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 Economic Value Added (EVA) Incentive
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>
<C> <S> <S>
Title of Amount Proposed Proposed Amount of
securities to be maximum maximum registration
to be registered offering aggregate fee
registered price offering
per unit price
Common Stock, 350,000<1><2> $17.3125<3> $6,059,375<3> $1,788<3>
without par
value
- ---------------------
<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 Economic
Value Added (EVA) Incentive
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.
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.
<PAGE>
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
The Company's Common Stock is registered
pursuant to Section 12 of the Exchange Act, and,
therefore, the description of securities is omitted.
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 Economic Value Added (EVA) Incentive
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
ECONOMIC VALUE ADDED (EVA)
INCENTIVE COMPENSATION PLAN
As Amended and Restated
Effective February 1, 1998
1.0 INTRODUCTION
1.1 Overview
Furon Company (the "Company") has established an
Economic Value Added (EVA) Incentive
Compensation Plan (the "Plan") in an effort to
relate more directly the Company's incentive
compensation to an increase in the value of the
Company to its shareholders. The Plan, which is
for officers, operational vice presidents,
general managers of selected business units and
selected other key employees, replaces the
Company's Short-Term Incentive Bonus Plan and
Long-Term Performance Incentive Plan. The Plan
provides a direct link between incentive
compensation and the return earned on capital
relative to a minimum required rate of return
and historic actual performance. Pursuant to
the Plan, a specific target incentive amount
will be established for each participant based
on a percentage of his or her base salary at the
beginning date of the fiscal year for Plan
participation eligibility. Incentive
compensation for participants changes as a
result of variation in the return on capital for
the Company as a whole, in the case of the
Company's executive officers and certain other
key employees, and the return on capital of a
business unit in the case of other participants.
The Plan will be administered by the
Compensation Committee (the "Committee") of the
Company's Board of Directors (the "Board") and,
to the extent provided herein, the Company's
Chairman of the Board, President and Chief
Financial Officer (collectively, the "Executive Group").
1.2 EVA
The primary financial objective of the Company
is to increase shareholder value. To support
that effort the Company has introduced a new
system of financial measurement called "Economic
Value Added" (EVA). Economic Value Added is the
internal measure of operating and financial
performance that best reflects the change in
shareholder value. Put simply, EVA is what is
left over from operating profits after deducting
the cost of capital.
The Company takes the view that the financial
marketplace is a competition for scarce capital.
Management of the Company is charged with the
task of putting that scarce capital to work to
earn the best possible returns. As long as the
Company is investing in projects that earn a
rate of return higher than its cost of capital,
then investors will earn a return in excess of
their required reward and the Company's capital
or stock will command a premium in the
marketplace.
This approach places less emphasis on the
traditional means of evaluating financial
results, such as return on equity or earnings
per share, because these measures do not always
correspond to the creation of economic value.
Economic Value Added provides a framework within
which management can make decisions that will
build long-term value for the Company and its
shareholders rather than focus on short-term
result. Economic Value Added can be more
specifically defined as the economic profit
generated by the business, less a charge for the
use of capital. Economic profit is an after-tax
measure of operating results which differ from
normal accounting profit as the consequence of
certain adjustments for non-economic charges.
1.3 Incentive Compensation
The Company recognizes that the performance and
contributions of its key employees will play a
pivotal role in maximizing shareholder value.
By measuring not only the Company's overall
performance, but also the performance of each
business unit, EVA provides the backbone of an
incentive compensation program that effectively
encourages management decisions that maximize
the value of investors' capital. The objectives
underlying the Plan are to more closely link
incentive awards to value added for
shareholders, and to provide a culture of
performance and ownership among the Company's
key employees. This requires management to
share some of the Company's business risk with
shareholders, but also provides the opportunity
for the upside potential that results from the
creation of value. Said another way, it helps
managers think as owners. Accordingly, the Plan
rewards long-term continuous improvements in
shareholder value.
Incentives are focused on the generation of
improved Economic Value Added, which in turn
results from:
1. Enhanced business efficiencies - Improve
the rate of return on the existing capital base
by improving operating profits without tying up
any more capital.
2. Profitable growth - Invest more capital as
long as the profits earned are in excess of the
charge for additional capital; and
3. Strategic downsizing - Reduce capital or
liquidate capital where it is employed in products,
projects or operations that are earning less
than the cost of capital.
2.0 EVA INCENTIVE COMPENSATION
2.1 General
Participants in the Plan are eligible to earn an
EVA Incentive Compensation Bonus ("Bonus") under
the Plan for a fiscal year for which performance
is being measured based upon the actual EVA
performance for the Company as a whole or their
business unit, as the case may be, for the
fiscal year, relative to an established EVA
target performance for the fiscal year (the "EVA
Target").
2.2 Eligibility for and Rate of Participation in the Plan
The Company's officers, operational vice
presidents, general managers of selected
business units ("General Managers") and selected
other key employees are eligible to participate
in the Plan. The rate of participation under
the Plan for Company officers shall be
determined by the Committee.
It is the responsibility of the Group General Manager
or appropriate Company officer to secure the
necessary approvals from the Executive Group
each fiscal year before a participant is
eligible to participate in the Plan for that
fiscal year. (See Company Human Resources
Policy 2.51). Approval must also be secured from
the Executive Group to remove a participant from
the Plan.
The rate of participation under the Plan for
operational vice presidents and General Managers
shall be determined by the Executive Group.
Participation and rate of participation under
the Plan at the division level will be
recommended by the responsible Vice President
or General Manager and subject to the written
approval of the Executive Group.
Participation and rate of participation at the
Main Office for non-officers will be determined
by the Executive Group. The rate of
participation shall be a percentage amount of
the participant's actual base salary at the
beginning date of the fiscal year (i.e. Base
salary shall not be reduced by (i) 401(k)
contributions or deferred base compensation
elections, (ii) contributions to any Company
cafeteria plan intended to qualify under Section
125 of the Internal Revenue Code, or (iii)
contributions to any Company employee stock
purchase plan). For a new hire, percentage
participation rate shall be the base salary on
date of hire (see Section 3.2).
The determination of which business units are
eligible to participate in the Plan will be made
by the Executive Group. The Executive Group may
elect at any time to terminate such eligibility
based on actual operating performance or
business conditions. Unless otherwise
determined by the Executive Group, general
managers and other key employees of discontinued
operations or other business units scheduled to
be divested shall not be eligible to participate
in the Plan.
2.3 EVA Target and Actual Performance
In determining the EVA Target for the first and
second fiscal years of the Plan's operation and
the actual EVA performance for each fiscal year,
for the Company as a whole an each business
unit, the Company will utilize principles and
concepts from the Stern Stewart EVA Bonus
System, as may be modified by the Company from
time to time, and which is
incorporated by reference into this Plan. In
future years, the EVA Target for the
Company/business unit will be calculated by the
Company as (i) an average from the previous
year's EVA Target and actual EVA performance if
such actual EVA performance is equal to or
greater than such EVA Target or (ii) such EVA
Target minus an amount equal to 30% of the
difference between such EVA Target and such
actual EVA performance if it is not.
All such determinations, modifications and
calculations shall be subject to approval by the
Executive Group. In addition, the EVA Target
for the Company and each business unit for the
first fiscal year of the Plan's operation shall
be subject to approval by the Committee.
2.4 Current Bonus and EVA Incentive Compensation Bank
The Company has placed no cap on the Bonus that
a participant may potentially earn for a fiscal
year. However, a participant is only eligible
to receive up to 100% of his or her Target
Bonus for a given fiscal year (the "Current");
the balance (if any) will be deferred. The
Plan will use an EVA Incentive Compensation Bank
("Bank") concept where the deferred amount will
be "deposited" in a Bank maintained for the
participant by the Company as an accounting
accrual against a possible future payment by
the Company. No interest (subject to Section
2.6(c)) shall be earned on the deferred amount
or credited to the Bank. The participant has no
vested right to receive the deferred amount;
rather, the distribution and unconditional
vesting thereof are subject to the future events
described herein. An individual record of the
participant's Bank will be maintained by
corporate accounting at the Company's Main
Office.
Each participant's Bank will be composed of a
Cash Account and a Stock Unit Account. Each
Stock Unit Account may be composed of one or
more Subaccounts, as necessary, to account for
Stock Units credited pursuant to Section 2.6
with respect to different fiscal years.
The following table sets forth the effects that
the various possible Total Unit Values will have
on a participant's Current Bonus and Bank for a
fiscal year for which performance is being
measured:
<TABLE>
<CAPTION>
<S> <C> <C>
As a Percentage of Target Bonus
Total Unit Values Current
Bonus Bank
Greater than 1.5 (150%) 100% Deposit excess
attributable to
Total Unit Value of
up to 1.5 to Stock
Unit Account,
deposit excess
attributable to
Total Unit Value
over 1.5 to Cash
Account.
Greater than 1.0 (100%) 100% Deposit excess
but no more than 1.5 to Stock Unit
(150%) Account.
0 to 1.0 0 to 100% None.
Less than 0 None Deduct Shortfall
From Cash
Account.
</TABLE>
At the end of each fiscal year for which performance
is being measured under the Plan, a participant will be
eligible to receive a payment from his or her Cash Account
equal to 33% of: (i) the participant's beginning Cash
Account balance for the fiscal year for which performance
is being measured less (ii) any subtractions from the Cash
Account resulting from a Total Unit Value of less than zero
for the fiscal year for which performance is being measure;
where such amount is a positive number. Negative Cash
Account balances are carried forward in the Bank to be
offset by additions to the Cash Account. However, negative
Cash Account balances do not reduce the Current Bonus. Stock
Unit Accounts are paid in accordance with Section 2.6.
Examples are attached to this document to illustrate Bonus
payments and additions to and subtractions from the Bank for
a hypothetical participant receiving an annual 5% base salary
increase (see Attachments A and B). Attachment A illustrates
positive performance except in Years 4 and 5 and shows how
negative performance can impact a participant's Bank in both
the current year and in subsequent years beginning in Year 4.
Attachment B, on the other hand, illustrates solid
performance for all ten (10) years where the participant
earns a Bonus each year.
2.5 Acquisitions and Extraordinary Capital Expenditures
Funds expended for capital expenditures and acquisitions will
be added to the capital base and accrue a capital charge for
the cost of capital. In instances where a capital
expenditures is for a major internal expansion project
(possibly the construction of a new plant) or an acquisition
is significant relative to the size of the business unit, the
Executive Group may, at their sole discretion, determine that
due to the size and significant nature of the capital
expenditure or acquisition, the funds expended will be
amortized into the capital base over a period of time thereby
reducing the capital charge.
2.6 Stock Unit Accounts
(a) The Company shall establish and maintain a Stock Unit
Account for each participant. Each participant's Stock Unit
Account shall consist of such Subaccounts as necessary to
account for Stock Units that are credited with respect to
different fiscal years.
(b) At the end of each fiscal year (or as soon as
administratively practicable after the Unit Value for such
year is determined) in which the Unit Value is greater than
1.0 (each a "Crediting Year"), each participant's Subaccount
for that Crediting Year shall be credited with Stock Units
pursuant to this Section 2.6(b). The number of Stock Units
to be credited for each such Crediting Year shall equal (i)
the excess amount (expressed in dollars) that is to be
credited to such participant's Stock Unit Account pursuant to
Section 2.4, divided by (ii) the "Trust Price," as defined
below. For the Crediting Year ended January 31, 1998, the
Trust Price shall equal the average price per share paid (or
received) by the trustee of the Furon Company Employee
Benefits Trust to acquire (or sell) Furon Company common
stock in the period commencing March 30, 1998 and ending
April 30, 1998. For the Crediting Year ended January 31,
1999, the Trust Price shall equal the average price per share
paid (or received) by the trustee of the Furon Company
Employee Benefits Trust to acquire (or sell) Furon Company
common stock in the period commencing April 30, 1998 and
ending January 31, 1999. For each subsequent Crediting Year,
the Trust Price shall equal the average price per share paid
(or received) by the trustee of the Furon Company Employee
Benefits Trust to acquire (or sell) Furon Company common
stock during the fiscal year corresponding to the Crediting
Year. If the trustee made no purchases or sales during the
relevant period, the Trust Price shall be the volume-weighted
average price of Furon Company common stock on the New York
Stock Exchange for the 30-day period
following the announcement of Unit Values for the Crediting
Year.
(c) As of the end of each fiscal year (or as soon as
administratively practicable thereafter), each of a
participant's Subaccounts shall be credited with additional
Stock Units in an amount equal to the amount of the Dividend
Equivalents representing cash dividends paid during such year
on that number of shares equal to the aggregate Stock Units
in that Subaccount as of the beginning of that fiscal year,
divided by the Trust Price.
(d) At the end of each fiscal year (or as soon as
administratively practicable thereafter) in which a
participant's Cash Account balance (after any adjustments
pursuant to Section 2.4 with respect to that fiscal year) is
positive (i.e., greater than zero), one-third of the Stock
Units then credited to each of the participant's Subaccounts
(excluding any Stock Units credited to a Subaccount pursuant
to Section 2.6(b) established with respect to that fiscal
year but including any Stock Units credited to the
participant's Subaccounts pursuant to Section 2.6(c) with
respect to that fiscal year) will become payable to the
participant.
(e) Any Stock Units remaining credited to a participant's
Subaccount at the end of the tenth fiscal year (or as soon as
administratively practicable thereafter) following the
Crediting Year with respect to such Subaccount was
established shall be distributed in a single lump sum.
(f) Benefit distributions in respect of Stock Units shall be
in the form of an equivalent number of whole shares of
Common Stock. The Committee may settle fractional share
interests in cash, permit the accumulation of fractional
share interests, disregard fractional share interests, or
adopt such other rules as it deems appropriate for the
payment or administration of fractional share interests. The
Common Stock to be delivered shall be shares owned by
the Company or any Company grantor trust which were acquired
through purchase on the open market. In the event that the
Company (or any Company grantor trust) has an insufficient number
of shares of Common Stock (which were purchased on the open
market) available for Plan purposes, or for any other reason
determined by the Committee (in its sole discretion), amounts
payable or distributable in the form of Common Stock may be
settled in cash.
(g) 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 Company, split-up, split-off, extraordinary
redemption, liquidation or similar change in capitalization
or any distribution to holders of the Company'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 Stock
Units and Stock Unit Accounts credited under this Plan so as
to preserve the benefits intended.
3.0 CHANGES IN EMPLOYMENT STATUS
3.1 Termination or Transfer of Employment
(a) The only time a participant may receive in a fiscal year
a distribution from his or her Cash Account in excess of 33%
of the balance, as provided in Section 2.4 is upon the
Retirement, Death or Disability (as those terms are defined
herein) of the participant while an actual full-time employee
of the Company. In such circumstances, the participant's
entire Cash Account balance (as determined below in the case
of Retirement) shall be paid to the retiree or disabled
participant or his or her designated Beneficiary or
Beneficiaries.
The only time a participant may receive in a fiscal year
a distribution from his or her Stock Unit Account other
than as provided in Section 2.6(d) or 2.6(e) is upon the
Retirement, Death or Disability (as those terms are
defined herein) of the participant while an actual full-
time employee of the Company. In such circumstances,
the total number of Stock Units then credited to the
participant's Stock Unit Account (as determined below in
the case of Retirement) shall be paid to the retiree or
disabled participant or his or her designated Beneficiary
or Beneficiaries.
For purposes of this Plan, designated Beneficiary or
Beneficiaries shall be the same as the participants
designate(s) in the Company Employees' Profit Sharing
Retirement Plan Summary Plan Description document, as
amended.
(b) A participant whose employment with the Company is
terminated, either voluntary or involuntary, for any reason
other than Retirement, Death or Disability, is not eligible
to receive any amount from his or her Bank; rather the entire
amount in the Bank (including Stock Units credited pursuant
to Section 2.6) is forfeited upon such termination.
(c) If a participant is transferred into a position not
eligible for participation in the Plan or if he or she is no
longer eligible to participate in the Plan, but the
participant remains employed by the Company, he or she: (i)
is not eligible to receive any amount from his or her Cash
Account, rather, the entire amount in the Cash Account is
forfeited upon such termination; and (ii) he or she will no
longer be eligible for additional Stock Units pursuant to
Section 2.6(b) or Section 2.6(c) and any Stock Units then
credited to his or her Stock Unit Account shall only be
payable pursuant to Section 2.6(e) (notwithstanding Section
2.6(d)). If the transferred participant later terminates
employment with the Company (for any reason including Death,
Disability, or Retirement), the Stock Units then credited to
his or her Stock Unit Account shall be forfeited.
(d) If a participant's employment terminates (other than due
to Retirement, death or disability), or Plan participation
terminates pursuant to Section 3.1(c), the participant shall
receive no portion of any Current Bonus.
If a participant Retires or terminates employment due
to death or disability during the fiscal year, the
participant is eligible to receive (i) a prorated amount
of the Current Bonus that he or she would have earned
for the full fiscal year had he or she remained a
participant in the Plan, and (ii) the participant's Bank
balance (including distribution of all Stock Units
credited to his or her Stock Unit Account in the form
of Common Stock or cash) at the end of the fiscal year
after giving effect to his or her prorated share of any
additions or deletions that would have been made to his
or her Bank in respect of the fiscal year if the
participant had remained a participant in the Plan. Each
such proration shall be based upon a fraction the
numerator of which is the number of full months during
the fiscal year prior to Retirement death or disability
and the denominator of which is 12. If the
participant's last work day is before the fifteenth of
the month, he or she will receive no credit for the
entire month. If the last work day is after the
fifteenth of the month, he or she will receive full
credit for that particular month. Payment to the
participant will be made following the end of the fiscal
year at the time payments are made to continuing
participants in the Plan pursuant to Section 4.
(e) In situations where a participant transfers to a new
Company business unit and remains an eligible participant,
the individual's Bank balance, either positive or negative,
shall transfer with him or her. Current Bonus payments and
additions or subtractions to the Bank for the fiscal year
during which the transfer takes place shall be determined by
a proration of the Total Unit Value achieved by the
participant's previous and new business units based upon the
time during the fiscal year that the participant was employed
at each respective business unit.
3.2 Partial EVA Bonus Credit
Unless otherwise determined by the Executive Group, Plan
participants who commence participation after the start of a
fiscal year will be entitled to receive a partial Bonus
credit based on months of service as a Plan participant
during the applicable fiscal year. If participation
commences on or before the 15th of a month, the participant
will receive credit for the entire month. If participation
commences after the 15th of a month, the participant will
receive no EVA Bonus credit for that month. For example, if
an eligible employee commenced Plan participation on June 3,
he or she would receive eight (8) months of credit and thus
be eligible to earn two-thirds (2/3) of the full fiscal year
Bonus. If the participation commenced on June 16, the
participant would receive seven (7) months of credit.
4.0 PAYMENT OF BONUS
Any and all payments under the Plan and any payment of Stock
Units in the form of shares of Common Stock or cash are at
the discretion of the Committee and the Executive Group.
Payments and the delivery of any shares will be made at the
conclusion of the Company's fiscal year and after the
Company's financial statements have been audited. All EVA
payments will be made less all applicable taxes in accordance
with Section 8.4. In order to receive a payment in respect
of a participant's Cash Account, other than in the case of
Retirement, Death or Disability or the occurrence of an Event
(as defined in Section 8.5), the Plan participant must be a
full-time employee of the Company at both the end of the
fiscal year in which the Bonus is earned and at the time the
payment is actually made. Unless otherwise determined by the
Executive Group, if both of the above conditions are not met,
there shall be no payment to the individual. Payment will
normally be made to the participant prior to the end of the
first fiscal quarter. This includes any payments from a
participant's Cash Account pursuant to Section 2.4 and any
delivery of shares or payment of cash in respect of a
participant's Stock Unit Account pursuant to Section 2.6.
Pursuant to Section 3.1, in the case of the Death or Disability
of a participant, payment to the participant or to his or her
Beneficiary or Beneficiaries of any funds in the participant's
Cash Account or delivery of shares or payment of cash in respect
of any Stock Units credited to the participant's Stock Unit
Account shall be made within sixty (60) days after the occurrence
of any of the aforementioned events.
5.0 TRAINING
Plan participants will receive a copy of the "EVA Incentive
Compensation" booklet prepared for the Company by Stern
Stewart & Company and a copy of the Plan Prospectus. In
addition, the Company may conduct management training
sessions for Plan participants concerning the Plan's
application. Training will be determined by Company
officials to provide participants with the opportunity to
fully understand the Plan and its principles.
Responsibility to educate participants of a business unit in
the mechanics of EVA shall remain with the unit's Vice
President or General Manager, controller and human resources
representative.
6.0 INTERPRETATION
The terms and conditions of this Plan shall be interpreted by
the Executive Group.
7.0 TERMINATION AND/OR MODIFICATION
The Committee retains the complete authority to make any
unilateral changes to the Plan for any reason and at any
time, which includes the termination of the Plan itself.
8.0 MISCELLANEOUS
8.1 Effective date
This Plan was first effective as of February 2, 1992. This
amendment to and restatement of the Plan is effective as of
February 1, 1998.
8.2 Administration
This Plan shall be administered by the Committee and, to the
extent provided herein, the Executive Group. Action of the
Committee or the Executive Group with respect to the
administration of this Plan shall be taken pursuant to a
majority vote or written consent of a majority of its
members. The Committee and the Executive Group may delegate
administrative functions to individuals who are officers or
employees of the Company. Any action under this Plan taken
by, or inaction under this Plan of, the Company, the Board,
the Committee, the Executive Group, any officer or any
delegate of the Committee or the Executive Group shall be
within the absolute discretion of that person and shall be
conclusive and binding upon all persons.
The Committee may authorize in writing the delayed payment or
delivery of shares of Common Stock which may become due under
this Plan, pursuant to and under the terms of any Board-
approved deferred compensation plan or program.
8.3 No Contract or Other Rights
Nothing contained in this Plan (or in any other documents
related to this Plan or to Bonuses) shall confer upon any
key employee or participant any right to any Bonus or to
continue in the employ of the Company or constitute any
contract or agreement of compensation, employment or
otherwise, or interfere in any way with the right of the
Company to reduce such person's Bonus or other compensation
or to terminate the employment of such person with or without
cause.
No benefit payable under, or interest in, this Plan or in any
Bonus shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance
or charge and any such attempted action shall be void and no
such benefit or interest shall be, in any manner, liable for,
or subject to debts, contracts, liabilities, engagements or
torts of any person. The Committee and the Executive Group
shall disregard any attempted transfer, assignment or other
alienation prohibited by the preceding sentence.
No person shall have any right, title or interest in any fund
or in any specific asset of the Company by reason of any
Bonus granted hereunder. Neither the provisions of this Plan
(or of any documents related hereto, nor the creation or
adoption of this Plan, nor any action taken pursuant to the
provisions of this Plan shall create, or be construed to
create, a trust of any kind or a fiduciary relationship
between the Company and any person.
8.4 Tax Withholding
There shall be deducted from each payment or distribution
made under the Plan or any other compensation payable to a
participant (or beneficiary) all taxes which are required to
be withheld by the Company (or a subsidiary) in respect to
such payment or distribution or this Plan. As a condition
precedent to any payment of cash or delivery of shares under
this Plan, if the Company (or a subsidiary), for any reason,
elects not to (or cannot) satisfy the withholding obligation
from the amounts otherwise payable under this Plan or
otherwise, the participant (or beneficiary) shall pay or
provide for payment in cash of the amount of any taxes which
the Company (or a subsidiary) may be required to withhold
with respect to the benefits hereunder.
8.5 Acceleration of Bank Payments
Notwithstanding the provisions of Section 8.3, upon the
occurrence of an "Event" (as defined below), each participant
shall immediately have a fully vested and unrestricted
contract right to receive full and immediate payment in cash
of the participant's then outstanding Cash Account balance
and delivery of shares of Common Stock or payment of cash in
respect of Stock Units credited to his or her Stock Unit
Account. The Committee may accelerate the vesting and
payment of Plan benefits in anticipation of or in connection
with the occurrence of an Event. Notwithstanding the
foregoing, this Section 8.5 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 Company, triggers a
"Change in Control" under clause (iv)(A) below which causes
the occurrence of the Event.
"Event" shall mean any of the following:
(i) Approval by the shareholders of the Company of the
dissolution or liquidation of the Company;
(ii) Approval by the shareholders of the Company of an
agreement to merge or consolidate, or otherwise reorganize,
with or into one or more entities which are not
"Subsidiaries" (as defined below), as a result of which less
than 50% of the outstanding voting securities of the
surviving or resulting entity are, or are to be, owned by
former shareholders of the Company;
(iii) Approval by the shareholders of the Company of the
sale or transfer of substantially all of the Company's
business and/or assets to a person or entity which is not a
Subsidiary; or
(iv) A Change in Control. A "Change in Control" shall be
deemed to have occurred if:
(A) any "person", alone or together with all
"affiliates" and "associates" of such person, is or
becomes (1) an "Acquiring Person" as defined in the
Rights Agreement, dated as of March 21, 1989 and as
amended, by and between the Company and The Bank of New
York, Rights Agent or (2) the "beneficial owner" of 30%
of the outstanding voting securities of the Company (the
terms "person", "affiliates", "associates" and
"beneficial owner" are used as such terms are used in
the Securities Exchange Act of 1934 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 Company, any Subsidiary
or any employee benefit plan or employee stock plan of
the Company 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
(B) 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 Company's shareholders,
of each new Board member was approved by a vote of at
least three-quarters (3/4) of the Board members then
still in office who were Board members at the beginning
of such period.
"Subsidiary" shall mean any corporation or other entity
a majority or more of whose outstanding voting stock or
voting power is beneficially owned directly or
indirectly by the Company.
8.6 No Shareholder Rights
This Plan creates no fiduciary duty to participants. The
Stock Units credited to a participant's Stock Unit Account
shall be used solely as a device for the determination of the
number of shares of Common Stock (or cash) to be eventually
distributed to such Participant in accordance with this Plan.
The Stock Units 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 Stock
Units granted or credited under this Plan.
8.7 Compliance with Laws
This Plan and the offer, issuance and delivery of shares of
Common Stock and/or the payment of money under this 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 Company,
be necessary or advisable in connection therewith. Any
securities delivered under this Plan shall be subject to such
restrictions, and the person acquiring such securities shall,
if requested by the Company, provide such assurances and
representations to the Company as the Company may deem
necessary or desirable to assure compliance with all
applicable legal requirements.
<PAGE>
GLOSSARY OF SELECTED TERMS
<TABLE>
<CAPTION>
TERM DEFINITION
<S> <C>
"Bank." Bank means the EVA Incentive Compensation
Bank described in Section 2.4 of the Plan,
which is composed of a participant's Cash
Account and Stock Unit Account.
"Base Unit An amount equal to 0.5.Value."
"Beneficiary" See Company Employees Profit Sharing or
or "Beneficiaries." Retirement Plan Summary Plan Description
document, as amended, for definition.
"Board." The Company's Board of Directors.
"Bonus." For a fiscal year for which performance is
being measured, the participant's Target
Bonus for the fiscal year multiplied by the
Total Unit Value for the fiscal year.
"Cash Cash Account means the bookkeeping account
Account." maintained by the Company for each
participant that (i) is credited with cash
amounts pursuant to Section 2.4, and (ii) is
debited with respect to shortfalls pursuant to
Section 2.4, and benefits in respect of such
account that are paid, forfeited, or
terminated.
"Committee." The Compensation Committee of the Board.
"Common Common Stock means the common stock, without
Stock." par value, of Furon Company (subject to
adjustment pursuant to Section 2.6(g)).
"Company." Furon Company, a California corporation.
"Current For a fiscal year for which performance is
Bonus." being measured, the participant's Target
Bonus for the fiscal year multiplied by the
lesser of (i) the Total Unit Value for the
fiscal year or (ii) 1.0, where such amount is a
positive number.
"Death." In order to receive payment of funds from the
Bank, a participant must be an active fulltime
employee and eligible to participate in the
Plan at the time of death.
"Disability." Disability shall mean the total and permanent
incapacity, as determined by the Executive
Group based upon competent medical advice, of a
participant to render substantial service
to the Company by reason of mental or
physical disability.
"Dividend Dividend Equivalent means the amount of cash
Equivalent." dividends or other cash distributions paid by
the Company on that number of shares of
Common Stock equal to the number of Stock Units
credited to a participant's Stock Unit Account
as of the applicable record date for the
dividend or other distribution, which amount
shall be credited in the form of additional
Stock Units to the participant's Stock Unit
Account, as provided in Section 2.6(c).
"EVA Target." The EVA target performance for the Company or
a business unit, as the case may be, that has
been established pursuant to the Plan for the
fiscal year for which performance is being
measured.
"Executive The Company's Chairman of the Board,
Group." President and Chief Financial Officer.
"General The general managers of the Company's
Managers" business units that the Executive Group from
time to time determines are eligible for
participation in the Plan.
"Performance An amount equal to: (i) the actual EVA
Unit Value" performance minus the EVA Target for the
Company/business unit for such fiscal year;
divided by (ii) the Variation Factor for the
Company/business unit.
"Plan." The Furon Company Economic Value Added (EVA)
Incentive Compensation Plan.
"Retirement." A participant is eligible to retire under the
Plan if at the time of retirement: (i) The
participant is at least age 60; and (ii) the
participant has had at least ten (10) years
of continuous full-time employment with the
Company.
"Stock Unit." Stock Unit means a non-voting unit of
measurement which is deemed solely for
bookkeeping purposes under this Plan to be
equivalent to one outstanding share of Common
Stock (subject to adjustment pursuant to
Section 2.6(g)).
"Stock Unit Stock Unit Account means a bookkeeping
Account." account maintained by the Company for each
participant that (i) is credited with Stock
Units pursuant to Section 2.6 and (ii) is
debited with respect to Stock Units that are
paid, forfeited, or terminated.
"Subaccount." Subaccount means a subaccount of a
participant's Stock Unit Account established
to separately account for Stock Units that are
credited with respect to different fiscal
years.
"Target For a fiscal year for which performance is
Bonus." being measured, the participant's base salary
for the fiscal year multiplied by the
participant's rate of participation under the
Plan.
"Total Unit The Total Unit Value for the Company as a
Value" whole or a business unit, as the case may be,
for a fiscal year shall be equal to the Base
Unit Value plus the Performance Unit Value.
"Variation The Variation Factor for the Company as a
Factor" whole or a business unit, as the case may be,
shall be equal to the factor then in effect
as determined by (i) the Compensation
Committee, in the case of the Company's
Variation Factor, or (ii) the Executive
Group, in the case of a business unit's
Variation Factor.
<PAGE>
Attachment A
</TABLE>
<TABLE>
<CAPTION>
<C> <S> <S> <S> <S> <S> <S> <S> <S>
<S> <S>
Assumptions YR1 YR2 YR3 YR4 YR5 YR6 YR7 YR8
YR9 YR10
Stock price
($/share) 20.00 24.00 28.80 34.56 41.47 49.77 59.72 71.66
86.00 103.20
Annual
growth in
stock price 20%
TARGET BONUS % 15% 15% 15% 15% 15% 15% 15% 15%
15% 15%
BASE SALARY $65,000 $68,250 $71,663 $75,246 $79,008 $82,958 $87,106 $91,462
$96,035 $100,836
TARGET BONUS $9,750 $10,238 $10,749 $11,287 $11,851 $12,444 $13,066 $13,719
$14,405 $15,125
TOTAL UNIT
VALUE 3.00 2.50 1.70 -1.00 -0.50 1.80 2.20 3.00
1.75 2.00
TOTAL BONUS $29,250 $25,594 $18,274($11,287)($5,926)$22,399 $28,745 $41,158
$25,209 $30,251
CURRENT
BONUS $9,750 $10,238 $10,749 $0 $0 $12,444 $13,066 $13,719
$14,405 $15,125
THE CASH
BANK ($)
BEGINNING
BANK BALANCE - $14,625 $19,988 $15,475 $2,792 ($3,134) $600 $9,546
$26,943 $21,563
PERFORMANCE
SUBTRACTIONS - $0 $0($11,287)($5,926) $0 $0 $0
$0 $0
BANK PAYOUT
BALANCE - $14,625 $19,988 $4,188 ($3,134)($3,134) $600 $9,546
$26,943 $21,563
BANK PAYOUT
PERCENT 33% 33% 33% 33% 33% 33% 33% 33%
33% 33%
BANK PAYOUT $0 $4,875 $6,662 $1,396 $0 $0 $200 $3,182
$8,981 $7,188
PERFOR-
MANCE
ADDITIONS $14,625 $10,238 $2,150 $0 $0 $3,733 $9,146 $20,579
$3,601 $7,563
ENDING
BANK
BALANCE $14,625 $19,988 $15,475 $2,792 ($3,134) $600 $9,546 $26,943
$21,563 $21,938
THE STOCK
BANK (Share
Units)
BEGINNING
BANK
BALANCE - 243.75 375.78 437.14 291.43 291.43 416.45 387.03
353.74 319.58
BANK PAYOUT
PERCENT 33% 33% 33% 33% 0% 0% 33% 33%
33% 33%
Bank Payout - 81.25 125.26 145.71 - - 138.82 129.01
117.91 106.53
PERFORMANCE
ADDITIONS($) $4,875 $5,119 $5,375 $0 $0 $6,222 $6,533 $6,860
$7,203 $7,563
PERFORMANCE
ADDITIONS
(Share Units)243.75 213.28 186.62 - - 125.02 109.39 95.72
83.75 73.29
ENDING
BANK
BALANCE 243.75 375.18 437.14 291.43 291.43 416.45 387.03 353.74
319.58 286.34
TOTAL
BONUS
PAYMENT
CURRENT
BONUS $9,750 $10,238 $10,749 $0 $0 $12,444 $13,066 $13,719
$14,405 $15,125
CASH BANK
PAYOUT ($) $0 $4,875 $6,662 $1,396 $0 $0 $200 $3,182
$8,981 $7,188
TOTAL CASH $9,750 $15,112 $17,412 $1,396 $0 $12,444 $13,266 $16,901
$23,386 $22,313
TOTAL SHARE
UNITS - 81.25 125.26 145.71 - - 138.82 129.01
117.91 106.53
Value =
Total Share
Units x Share
Price $ - $1,950 $3,607 $5,036 $ - $ - $8,290 $9,245
$10,140 $10,993
Cash + Value
of Stock
Units $9,750 $17,062 $21,019 $6,432 $0 $12,444 $21,556 $26,146
$33,526 $33,306
</TABLE>
<PAGE>
Attachment B
<TABLE>
<CAPTION>
<C> <S> <S> <S> <S> <S> <S> <S> <S>
<S> <S>
Assumptions YR1 YR2 YR3 YR4 YR5 YR6 YR7 YR8
YR9 YR10
Stock price
($/share) 20.00 24.00 28.80 34.56 41.47 49.77 59.72 71.66
86.00 103.20
Annual
growth in
stock price 20%
TARGET BONUS % 15% 15% 15% 15% 15% 15% 15% 15%
15% 15%
BASE SALARY $65,000 $68,250 $71,663 $75,246 $79,008 $82,958 $87,106 $91,462
$96,035 $100,836
TARGET BONUS $9,750 $10,238 $10,749 $11,287 $11,851 $12,444 $13,066 $13,719
$14,405 $15,125
TOTAL UNIT
VALUE 3.00 2.50 1.70 1.40 1.60 1.80 2.20 3.00
1.75 2.00
TOTAL BONUS $29,250 $25,594 $18,274 $15,802 $18,962 $22,399 $28,745 $41,158
$25,209 $30,251
CURRENT
BONUS $9,750 $10,238 $10,749 $11,287 $11,851 $12,444 $13,066 $13,719
$14,405 $15,125
THE CASH
BANK ($)
BEGINNING
BANK BALANCE - $14,625 $19,988 $15,475 $10,317 $8,063 $9,108 $15,218
$30,274 $24,084
PERFORMANCE
SUBTRACTIONS - $0 $0 $0 $0 $0 $0 $0
$0 $0
BANK PAYOUT
BALANCE - $14,625 $19,988 $15,475 $10,317 $8,063 $9,108 $15,218
$30,724 $24,084
BANK PAYOUT
PERCENT 33% 33% 33% 33% 33% 33% 33% 33%
33% 33%
BANK PAYOUT $0 $4,875 $6,662 $5,158 $3,439 $2,688 $3,036 $5,073
$10,241 $8,028
PERFOR-
MANCE
ADDITIONS $14,625 $10,238 $2,150 $0 $1,185 $3,733 $9,146 $20,579
$3,601 $7,563
ENDING
BANK
BALANCE $14,625 $19,988 $15,475 $10,317 $8,063 $9,108 $15,218 $30,724
$24,084 $23,619
THE STOCK
BANK (Share
Units)
BEGINNING
BANK
BALANCE - 243.75 375.78 437.14 422.06 424.26 407.86 381.30
349.92 317.03
BANK PAYOUT
PERCENT 33% 33% 33% 33% 33% 33% 33% 33%
33% 33%
Bank Payout - 81.25 125.26 145.71 140.69 141.42 135.95 127.10
116.64 105.68
PERFORMANCE
ADDITIONS($) $4,875 $5,119 $5,375 $4,515 $5,926 $6,222 $6,533 $6,860
$7,203 $7,563
PERFORMANCE
ADDITIONS
(Share Units) 243.75 213.28 186.62 130.63 142.88 125.02 109.39 95.72
83.75 73.29
ENDING
BANK
BALANCE 243.75 375.18 437.14 422.06 424.26 407.86 381.30 349.92
317.03 284.64
TOTAL
BONUS
PAYMENT
CURRENT
BONUS $9,750 $10,238 $10,749 $11,287 $11,851 $12,444 $13,066 $13,719
$14,405 $15,125
CASH BANK
PAYOUT ($) $0 $4,875 $6,662 $5,158 $3,439 $2,688 $3,036 $5,073
$10,241 $8,028
TOTAL CASH $9,750 $15,112 $17,412 $16,445 $15,290 $15,131 $16,102 $18,792
$24,647 $23,154
TOTAL SHARE
UNITS - 81.25 125.26 145.71 140.69 141.42 135.95 127.10
116.64 105.68
Value =
Total Share
Units x Share
Price $ - $1,950 $3,607 $5,036 $5,835 $7,038 $8,119 $9,108
$10,031 $10,906
Cash + Value
of Stock
Units $9,750 $17,062 $21,019 $21,481 $21,125 $22,169 $24,221 $27,900
$34,677 $34,059
</TABLE>
<PAGE>
[O'Melveny & Myers LLP Letterhead]
September 8, 1998
Furon Company
29982 Ivy Glenn Drive
Laguna Niguel, California 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 350,000 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"), to be delivered pursuant
to the Furon Company Economic Value Added (EVA) Incentive Compensation
Plan (the "Plan"). We have examined the proceedings heretofore taken
and to be taken in connection with the authorization of the Plan and
the Shares to be 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 have
been duly authorized by all necessary corporate action on the part of
the Company and, when 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, and the Common Stock will be fully paid and
nonassessable.
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 Economic Value
Added (EVA) Incentive 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
