As filed with the Securities and Exchange Commission on September
10, 1998
Registration No.
333-____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------------
Furon Company
(Exact name of registrant as specified in its charter)
----------------------------
California 95-1947155
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
29982 Ivy Glenn Drive,
Laguna Niguel, California 92677-2044 (714) 831-5350
(Address of principal executive offices)
----------------------------
Furon Company Deferred Compensation Plan
(Full title of the plan)
--------------------------
Donald D. Bradley
General Counsel and Secretary
Furon Company
29982 Ivy Glenn Drive,
Laguna Niguel, California 92677-2044
(Name and address of agent for service)
Telephone number, including area code, of agent for service:
(949) 831-5350
-------------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Title of Amount Proposed Proposed Amount
of
of securities to be maximum maximum
registration
to be registered offering aggregate fee
Common Stock, 300,000<1><2> $17.3125<3> $5,193,750<3>
$1,533<3>
without par value
Deferred $2,500,000<4> 100% $2,500,000<5> $7380
Compensation
Obligations
- --------------------------------------------
<FN>
<1> This Registration Statement covers, in addition to the
number
of shares of Common Stock stated above, other rights to
purchase or acquire the shares of Common Stock covered by
the Prospectus and, pursuant to Rule 416(c) under the
Securities Act of 1933, an indeterminate number
of shares and rights which by reason of certain events
specified in the Furon Company Deferred Compensation
Plan (the "Plan") may become subject to the Plan.
<2> Each share is accompanied by a common share purchase right
pursuant to the Registrant's Rights Agreement, dated March
21, 1989, as amended, with The Bank of New York, as Rights
Agent.
<3> Pursuant to Rule 457(h), the maximum offering price, per
share and in the aggregate, and the registration fee were
calculated based upon the average of the high and low
prices of the Common Stock on September 2, 1998, as
reported on the New York Stock Exchange and published in the
Western Edition of The Wall Street Journal.
<4> The Deferred Compensation Obligations being registered are
general unsecured obligations of Furon Company to pay
deferred
compensation in the future to participating members of a
select group of management or highly compensated employees
in accordance with the terms of the Plan.
<5> Estimated solely for purposes of determining the
registration
fee.
The Exhibit Index for this Registration Statement is at page
S-3.
</FN>
</TABLE>
<PAGE>
PART I
INFORMATION REQUIRED IN THE
SECTION 10(a) PROSPECTUS
The documents containing the information specified in
Part I of Form S-8 (plan information and registrant information)
will be sent or given to employees as specified by Rule 428(b)(1)
of the Securities Act of 1933, as amended (the "Securities Act").
Such documents need not be filed with the Securities and Exchange
Commission (the "Commission") either as part of this Registration
Statement or as prospectuses or prospectus supplements pursuant
to Rule 424 of the Securities Act. These documents, which
include
the statement of availability required by Item 2 of Form S-8, and
the documents incorporated by reference in this Registration
Statement
pursuant to Item 3 of Form S-8 (Part II hereof), taken together,
constitute a prospectus that meets the requirements of Section
10(a)
of the Securities Act.
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
The following documents of Furon Company (the "Company")
filed
with the commission are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal
year ended January 31, 1998, filed with the Commission
on April 9, 1998;
(b) The Company's Quarterly Report on Form 10-Q for the
quarterly period ended May 2, 1998, filed with the
Commission on May 29, 1998; and
(c) The Description of the Company's Common Stock included
in its Registration Statements on Forms 8-A, each dated
and filed with the Commission on January 23, 1995, and
any amendment or report filed for the purpose of
updating
such description;
All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act
of 1934, as amended (the "Exchange Act"), prior to the filing of
a
post-effective amendment which indicates that all securities
offered
hereby have been sold or which deregisters all securities then
remaining
unsold shall be deemed to be incorporated by reference into the
prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained herein or in a document,
all
or a portion of which is incorporated or deemed to be
incorporated by reference herein, shall be deemed to be modified
or superseded
for purposes of this Registration Statement to the extent that a
statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by
reference
herein modifies or supersedes such statement. Any such statement
so
modified or superseded shall not be deemed, except as so modified
or amended, to constitute a part of this Registration Statement.
Item 4. Description of Securities
Common Stock. The Company's Common Stock is registered
pursuant
to Section 12 of the Exchange Act, and, therefore, the
description of securities is omitted.
Deferred Compensation Obligations. The Plan provides a
select
group of management or highly compensated employees of the
Company
and certain of its subsidiaries with the opportunity to defer the
receipt of certain pre-tax compensation. The obligations of the
Company under the Plan (the "Deferred Compensation Obligations")
will be general unsecured obligations of the Company to pay
deferred compensation in the future to participating eligible
employees (the "Participants") in accordance with the terms
of the Plan from the general assets of the Company, and will
rank pari passu with other unsecured and unsubordinated
indebtedness of the Company from time to time outstanding. The
Deferred Compensation Obligations will be denominated and payable
in United States dollars.
Each Participant may elect to defer all or a portion of his
or her salary and/or cash or stock bonus payments that may become
payable under the Furon Company Economic Value Added (EVA)
Incentive Compensation Plan (to the extent that such amounts
exceed the
applicable Social Security Wage Base, and such amounts reduced
for
any amounts required to satisfy applicable withholding
obligations),
if any, payable with respect to a particular year. A
Participant's
compensation deferrals are credited to the Participant's
bookkeeping account ("Account") maintained under the Plan. Each
Participant's Account is credited on a periodic basis with a
deemed rate of earnings.
With certain exceptions, Deferred Compensation Obligations
will be paid after the Participant's payment eligibility date,
which is the first day of January in the year immediately
following
the earliest of (i) the date on which the Participant terminates
employment, dies, or becomes totally disabled, or (ii) the
fixed date elected by the Participant at the time of the
deferral.
A Participant may elect to receive payment in the form of (i) a
lump-sum, or (ii) annual installment payments paid over 5, 10,
15, or 20 years. Payments will be made in cash or shares of
Common Stock, depending on the deemed investment elections
made by the Participant.
No amount payable under the Plan shall be subject to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or charge, voluntary or involuntary. Any attempt
to dispose of any rights to benefits payable under the Plan shall
be void.
The Deferred Compensation Obligations are not subject to
redemption, in whole or in part, prior to the individual payment
dates selected by the Participants. However, the Company
reserves
the right to amend or terminate the Plan at any time.
The total amount of the Deferred Compensation Obligations
is not determinable because the amount will vary depending upon
the level of participation by eligible employees and the amounts
of their salaries and bonuses. The duration of the Plan is
indefinite
(subject to the Company's ability to terminate the Plan). The
Deferred Compensation Obligations are not convertible into
another security of the Company (subject to certain investment
elections that a Participant may make at the time of his or her
deferral to have amounts deemed to be invested, and eventually
paid, in the form of Common Stock). The Deferred Compensation
Obligations will not have the benefit of a negative pledge or any
other affirmative or negative covenant on the part of the
Company.
Each Participant will be responsible for acting independently
with respect to, among other things, the giving of notices,
responding to any requests for consents, waivers or amendments
pertaining to the Deferred Compensation Obligations, enforcing
covenants and taking action upon a default by the Company.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
The Company's Restated Articles of Incorporation contain
a provision which eliminates the liability of directors for
monetary damages to the fullest extent permissible under
California law. The General Corporation Law of California
(the "Law") (i) eliminates the liability of directors for
monetary damages in an action brought by a shareholder in the
right of the Company (referred to herein as a "derivative
action")
or by the Company for breach of a director's duties to the
Company and its shareholders and (ii) authorizes the Company
to indemnify directors and officers for monetary damages for
all acts or omissions committed by them in their respective
capacities; provided, however, that liability is not limited
nor may indemnification be provided for (a) acts or omissions
that involve intentional misconduct or a knowing and culpable
violation of law, (b) for acts or omissions that a director
or officer believes to be contrary to the best interests of
the Company or its shareholders or that involve the absence
of good faith on the part of a director or officer seeking
indemnification, (c) for any transaction from which a director
or officer derives an improper personal benefit, (d) for acts
or omissions that show a reckless disregard for the director's
or officer's duty to the Company or its shareholders in
circumstances in which such person was aware, or should have
been aware, in the ordinary course of performing his duties,
of a risk of serious injury to the Company or its shareholders,
(e) for acts or omissions that constitute an unexcused pattern
of inattention that amounts to an abdication of the director's
or officer's duty to the Company or its shareholders, and (f) for
liabilities arising under Section 310 (contracts in which a
director has a material financial interest) and 316 (certain
unlawful dividends, distributions, loans and guarantees)
of the Law. In addition, the Company may not indemnify
directors and officers in circumstances in which
indemnification is expressly prohibited by Section 317
of the Law.
The Amended and Restated Bylaws of the Company provide
that indemnification for directors and officers must be provided
to the fullest extent permitted under California law and the
Company's Restated Articles of Incorporation. The Company has
entered into indemnification agreements with its directors
and officers which require that the Company indemnify such
directors and officers in all cases to the fullest extent
permitted by applicable provisions of the Law. The Company
also maintains a directors' and officers' liability insurance
policy insuring directors and officers of the Company.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
See the attached Exhibit Index on page S-3.
Item 9. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers
or sales are being made, a post-effective
amendment to this Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts
or events arising after the effective date of this
Registration Statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent
a fundamental change in the information set forth
in this Registration Statement; and
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in this Registration Statement or any
material change to such information in this
Registration Statement; Provided, however, that
paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the information required to be included in
a post-effective amendment by those paragraphs
is contained in periodic reports filed by the
registrant with or furnished to the Commission
pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference
in this Registration Statement;
(2) That, for the purpose of determining any
liability under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that,
for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual
report
pursuant to Section 15(d) of the Exchange Act) that is
incorporated
by reference in this Registration Statement shall be deemed to
be a new registration statement relating to the securities
offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof.
(h) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
provisions described in Item 6 above, or otherwise, the
registrant has been advised that in the opinion of the
Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act,
the registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing
on Form S-8 and has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Laguna Niguel, State of
California, on September 9, 1998.
By: /s/ J. Michael Hagan
------------------------
- -
J. Michael Hagan
Its: Chairman of the
Board
and Chief Executive
Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and
appoints J. Michael Hagan and Donald D. Bradley, or either of
them
individually, his true and lawful attorney-in-fact and agent,
with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities,
to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the
same, with all exhibits thereto, and other documents in
connection therewith, with the Commission, granting unto
said attorneys-in-fact and agents, or either of them
individually, full power and authority to do and perform each
and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact
and agents, or either of them individually, or his
substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act
of 1933, this Registration Statement has been signed below
by the following persons in the capacities and on the dates
indicated.
<TABLE>
<S> <C> <C>
Signature Title Date
/s/ J. Michael Hagan Chairman of the September 9, 1998
J. Michael Hagan Board and Chief
Executive Officer
(Principal Executive
Officer)
/s/ Terrence A. Noonan President, Chief September 9, 1998
Terrence A. Noonan Operating Officer
and Director
/s/ Peter Churm Chairman Emeritus, September 9, 1998
Peter Churm Director
/s/ Monty A. Houdeshell Vice President and September 9,1998
Monty A. Houdeshell Chief Financial
Officer (Principal
Financial Officer)
/s/ David L. Mascarin Controller September 9, 1998
David L. Mascarin (Principal
Accounting Officer)
/s/ Cochrane Chase Director September 9, 1998
Cochrane Chase
/s/ William D. Cvengros Director September 9, 1998
William D. Cvengros
/s/ Bruce E. Ranck Director September 9, 1998
Bruce E. Ranck
/s/ William C. Shepherd Director September 9, 1998
William C. Shepherd
/s/ R. David Threshie Director September 9, 1998
R. David Threshie
<PAGE>
EXHIBIT INDEX
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Exhibit
Number Description
4. Furon Company Deferred Compensation Plan.
5. Opinion of O'Melveny & Myers LLP (opinion re
legality).
23.1 Consent of Ernst & Young LLP (consent of independent
auditors).
23.2 Consent of O'Melveny & Myers LLP (included in Exhibit
5).
24. Power of Attorney (included in this Registration
Statement under "Signatures").
<PAGE>
</TABLE>
FURON COMPANY DEFERRED COMPENSATION PLAN
(As Amended and Restated
Effective February 1, 1998)
ARTICLE I.
PURPOSE
1.1 Establishment of the Plan. Effective as of January 1,
1993, Furon Company, a California corporation, established
the Furon Company Deferred Compensation Plan (the "Plan").
This amendment and restatement of the Plan is effective as
of February 1, 1998.
1.2 Purpose of the Plan. The purpose of the Plan is to permit
participating employees of Furon Company and its
Subsidiaries to defer the payment of all or part of their
annual salary and certain bonuses that they may earn. The
opportunity to elect such deferrals is provided in order to
help the Company attract and retain key employees who
appreciate the tax flexibility and other advantages of such
a deferral program.
1.3 Duration of the Plan. Subject to prior termination by law
or by the Board of Directors of Furon Company pursuant to
the right of termination it has reserved under Section 5.9
hereof, the Plan shall continue in effect indefinitely.
1.4 Definitions. Whenever the following words and phrases are
used in the Plan, with the first letter capitalized, they
shall have the meanings specified below:
"Account" or "Accounts" shall mean a Participant's Deferral
Account and/or Stock Account.
"Beneficiary" or "Beneficiaries" shall have the meaning set
forth in Section 5.2.
"Board of Directors" or "Board" shall mean the Board of
Directors of the Corporation.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Committee" shall mean the committee appointed in accordance
with Section 2.1 which shall administer the Plan.
"Common Stock" shall mean the common stock, without par
value, of the Corporation, subject to adjustment pursuant
to Section 4.4(b)(4).
"Company" shall mean the Corporation and its Subsidiaries.
"Corporation" shall mean Furon Company, a California
corporation, and any successor corporation.
"Deferral Account" shall mean the bookkeeping account
maintained
by the Committee for each Participant that (1) is credited
with
(i) deferrals elected pursuant to Section 4.1(a), (ii) the
amounts that the Participant elects to defer to such account
pursuant to Section 4.1(b), (iii) transfers elected by the
Participant from his or her Stock Account, and (iv) earnings
or
losses (determined with reference to the deemed investments
selected by the Participant) with respect to amounts
credited to
such account; and (2) is debited for (i) payments from such
account, and (ii) transfers to the Participant's Stock
Account.
"Deferred Share" shall mean a non-voting unit of measurement
which is deemed solely for bookkeeping purposes under the
Plan to
be equivalent to one outstanding share of Common Stock
(subject
to Section 4.4(b)(4)).
"Distribution Subaccounts" shall mean the subaccount of a
Participant's Deferral Account and/or Stock Account
established
separately to account for deferred compensation which is
subject
to different distribution elections.
"Dividend Equivalent" shall mean the amount of cash
dividends or
other cash distributions paid by the Corporation on that
number
of shares of Common Stock equal to the number of Deferred
Shares
credited to a Participant's Stock Account as of the
applicable
record date for the dividend or other distribution, which
amount
shall be credited in the form of additional Deferred Shares
to
the Participant's Stock Account, as provided in Section
4.4(b)(2).
"Eligible Employee" shall mean any officer or employee of
the
Company.
"ERISA" shall mean the Employee Retirement Income Security
Act
of 1974, as amended.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as
amended from time to time.
"Fair Market Value" shall mean on any date the closing price
of
the Common Stock 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 Common Stock is
so
listed, admitted to trade, or quoted on such date, or, if
there
is no trading of (or no available closing price of) the
Common
Stock on such date, then the closing price of the Common
Stock as
quoted on such Composite Tape on the next preceding date on
which
there was trading in such shares. If the Common Stock is
not so
listed, admitted or quoted, the Committee may designate such
other exchange, market or source of data as it deems
appropriate
for determining such value for purposes of the Plan.
"Participant" shall mean any Eligible Employee who has been
selected by the Committee in accordance with Section 3.1 to
participate in the Plan.
"Plan" shall mean the Furon Company Deferred Compensation
Plan
set forth herein, now in effect, or as amended from time to
time.
"Plan Year" shall mean the 12 consecutive month period
beginning
January 1 each year and ending the following December 31.
"Stock Account" shall mean a bookkeeping account maintained
by
the Committee for each Participant that (1) is credited with
Deferred Shares with respect to (i) the amounts that the
Participant elects to defer to such account pursuant to
Section
4.1(b), (ii) the deferrals elected by the Participant
pursuant to
Section 4.1(c), (iii) transfers elected by the Participant
from
his or her Deferral Account, and (iv) Dividend Equivalents
(if
any); and (2) is debited with Deferred Shares with respect
to (i)
payments or distributions from such account, and (ii)
transfers
to the Participant's Deferral Account.
"Subsidiary" shall mean any corporation or other entity of
which
more than 50% of the outstanding voting stock or voting
power is
beneficially owned directly or indirectly by the
Corporation.
"Trust Price" shall mean, for any calendar quarter, the
average
price paid (or received) by the trustee of the Furon Company
Employee Benefits Trust to acquire (or sell) Common Stock in
the
30-day period following such quarter. If the trustee made
no
purchases (or sales) during such period, the Trust Price
shall be
the volume-weighted average price of the Common Stock on the
New
York Stock Exchange for such period.
ARTICLE II. ADMINISTRATION
2.1 Committee. The Committee shall be appointed by, and serve
at the pleasure of, the Board of Directors. Any member of
the
Board of Directors and/or officer or employee of the Company
may
be appointed as a Committee member. The number of members
comprising the Committee shall be determined by the Board
which
may from time to time vary the number of members. A member
of
the Committee may resign by delivering a written notice of
resignation to the Board. The Board may remove any member
by
delivering a certified copy of its resolution of removal to
such
member. Vacancies in the membership of the Committee shall
be
filled promptly by the Board.
2.2 Committee Action. The Committee shall act at meetings by
affirmative vote of a majority of the members of the
Committee.
Any action permitted to be taken at a meeting may be taken
without a meeting if, prior to such action, a written
consent to
the action is signed by all members of the Committee and
such
written consent is filed with the minutes of the proceedings
of
the Committee. A member of the Committee shall not vote or
act
upon any matter which relates solely to himself or herself
as a
Participant. The Chairman or any other member or members of
the
Committee designated by the Chairman may execute any
certificate
or other written direction on behalf of the Committee.
2.3 Powers and Duties of the Committee. The Committee, on
behalf of the Participants and their Beneficiaries, shall
enforce
the Plan in accordance with its terms, shall be charged with
the
general administration of the Plan, and shall have all
powers
necessary to accomplish its purposes, including, but not by
way
of limitation, the following:
(1) To select the funds or portfolios available for
the deemed investment of Deferral Accounts;
(2) To construe and interpret the terms and provisions
of
the Plan;
(3) To compute and certify to the Corporation the
amount and
kind of benefits payable to Participants and their
Beneficiaries, and to determine the time and
manner in
which such benefits are paid;
(4) To maintain all records that may be necessary for
the
administration of the Plan;
(5) To provide for the disclosure of all information
and the
filing or provision of all reports and statements
to
Participants, Beneficiaries or governmental
agencies as
shall be required by law;
(6) To make and publish such rules for the regulation
of the
Plan and procedures for the administration of the
Plan as
are not inconsistent with the terms hereof;
(7) To appoint a plan administrator or any other
agent, and
to delegate to them such powers and duties in
connection
with the administration of the Plan as the
Committee may
from time to time prescribe;
(8) To authorize all disbursement by the Corporation
pursuant to
the Plan; and
(9) To direct any Corporation grantor trust
established with
respect to the Plan (but the Committee's powers
and
duties shall not extend to the Furon Company
Employee
Benefits Trust) concerning the performance of
various
duties and responsibilities under the related
trust agreement.
2.4 Construction and Interpretation. The Committee shall have
full discretion to construe and interpret the terms and
provisions of the Plan, which interpretation or construction
shall be final and binding on all parties, including but not
limited to the Corporation, its Subsidiaries and any
Participant
or Beneficiary. The Committee shall administer such terms
and
provisions in a uniform and nondiscriminatory manner and in
full
accordance with any and all laws applicable to the Plan.
2.5 Information. To enable the Committee to perform its
functions, the Corporation shall supply full and timely
information to the Committee on all matters relating to the
compensation of all Participants, their death or other cause
of
termination, and such other pertinent facts as the Committee
may
require.
2.6 Compensation, Expenses and Indemnity. The members of the
Committee shall serve without compensation for their
services
hereunder. The Committee is authorized at the expense of
the
Corporation to employ such legal counsel as it may deem
advisable
to assist in the performance of its duties hereunder.
Expenses
and fees in connection with the administration of the Plan
shall
be paid by the Corporation. To the extent permitted by
applicable state law, the Corporation shall indemnify and
save
harmless the Committee and each member thereof, the Board of
Directors and any delegate of the Committee who is an
employee of
the Corporation against any and all expenses, liabilities
and
claims, including legal fees to defend against such
liabilities
and claims arising out of their discharge in good faith of
responsibilities under or incident to the Plan, other than
expenses and liabilities arising out of willful misconduct.
This
indemnity shall not preclude such further indemnities as may
be
available under insurance purchased by the Corporation or
provided by the Corporation under any bylaw, agreement or
otherwise, as such indemnities are permitted under state
law.
2.7 Quarterly Statements. Under procedures established by the
Committee, a Participant shall receive a statement with
respect
to such Participant's Accounts as soon as administratively
practicable following the end of each calendar quarter.
ARTICLE III. PARTICIPANTS
3.1 Participants. The Committee shall determine and designate
from the class of Eligible Employees those individuals who
are
eligible to elect deferrals under the Plan. To be selected
for
participation by the Committee, an Eligible Employee must
have
significant responsibility for the management, direction
and/or
success of the Company as a whole or a particular business
unit
thereof. The Committee shall limit the class of
Participants to
a select group of management or highly compensated
employees, as
set forth in Sections 201, 301, and 401 of ERISA.
ARTICLE IV. DEFERRALS
4.1 Deferrals.
(a) Salary Deferrals. Each Participant may elect to defer
any
portion of his regular salary, but only to the extent
that his
compensation (including salary, bonus amounts and
taxable
payments of deferred compensation) payable during the
Plan Year
exceeds the Social Security Wage Base for old age and
survivors
benefits for that year. Any such election must be
entered into
between the Participant and the Corporation by filing a
deferred
compensation agreement form with the Corporation on or
before the
December 1 prior to the beginning of the Plan Year for
which the
deferral is to be effective. Salary reductions and
Company
deferrals shall be made throughout the year based on
the amount
by which a Participant's compensation for the year is
expected to
exceed such Wage Base. Compensation which a
Participant elects
to defer pursuant to this Section 4.1(a) shall be
credited to the
Participant's Deferral Account in accordance with
Section 4.4(a).
(b) Cash Bonus Deferrals. Each Participant who is eligible
for
the Company's Economic Value Added Plan (the "EVA
Plan") may
elect to defer the payment of all or a portion of his
cash bonus
to be earned during the current fiscal year, but only
to the
extent that his compensation projected to be payable
for the
following Plan Year (including salary, bonus amounts
and taxable
payments of deferred compensation) exceeds the Social
Security
Wage Base for old age and survivors benefits for such
following
year. Any such election must be entered into between
the
Participant and the Corporation by filing a deferred
compensation
agreement form with the Corporation prior to October 1
of the
fiscal year for which the bonus is to be earned
(December 14,
in the case of bonuses earned for fiscal year that
begins in
1992). A Participant may elect on his or her cash
bonus
election to have a specified percentage of the cash
bonus
that he or she elects to defer credited to his or her
Stock Account in the form of Deferred Shares in
accordance
with Section 4.4(b). The remaining portion of any
deferred
cash bonus not credited to the Participant's Stock
Account
in accordance with the preceding sentence (or, if no
Deferred Share election is made on the Participant's
cash bonus deferral election, the entire amount of the
cash
bonus deferred pursuant to such election) will be
credited
to the Participant's Deferral Account in accordance
with
Section 4.4(a).
(c) Stock Bonus Deferrals. Each Participant who is
eligible for
the EVA Plan may elect to defer the delivery of all or
a
portion of the Common Stock that he or she would
otherwise
receive under such plan, but only to the extent that
his
compensation projected to be payable for the following
Plan Year (including salary, bonus amounts and taxable
payments of deferred compensation) exceeds the Social
Security Wage Base for old age and survivors benefits
for such following year. Any such election must be
entered into between the Participant and the
Corporation by
filing a deferred compensation agreement form with the
Corporation on or before the October 1 prior to the
beginning of
the Plan Year for which the deferral is to be
effective. If a
Participant elects to defer the delivery of Common
Stock pursuant
to this Section 4.1(c), such Common Stock shall be
credited in
the form of Deferred Shares to the Participant's Stock
Account in
accordance with Section 4.4(b).
(d) Withholding Limitation. No election shall be effective
to
reduce the salary, bonus, or other compensation payable
to a
Participant for a calendar year to an amount which is
less than
the amount that the Company is required to withhold
from such
person's compensation for such calendar year for
purposes of
federal, state and local (if any) income tax,
employment tax
(including without limitation Federal Insurance
Contributions Act
(FICA) tax), and other tax withholdings.
4.2 Deferral Procedures. If a deferral is elected, the election
shall be irrevocable and shall be made on a form and in a
manner
prescribed by the Committee. The deferral shall authorize
appropriate tax withholding measures in accordance with
Section 5.7. The Committee shall not permit any deferral to
be
elected on a date that is after the time that a bonus or
award
to which the election relates has become substantially
earned and
determinable. If a Participant has not elected a deferral,
any
compensation that may become payable to the Participant
shall be
paid in accordance with the Company's normal practices. A
deferral election shall be effective only with respect to
the
Plan Year with respect to which it is made.
4.3 Deferral Options. If a deferral is elected, the
Participant's period of deferral shall end with the
Participant's
termination of employment with the Company for any reason
(including, without limitation, retirement, death, permanent
disability, resignation or termination by the Company). In
addition, the Participant shall have the right to elect on
his or
her deferral election that amounts deferred pursuant to such
election shall become payable, in the absence of the
occurrence
of an event described in the preceding sentence, upon the
expiration of 5, 10, 15 or 20 years following the original
deferral.
4.4 Accounts. The Corporation shall establish a Deferral
Account and a Stock Account for each Participant. Accounts
shall
reflect the Corporation's obligation to pay the deferred
amount
as provided in Section 4.7. The Corporation may establish
separate Distribution Subaccounts under each of a
Participant's
Accounts.
(a) Deferral Account.
(1) Amounts deferred pursuant to Section 4.1 to a
Participant's Deferral Account shall be credited in the
form
of cash to such Account as of the end of the month in
which
such amounts would have otherwise, in the absence of a
deferral
election, been paid to the Participant.
(2) Assumed earnings (or losses) shall be credited to
the
Participant's Deferral Account at the end of each
calendar
qarter in the form of cash and shall be calculated
based on the
Participant's Deferral Account balance as of the first
day of
that quarter. The Committee may provide that deemed
earnings (or
losses) shall be credited more frequently than
quarterly. The
Corporation shall select, from time to time, two or
more
investment funds which shall be used for purposes of
determining
the amount of assumed earnings (or losses) to be
credited to
Participants' Deferral Accounts. Each Participant
shall be
notified of the funds available for selection, and then
may
designate, on a form and in the manner prescribed by
the
Committee, percentages of his or her Deferral Account
which shall
be credited with earnings or losses that equal or
"mirror" the
appreciation or depreciation in the funds to which such
percentages of his or her Deferral Account have been
identified.
Each Participant shall be entitled to change the
percentages of
his or her Deferral Account identified, on a form and
in the
manner prescribed by the Committee, to any of the
investment
funds as of the first day of each calendar quarter,
provided that
notice is received by the Committee at least two weeks
in advance
of such date. The Committee may, at any time and
without notice,
change the number, types and/or particular funds
offered.
(3) As of the end of each fiscal year of the
Corporation, the
Deferral Account of any Participant that has increased
in value
during such year as a result of the crediting of deemed
earnings
or losses shall be decreased, in accordance with
procedures
adopted for the purpose by the Committee, by the
incremental
marginal tax rate applicable to the Corporation for
such year.
(b) Stock Account.
(1) A Participant's Stock Account shall be credited
once
each year. As soon as administratively practicable
following the
close of the calendar quarter in which stock bonuses
are or would
be paid under the EVA Plan, a Participant's Stock
Account shall
be credited with a number of Deferred Shares equal to
the sum of
(i) the number of EVA Plan bonus shares that would
otherwise have
been paid at the end of such calendar quarter to the
Participant
that the Participant elected to defer in accordance
with Section
4.1(c), and (ii) the portion of the Participant's cash
bonus
deferred to such account during the preceding EVA Plan
year in
accordance with Section 4.1(b) divided by the Trust
Price for
such first calendar quarter.
(2) As soon as administratively practicable following
the close
of the first calendar quarter of each year, the
Participant's
Stock Account shall be credited with additional
Deferred Shares
in an amount equal to the amount of the Dividend
Equivalents
representing cash dividends paid during the preceding
four
quarters on that number of shares equal to the
aggregate Deferred
Shares in the Participant's Stock Account as of the
beginning of
the second quarter of the previous year, divided by the
Trust
Price for such first calendar quarter.
(3) A Participant's Stock Account shall be a
memorandum account
on the books of the Corporation. The Deferred Shares
credited to
a Participant's Stock Account shall be used solely as a
device
for the determination of the number of shares of Common
Stock to
be eventually distributed to such Participant in
accordance with
the Plan. The Deferred Shares shall not be treated as
property
or as a trust fund of any kind. No Participant shall
be entitled
to any voting or other stockholder rights with respect
to
Deferred Shares granted or credited under the Plan.
The number
of Deferred Shares credited (and the Common Stock to
which the
Participant is entitled under the Plan) shall be
subject to
adjustment in accordance with Section 4.4(b)(4).
(4) If any stock dividend, stock split,
recapitalization,
merger, consolidation, combination or other
reorganization,
exchange of shares, sale of all or substantially all of
the
assets of the Corporation, split-up, split-off,
extraordinary
redemption, liquidation or similar change in
capitalization or
any distribution to holders of the Corporation's Common
Stock
(other than cash dividends and cash distributions)
shall occur,
proportionate and equitable adjustments consistent with
the
effect of such event on stockholders generally (but
without
duplication of benefits if Dividend Equivalents are
credited)
shall be made in the number and type of shares of
Common Stock or
other securities, property and/or rights contemplated
hereunder
and of rights in respect of Deferred Shares and Stock
Accounts
credited under the Plan so as to preserve the benefits
intended.
(c) Transfers. Effective as of the end of the first
calendar
quarter in each year, a Participant may elect: (i) to
have the
Committee reduce the number of any Deferred Shares
allocated to
his or her Stock Account and credit to such
Participant's
Deferral Account an amount equal to the Trust Price for
such
quarter of the same number of shares of Common Stock as
the
number of Deferred Shares so deducted; or (ii) to have
the
Committee reduce the amount of cash credited to his or
her
Deferral Account and credit a number of Deferred Shares
to such
Participant's Stock Account, which number of Deferred
Shares
shall be determined by dividing the cash amount of the
Participant's Deferral Account that he or she has
elected to
transfer by the Trust Price for such quarter. Any such
election
shall be filed with the Committee at least 20 days
prior to the
end of the applicable quarter on a form and in a manner
prescribed by the Committee. A transfer election shall
not
affect the crediting of Deferred Shares pursuant to
Section
4.4(b)(1) with respect to deferrals during the
preceding EVA Plan
year.
The transfers described in the preceding paragraph
shall first be allowed as of the end of the first
calendar
quarter in 1999. The Committee may, in its sole
discretion,
allow Participants a special opportunity during 1998 to
elect a
similar transfer according to procedures established by
the
Committee. The Trust Price applicable to such transfers
shall be
the Trust Price for the quarter in which such transfer
is
allowed.
4.5 Discretionary Investment by Corporation. The deferred
amounts to be paid to Participants are an unfunded
obligation of
the Corporation. The Committee may annually direct that an
amount equal to the deferred amounts for that year shall be
invested by the Corporation as the Committee, in its sole
discretion, shall determine. Prior to the applicability of
Section 4.6, the Committee may in its sole discretion
determine
that all or some portion of an amount equal to the deferred
amounts shall be paid into one or more grantor trusts that
may be
established by the Corporation for the purpose of providing
a
potential source of funds to pay Plan benefits. Moreover,
such
payment of previously deferred amounts to a grantor trust
shall
be required in connection with Change in Control to the
extent
required by Section 4.6(e). The Committee may designate an
investment advisor to direct the investment of funds that
may be
used to pay benefits, including the investment of the assets
of
any grantor trusts hereunder.
4.6 Change in Control. In the Event of a Change in Control (as
defined below), the following rules shall apply:
(a) All Participants shall continue to have a fully vested,
nonforfeitable interest in their Account balances.
(b) Deferrals of amounts payable for the current year or a
period ending with the end of the current year shall
continue in
accordance with existing elections and shall apply from
the
normal payment dates for the amounts deferred.
(c) The assumed earnings pursuant to Section 4.4(a)
following a
Change in Control shall be determined on the basis of
the
calculation formula and options in effect just prior to
the
Change in Control and shall be compounded at intervals
no less
frequent than those being used just prior to the Change
in
Control.
(d) All payments of deferred amounts following a Change in
Control shall be made as follows:
(1) Payments that have already commenced shall
continue to be made no less rapidly than under the
schedule in effect just prior to the Change in
Control.
(2) Payments that have not yet commenced shall be made
in a
cash lump sum at the earliest possible payment
date
under the normal rules for benefit commencement
pursuant to Section 4.3 as in effect on the day
before
the day of the Change in Control and shall be in
an
amount equal to the full Account balance on such
date (for purposes of this paragraph, the value of
Deferred
Shares shall equal the Fair Market Value of a
share
of Common Stock on the day before the Change in
Control).
(e) If the Corporation has established a grantor trust in
connection with the Plan, the Corporation shall
continue to make
any required payments to that trust in accordance with
its
funding rules as in effect prior to the Change in
Control.
(f) A Participant's termination of employment for purposes
of
the Plan shall be deemed to include (but shall not be
limited
to) any event (such as a constructive discharge) giving
the
Participant the right to receive salary continuation or
other
severance benefits following a Change in Control, as
determined
under any plan, program, or agreement covering the
Participant
that is in effect at the time of the Change in Control.
For purposes of the Plan, a "Change in Control" means
any of the
following:
(1) The dissolution or liquidation of the Corporation;
(2) The merger, consolidation, or other reorganization
of the
Corporation with or into one or more entities
which are not
Subsidiaries, as a result of which 50% or less of
the
outstanding voting securities of the surviving or
resulting entity are, or are to be, owned by
former
shareholders of the Corporation;
(3) The sale or transfer of substantially all of the
Corporation's business and/or assets to a person
or entity which is not a Subsidiary; or
(4) any "person", alone or together with all
"affiliates and "associates" of such person is or
becomes (a) an "Acquiring Person" as defined in
the Rights Agreement, originally dated as of March
21,
1989, by and between the Corporation and
The Bank of New York, successor Rights Agent, or
(b) the "beneficial owner" of 20% or more of the
outstanding voting securities of the Corporation
(the terms "person", "affiliates", "associates"
and
"beneficial owner" are used as such terms are
used in the Exchange Act and the General Rules and
Regulations thereunder); provided, however, that a
"Change in Control" shall not be deemed to have
occurred if such "person" is the Corporation, any
Subsidiary or any employee benefit plan or
employee
stock plan of the Corporation or of any
Subsidiary,
or any trust or other entity organized,
established
or holding shares of such voting securities by,
for
or pursuant to, the terms of any such plan; or
(5) individuals who at the beginning of any period of
two
consecutive calendar years constitute the Board
cease
for any reason, during such period, to constitute
at
least a majority thereof, unless the election, or
the
nomination for election by the Corporation's
shareholders,
of each new Board member was approved by a vote of
at
least three quarters of the Board members
then still in office who were Board members at the
beginning of such period.
If the approval of the shareholders of the Corporation for
any of
the occurrences set forth in subsections (1) through (5) is
obtained prior to such occurrence, then such shareholder
approval
shall constitute the event.
A Change of Control shall occur on the first day on which
any of
the preceding conditions has been satisfied. However,
notwithstanding the foregoing, this Section 4.6 shall not
apply
to any Participant who alone or together with one or more
other
persons acting as a partnership, limited partnership,
syndicate,
or other group for the purpose of acquiring, holding or
disposing
of securities of the Corporation, triggers a "Change in
Control"
within the meaning of paragraphs (1) and (2) above.
4.7 Payment of Deferred Amounts. A Participant shall have a
fully vested, nonforfeitable interest in his or her Account
balance at all times. However, vesting does not confer a
right
to payment. Upon the expiration of the deferral period
selected
by the Participant, the Corporation shall pay to such
Participant
(or to the Participant's Beneficiary, in the case of the
Participant's death), the Participant's benefits in the form
of:
(a) a single lump sum, or
(b) substantially equal installments payable not less
frequently
than annually over a 5, 10, 15 or 20 year period, as
selected by
the Participant.
The form of payment (lump sum or number of installments)
shall be
as specified by the Participant on his compensation deferral
agreement and shall be irrevocable, with respect to
deferrals for
that year, once made. A Participant's Deferral Account shall be
paid in the form of cash, with cash payment equal to the balance
of the Participant's Deferral Account, plus any assumed earnings
on his or her Deferral Account (determined by the Committee
pursuant to Section 4.4) on the outstanding Deferral Account
balance to the date of distribution. Deferred Shares credited to
a Participant's Stock Account shall be distributed in an
equivalent number of whole shares of Common Stock; provided that
the Committee may, in its sole discretion, pay Deferred Shares in
the form of cash or may give Participants the ability to elect
shares or cash. The Common Stock to be delivered shall be shares
owned by the Corporation or any Corporation grantor trust which
were acquired through purchase on the open market. Fractional
share interests shall be settled in cash. Unless payment has
commenced in accordance with an election under Section 4.3,
payment (or distribution of any shares in respect of Deferred
Shares) shall commence or be made in January of the year
following the
Participant's retirement, death, permanent disability,
resignation or other termination of employment, provided that
with respect to a Participant who retires with advance notice in
December or January, the Committee, in its discretion, may direct
that payment shall commence or be made on the December 31 nearest
the retirement date, on the January 31 following the retirement
date or in January of the year following retirement.
The cumulative amount by which the assumed earnings of a
participant's Deferral Account has been reduced to reflect
the
Corporation's incremental marginal tax rate in prior years
shall
represent a bonus pool that shall be distributed to such
participant. Each payment of deferred compensation to a
participant or beneficiary under this plan shall be
accompanied
by a payment of a share from this pool that shall equal the
net
total amount of such reductions (adjusted by the amount of
any
previous bonus payments from the under this paragraph) times
the
ratio of assumed earnings being distributed to total assumed
earnings that remain to be paid at the time of payment. For
this
purpose, assumed earnings will be considered distributed
first,
before deferral amounts.
4.8 Acceleration of Payment of Deferred Amounts. The Committee,
in its discretion, may accelerate the payment of the unpaid
balance of a Participant's Account in the event of the
Participant's retirement, death, permanent disability,
resignation or termination of employment, or upon its
determination that the Participant (or his Beneficiary in
the
case of his death) has incurred a severe, unforeseeable
financial
hardship creating an immediate and heavy need for cash that
cannot reasonably be satisfied from sources other than an
accelerated payment from the Plan. The Committee in making
its
determination may consider such factors and require such
information as it deems appropriate.
<PAGE>
ARTICLE V.
GENERAL PROVISIONS
5.1 Unfunded Obligation. The deferred amounts to be paid to
Participants pursuant to the Plan are unfunded obligations
of the
Corporation. Participants and their beneficiaries, heirs,
successors, and assigns shall have no legal or equitable
rights,
claims, or interest in any specific property or assets of
the
Company or any Company grantor trust. Except as provided in
Section 4.6, the Company is not required to segregate any
monies
from its general funds, to create any trusts, or to make any
special deposits with respect to this obligation. Title to
and
beneficial ownership of any investments including grantor
trust
investments which the Committee has determined and directed
the
Corporation to make to fulfill obligations under the Plan
shall
at all times remain the general, unpledged, unrestricted
assets
of the Corporation. At the time a Participant's period of
deferral ends, the Corporation may direct that the
Participant's
Plan benefits be paid directly from a Corporation grantor
trust
in lieu of payment from other Corporation assets. Any
investments and the creation or maintenance of any trust or
Accounts shall not create or constitute a trust or a
fiduciary
relationship between the Committee or the Company and a
Participant, or otherwise create any vested or beneficial
interest in any Participant or his or her Beneficiary or his
or
her creditors in any assets of the Company whatsoever. The
Participants shall have no claim for any changes in the
value of
any assets which may be invested or reinvested by the
Corporation
in an effort to match its liabilities under the Plan. The
Corporation's obligation under the Plan shall be merely that
of
an unfunded and unsecured promise of the Corporation to pay
money
in the future, and the rights of the Participants and
beneficiaries shall be no greater than those of unsecured
general
creditors.
5.2 Beneficiary. The term "Beneficiary" shall mean the person
or persons to whom payments are to be paid pursuant to the
terms
of the Plan in the event of the Participant's death. A
Participant may designate a Beneficiary on a form provided
by the
Committee, executed by the Participant, and delivered to the
Committee. The Committee may require the consent of the
Participant's spouse to a designation relating to a marital
property interest of the spouse if the designation specifies
a
Beneficiary other than the spouse. A Participant may change
a
Beneficiary designation at any time. If no Beneficiary is
designated, if the designation is ineffective, or if the
Beneficiary dies before the balance of the Account is paid,
the
balance shall be paid to the Participant's surviving spouse,
or
if there is no surviving spouse, to the Participant's
estate.
5.3 Receipt or Release. Any payment to a Participant or the
Participant's Beneficiary in accordance with the provisions
of
the Plan shall, to the extent thereof, be in full
satisfaction of
all claims against the Committee, the Company, and any
trustee of
any Company grantor trust. The Committee may require such
Participant or Beneficiary, as a condition precedent to such
payment, to execute a receipt and release to such effect.
5.4 Incapacity of Participant or Beneficiary. Every person
receiving or claiming benefits under the Plan shall be
conclusively presumed to be mentally competent and of age
until
the date on which the Committee receives a written notice,
in a
form and manner acceptable to the Committee, that such
person is
incompetent or a minor, for whom a guardian or other person
legally vested with the care of his person or estate has
been
appointed; provided, however, that if the Committee finds
that
any person to whom a benefit is payable under the Plan is
unable
to care for his or her affairs because of incompetency, or
because he or she is a minor, any payment due (unless a
prior
claim therefor shall have been made by a duly appointed
legal
representative) may be paid to the spouse, a child, a
parent, a
brother or sister, or to any person or institution
considered by
the Committee to have incurred expense for such person
otherwise
entitled to payment. To the extent permitted by law, any
such
payment so made shall be a complete discharge of liability
therefor under the Plan.
If a guardian of the estate of any person receiving or
claiming benefits under the Plan is appointed by a court of
competent jurisdiction, benefit payments may be made to such
guardian provided that proper proof of appointment and
continuing
qualification is furnished in a form and manner acceptable
to the
Committee. In the event a person claiming or receiving
benefits
under the Plan is a minor, payment may be made to the
custodian
of an account for such person under the Uniform Gifts to
Minors
Act. To the extent permitted by law, any such payment so
made
shall be a complete discharge of any liability therefor
under the
Plan.
5.5 Nonassignment. The Corporation shall pay all amounts
payable hereunder only to the person or persons designated
by the
Plan and not to any other person or corporation. No part of
a
Participant's Accounts shall be liable for the debts,
contracts,
or engagements of any Participant, his or her Beneficiary,
or
successors in interest, nor shall a Participant's Accounts
be
subject to execution by levy, attachment, or garnishment or
by
any other legal or equitable proceeding, nor shall any such
person have any right to alienate, anticipate, commute,
pledge,
encumber, or assign any benefits or payments hereunder in
any
manner whatsoever. If any Participant, Beneficiary or
successor
in interest is adjudicated bankrupt or purports to
anticipate,
alienate, sell, transfer, assign, pledge, encumber or charge
any
distribution or payment from the Plan, voluntarily or
involuntarily, the Committee, in its discretion, may cancel
such
distribution or payment (or any part thereof) to or for the
benefit of such Participant, Beneficiary or successor in
interest
in such manner as the Committee shall direct.
5.6 No Right to Continued Employment. Nothing in the Plan shall
be construed to confer upon any Participant any right to
continued employment with the Company, nor shall the Plan
interfere in any way with the right of the Company to
terminate
the employment of such Participant at any time without
assigning
any reason therefor.
5.7 Withholding Taxes. The Company may satisfy any state or
federal employment tax withholding obligation with respect
to
compensation deferred under the Plan by deducting such
amounts
from any compensation payable by the Company to the
Participant.
There shall be deducted from each payment made under the
Plan or
any other compensation payable to the Participant (or
Beneficiary) all taxes which are required to be withheld by
the
Company in respect to any payment or distribution of shares
under
the Plan. The Company shall have the right to reduce any
payment
by the amount of cash sufficient to provide the amount of
said
taxes. As a condition precedent to the payment of any
benefits
under the Plan, if the Company (for any reason) elects not
to (or
cannot) satisfy the withholding obligation from the amounts
otherwise payable under the Plan, the Participant shall pay
or
provide for payment in cash of the amount of any taxes which
the
Company may be required to withhold with respect to the
benefits
hereunder.
5.8 Claims Procedure and Arbitration. A person who believes
that he or she is being denied a benefit to which he or she
is
entitled under the Plan (hereinafter referred to as
"Claimant")
may file a written request for such benefit with the
Committee,
setting forth his or her claim. The request must be
addressed to
the Committee at the Company's then principal executive
offices.
Upon receipt of a claim, the Committee shall advise the
Claimant
that a reply will be forthcoming within ninety (90) days and
shall, in fact, deliver such reply within such period. The
Committee may, however, extend the reply period for an
additional
ninety (90) days for special circumstances. If the claim is
denied in whole or in part, the Committee shall inform the
Claimant in writing, using language calculated to be
understood
by the Claimant, setting forth: (i) the specified reason or
reasons for such denial, (ii) the specific reference to
pertinent
provisions of the Plan on which such denial is based, (iii)
a
description of any additional material or information
necessary
for the Claimant to perfect his or her claim and an
explanation
why such material or such information is necessary, (iv)
appropriate information as to the steps to be taken if the
Claimant wishes to submit the claim for review, and (v) the
time
limits for requesting a review set forth below.
Within sixty (60) days after the receipt by the Claimant of
the
written opinion described above, the Claimant may request in
writing that the Committee review its determination. Such
request must be addressed to the Committee at the Company's
then
principal executive offices. The Claimant or his or her
duly
authorized representative may, but need not, review the
pertinent
documents and submit issues and comments in writing for
consideration by the Committee. If the Claimant does not
request
a review within such sixty (60) day period, he or she shall
be
barred and estopped from challenging the Company's
determination.
Within sixty (60) days after the Committee's receipt of a
request
for review, after considering all materials presented by the
Claimant, the Committee will inform the Claimant in writing,
in
manner calculated to be understood by the Claimant, of its
decision setting forth the specific reasons for the decision
and
containing specific references to the pertinent provisions
of the
Plan on which the decision is based. If special
circumstances
require that the sixty (60) day time period be extended, the
Committee will so notify the Claimant and will render the
decision as soon as possible, but no later than one hundred
twenty (120) days after receipt of the request for review.
Following a Change in Control of the Corporation (as
determined
under Section 4.6) the claims procedure shall include the
following arbitration procedure.
Since time will be of the essence in determining whether any
payments are due to the Participant under the Plan following
a Change in Control, a Participant may submit any claim for
payment to arbitration as follows: On or after the second
day
following the termination of the Participant's employment or
other event triggering a right to payment), the claim may be
filed orally with an arbitrator of the Participant' choice
and
thereafter the Corporation shall be notified orally. The
arbitrator must be:
(a) a member of the National Academy of Arbitrators or one
who
currently appears on arbitration panels issued by the
Federal
Mediation and Conciliation Service or the American
Arbitration
Association; or
(b) a retired judge of the State in which the claimant is a
resident who served at the appellate level or higher.
The
arbitration hearing shall be held within 10 days (or as
soon
thereafter as possible) after filing of the claim
unless the
Participant and the Corporation agree to a later date.
No
continuance of said hearing shall be allowed without
the mutual
consent of the Participant and the Corporation.
Absence from or
nonparticipation at the hearing by either party shall
not prevent
the issuance of an award. Hearing procedures which
will expedite
the hearing may be ordered at the arbitrator's
discretion, and
the arbitrator may close the hearing in his or her sole
discretion upon deciding he or she has heard sufficient
evidence
to satisfy issuance of an award. In reaching a
decision, the
arbitrator shall have no authority to ignore, change,
modify, add
to or delete from any provision of the Plan, but
instead is
limited to interpreting the Plan. The arbitrator's
award shall
be rendered as expeditiously as possible, and in no
event, later
than seven days after the close of the hearing. If the
arbitrator finds that any payment is due to the
Participant from
the Corporation, the arbitrator shall order the
Corporation to
pay that amount to the Participant within 48 hours
after the
decision is rendered. The award of the arbitrator
shall be final
and binding upon the Participant and the Corporation.
Judgment
upon the award rendered by the arbitrator may be
entered in any
court in any State of the United States. In the case
of any
arbitration regarding this Agreement, the Participant
shall be
awarded the Participant's costs, including attorney's
fees. Such
fee award may not be offset against the deferred
compensation due
hereunder. The Corporation shall pay the arbitrator's
fee and
all necessary expenses of the hearing, including
stenographic
reporter if employed.
5.9 Termination and Amendment. The Board may from time to time
amend, suspend or terminate the Plan, in whole or in part,
and if
the Plan is suspended or terminated, such board may
reinstate any
or all of its provisions. No amendment, suspension or
termination may impair the right of a Participant or a
designated
Beneficiary to receive the deferred compensation benefit
accrued
prior to the effective date of such amendment, suspension or
termination in accordance with the terms of the Plan at such
prior time. The Committee may however, in connection with
the
termination of this Plan and in its sole discretion, elect
to
accelerate the distribution of benefits and pay benefits in
the
form of a lump sum rather than installments. Following a
Change
in Control, as defined in Section 4.6, the change in control
provisions of such section and arbitration provisions of
Section
5.8 may not be changed.
5.10 Applicable Law. The Plan shall be construed and governed in
accordance with applicable federal law and, to the extent
not
preempted by such federal law, the laws of the State of
California. If any provisions of this instrument shall be
held
by a court of competent jurisdiction to be invalid or
unenforceable, the remaining provisions hereof shall
continue to
be fully effective.
5.11 Compliance with Laws. The Plan and the offer, issuance and
delivery of shares of Common Stock and/or the payment of
money
through the deferral of compensation under the Plan are
subject
to compliance with all applicable federal and state laws,
rules
and regulations (including but not limited to state and
federal
securities law) and to such approvals by any listing, agency
or
any regulatory or governmental authority as may, in the
opinion
of counsel for the Corporation, be necessary or advisable in
connection therewith. Any securities delivered under the
Plan
shall be subject to such restrictions, and the person
acquiring
such securities shall, if requested by the Corporation,
provide
such assurances and representations to the Corporation as
the
Corporation may deem necessary or desirable to assure
compliance
with all applicable legal requirements.
5.12 Plan Construction. It is the intent of the Corporation that
transactions pursuant to the Plan satisfy and be interpreted
in a
manner that satisfies the applicable requirements of Rule
16b-3
promulgated under the Exchange Act ("Rule 16b-3") so that,
to the
extent elections are timely made, the crediting of Deferred
Shares, the distribution of shares of Common Stock and any
other
event with respect to Deferred Shares under the Plan will be
entitled to the benefits of Rule 16b-3 or other exemptive
rules
under Section 16 of the Exchange Act and will not be
subjected to
avoidable liability thereunder.
5.13 Headings, etc. Not Part of Plan. Headings and subheadings
in the Plan are inserted for convenience of reference only
and
are not to be considered in the construction of the
provisions
hereof.
<PAGE>
[O'Melveny & Myers LLP Letterhead]
September 8, 1998
Furon Company
29982 Ivy Glenn Drive
Laguna Niguel, CA 92677-2044
Re: Registration Statement on Form S-8
of Furon Company (the "Company")
Gentlemen:
At your request, we have examined the Registration
Statement on Form S-8 to be filed with the Securities and
Exchange Commission in connection with the registration under the
Securities Act of 1933, as amended, of 300,000 shares of Common
Stock,
without par value, of the Company (the "Common Stock"), and
additional rights pursuant to the Company's Rights Agreement
dated March 21, 1989, as amended, with The Bank of New York, as
rights
agent (the "Rights" and, together with the Common Stock, the
"Shares"),
and $2,500,000 of Deferred Compensation Obligations of the
Company
(the "Obligations"), to be issued or delivered pursuant to the
Furon
Company Deferred Compensation Plan (the "Plan"). We have examined
the proceedings heretofore taken and to be taken in connection
with
the authorization of the Plan, the Shares, and the Obligations to
be
issued or delivered pursuant to and in accordance with the Plan.
We
have been advised by you that the Common Stock to be delivered
pursuant
to and in accordance with the Plan will be purchased by the
Company
on the open market.
Based upon such examination and upon such matters of fact
and law
as we have deemed relevant, we are of the opinion that the Shares
and
the Obligations have been duly authorized by all necessary
corporate
action on the part of the Company and, when issued or delivered
in
accordance with such authorization, the provisions of the Plan
and
relevant agreements duly authorized by and in accordance with the
terms of the Plan, the Shares will be validly issued, the Common
Stock
will be fully paid and nonassessable, and the Obligations will be
validly issued, legally binding obligations of the Company.
We consent to the use of this opinion as an exhibit to the
Registration Statement.
Respectfully submitted,
/s/ O'Melveny & Myers LLP
<PAGE>
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration
Statement (Form S-8) pertaining to the Furon Company Deferred
Compensation Plan of Furon Company of our report dated March 16,
1998, with respect to the consolidated financial statements and
schedule of Furon Company included in its Annual Report (Form 10-
K)
for the year ended January 31, 1998, filed with the Securities
and Exchange Commission.
/s/ Ernst & Young LLP
Ernst & Young LLP
Orange County, California
September 9, 1998