.00 per
share, of the Company ("Common Stock"), subject to certain restrictions and on
the terms and conditions contained in this Agreement and the Plan;

NOW, THEREFORE

, in consideration of the premises and agreements set forth herein, the parties
hereto hereby agree as follows:

Award of Restricted Stock Units

.

The Company, effective as of the date of this Agreement, hereby grants to
Participant an award of ______ Restricted Stock Units, each Restricted Stock
Unit representing the right to receive one share of Common Stock on such date as
set forth herein, plus an additional amount pursuant to Section 2(b) hereof,
subject to the terms and conditions set forth in this Agreement.

2. Rights of Participant with Respect to the Restricted Stock Units

.

(a) No Shareholder Rights. The Restricted Stock Units granted pursuant to this
Agreement do not and shall not entitle Participant to any rights of a
shareholder of Common Stock. The rights of Participant with respect to the
Restricted Stock Units shall remain forfeitable at all times prior to the date
on which such rights become vested, and the restrictions with respect to the
Restricted Stock Units lapse, in accordance with Section 3 hereof.

(b) Dividend Equivalents. As long as Participant holds Restricted Stock Units
granted pursuant to this Agreement, the Company shall credit to Participant, on
each date that the Company pays a cash dividend to holders of Common Stock
generally, an additional number of Restricted Stock Units ("Additional
Restricted Stock Units") equal to the total number of whole Restricted Stock
Units and Additional Restricted Stock Units previously credited to Participant
under this Agreement multiplied by the dollar amount of the cash dividend paid
per share of Common Stock by the Company on such date, divided by the Fair
Market Value of a share of Common Stock on such date. Any fractional Restricted
Stock Unit resulting from such calculation shall be included in the Additional
Restricted Stock Units. A report showing the number of Additional Restricted
Stock Units so credited shall be sent to Participant periodically, as determined
by the Company. The Additional Restricted Stock Units so credited shall be
subject to the same terms and conditions as the Restricted Stock Units granted
pursuant to this Agreement and the Additional Restricted Stock Units shall be
forfeited in the event that the Restricted Stock Units with respect to which the
dividend equivalents were paid are forfeited.

(c) Issuance of Shares; Conversion of Restricted Stock Units. No shares of
Common Stock shall be issued to Participant prior to the date on which the
Restricted Stock Units vest, and the restrictions with respect to the Restricted
Stock Units lapse, in accordance with Section 3 hereof. Neither this
Section 2(c) nor any action taken pursuant to or in accordance with this Section
2(c) shall be construed to create a trust of any kind. After any Restricted
Stock Units vest pursuant to Section 3 hereof, the Company shall promptly cause
to be issued, in either certificated or uncertificated form, shares of Common
Stock registered in Participant's name or in the name of Participant's legal
representatives, beneficiaries or heirs, as the case may be, in payment of such
vested whole Restricted Stock Units and any Additional Restricted Stock Units
and shall cause such certificated or uncertificated shares to be delivered to
Participant or Participant's legal representatives, beneficiaries or heirs, as
the case may be. The value of any fractional Restricted Stock Unit shall be paid
in cash at the time certificated or uncertificated shares are delivered to
Participant in payment of the Restricted Stock Units and any Additional
Restricted Stock Units.

3. Vesting; Forfeiture

.

(a) Vesting. Subject to the terms and conditions of this Agreement, the
Restricted Stock Units shall vest in full and the restrictions with respect to
the Restricted Stock Units shall lapse if Participant remains continuously
employed by the Company or an Affiliate of the Company until
                        , 20   .

(b) Early Vesting. Notwithstanding the vesting provision contained in Section
3(a) above, but subject to the other terms and conditions set forth herein, upon
the occurrence of a "Change in Control" (as defined below) or in the event of
Participant's death, permanent disability, or normal retirement at age 65 or
older, Participant or Participant's legal representatives, beneficiaries or
heirs, as the case may be, shall become immediately vested in all of the
Restricted Stock Units, and the restrictions with respect to the Restricted
Stock Units shall lapse, as of the date of such Change in Control, death,
permanent disability, or retirement.

(c) For the purposes of this Agreement, a "Change in Control" shall be deemed to
have occurred upon any of the following events:

(1) a public announcement (which, for purposes hereof, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) that any individual, corporation,
partnership, association, trust or other entity becomes the beneficial owner (as
defined in Rule 13(d)(3) promulgated under the Exchange Act), directly or
indirectly, of securities of the Company representing 15% or more of the voting
power of the Company then outstanding;

(2) 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);

(3) the approval of the shareholders of the Company of (i) any consolidation,
merger or statutory share exchange of the Company with any person in which the
surviving entity would not have as its directors at least 60% of the Incumbent
Board and as a result of which those persons who were shareholders of the
Company immediately prior to such transaction would not hold, immediately after
such transaction, at least 60% of the voting power of the Company then
outstanding or the combined voting power of the surviving entity's then
outstanding voting securities; (ii) any sale, lease, exchange or other transfer
in one transaction or series of related transactions substantially all of the
assets of the Company; or (iii) the adoption of any plan or proposal for the
complete or partial liquidation or dissolution of the Company; or

(4) 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.

(d) Forfeiture. If Participant ceases to be employed by the Company or an
Affiliate of the Company for any reason other than those specified in Section
3(b) hereof prior to the vesting of the Restricted Stock Units pursuant to
Section 3(a) hereof, Participant's rights to all of the Restricted Stock Units
shall be immediately and irrevocably forfeited, including the right to receive
any Additional Restricted Stock Units.

4. Restrictions on Transfer

.

The Restricted Stock Units shall not be transferable other than by will or by
the laws of descent and distribution. Notwithstanding the foregoing, Participant
may, in the manner established by the Committee, designate a beneficiary or
beneficiaries to exercise the rights of Participant and receive any property
distributable with respect to the Restricted Stock Units upon the death of
Participant. Each right under this Agreement shall be exercisable during
Participant's lifetime only by Participant or, if permissible under applicable
law, by Participant's legal representative. The Restricted Stock Units and any
rights under this Agreement may not be sold, assigned, transferred, pledged,
alienated, attached or otherwise encumbered and any purported sale, assignment,
transfer, pledge, alienation, attachment or encumbrance shall be void and
unenforceable against the Company or any Affiliate.

5. Income Tax Matters.

In order to comply with all applicable federal, foreign, state or local income
tax laws or regulations, the Company may take such action as it deems
appropriate to ensure that all applicable federal, foreign, state or local
payroll, withholding, income or other taxes, which are the sole and absolute
responsibility of Participant, are withheld or collected from Participant. Upon
vesting of the Restricted Stock Units and the lapse of the restrictions with
respect to the Restricted Stock Units under the terms of this Award Agreement,
Participant shall be obligated to pay any applicable withholding taxes arising
from such vesting and lapse of restrictions. Unless the Company receives an
irrevocable written instruction, addressed to the attention of the Secretary of
the Company, from Participant prior to the date that the Restricted Stock Units
vest and the restrictions lapse, the Company shall automatically withhold as
payment the number of shares of Common Stock, determined by the Fair Market
Value at the date of such vesting and lapse of restrictions, required to pay the
applicable withholding taxes. The Company shall not be required to deliver any
fractional share of Common Stock but will pay, in lieu thereof, the Fair Market
Value (as of the date the Restricted Stock Units vest and the restrictions
lapse) of such fractional share.

6. Securities Matters

.

No shares of Common Stock shall be issued pursuant to this Agreement prior to
such time as counsel to the Company shall have determined that the issuance of
such shares will not violate any securities or other laws, rules or regulations.
The Company shall not be required to deliver any shares of Common Stock until
the requirements of any applicable securities or other laws, rules or
regulations (including the rules of any securities exchange) as may be
determined by the Company to be applicable are satisfied.

7. Adjustments

.

In the event that the Committee shall determine that any dividend or other
distribution (whether in the form of cash, shares, other securities or other
property), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase or exchange
of shares or other securities of the Company, issuance of warrants or other
rights to purchase shares or other securities of the Company or other similar
corporate transaction or event affects the Common Stock such that an adjustment
is determined by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under this Agreement, then the Committee shall, in such manner as it may deem
equitable, in its sole discretion, adjust any or all of the number and type of
shares subject to the Restricted Stock Units.

8. General Provisions

.

(a) Interpretations. This Agreement is subject in all respects to the terms of
the Plan. Terms used herein which are defined in the Plan shall have the
respective meanings ascribed to such terms in the Plan, unless otherwise defined
herein. In the event that any provision of this Agreement is inconsistent with
the terms of the Plan, the terms of the Plan shall govern. Any question of
administration or interpretation arising under this Agreement shall be
determined by the Committee, and such determination shall be final and
conclusive upon all parties in interest.

(b) No Right to Employment. The grant of the Restricted Stock Units shall not be
construed as giving Participant the right to be retained as an employee of the
Company or any Affiliate. In addition, the Company or an Affiliate may at any
time dismiss Participant from employment, free from any liability or any claim
under this Agreement, unless otherwise expressly provided in this Agreement.

(c) Headings. Headings are given to the sections and subsections of this
Agreement solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of this Agreement or any provision hereof.

(d) Severability. If any provision of this Agreement is or becomes or is deemed
to be invalid, illegal or unenforceable in any jurisdiction under any law deemed
to be applicable by the Committee, such provision shall be construed or deemed
amended to conform to the applicable law, or if it cannot be so construed or
amended without, in the determination of the Committee, materially altering the
purpose or intent of this Agreement, such provision shall be stricken as to such
jurisdiction or this Agreement, and the remainder of this Agreement shall remain
in full force and effect.

(e) Governing Law. The internal law, and not the law of conflicts, of the State
of Minnesota will govern all questions concerning the validity, construction and
effect of this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first set forth above.

   

H.B. FULLER COMPANY

               

By: _____________________________

                     

   

Participant