Exhibit 10.1

SEPARATION AGREEMENT

 

This Separation Agreement (“Agreement”) is made and entered into this 17th day
of December, 2004, by and between James R. Conaty (“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 and their agents,
officers, employees, directors, and shareholders (hereinafter collectively
“Fuller”):

 

WHEREAS, Fuller has made a business decision to terminate my employment as Group
President, General Manager Global Adhesives; and

 

WHEREAS, I have elected to take early retirement effective December 31, 2004;
and

 

WHEREAS, I have agreed, in lieu of severance, to accept the benefits,
obligations and payments provided herein;

 

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. Employment and Termination. I agree that My employment with Fuller will end
December 31, 2004. I further agree that effective immediately upon my execution
of this Agreement, I will offer my resignation as an officer and director, as
applicable, of all Fuller-controlled entities, including subsidiaries and joint
ventures such as EFTEC North America LLC. It is further understood and agreed
that I will not be required to actively perform My current duties after the date
of this Agreement, but that I will remain available as necessary and reasonably
requested by Fuller through December 31, 2004 to assist with transitional
issues. I understand and acknowledge that My employment with Fuller may be
terminated earlier than December 31, 2004, but only for gross violation of
working rules or gross misconduct. I further understand and agree that this
Agreement will become automatically null, void and unenforceable in the event I
am so terminated.

 

3. Separation Payment. Upon the termination of my employment on December 31,
2004, I agree to provide Fuller with an executed Release Agreement in the form
attached hereto as Exhibit A. In return, and in consideration of the promises,
agreements and covenants contained herein, Fuller agrees to pay Me the sum of
$504,034.00 (the “Separation Payment”). Unless there is a timely rescission of
this Agreement as provided herein, the Separation Payment shall be paid in one
lump sum (less state and federal taxes and other standard legal deductions)
following termination of My employment, upon Fuller’s receipt of this signed
Agreement and within ten business days after expiration of the rescission
periods referenced herein. In no case will this payment be made prior to January
31, 2005. Except as expressly provided herein, it is understood and agreed that
I am waiving and forfeiting any right, claim or interest to any severance
payment under any Fuller plan, including, specifically, the H.B. Fuller Company
Severance Pay Plan.

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4. Benefits. Except as otherwise stated herein, Fuller agrees that, until
termination of My employment, I will continue to be eligible for participation
as a full time employee under Fuller’s benefit programs, including all key
manager benefits. I understand and agree that My rights to benefits under any
Fuller benefit plan, including but not limited to Fuller’s Retirement Plan and
Fuller’s Supplemental Executive Retirement Plan, are governed and determined by
the rules of said plans, as they may exist from time to time. It is further
understood and agreed that, except as expressly stated herein, I am not waiving
any rights to vested employee benefits extended under any Fuller plan.

 

5. Paid Time Off. It is agreed that I will receive payment for all accrued but
unused Paid Time Off for fiscal year ending 2004. It is anticipated that this
amount will equal approximately $31,963.50. Unless there is a timely rescission
of this Agreement as provided herein, this payment shall be paid in one lump sum
(less state and federal taxes and other standard legal deductions) following
termination of My employment, upon Fuller’s receipt of this signed Agreement and
within ten business days after expiration of the rescission periods referenced
herein. I acknowledge that I will not earn or accrue any Paid Time Off for
fiscal year 2005.

 

6. T&E Reporting. I agree to provide Fuller with all documentation necessary to
reconcile My outstanding Travel and Expense Reporting, and will authorize Fuller
to deduct from my Separation Pay any amounts for any non-reimbursable expenses
or expenses that do not comply with Fuller’s policies regarding Travel and
Expense Reporting.

 

7. Outplacement Services. Fuller agrees to pay up to $25,000.00 for outplacement
services and travel related to outplacement utilized by Me. Fuller shall at its
election either reimburse Me for such amounts upon proper documentation, or pay
the outplacement services provider directly on a receipt or invoice basis from
the outplacement services provider.

 

8. Medical and Dental Benefits Continuation. I understand My eligibility for
medical and dental benefits is controlled by the terms of any applicable plans,
including the H.B. Fuller Supplemental Employee Retirement Plan or the EFTEC
retirement plan.

 

9. Professional Service Fees. Fuller agrees to provide Me with an amount of
$7,500 for professional services such as tax planning.

 

10. Bonus Payment. I understand and acknowledge that I am not eligible for any
short-term incentive bonus for fiscal year 2004.

 

11. Grants and Awards. Except as otherwise stated herein, I understand and agree
that My rights to any long term incentives pursuant to any Fuller grant or
award, including, but not limited to, Performance Units and Stock Options
(summarized and attached hereto as Exhibit B), shall be governed and determined
by the terms of such grant or award, including the terms and conditions of the
plan or plans pursuant to which the grant or award was made. Fuller agrees that
I will be eligible for potential payment of outstanding Performance Units earned
through the performance period for the fiscal year ending 2004.

 

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12. Restricted Stock. The shares (plus accrued dividends) of restricted Common
Stock of H.B. Fuller Company granted to Me pursuant to written award agreements
dated August 3, 1995 and June 14, 1996, as amended (2,400 each for a total of
4,800 shares) (summarized and attached hereto as Exhibit B), shall vest, and the
applicable restricted periods shall end effective the date of termination of My
employment.

 

13. Key Employee Deferred Compensation Plan. My participation in the Key
Employee Deferred Compensation Plan (“KEDC”) will end as of the date of my
termination. Distributions under the KEDC will be made pursuant to the terms of
that plan.

 

14. Executive Stock Purchase Program. I understand and acknowledge that I have
$552,677.87, outstanding under Fuller’s Executive Stock Purchase Program as of
August 31, 2004, and that the full amount of principal and interest under My
loan under this program is due and payable on or before January 11, 2006.

 

15. Key Manager Car Allowance. I understand and acknowledge that all benefits
under the Key Manager Car Allowance will end as of the date of my termination,
and that the applicable lease will be ended on such date.

 

16. Laptop Computer. Fuller agrees to transfer title to my laptop computer and
to provide me with e-mail access until December 31, 2004.

 

17. Office Furniture. Fuller agrees to arrange for reasonable packing and
shipping of office furniture that I own and have used in my Fuller office.

 

18. Executive Physical Examination. Fuller agrees that I will be eligible for
Fuller’s standard executive physical examination program during 2005.

 

19. Confidential Information. 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. Upon
termination

 

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of My employment, I agree that all Confidential Information, including all
copies, excerpts and summaries in My possession or control, as well as other
Fuller property not transferred herein shall be immediately returned to Fuller.

 

20. Non-Competition. For a period of one year following the date of termination
of My employment, 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 of
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
organization which resembles or competes with a product, process, equipment,
concept or service of Fuller or concerning which I acquired Confidential
Information at any time through My work with Fuller.

 

In the event I am presented with an opportunity that I believe might violate
this covenant, I can submit in writing to Fuller, in care of the Chairman of the
Board, President and Chief Executive Officer, a description of the opportunity,
asking for Fuller’s written consent to pursue that opportunity. Fuller agrees to
promptly reply in writing to any such written request.

 

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.

 

21. Non-Solicitation. For a period of one year following the date of termination
of My employment, I agree that I will not induce, attempt to induce, or in any
way knowingly 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 knowingly 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 to My knowledge currently in an
employment or agency relationship with Fuller.

 

22. Non-Disparagement. The parties agree that they will not make statements,
publicly or otherwise, which disparage, defame or are adverse to their
respective interests.

 

23. Information, Assistance, Testimony. I understand that Fuller may
occasionally ask me to provide information, assistance or testimony regarding
litigation or legal matters, and I agree to cooperate, provided that Fuller
reimburses me for any out-of-pocket expenses, and pays me reasonable
compensation in the event that my attendance at a trial or deposition or similar
proceeding is required for more than five days.

 

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24. Remedies. The parties hereto acknowledge that the provisions of this
Agreement are reasonable and necessary for their mutual protection and that any
violation of this Agreement may cause irreparable harm for which the
non-breaching party would be entitled to temporary or permanent injunctive
relief, and for money damages insofar as they can be determined. In the event of
a breach of any of the provisions of this Agreement, the non-breaching party
shall, if it prevails in a lawsuit against the breaching party, also be entitled
to costs and reasonable attorneys’ fees to enforce its rights hereunder.

 

25. 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.

 

26. 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, 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: December 17, 2004   H.B. FULLER COMPANY     By:  

/s/ Patricia L. Jones

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    Its:   Senior Vice President and CAO Dated: 17 December, 2004      

/s/ James R. Conaty

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        James R. Conaty         1314 Marquette Avenue         Minneapolis, MN
55403

 

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EXHIBIT A

 

Release Agreement

 

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 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.

 

It is specifically agreed and understood that I am not waiving or releasing any
right I may have under Fuller’s corporate undertakings or pursuant to any
applicable policy of insurance, to defense and/or indemnity for third party
claims.

 

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 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 Chairman of

 

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the Board, President and Chief Executive Officer, 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 55164-0683, attention Chairman of the Board, President and Chief
Executive Officer.

 

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.

 

Dated: December 31, 2004  

 

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    James R. Conaty     1314 Marquette Avenue     Minneapolis, MN 55403

 

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EXHIBIT B

 

Stock Award Handling

 

                        

Award Handling
Approved By Compensation
Committee

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Grant Date

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Grant

Type

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   Shares/Options
Outstanding

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   Option
Price

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Original Vest Date

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Separation Date

12/31/2004

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08/03/95    Restricted Stock    2,400      N/A    08/03/05    Vests 12/31/2004
06/14/96    Restricted Stock    2,400      N/A    06/14/06    Vests 12/31/2004
12/02/98    NQSO’s    9,920    $ 21.5000    All options vested    Exercisable up
to 12/02/2008 12/01/99    NQSO’s    7,086    $ 27.3750    All options vested   
Exercisable up to 12/01/2009 12/07/00    NQSO’s    15,152    $ 18.6250   

11,364 vested

3,788 vest 12/07/04

   Vests upon retirement Exercisable up to 12/07/2010 01/17/02    NQSO’s   
8,965    $ 25.9500   

4,482 vested

2,241 vest 01/17/05

2,242 vest 01/17/06

   Vests upon retirement Exercisable up to 01/17/2012 12/09/02    NQSO’s   
8,193    $ 27.9000   

2,048 vested

2,048 vest 12/09/04

2,048 vest 12/09/05

2,049 vest 12/09/06

   Vests upon retirement Exercisable up to 12/31/2007

 

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