FURON COMPANY
1994 EMPLOYEES' STOCK PURCHASE PLAN
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 was
approved by shareholders) shall be 'Eligible Employees' who may
participate in the Plan, except that any employee whose customary
employment as of the Grant Date (as defined in subparagraph 4(a))
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. To the extent that the contributions
that
an Eligible Employee makes to the Plan would cause either of the
circumstances described in clause (i) or (ii) of this subsection
(b) to occur, such contribution shall be refunded to the Eligible
Employee as soon as administratively practicable.
Section 3. STOCK SUBJECT TO THE PLAN; SHARE LIMITATIONS.
The total number of shares to be made available under
this Plan is 400,000 (800,000, subject to approval of such
increase
by shareholders at the 1998 annual meeting of shareholders)
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 Grant Date for such Option Period, a
written
payroll deduction authorization in a form prepared by the Company
whereby the Eligible Employee designates a whole percentage from
1% to 10% of the Eligible Employee's Eligible Compensation (as
defined in subparagraph 4(c)) to be contributed to the Plan on
each
payday. The Company will maintain on its books or cause to be
maintained by a record keeper 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 subparagraph 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 shares of whole and fractional Stock
determined by dividing the balance of the participant's Account
as
of the Exercise Date by the Option Price (as defined in
Subsection
5(b)). Any balance remaining in the participant's Account after
payment of the Option Price for shares of Stock 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 Composite Tape, as published in the
Western Edition of the Wall Street Journal, of the principal
securities exchange or market on which the Stock is so listed,
admitted to trade, or quoted on such date. 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 arrange
the delivery to each participant or to a broker's account
established by the participant, as appropriate, of a certificate
representing the shares purchased upon exercise of the Option.
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. For purposes of this Subsection 6(a), if a
participant
who is on a leave of absence approved in writing by the Company
elects to cease making contributions during an Option Period, the
cessation of the participant's contributions shall not be deemed
to constitute a withdrawal from participation in the Plan.
(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.
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 the
descent and distribution, or unless otherwise provided by law,
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.