FURON COMPANY
1994 EMPLOYEES' STOCK PURCHASE PLAN
SECTION 1. ESTABLISHMENT OF THE PLAN.
This plan shall be known as the Furon Company 1994
Employees' Stock Purchase Plan (the "Plan"). The purpose of the
Plan is to furnish to Eligible Employees (as defined in
subparagraph 2(a)) an incentive to advance the best interests of
Furon Company (the "Company") by providing a method whereby they
voluntarily may purchase stock of the Company at a favorable
price and upon favorable terms. The Plan is intended to meet the
requirements of Section 423 of the Internal Revenue Code of 1986,
as amended (the "Code"). As used herein, the term "Subsidiary"
means any corporation in an unbroken chain of corporations
(beginning with the Company) in which each corporation (other
than the last corporation) owns stock possessing 50 percent or
more of the total combined voting power of all classes of stock
in one or more of the other corporations in the chain.
SECTION 2. ELIGIBILITY.
(a) Eligible Employees. All employees of the
Company or of any Subsidiary which has been designated in writing
by the Committee as a "Participating Subsidiary" (including any
Subsidiaries which have become such after the date the Plan is
approved by shareholders) shall be "Eligible Employees" who may
participate in the Plan, except that any employee who has not as
of the Grant Date (as defined in subparagraph 4(a)) completed at
least twelve months of continuous full-time employment with the
Company or a Subsidiary or whose customary employment is for less
than twenty (20) hours per week shall not be an Eligible
Employee.
(b) Limitations on participation. Notwithstanding
anything else contained herein, a person who is otherwise an
Eligible Employee shall not be granted any right to purchase
stock under the Plan to the extent (i) it would, if exercised,
cause the person to own shares of stock (including shares which
would be owned if all outstanding options to purchase stock owned
by such person were exercised) in excess of five percent (5%) of
the total combined voting power of all classes of stock of the
Company or of a Subsidiary, or (ii) it causes such person to have
purchase rights under the Plan which accrue at a rate which
exceeds $25,000 of fair market value of stock of the Company or
any Subsidiary (determined at the time the right to purchase
stock under this Plan is granted) for each calendar year in which
such right is outstanding. For this purpose a right to purchase
stock accrues when it first becomes exercisable during the
calendar year. In determining whether the stock ownership of an
Eligible Employee equals or exceeds the five percent (5%) limit
set forth above, the rules of Section 424(d) of the Code
(relating to attribution of stock ownership) shall apply.
SECTION 3. STOCK SUBJECT TO THE PLAN; SHARE LIMITATIONS.
The total number of shares to be made available under
this Plan is two hundred thousand (200,000) authorized and
unissued or treasury shares of Common Stock, without par value,
of the Company ("Stock"), subject to adjustments pursuant to
Section 10. The aggregate number of shares an Eligible Employee
may purchase under the Plan during each Option Period shall not
exceed 5,000 shares, subject to adjustments pursuant to Section
10. In the event that all of the Stock made available under the
Plan is subscribed prior to the expiration of the Plan, the Plan
may be terminated in accordance with Section 12.
SECTION 4. GRANT OF OPTIONS.
(a) Grant Date; Option Period; Exercise Date. The
Plan shall be in effect from November 1, 1994 through and
including October 31, 2004, unless it is sooner terminated in
accordance with Section 12. During the term of the Plan, the
Company will offer options to purchase the Company's Stock to all
Eligible Employees. Each Option shall become effective each
November 1 (the "Grant Date"). The term of each option is twelve
months (the "Option Period") ending on October 31 (the "Exercise
Date").
(b) Election to participate; payroll deduction
authorization. As of each Grant Date, an option under the Plan
shall be deemed to have been granted to each Eligible Employee
who has delivered to the Company a payroll deduction
authorization within the time and in the form and manner
described in this subparagraph. Each Eligible Employee who
elects to participate in the Plan for a particular Option Period
shall deliver to the Company, prior to the October 15 preceding
the Grant Date for such Option Period, a written payroll
deduction authorization in a form prepared by the Company whereby
the Eligible Employee designates a stated amount of whole dollars
to be deducted from his or her Eligible Compensation (as defined
in subparagraph 4(c)) on each pay day. The minimum payroll
deduction shall be no less than 1% of the Eligible Employee's
Eligible Compensation during the Option Period and the maximum
deduction shall be no more than 10% of such Eligible Employee's
Eligible Compensation during the Option Period. The Company will
maintain on its books or cause to be maintained by a recordkeeper
an account (the "Account") in the name of each participant. At
the close of each pay period, the amount deducted from the
participant's Eligible Compensation will be credited to the
participant's Account. An Eligible Employee's election to
participate made pursuant to this Section 4(b) shall only be
effective for the Option Period to which such election relates.
(c) Eligible Compensation. The term "Eligible
Compensation" includes the following: regular earnings, overtime
pay, sick pay, shift differential, shift premium, vacation pay,
incentive compensation, and bonuses. Eligible Compensation also
includes any amounts contributed to a plan qualifying under
Sections 401(k), 125 and 129 of the Code as salary reduction
contributions. Any other form of compensation is excluded from
Eligible Compensation, including but not limited to the
following: prizes, awards, housing allowances, stock option
exercises, stock appreciation rights, restricted stock exercises,
performance awards, auto allowances, tuition reimbursement, and
forms of imputed income.
SECTION 5. EXERCISE OF OPTIONS.
(a) Option exercise. Each participant will be
deemed to have exercised his or her option on each Exercise Date,
subject to the provisions of Sections 6 and 7 of the Plan. Each
participant who is deemed to have exercised his or her option
shall be entitled to receive that number of whole shares of Stock
determined by dividing the balance of the participant's Account
as of the Exercise Date by the Option Price (as defined in
subparagraph 5(b)). Any balance remaining in the participant's
Account after payment of the Option Price for whole shares shall
be refunded to the participant. In the event the number of
shares of Stock subscribed for in any Option Period exceeds the
number of shares available for sale under the Plan for such
period, the available shares shall be allocated among the
participants in proportion to their Account balances.
(b) Option Price. The "Option Price" for each
share of Stock shall be the lesser of (i) eighty five percent
(85%) of the fair market value of such share on the Grant Date or
(ii) eighty five percent (85%) of the fair market value of such
share on the Exercise Date. The fair market value of a share
shall be the closing price reported on the applicable date in the
consolidated reporting system of NASDAQ and published in the
Western Edition of the Wall Street Journal. In the event the
Stock is not traded on the date as of which fair market value is
to be determined, the date used to determine value shall be the
next preceding date on which the Stock is traded.
(c) Delivery of share certificates. As soon as
practicable following the Exercise Date, the Company will deliver
a certificate issued in the participant's name with respect to
which the option was exercised and for which the Option Price has
been paid. Notwithstanding the preceding sentence, with respect
to a participant who is subject to Section 16(a) of the
Securities Exchange Act of 1934, as amended (a "Section 16
Person"), the Company will not deliver a certificate issued in
such participant's name until the day after the date which is six
months after the Exercise Date, and such participant cannot
transfer record or beneficial ownership of the shares to be
issued pursuant to such certificate within such six month period.
The Company will deliver certificates to the participant;
however, in the event the Company makes available an alternate
arrangement for delivery to a recordkeeping service, the
Committee in its discretion may either require or permit the
participant to elect that such certificate be delivered to such
recordkeeping service. In the event the Company is required to
obtain from any commission or agency authority to issue any such
certificate, the Company will seek to obtain such authority.
Inability of the Company to obtain from any such commission or
agency authority which counsel for the Company deems necessary
for the lawful issuance of any such certificate shall relieve the
Company from liability to any participant in the Plan except to
return to the participant the amount of the balance in his or her
Account.
SECTION 6. WITHDRAWAL FROM THE PLAN.
(a) Withdrawal during an Option Period. Each
participant may withdraw from the Plan at any time during an
Option Period. A participant who wishes to withdraw from the
Plan must deliver to the Company a notice of withdrawal in a form
prepared by the Company. The Company, promptly following the
time when the notice of withdrawal is delivered, will refund to
the participant the amount of the balance in his or her Account
and thereupon such participant's payroll deduction authorization,
interest in the Plan, and interest in his or her option under the
Plan shall terminate.
(b) Withdrawal resulting from loss of eligibility.
If a participant ceases to an Eligible Employee because he or she
no longer satisfies the requirements for eligibility stated in
Section 2 or any additional requirements imposed by applicable
local law, the participant shall be deemed to have withdrawn from
the Plan as of the date when he or she ceased to be an Eligible
Employee. The Company shall promptly refund to the participant
the amount of the balance of his or her Account, and the
participant's payroll deduction authorization, interest in the
Plan, and interest in his or her option under the Plan shall
terminate.
(c) Participation following withdrawal. A
participant who elects to withdraw from the plan in a manner
described in subparagraph (a) may participate in the Plan as of
the next following Option Period provided he or she is an
Eligible Employee on such date. If a participant is deemed to
have withdrawn from the Plan by his or her loss of eligibility to
participate as stated in subparagraph (b), such participant shall
again be eligible to participate as of the Grant Date which
coincides with or follows the date he or she again becomes an
Eligible Employee. Notwithstanding the preceding sentences, in
the event that a Section 16 Person withdraws in accordance with
subparagraph (a) or is deemed to have withdrawn in accordance
with subparagraph (b), such Section 16 Person shall not be
eligible to participate in the Plan until the Grant Date which is
at least six months after the date of his or her withdrawal.
SECTION 7 TERMINATION OF EMPLOYMENT.
(a) Termination of employment other than by
retirement or death. If the employment of a participant
terminates during the Option Period other than by retirement or
death, the participant shall be deemed to have withdrawn from the
Plan on the day following the effective date of his or her
termination of employment. The Company shall promptly refund to
the participant the amount of the balance in his or her Account,
and thereupon the participant's interest in the Plan and interest
in his or her outstanding option under the Plan shall terminate.
(b) Termination by retirement. If a participant
retires on or after the date that is three months before the
Exercise Date, such participant may elect in writing before his
or her retirement to either (i) exercise his or her outstanding
option, in which event the Company shall retain the balance in
such participant's Account during the then current Option Period
and then apply the balance in such Account under the Plan to
purchase at the Option Price whole shares of the Company's Stock
on the next following Exercise Date and refund the excess, if
any, or (ii) request payment of the balance in such Account, in
which event the Company promptly shall make payment, and
thereupon the participant's interest in the Plan and in his or
her outstanding option under the Plan shall terminate.
If a participant retires prior to the date that is
three months before the Exercise Date, the Company promptly shall
refund the amount in the participant's Account, and thereupon the
participant's interest in the Plan and in his or her outstanding
option under the Plan shall terminate.
(c) Termination by death. If the employment of a
participant is terminated by death, the Company promptly shall
pay the balance of the participant's Account under the Plan to
the person whom the participant has named beneficiary to receive
the benefits of the Company's basic group life insurance plan, or
to the participant's estate if he or she has not named any such
beneficiary, and thereupon the participant's interest in the Plan
and in his or her option under the Plan shall terminate.
SECTION 8. NONTRANSFERABILITY.
Except for transfers by will or under the laws of
descent and distribution, or unless otherwise provided by law
(and in the case of a Section 16 Person, consistent with Rule
16b-3 promulgated under the Securities Exchange Act of 1934, as
amended), neither the payroll deductions credited to an Eligible
Employee's Account nor an Eligible Employee's rights to purchase
Stock under this Plan may be sold, assigned, transferred,
pledged, or otherwise disposed of or encumbered, and any such
action taken by the Eligible Employee, or any claim asserted by
another party in respect of such right or interest, shall be
void. During the Eligible Employee's lifetime, an option granted
under this Plan may be exercised only by the Eligible Employee.
SECTION 9. EMPLOYEE'S RIGHTS.
Nothing in this Plan shall prevent the Company or any
Subsidiary from terminating any employee's employment. No
employee shall have any rights as a shareholder until a
certificate for shares has been issued in the participant's name
following exercise of his or her option.
Section 10. ADJUSTMENT OF AND CHANGES IN THE STOCK.
In the event that the shares of Stock shall be changed
into or exchanged for a different number or kind of shares of
stock or other securities of the Company or of another
corporation (whether by reason or merger, consolidation,
recapitalization, stock split, combination of shares, or
otherwise), or if the number of shares of Stock shall be
increased through a stock split or the payment of a stock
dividend, then there shall be substituted for or added to each
share of Stock theretofore reserved for sale under the Plan, the
number and kind of shares of stock or other securities into which
each outstanding share of Stock shall be so changed, or for which
each such share shall be exchanged, or to which each such share
is entitled, as the case may be, or the number or kind of
securities which may be sold under the Plan and the purchase
price per share shall be appropriately adjusted consistent with
such change in such manner as the Board of Directors may deem
equitable to prevent substantial dilution or enlargement of
rights granted to, or available for, Eligible Employees.
SECTION 11. USE OF FUNDS; NO INTEREST PAID.
All funds received or held by the Company under the
Plan will be included in the general funds of the Company and may
be used for any corporate purpose. No interest will be paid to
any participant or credited to his or her Account under the Plan.
SECTION 12. AMENDMENT OR DISCONTINUANCE OF THE PLAN.
The Board of Directors of the Company shall have the
right to amend, modify or terminate the Plan at any time without
notice, provided that no participant's existing rights are
adversely affected thereby and provided further that without the
approval of the holders of a majority of the issued and
outstanding shares of Stock no such amendment shall be made which
(i) increases the total number of shares subject to the Plan,
(ii) changes the formula by which the price at which the shares
shall be sold is determined, (iii) changes the class of employees
eligible to participate in the Plan, or (iv) requires stockholder
approval under any applicable provision of law including Rule
16b-3. Notwithstanding anything else contained herein, the
Committee shall have the right to designate from time to time the
Subsidiaries whose employees may be eligible to participate in
the Plan and such designations shall not constitute an amendment
to the Plan requiring shareholder approval in accordance with
Treasury Regulation Section 1.423-2(c)(4).
SECTION 13. ADMINISTRATION.
The Plan shall be administered by a Committee appointed
by the Board of Directors consisting of three employees of the
Company. No members of the Committee shall be entitled to act on
or decide any matter relating solely to himself or herself or any
of his or her rights or benefits under the Plan. The Committee
may from time-to-time adopt rules and regulations for carrying
out the Plan. The Committee shall have full power and discretion
to construe and interpret the Plan, which construction or
interpretation shall be final and conclusive on all persons.