SCHEDULE 14A INFORMATION
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Chemfab Corporation
(Name of Registrant as Specified In Its Charter)
Chemfab Corporation
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CHEMFAB CORPORATION
701 DANIEL WEBSTER HIGHWAY
MERRIMACK, NEW HAMPSHIRE 03054
NOTICE OF 1997 ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF CHEMFAB CORPORATION:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Shareholders of
Chemfab Corporation will be held at the Corporation's principal executive
office, 701 Daniel Webster Highway, Merrimack, New Hampshire, on Thursday,
October 30, 1997 at 9:00 A.M. (local time) for the following purposes:
(a) To elect directors of the Corporation; and
(b) To consider and vote upon a proposal to ratify the adoption and
approval by the Board of Directors of an amendment to the
Corporation's Second Amended and Restated 1991 Stock Option Plan,
as amended ("the 1991 Plan"), to provide for an increase in the
number of shares of Common Stock authorized for issuance under the
1991 Plan from 1,500,000 to 1,950,000; and
(c) To consider and vote upon a proposal to ratify the selection by
the Board of Directors of the firm of Ernst & Young LLP as
independent auditors of the Corporation for the fiscal year ending
June 30, 1998; and
(d) To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The Board of Directors has fixed September 3, 1997 as the record date
for the determination of shareholders entitled to notice of, and to vote at,
the 1997 Annual Meeting of Shareholders. Accordingly, only shareholders of
record at the close of business on September 3, 1997 will be entitled to
notice of, and to vote at, such meeting or any adjournments thereof.
By order of the Board of Directors
Thomas C. Platt III
Secretary
September 23, 1997
NOTE: THE BOARD OF DIRECTORS SOLICITS THE EXECUTION AND PROMPT RETURN OF
THE ACCOMPANYING PROXY. A RETURN ENVELOPE IS ENCLOSED.
CHEMFAB CORPORATION
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Chemfab
Corporation (the "Corporation") for use at the 1997 Annual Meeting of
Shareholders on October 30, 1997 and at any adjournments or postponements
thereof (the "Meeting").
The Corporation's principal executive office is located at 701 Daniel
Webster Highway, P.O. Box 1137, Merrimack, New Hampshire 03054.
The cost of soliciting proxies by mail, telephone, telegraph or in
person will be borne by the Corporation. The Corporation has retained the
services of W.F. Doring & Company, a proxy solicitation firm based in New
Jersey, to whom the Corporation will pay a fee of $2,500 plus reimbursement
for mailing and out-of-pocket expenses. In addition to solicitation by
mail, the Corporation will reimburse brokerage houses and other nominees for
their expenses incurred in sending proxies and proxy material to the
beneficial owners of shares held by them.
You may revoke your proxy at any time prior to its use by giving
written notice to the Secretary of the Corporation, by executing a revised
proxy at a later date or by attending the Meeting and voting in person.
Proxies in the form enclosed, unless previously revoked, will be voted at
the Meeting in accordance with the specifications made by you thereon or, in
the absence of such specifications, in favor of the election of the nominees
for directors listed herein, in favor of the proposal to ratify an amendment
to the Corporation's Second Amended and Restated 1991 Stock Option Plan, as
amended, and in favor of the proposal to ratify the selection of Ernst &
Young LLP as independent auditors for the fiscal year ending June 30, 1998,
and, with respect to any other business which may properly come before the
meeting, in the discretion of the named proxies. If, in a proxy submitted
on your behalf by a person acting solely in a representative capacity, the
proxy is marked clearly to indicate that the shares represented thereby are
not being voted with respect to one or more proposals, then your proxy will
not be counted as present at the meeting with respect to such proposals.
Proxies submitted with abstentions as to one or more proposals will be
counted as present for purposes of establishing a quorum for such proposals.
All holders of record of the common stock, par value $.10 per share,
of the Corporation (the "Common Stock") at the close of business on
September 3, 1997, will be eligible to vote at the Meeting. Each share is
entitled to one vote. As of September 3, 1997, the Corporation had
outstanding 7,955,565 of Common Stock. The presence, in person or by proxy,
of a majority of the issued and outstanding Common Stock will constitute a
quorum for the transaction of business at the Meeting. This proxy statement
and the enclosed proxy are first being mailed or given to shareholders on or
about September 23, 1997.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to
each person known to the Corporation to be the beneficial owner of more than
5% of the issued and outstanding Common Stock as of August 11, 1997 or other
date noted below. As of August 11, 1997, 7,998,537 shares of Common Stock
were outstanding.
AMOUNT AND NATURE OF PERCENTAGE OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP OUTSTANDING SHARES OF
OF BENEFICIAL OWNER OF COMMON STOCK (1) COMMON STOCK OWNED (1)
- ------------------- ------------------- ----------------------
Peter B. Cannell & 959,473 (2) 12.0%
Co., Inc. ("Cannell")
919 Third Avenue
New York, NY 10022
Paul M. Cook 465,835 (3)(4) 5.8%
PMC Assoc.
c/o SRI
P.O. Box 880
Menlo Park, CA 94026-0880
Dimensional Fund Advisors Inc. 455,150 (5) 5.7%
1299 Ocean Avenue, 11th
Floor
Santa Monica, CA 90401
- ------------------------
(1) The shares owned, and the shares included in the total number of shares
outstanding, have been adjusted, and the percentage owned has been
computed, in accordance with Rule 13d-3(d)(1) under the Securities
Exchange Act of 1934, as amended, and includes, options to the extent
called for by such rule, with respect to shares of Common Stock that
can be exercised on or before October 10, 1997. Except as set forth in
the footnotes below, such shares are beneficially owned with sole
investment and sole voting power.
(2) Based upon information provided to the Corporation by Cannell as of
August 6, 1997. Consists entirely of shares of Common Stock of the
Corporation owned by investment advisory clients of Cannell, principals
of Cannell, and The Peter B. Cannell 401(k) Plan. Cannell disclaims
beneficial ownership of all such shares.
(3) Assumes that options covering 54,000 shares are exercised.
(4) Includes 411,835 shares held by the Paul and Marcia Cook Living Trust,
as to which Mr. Cook and his wife share voting and investment power as
co-trustees.
(5) Based upon information as of June 30, 1997 provided to the Corporation
by Dimensional Fund Advisors. Consists entirely of shares of Common
Stock owned by portfolios of DFA Investment Dimensions Group, Inc., a
registered open-end investment company, or in series of The DFA
Investment Trust Company, a Delaware business trust, or the DFA Group
Trust and the DFA Participating Group Trust, investment vehicles for
qualified employee benefit plans, all of which Dimensional Fund
Advisors Inc. serves as investment manager. Of such shares,
Dimensional Fund Advisors does not have voting power with respect to
162,200 shares. Dimensional Fund Advisors disclaims beneficial
ownership of all 455,150 shares.
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION AS DIRECTORS
The Board of Directors has set the number of Board members at seven
for the upcoming year. Each director is elected to hold office until the
next annual meeting of shareholders, or special meeting in lieu thereof, and
until their respective successors are duly elected and qualified. The Board
has nominated all of the current members of the Board for reelection and has
also nominated John W. Verbicky for election as a director. The affirmative
vote of a plurality of the shares of Common Stock present at the Meeting, in
person or by proxy, is required for the election of the members of the
Board.
Unless authority to do so is withheld, the persons named in each proxy
(and/or their substitutes) will vote the shares represented thereby "FOR"
the election of the director nominees named below. If for any reason any
nominee is not a candidate (which is not now expected), a new nominee will
be designated by the Board to fill such vacancy, unless the Board of
Directors shall reduce the number of directors in accordance with the By-
Laws of the Corporation.
INFORMATION AS TO DIRECTORS AND NOMINEES FOR DIRECTOR
There is shown below for each director and nominee for director, as
reported to the Corporation, the name, age and family relationship, if any,
with any other director or officer, the principal occupation and employment
over at least the last five years, the position, if any, with the
Corporation, the period of service as a director of the Corporation, and
certain other directorships held.
NAME AGE OFFICE HELD DIRECTOR SINCE
- ---- --- ----------- --------------
Paul M. Cook 73 Director March 1976
Warren C. Cook 52 Director September 1976
Robert E. McGill, III 66 Director October 1995
James E. McGrath 63 Director October 1993
Duane C. Montopoli 48 President, Chief February 1986
Executive Officer
and Director
Nicholas Pappas 67 Director May 1991
John W. Verbicky (1) 45 Executive Vice President --
and Chief Operating
Officer
- -----------------------------
(1) Non-incumbent nominee for election to the Board of
Directors
PAUL M. COOK has served as Chief Executive Officer and Chairman of the
Board of Diva Systems Corporation since June 1995. He is also Chairman of
the Board of Directors of SRI International, Menlo Park, California, a
position he has held since December 1993. Mr. Cook has also served as
Chairman of the Board of Directors of CellNet Data Systems, Inc. (formerly
Domestic Automation Company) of San Carlos, California since June 1990 and
served as Chief Executive Officer of that company from August 1990 through
August 1994. Mr. Cook was a member of the Board of Directors of Raychem
Corporation ("Raychem"), Menlo Park, California, from the time he founded
the company in 1957 through August 1996. Mr. Cook also served as Raychem's
President from 1957 through 1982 and Chief Executive Officer from 1957
through April 1990. Mr. Cook is the uncle of Mr. Warren Cook, also a
director of the Corporation.
WARREN C. COOK is Senior Vice President and Chief Operations Officer
of American Skiing Company and Managing Director of Sugarloaf Mountain
Corporation. Prior to his resignation in June 1986, Mr. Cook was President
and Chief Executive Officer of the Corporation. Mr. Cook is the nephew of
Mr. Paul Cook, also a director of the Corporation.
ROBERT E. McGILL, III has been Managing Director of the Berkshires
Management Company L.L.C., the general partner of the Berkshires Capital
Investors Limited Partnership, since February 1997. From 1989 through
December 1994, Mr. McGill served as Executive Vice President - Finance and
Administration of The Dexter Corporation, Windsor Locks, Connecticut and
also served as a director of The Dexter Corporation from 1983 through April
1995. Prior to his appointment as Executive Vice President, Mr. McGill
served as Vice President and Senior Vice President of Finance and
Administration from 1975 through 1989. He is currently a member of the
Board of Directors of CN Biosciences, Inc. and Connecticut Surety
Corporation. Mr. McGill is also a Trustee for Travelers Mutual and Variable
Annuity Funds.
JAMES E. McGRATH, Ph.D., is the Ethyl Chaired Professor of Chemistry
and Director of the National Science Foundation's Science and Technology
Center for High Performance Polymer Adhesives and Composites at Virginia
Polytechnic Institute and State University ("VPI"). Prior to his
appointment as Director of the Science and Technology Center in February
1989, Dr. McGrath served as Director of the Materials Institute at VPI. Dr.
McGrath also held various positions as a research scientist and chemist
during his 17 years in private industry with several companies, including
Union Carbide and Goodyear Tire and Rubber Co.
DUANE C. MONTOPOLI is President and Chief Executive Officer of the
Corporation. He has held these positions since June 1986. From December
1983 until January 1990, Mr. Montopoli was a partner in Oak Grove Ventures,
Menlo Park, California. Prior to that time, he was a partner in Arthur
Young & Company (a predecessor firm of Ernst & Young LLP). Mr. Montopoli is
also a trustee of Optima Healthcare, a non-profit corporation that operates
a network of community hospitals and affiliated entities in Southern New
Hampshire. On August 7, Mr. Montopoli announced his intention to resign as
President and Chief Executive Officer of the Corporation effective on or
about December 31, 1997. He intends to remain a director of the Corporation
thereafter.
NICHOLAS PAPPAS, Ph.D., is retired Vice Chairman of the Board of
Directors of Rollins Environmental Services, Inc., Wilmington, Delaware.
Prior to his appointment as Vice Chairman, Mr. Pappas served as President
and Chief Operating Officer from July 1991 through September 1995. Dr.
Pappas was employed by the Du Pont Company in various capacities from 1956
until his retirement in December 1990. Dr. Pappas served as Executive Vice
President of Du Pont from 1988 to December 1990, and was Group Vice
President - Polymer Products from 1983 to 1988. He is also a director of
Yenkin-Majestic Corp. of Dayton, Ohio, Nova Corporation, a Canadian company,
Witco Corporation of Greenwich, Connecticut, and Biotraces Inc. of Fairfax,
Virginia. In connection with Mr. Montopoli's announcement of his intention
to terminate his employment with the Corporation effective on or about
December 31, 1997 (see above), the Board of Directors has named Dr. Pappas
to the newly created position of Chairman of the Board of Directors of the
Corporation effective January 1998, assuming Dr. Pappas is re-elected as a
director.
JOHN W. VERBICKY, Ph.D., is Executive Vice President and Chief
Operating Officer of the Corporation. He has held these positions since
March 1996. Prior to that time, he served as Vice President - Research &
Development from January 1993 to April 1994, and as Vice President - U.S.
Business Group from April 1994 to March 1996. From November 1990 until the
commencement of his employment with the Corporation, Dr. Verbicky was
employed by General Electric ("GE") as manager of the Environmental
Technology Laboratory at GE's Research and Development Center. He
previously served as manager of the Chemical Synthesis Laboratory after
joining GE in 1979. The Board of Directors has named Dr. Verbicky as Mr.
Montopoli's successor as President and Chief Executive Officer of the
Corporation.
As compensation for service as director, each non-employee director
receives cash compensation and annual stock option grants. The Corporation
pays to each non-employee director $1,000 for every meeting of the Board of
Directors attended in person by such director, and $250 for every telephonic
meeting of the Board of Directors (or committee thereof) in which such
director participates. In addition, pursuant to the Corporation's Second
Amended and Restated 1991 Stock Option Plan, as amended, the non-employee
directors of the Corporation receive annual automatic grants of options to
purchase shares of Common Stock. During fiscal 1997, Mr. McGill, Mr.
McGrath and Dr. Pappas each received an automatic grant of options under the
Second Amended and Restated 1991 Stock Option Plan, as amended (the "1991
Plan"), to purchase 6,000 shares of the Common Stock at fair market value as
of the date of grant ($13.75 per share), and such options became fully
vested over the course of that fiscal year. During fiscal 1997, no other
directors received an automatic grant because of certain limitations that
the directors imposed upon themselves. This limitation has since been
lifted. The Board of Directors met 9 times last year. Each director
attended at least 75% of the aggregate of the total number of such meetings
of the Board of Directors and the total number of meetings held by all
committees on which he served.
COMMITTEES
During fiscal 1997, the Audit Committee of the Board of Directors
consisted of Mr. Warren Cook, Mr. McGill, Dr. McGrath and Dr. Pappas. This
committee met 2 times in fiscal 1997. The functions of the Audit Committee
include: (1) making recommendations to the Board of Directors with respect
to the engagement of the independent auditors; (2) reviewing the audit plans
developed by the independent auditors for the annual audit of the
Corporation's books and records and the results of such audit; (3) reviewing
the annual financial statements; (4) reviewing the professional services
provided by the independent auditors and the auditors' independence; and (5)
reviewing the adequacy of the Corporation's system of internal controls and
the responses to management letters issued by the independent auditors.
During fiscal 1997, the Option/Compensation Committee of the Board of
Directors consisted of Mr. Paul M. Cook, Mr. Warren C. Cook, and Dr. James
E. McGrath. This committee met 4 times in fiscal 1997. The principal
functions of the Option/Compensation Committee are to review and approve
salary plans and bonus awards, as well as other forms of compensation, and
to administer the Corporation's stock option plans pursuant to the terms of
such plans.
OWNERSHIP OF EQUITY SECURITIES BY MANAGEMENT
The table below sets forth information as of August 11, 1997, as
reported to the Corporation, as to the beneficial ownership of the Common
Stock of the Corporation by each director, each nominee for election as a
director, and each named executive officer, and by all directors and
executive officers as a group.
AMOUNT AND NATURE OF PERCENTAGE OF
BENEFICIAL OWNERSHIP OUTSTANDING SHARES OF
NAME OF COMMON STOCK (1) COMMON STOCK OWNED
----- ------------------- ------------------
Paul M. Cook (2)......... 465,835 5.78%
Warren C. Cook (3)....... 190,827 2.37%
Robert E. McGill, III (4) 13,000 *
James E. McGrath ........ 24,000 *
Duane C. Montopoli (5)... 181,750 2.23%
Moosa E. Moosa .......... 11,750 *
Gabriel P. O'Gara ....... 10,203 *
Nicholas Pappas ......... 42,000 *
Charles Tilgner III (6).. 19,872 *
John W. Verbicky ........ 33,126 *
All directors and executive
officers as a group (12 1,008,333 12.01%
persons) (7)
- ------------------------
* Indicates less than 1%
(1) Except as set forth in the footnotes below, each stockholder has sole
investment and voting power with respect to the shares beneficially
owned. Includes options with respect to shares of Common Stock that
can be exercised on or before October 10, 1997. Assumes exercise of
options covering 54,000 shares for Mr. Paul Cook, 54,000 shares for Mr.
Warren Cook, 8,000 shares for Mr. McGill, 18,000 shares for Dr.
McGrath, 143,000 shares for Mr. Montopoli, 11,250 shares for Mr. Moosa,
10,188 shares for Mr. O'Gara, 36,000 shares for Dr. Pappas, 17,075
shares for Mr. Tilgner, 33,126 shares for Dr. Verbicky, and 400,390
shares for all directors and executive officers as a group.
(2) Consists of 411,835 shares held by the Paul and Marcia Cook Living
Trust, as to which Mr. Cook and his wife share voting and investment
power as co-trustees.
(3) Includes 136,827 shares held in trust for the benefit of Mr. Warren
Cook's two children, as to which Mr. Cook has no voting or investment
power and disclaims beneficial ownership.
(4) Includes 5,000 shares held in a trust of which Mr. McGill is a
beneficiary and over which Mr. McGill shares voting control.
(5) Includes 4,500 shares held by Mr. Montopoli as custodian for his two
children, as to which Mr. Montopoli disclaims beneficial ownership.
(6) Includes 15 shares owned by Mr. Tilgner's wife, Mr. Tilgner disclaims
beneficial ownership.
(7) Does not include 10,203 shares beneficially owned by Mr. O'Gara, a
former executive officer of and currently a consultant to the
Corporation.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below sets forth certain compensation information for the
fiscal years ended June 30, 1997, 1996 and 1995 with respect to the
Corporation's Chief Executive Officer and those four other executive
officers of the Corporation who were the most highly paid for fiscal 1997.
<TABLE>
<S><C>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
NAME AND PRINCIPAL ----------------------- ---------- ALL OTHER
POSITION YEAR SALARY($)(1) BONUS($) OPTIONS(#) COMPENSATION($)(2)
- ------------------ ---- ------------ -------- ---------- ------------------
Duane C. Montopoli 1997 $229,000 $53,000 14,000 $7,067
President, CEO and 1996 $225,000 $85,000 18,000 $6,828
Director 1995 $219,000 $66,000 12,000 $5,666
John W. Verbicky 1997 $180,000 $44,000 0 $1,531
Executive Vice 1996 $151,000 $57,000 98,250 $16,050 (3)
President 1995 $130,000 $24,000 9,000 $15,892 (3)
and Chief Operating
Officer
Gabriel P. O'Gara (4) 1997 $130,000 $26,200 13,000 $1,728
Vice President- 1996 $134,000 $57,000 12,750 $2,001
European 1995 $126,891 $34,000 9,000 $1,740
Business Group
Moosa E. Moosa (5) 1997 $129,000 $31,500 45,000 $11,250 (6)
Vice President,
Finance,
Treasurer and Chief
Financial Officer
Charles Tilgner III 1997 $111,000 $25,000 5,300 $5,881
Vice President and 1996 $107,000 $40,000 6,000 $4,294
Director of 1995 $103,000 $23,000 0 $4,166
U.S. Operations
and Engineering
</TABLE>
- ------------------------
(1) Salary includes amounts deferred pursuant to the Corporation's 401(k)
Plan.
(2) All Other Compensation includes (i) the Corporation's matching
contributions, and discretionary payments made by the Corporation,
under the Corporation's 401(k) Plan, and (ii) life insurance premiums
paid by the Corporation on behalf of the named executive officer.
(3) Pursuant to the terms of Dr. Verbicky's employment agreement, the
Corporation has forgiven $15,000 of indebtedness owed by Dr. Verbicky
to the Corporation for each of fiscal 1996 and 1995.
(4) Mr. O'Gara ceased to be an officer of the Corporation on June 2, 1997,
but remains a consultant to the Corporation.
(5) Mr. Moosa joined the Corporation in July 1996.
(6) Pursuant to the terms of Mr. Moosa's employment agreement, the
Corporation paid Mr. Moosa a $10,000 signing bonus at the commencement
of his employment.
OPTION GRANTS IN LAST FISCAL YEAR
The following table discloses information regarding stock options granted
during the fiscal year ended June 30, 1997 pursuant to the Corporation's Second
Amended and Restated 1991 Stock Option Plan, as amended, to the individuals
listed in the Summary Compensation Table. In accordance with Securities and
Exchange Commission rules, also shown are the hypothetical gains or "option
spreads," on a pre-tax basis, that would exist for the respective options.
These gains are based on assumed rates of annual compound stock price
appreciation of 0%, 5% and 10% from the date the options were granted over the
full option term of ten (10) years.
<TABLE>
<S><C>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE AT
----------------- ASSUMED ANNUAL RATES OF
% OF TOTAL STOCK PRICE APPRECIATION FOR
OPTIONS GRANTED OPTION TERM
OPTIONS TO EMPLOYEES EXERCISE EXPIRATION -----------------------------
NAME GRANTED(#)(1) IN FY 1997 PRICE (PER SH) DATE 0% 5% 10%
- --------------------- ------------- ----------------- -------------- ---------- ---- ---- -----
Duane C. Montopoli 14,000 6.18% $14.125 8/1/06 $ 0 $124,364 $315,163
Moosa E. Moosa 45,000 19.87% $14.000 7/29/06 $ 0 $396,204 $1,004,058
Gabriel P. O'Gara 13,000 5.74% $14.125 8/1/06 $ 0 $115,481 $292,651
Charles Tilgner III 5,300 2.34% $14.125 8/1/06 $ 0 $47,081 $119,312
John W. Verbicky 0 -- -- -- -- -- --
</TABLE>
- --------------------
(1) Each option grant is exercisable, cumulatively, in increments of 25% on
each of the first four anniversaries of the grant date. Options granted to
executive officers provide for accelerated vesting in the event of a change
in control of the Corporation.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table sets forth information as to options exercised during
the fiscal year ended June 30, 1997, and unexercised options held at the end of
such fiscal year, by the individuals listed in the Summary Compensation Table.
<TABLE>
<S><C>
VALUE OF UNEXERCISED
NUMBERS OF UNEXERCISED IN-THE MONEY OPTIONS
SHARES ACQUIRED VALUE OPTIONS AT 6/30/97 (#) AT 6/30/97($)
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- -------------------- --------------- ----------- ------------------------- ----------------------------
Duane C. Montopoli 64,250 804,542 129,000/36,500 1,454,500/350,250
Moosa E. Moosa 0 0 0/45,000 0/315,000
Gabriel P. O'Gara 20,000 212,692 27,625/28,562 247,769/264,558
Charles Tilgner III 3,000 40,875 14,250/9,800 122,750/79,938
John W. Verbicky 22,000 188,792 27,313/78,187 230,276/649,308
</TABLE>
- --------------------
(1) Value is based on the closing sale price of $21.00 per share of the Common
Stock as of June 30, 1997 (the last trading date during fiscal 1997) minus
the exercise price.
DEFINED BENEFIT PLAN
Defined Benefit Plan--United States
The Corporation maintains a defined benefit pension plan (the "Defined
Benefit Plan") for its U.S. employees. The following table shows the estimated
annual benefit payable at age 65 upon retirement to participants in the
Corporation's Defined Benefit Plan at the specified compensation and years-of-
service classifications.
<TABLE>
<S><C>
Years of Service
-----------------------------------------------------------------------------
10 15 20 25 and over
---------------- ---------------- ---------------- ----------------
Range of Officer Range of Officer Range of Officer Range of Officer
Birth Dates Birth Dates Birth Dates Birth Dates
Remuneration* 1960 1935 1960 1935 1960 1935 1960 1935
- ------------- ---------------- ---------------- ---------------- ----------------
$100,000 $ 9,700 $11,700 $14,500 $17,500 $19,400 $23,300 $24,200 $29,100
125,000 13,200 15,100 19,700 22,700 26,300 30,300 32,900 37,800
150,000 16,600 18,600 25,000 27,900 33,300 37,200 41,600 46,500
175,000 20,100 22,100 30,200 33,100 40,200 44,200 50,300 55,200
200,000 23,600 25,600 35,400 38,300 47,200 51,100 59,000 63,900
225,000 27,100 29,000 40,600 43,500 54,100 58,100 67,700 72,600
250,000 30,500 32,500 45,800 48,800 61,100 65,000 76,300 81,300
275,000 34,000 36,000 51,000 54,000 68,000 72,000 85,000 90,000
</TABLE>
- --------------------
* Represents the average annual compensation paid during the sixty (60) months
preceding retirement.
Compensation for purposes of computing retirement benefits under the
Defined Benefit Plan includes salary and only those bonuses paid under the
Corporation's sales incentive program. For the purpose of computing
retirement benefits under the Defined Benefit Plan, compensation for fiscal
1997, reported to the pension trustee in August 1997, for Mr. Montopoli was
$233,654, for Mr. Moosa was $129,259, for Mr. Tilgner was $112,971, and for
Dr. Verbicky was $183,462. Mr. O'Gara does not participate in the Defined
Benefit Plan.
Benefits are computed on a straight-life annuity basis and, in general,
are payable monthly commencing at age 65. Early retirement is permitted
between the ages of 55 and 65, but at a considerably reduced benefit and
subject to certain restrictions. Benefits are not subject to any reduction
for social security or other offset amounts.
For the purpose of computing retirement benefits under the Defined
Benefit Plan, on June 30, 1997 Mr. Montopoli had 11 years of credited
service; Mr. Moosa, 1 year; Mr. Tilgner, 19 years; and Dr. Verbicky, 4
years.
Defined Benefit Plan--Ireland
One of the Corporation's wholly-owned subsidiaries maintains a defined
benefit plan (the "Irish Pension Plan") for its Irish employees. Monthly
pension benefits are based on the participant's number of years of service
at the time of retirement at age 65 (not to exceed 40 years) multiplied by
1.67% of average pensionable salary as defined in the Irish Pension Plan.
Additional benefits may be payable upon retirement in the event that a
participant contributes voluntarily to the Irish Pension Plan in excess of
the compulsory contributions described below.
Under the Irish Pension Plan, participating employees contribute 5% of
pensionable salary while the Corporation's subsidiary contributes the
balance of the funding which is required to ensure sound funding of the
Irish Pension Plan. In addition to the compulsory employee contributions
referred to above, employees may also voluntarily defer up to 15% of their
gross salary to a separate account in their name under the Irish Pension
Plan in order to supplement the defined benefit.
Full time employees and certain designated consultants of the Irish
subsidiary are eligible to participate in the Irish Pension Plan upon having
attained age 24 and one year of service as of the first day of the relevant
plan year (March 1). Early retirement is permitted between the ages of 50
and 65, but at a considerably reduced benefit.
EXECUTIVE EMPLOYMENT AGREEMENTS
The Corporation entered into an employment agreement with Duane C.
Montopoli, the President and Chief Executive Officer of the Corporation, as
of May 29, 1992 (the "Montopoli Employment Agreement"). Mr. Montopoli's
current annual base salary under the Montopoli Employment Agreement is
$235,000, subject to annual review and increase by the Board of Directors of
the Corporation. Under the Montopoli Employment Agreement as amended, Mr.
Montopoli is eligible to participate in the Chemfab Corporate Officer Bonus
Plan and may receive an annual cash bonus depending on the Corporation's
financial performance for the year. Furthermore, Mr. Montopoli is entitled
to fringe benefits under the Montopoli Employment Agreement, including life
insurance, health insurance and a company car. (See Option/Compensation
Committee Reports.) On August 7, Mr. Montopoli announced his intention to
resign as President and Chief Executive Officer of the Corporation effective
on or about December 31, 1997. He intends to remain a director of the
Corporation after such date.
Concurrent with the announcement of Mr. Montopoli's intention to resign
as President and Chief Executive Officer of the Corporation effective on or
about December 31, 1997 (see above), the Board of Directors named John W.
Verbicky, the Executive Vice President and Chief Operating Officer of the
Corporation, to succeed Mr. Montopoli as the Corporation's President and
Chief Executive Officer at that time. Effective September 8, 1997, the
Corporation's Option/Compensation Committee increased Dr. Verbicky's annual
base salary to $220,000 and granted him options to purchase 72,000 shares of
the Corporation's Common Stock at a price of $21.125 per share that will
vest at the rate of 25% per year.
Under Dr. Verbicky's current employment agreement with the Corporation
(the "Verbicky Employment Agreement"), Dr. Verbicky's annual base salary is
subject to annual review and increase by the Board of Directors of the
Corporation. Dr. Verbicky is also eligible to participate in the Chemfab
Corporate Officer Bonus Plan and may receive an annual cash bonus depending
on the Corporation's financial performance for the year. Furthermore, Dr.
Verbicky is entitled to fringe benefits under the Verbicky Employment
Agreement, including life insurance, health insurance and a company car.
(See Option/Compensation Committee Reports.)
The Verbicky Employment Agreement also provides that Dr. Verbicky's
employment with the Corporation may be terminated by either Dr. Verbicky or
the Corporation, at any time and for any reason whatsoever, by giving up to
ninety (90) days' written notice of termination. If the Corporation
terminates Dr. Verbicky's employment under certain specified circumstances,
the Corporation will continue to pay Dr. Verbicky's base salary and fringe
benefits for a period of nine (9) months following such termination. These
payments would be subject to offset by the amount of any salary or bonus
received by Dr. Verbicky from subsequent employment (unless such termination
occurs after a sale of the Corporation). The Verbicky Employment Agreement
contains similar compensation provisions in the event that Dr. Verbicky's
employment with the Corporation terminates as a result of his death or
disability, except that, in the case of Dr. Verbicky's disability, the
compensation payable by the Corporation to Dr. Verbicky is expected to be
funded, in part, from disability insurance coverage maintained by the
Corporation.
OPTION/COMPENSATION COMMITTEE REPORT
ON EXECUTIVE OFFICER COMPENSATION
COMPENSATION PHILOSOPHY AND OBJECTIVES
The Corporation's executive officer compensation consists of three
primary components: base salary, annual bonuses, and grants of stock
options. Each component is intended to further the Corporation's overall
compensation philosophy, and to achieve the compensation objectives of the
Corporation. The Corporation's compensation philosophy is that executive
officer compensation should reflect the value created and protected for
shareholders, while furthering the Corporation's short and long-term
strategic goals and values by aligning compensation with business objectives
and individual performance. Short and long-term compensation should
motivate and reward high levels of performance and are geared to attract and
retain qualified executive officers.
The Corporation's executive officer compensation program is based on
the following principles and objectives:
-- Competitive, Fair and Balanced Compensation
The Corporation is committed to providing an executive officer
compensation program that helps attract and retain highly qualified
executive officers. To ensure that compensation is competitive, the
Corporation compares its compensation practices with those of other
companies and compensation for similar positions in the market. The
Corporation also seeks to achieve a balance of the compensation paid to
a particular individual and the compensation paid to other executive
officers inside the Corporation, and strives to achieve a balance
between the fixed and variable components, and between the short and
long-term components, of each executive officer's compensation.
-- Performance
Executive officers are rewarded based upon both corporate and
individual performance. Corporate performance is evaluated by
reviewing the extent to which strategic and business plan goals are
met. Individual performance is evaluated by reviewing the achievement
of specified individual objectives and the degree to which the
executive officer contributed to the overall success of the Corporation
and the management team.
In evaluating each executive officer's performance, the Corporation
generally follows the process described below:
-- Prior to or shortly after the beginning of each fiscal year, the
Corporation's goals and objectives are set through the preparation
of the annual plan, which is reviewed with, and ultimately
approved by, the full Board of Directors. Mr. Montopoli reports
to the Board on the Corporation's progress toward achieving its
strategic goals and operating plan throughout the year at
quarterly Board meetings and at other times as necessary.
-- In conjunction with the August Board meeting, the
Option/Compensation Committee (the "Committee") meets with Mr.
Montopoli to review the performance of each executive officer
other than Mr. Montopoli during the fiscal year just ended, with
particular emphasis on the contribution made toward the attainment
of the Corporation's goals and objectives for that year. At that
time, Mr. Montopoli makes specific salary, bonus and option award
recommendations to the Committee for each executive officer.
Based upon all the information available, including the
performance of the individual officer and compensation information
for individuals holding similar positions in other companies, the
Committee makes the final determination of the salary, bonus and
option awards for each executive officer.
-- At the same time, the Committee also addresses certain aspects of
Mr. Montopoli's compensation. Since his base salary level is set
by his Employment Agreement (see "EXECUTIVE COMPENSATION --
Executive Employment Agreement" above), this annual determination
by the Committee relates only to his annual salary increase, if
any, the discretionary portion of his annual bonus and stock
option grants.
COMPENSATION FOR FISCAL 1997
Salary
As described above, the Committee sets the base salary for executive
officers after reviewing the Chief Executive Officer's recommendations and
evaluations of performance, compensation for competitive positions in the
market and the historical compensation levels of the executive officers. In
Mr. Montopoli's case this process applies only to any annual increase in his
base salary under the Montopoli Employment Agreement. At its August 1996
meeting, the Committee reviewed the salaries of the Corporation's executive
officers, including Mr. Montopoli, and the Corporation's financial
performance for fiscal year ended June 30, 1996. Based upon this review,
the Committee concluded that increases ranging from 1.8% to 4.7% were
appropriate for each executive officer.
Bonus Awards
For fiscal 1997, the Corporation's executive officers, including Mr.
Montopoli, were eligible to receive bonuses pursuant to the terms of the
Chemfab Corporate Officer Bonus Plan (the "Plan") which was approved by the
Committee early in fiscal 1997. Under the terms of the Plan, executive
officer bonuses are paid from a bonus pool which is funded based upon a
formula tied to the Corporation's consolidated pretax profit for the year.
The individual's total bonus opportunity is divided into two components:
60% of the opportunity is tied to the individual's base pay as of July 1,
1996 and 40% is variable based upon an assessment by the Committee of the
individual's achievements and contributions to the success of the business
during the year.
Based upon the Corporation's actual pretax profit for fiscal 1997, the
total bonus pool created under the Chemfab Corporate Officer Bonus Plan was
$205,000, which represented approximately 23% of the base salaries of the
executive officer group as a whole. The bonus payment to Mr. Montopoli for
fiscal 1997 was $53,000, which represented approximately 23% of his base
pay. The other four most highly paid executive officers received bonus
payments equal to approximately 23% of their base pay in the aggregate.
These amounts were paid in September 1997.
Stock Option Grants
The Committee believes that stock options have been and remain an
excellent vehicle for compensating employees. Because the option exercise
price for the employee is generally the fair market value of the stock on
the date of grant, employees recognize a gain only if the value of the stock
increases. Thus, employees with stock options are rewarded for their
efforts to improve long-term performance of the Corporation's stock. The
size of stock option grants is generally intended by the Committee to
reflect the executive officer's position with the Corporation and his other
contributions to the Corporation, while at the same time considering his
other prior equity holdings in the Corporation and the stock option awards
made to other executive officers of the Corporation. Grants to executive
officers under the stock option program typically involve a four-year
vesting period (subject to accelerated vesting upon a change of control of
the Corporation) to encourage key employees to continue in the employ of the
Corporation. At its August 1997 meeting, the Compensation Committee granted
stock options to the named officers as follows: Mr. Montopoli, 7,000 shares;
Mr. Moosa, 5,000 shares; Mr. Tilgner, 4,000 shares; and Dr. Verbicky, 8,000
shares. Mr. O'Gara, was no longer an officer of the Corporation in August
1997 and, accordingly, received no option grants at that time.
Conclusion
The Committee believes that the total fiscal 1997-related compensation
of the Chief Executive Officer and each of the other named officers, as
described above, including the bonus awards and stock option grants made in
August 1997, is fair, and is well within the range of compensation for
executive officers in similar positions at comparable companies.
Option/Compensation Committee
Paul M. Cook
Warren C. Cook
James E. McGrath
CERTAIN TRANSACTIONS
In February 1995, Gabriel P. O'Gara, who was an officer of the
Corporation until June 2, 1997 and who currently is a consultant to the
Corporation, acquired a 50% ownership interest in Fothergill Engineered
Fabrics ("FEF"), which is a commercial weaver of specialty fibers in
England. FEF is also a raw material supplier to the Corporation's U.K. and
Irish subsidiaries, and owns the site on which the U.K. subsidiary operates.
The Corporation has entered into a lease and related agreements with FEF
which provide for minimum annual payments by the Corporation to FEF of
approximately $65,000 for a period of at least five years. During the
fiscal year ended June 30, 1997, the Corporation's U.K. and Irish
subsidiaries purchased an aggregate of $1,801,000 of woven materials from
FEF and paid an aggregate of $516,000 for rent and shared services. At
June 30, 1997, the amount payable to FEF for material purchases and services
was an aggregate of $318,000.
On August 2, 1996, the Corporation entered into a Consulting Agreement
with Nicholas Pappas, a director of the Company, pursuant to which Dr.
Pappas provided to the Corporation, on an as-needed basis, certain defined
consulting services. Pursuant to the agreement, the Corporation paid to Dr.
Pappas compensation in the amount of $7,500 per month, and reimbursed his
reasonable expenses incurred in the performance of his consulting services.
The consulting agreement terminated on November 30, 1996, pursuant to its
terms.
On June 2, 1997, Gabriel O'Gara terminated his employment with Chemfab
Europe, resigned his offices of the Corporation and entered into a
consultancy agreement with the Corporation and its subsidiaries (the
"Consulting Agreement"). The Consulting Agreement requires that Mr. O'Gara
provide various consulting services to the Corporation and/or its
subsidiaries. In consideration for these services, the Corporation and/or
its subsidiaries have agreed to pay Mr. O'Gara consulting fees at the
average rate of Irish Pound Sterling 6,250 per month and provide him with
certain other benefits costing approximately Irish Pound Sterling 1,000
per month. The Consulting Agreement terminates on December 31, 1999,
unless sooner terminated by the Corporation for cause or by Mr. O'Gara upon
notice to the Corporation.
On June 5, 1997, the Corporation repurchased from the Paul and Marcia
Cook Living Trust (the "Trust") 43,440 shares of the Corporation's Common
Stock for an aggregate purchase price of $771,060 ($17.75 per share, which
price represented a $.25 discount to the last reported sale price of the
Common Stock on that date). This transaction was approved by the Board of
Directors and occurred pursuant to the Corporation's stock repurchase plan.
Mr. Paul Cook, a director of the Corporation is a beneficiary of the Trust
and shares voting and investment power as a co-trustee of the Trust.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, as
amended, the Company's directors and certain of its officers and persons
holding more than ten percent of the Company's Common Stock are required to
report their ownership of the Common Stock and any changes in such ownership
to the Securities and Exchange Commission and the Company. Based on the
Company's review of copies of such reports, no untimely reports were made
during the fiscal year ended June 30, 1997.
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following graph compares the performance of the Corporation's
Common Stock to the Nasdaq Stock Market (U.S.) Index (the "Nasdaq Index"),
the S&P Manufacturing (Diversified Industrial) Index (the "S&P Index"), the
Russell 2000 Index and the Dow Jones Specialty Chemicals Index
(collectively, the "New Indexes") since June 30, 1992. In the past, the
Corporation has compared the performance of its Common Stock to the Nasdaq
Index and the S&P Index. However, as the Corporation's Common Stock has
traded on the New York Stock Exchange since March 11, 1997, the Corporation
believes that the New Indexes now provide more appropriate bases for
measuring the performance of its Common Stock and intends to use the New
Indexes in lieu of the Nasdaq Index and the S&P Index for comparative
purposes in the future. The graph assumes that the value of an investment
in the Corporation's Common Stock and each index was $100 at June 30, 1992
and that all dividends were reinvested. The total cumulative return
reflected in the graph below in respect of the fiscal year ended June 30,
1994 and June 30, 1995 has been computed based on the closing sale price of
the Corporation's Common Stock on June 29 and June 27, respectively, the
last trading days of the Corporation's Common Stock in such fiscal years.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN *
Cumulative Total Return
-----------------------
6/92 6/93 6/94 6/95 6/96 6/97
---- ---- ---- ---- ---- ----
CHEMFAB CORP CFA 100 74 83 111 145 217
NASDAQ STOCK MARKET (U.S) INAS 100 126 127 169 218 265
RUSSELL 2000 IR20 100 126 131 158 196 228
S & P MANUFACTURING IMNV 100 119 132 175 223 332
(DIVERSIFIED)
DJ SPECIALTY CHEMICALS ICHS 100 107 108 139 153 183
* $100 INVESTED ON 6/30/92 IN STOCK OR INDEX -- INCLUDING REINVESTMENT OF
DIVIDENDS.
FISCAL YEAR ENDING JUNE 30.
GRAPH PRODUCED BY RESEARCH
RATIFICATION OF ADOPTION AND APPROVAL OF
AMENDMENT TO SECOND AMENDED AND RESTATED
1991 STOCK OPTION PLAN, AS AMENDED
On August 5, 1997, the Corporation's Board of Directors adopted and
approved an amendment to the Corporation's Second Amended and Restated 1991
Stock Option Plan, as amended (the "1991 Plan"), for the purpose of
increasing the number of shares of Common Stock authorized for issuance
under the 1991 Plan from 1,500,000 shares to 1,950,000 shares.
The Board of Directors believes that an increase in the number of
shares available for issuance under the 1991 Plan will enable the
Corporation to continue its general practice of making annual grants of
stock options to key employees, officers and directors, thereby encouraging
stock ownership by key employees, officers and directors of the Corporation
and its subsidiaries and providing additional incentives for them to promote
the success of the Corporation's business.
The discussion below provides a summary description of certain
provisions of the 1991 Plan, as amended, and a brief and general description
of the Federal income tax rules applicable to incentive stock options and
nonqualified stock options granted under the 1991 Plan.
Participation in the 1991 Plan is limited to key employees (as
determined by the Corporation's Option/Compensation Committee) and directors
of, and consultants to, the Corporation and its subsidiaries. The 1991 Plan
is intended to be an incentive stock option plan within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
although, as further described below, options granted under the 1991 Plan
need not be incentive stock options.
The 1991 Plan is administered by the Corporation's Option/Compensation
Committee (the "Committee"), although the Board of Directors may at any time
at its discretion take over any or all functions of the Committee under the
1991 Plan other than the granting of options to officers of the Corporation
or to directors of the Corporation who are officers or employees thereof.
The committee administering the 1991 Plan must consist of no fewer than two
(2) directors who are not officers or employees of the Corporation ("Non-
employee Directors"). Only Non-employee Directors may be elected to such
committee.
Non-employee Directors may be granted options under the 1991 Plan only
by automatic grant thereunder ("Automatic Grant"), and only Non-employee
Directors receive Automatic Grants. Options granted by Automatic Grant are
nonqualified options. Automatic Grants require no action by the Committee
or the Board and occur as follows:
1. Each Non-employee Director elected or re-elected at an annual
shareholders meeting (including the Meeting) or a special meeting in lieu of
an annual meeting, or who continues to serve after such meeting, is
automatically granted, on the date of such meeting (an "Automatic Grant
Date"), a nonqualified option to purchase 6,000 shares of Common Stock (as
appropriately adjusted for capital changes occurring in the future) to vest
(if the director continues to serve as such) 25% on the Automatic Grant
Date, 25% on the last day of the fiscal quarter that includes the Automatic
Grant Date (if, however, the Automatic Grant Date is the last day of a
fiscal quarter, this second 25% portion vests on the last day of the
immediately subsequent fiscal quarter), and 25% on the last day of each of
the next two fiscal quarters.
2. Each Non-employee Director elected other than at an annual
shareholders meeting is automatically granted, on the date of such election,
a nonqualified option to purchase shares of Common Stock; the terms of the
1991 Plan will generally result in each such director receiving nonqualified
options on 1,500 shares (as appropriately adjusted for capital changes
occurring in the future) for each partial or complete fiscal quarter
remaining in the period from one annual meeting to the next, to vest (if the
director continues to serve as such) in increments of 1,500 shares on the
last day of each of those fiscal quarters.
Nonqualified options granted by Automatic Grant have an exercise price
equal to the fair market value of the Common Stock on the Automatic Grant
Date.
Options other than those granted by Automatic Grant under the 1991 Plan
("non-automatic options") are granted at the times, to the optionees, and in
the amounts determined by the Committee. Non-automatic options may be
incentive stock options or nonqualified stock options, at the Committee's
discretion, but only employees of the Corporation and its subsidiaries are
eligible to receive grants of incentive stock options under the 1991 Plan.
The exercise price of an incentive stock option must not be less than
100% (or 110% with respect to any optionee owning more that 10% of the total
combined voting power of all classes of stock of the Corporation) of the
fair market value of the Common Stock to any one employee on the date of
grant, and the aggregate fair market value (determined at the time of grant)
of shares issuable pursuant to incentive options which first become
exercisable in any calendar year may not exceed $100,000. In the case of
nonqualified stock options, the exercise price of each such option (other
than an option granted by Automatic Grant) is determined by the Committee,
and need not be the market value of such stock. The vesting schedule, if
any, of each non-automatic option, and its date of termination (which may
not be more than ten (10) years after the date of grant), are also
established by the Committee at the time of grant, except that the date of
termination of any incentive option granted to an optionee who owns more
than 10% of the total combined voting power of all classes of the stock of
the Corporation may not be more than five (5) years after the date of grant.
The Federal income tax aspects of incentive stock options and
nonqualified stock options are generally as described below. An employee
will generally not be taxed at the time of grant or exercise of an incentive
stock option, although exercise of an incentive stock will give rise to an
item of tax preference that may result in an alternative minimum tax. If
the employee holds the shares acquired upon exercise of an incentive stock
option until at least one year after issuance and two years after the option
grant, he or she will have long-term capital gain (or loss) based on the
difference between the amount realized on the sale or disposition and his or
her option price. If these holding periods are not satisfied, then upon
disposition (a "disqualifying disposition") of the shares the employee will
recognize ordinary income equal, in general, to the excess of the fair
market value of the shares at time of exercise over the option price, plus
capital gain in respect of any additional appreciation. With respect to a
nonqualified stock option, an optionee will not be taxed at the time of
grant; upon exercise, however, he or she will generally realize compensation
income to the extent the then fair market value of the stock exceeds the
option price. The Corporation will generally have a tax deduction to the
extent that, and at the time that, an optionee realizes compensation income
with respect to an option; in the case of an incentive stock option, this
means that the Corporation ordinarily is not entitled to a Federal income
tax deduction.
On August 5, 1997, the Corporation's Board of Directors amended the
1991 Plan to provide that options granted under the 1991 Plan on or after
that date be subject to a provision requiring the disgorgement of certain
option-related profits by option holders who engage in activities in
conflict with, competitive with or adverse to the interests or business of
the Corporation within the 12-month period following the termination of
their employment (or similar relationship) with the Corporation. An option
holder who engages in any such activity during this 12-month period must pay
to the Corporation an amount equal to the profit realized by such person
through the exercise of certain stock options during and after the 9-month
period immediately prior to the option holder's termination of employment
(i.e., the fair market value on the date of exercise minus the exercise
price of each share). The Committee may waive enforcement of this
requirement, in whole or in part, on a case by case basis.
Options under the 1991 Plan may not be granted later than August 27,
2001. The Board of Directors of the Corporation may, at any earlier time,
terminate the 1991 Plan or make such modifications to the 1991 Plan as it
shall deem advisable. The Board may not, however, (i) without further
approval of the Corporation's shareholders, increase the maximum number of
shares available for option under the 1991 Plan, or extend the period during
which options may be granted or exercised or (ii) amend certain provisions
of the 1991 Plan, including provisions relating to Automatic Grants, more
than once in any six (6) month period. No termination or amendment of the
1991 Plan may, without the consent of each optionee to whom an option under
the 1991 Plan shall theretofore have been granted, adversely affect the
rights of such optionee under such option.
As of August 11, 1997, options for the purchase of a total of 1,010,939
shares of Common Stock were outstanding under the 1991 Plan (of which
511,521 were exercisable as of such date), and options to purchase an
additional 122,748 shares remained available for grant under the 1991 Plan
before its amendment by the Corporation's Board of Directors on August 5,
1997. All of the outstanding options under the 1991 Plan are nonqualified
stock options. On September 3, 1997, the closing sale price of the Common
Stock, as reported on the New York Stock Exchange, was $20.625 per share.
The following table sets forth information as of August 11, 1997 with
respect to stock options which have been received since the 1991 Plan was
adopted by the Corporation by (i) each of the Corporation's Chief Executive
Officer and the four other executive officers of the Corporation named in
the Summary Compensation Table, (ii) all executive officers of the
Corporation as a group, (iii) each of the directors of the Corporation,
(iv) all directors of the Corporation, other than those who are executive
officers, as a group, and (v) all employees of the Corporation, excluding
executive officers, as a group since the 1991 Plan was adopted by the
Corporation.
OPTION GRANTS UNDER 1991 PLAN
Name Options (Shares)
---- ---------------
Paul M. Cook 30,000
Warren C. Cook 30,000
James E. McGrath 24,000
Duane C. Montopoli 100,500
Moosa E. Moosa 50,000
Gabriel P. O'Gara 61,750
Nicholas Pappas 36,000
Charles Tilgner III 23,550
John W. Verbicky 160,250
All executive officers as a group (2) 440,300
All directors of the Corporation,
excluding executive officers, as a group 132,000
All employees of the Corporation,
excluding executive officers, as a group(1) 792,952
(1) Does not include 134,748 shares subject to stock options
previously granted to former employees that were forfeited upon
termination of their employment.
(2) Does not include 61,750 shares subject to options granted to Mr.
O'Gara, a former executive officer of and current consultant to
the Corporation.
The affirmative vote of the holders of a majority of the shares of
Common Stock voted on the issue at the Meeting, in person or by proxy, is
required to ratify the adoption and approval by the Board of Directors of
the amendment to the 1991 Plan. If the proposal to ratify the amendment to
the 1991 Plan is not approved at the Meeting, the 1991 Plan, as previously
adopted by the Board of Directors and ratified by the shareholders, will
remain in full force and effect.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO RATIFY
THE ADOPTION AND APPROVAL OF THE AMENDMENT TO THE CORPORATION'S SECOND
AMENDED AND RESTATED 1991 STOCK OPTION PLAN, AND PROXIES SOLICITED BY THE
BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A SHAREHOLDER HAS INDICATED
OTHERWISE ON THE PROXY.
RATIFICATION OF INDEPENDENT AUDITORS
Based upon the recommendation of its Audit Committee, the Board of
Directors has selected the firm of Ernst & Young LLP as the independent
auditors of the Corporation for the fiscal year ending June 30, 1998. Ernst
& Young LLP (together with one of its predecessor firms, Arthur Young &
Company) have acted in such capacity for the Corporation since the 1980
fiscal year. The Board will propose at the Meeting that the shareholders
ratify this selection.
Representatives of Ernst & Young LLP are expected to be present at the
Meeting and will be afforded the opportunity to make a statement if they so
desire and to respond to appropriate questions.
The affirmative vote of a majority of the shares of Common Stock
present at the Meeting, in person or by proxy, is required for the
ratification of the appointment of Ernst & Young LLP as the Corporation's
auditors. If the proposal to ratify the appointment of Ernst & Young LLP is
not approved, the Board of Directors will select and appoint an independent
accounting firm for the fiscal year ending June 30, 1998 without further
shareholder action.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE
THE SELECTION OF ERNST & YOUNG LLP AS THE INDEPENDENT AUDITORS OF THE
CORPORATION FOR THE FISCAL YEAR ENDING JUNE 30, 1998, AND PROXIES SOLICITED
BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A SHAREHOLDER HAS
INDICATED OTHERWISE ON THE PROXY.
MISCELLANEOUS
OTHER MATTERS
The Board of Directors does not know of any other matters that may be
presented at the Meeting, except for routine matters. If other business
does properly come before the Meeting, however, the persons named on the
accompanying proxy intend to vote on such matters in accordance with their
best judgment.
1998 SHAREHOLDER PROPOSALS
In order for shareholder proposals to be presented at the
Corporation's 1998 annual meeting of shareholders, such proposals must be
received by the Secretary of the Corporation at the Corporation's principal
office in Merrimack, New Hampshire not later than May 26, 1998 for inclusion
in the proxy statement for that meeting, subject to the applicable rules of
the Securities and Exchange Commission. Delivery of such proposals should
be by Certified Mail, Return Receipt Requested.
ANNUAL REPORT ON FORM 10-K
The Corporation's Annual Report on Form 10-K (without exhibits) is
included in the Corporation's Annual Report to Shareholders, and is being
furnished to shareholders of record together with this Proxy Statement.
Requests for additional copies should be directed to: Secretary, Chemfab
Corporation, 701 Daniel Webster Highway, P.O. Box 1137, Merrimack, New
Hampshire 03054.
September 23, 1997
ANNEX
CHEMFAB CORPORATION
AMENDMENT NO. 2 TO
SECOND AMENDED AND RESTATED
1991 STOCK OPTION PLAN
1. Effective as of August 5, 1997, the first sentence of Section 5 of the
Corporation's Second Amended and Restated 1991 Stock Option Plan (the "1991
Plan") was deleted in its entirety and replaced with the following:
The Plan covers 1,950,000 shares of the Stock, subject, however, to
the provisions of Section 15 of the Plan.
2. Effective as of August 5, 1997, Section 14 of the 1991 Plan was
deleted in its entirety and replaced with the following:
14. TERMINATION OF EMPLOYMENT, DISGORGEMENT OF CERTAIN PROFITS.
(a) If an Optionee ceases to be an employee, director or
consultant of the Company or any of its subsidiaries for any reason
other than retirement of an employee or death of an Optionee, any
Option held by that Optionee may be exercised by the Optionee at any
time within 90 days after the termination of such relationship, but
only to the extent exercisable at termination and in no event after
the option period. If an Optionee enters retirement from employment
or dies, any Option held by that Optionee may be exercised by the
Optionee or the Optionee's executor or administrator at any time
within the shorter of the option period or 12 months after the date of
retirement or death, but only to the extent exercisable at retirement
or death. Options which are not exercisable at the time of
termination of such relationship or which are so exercisable but are
not exercised within the time periods described above shall terminate.
Military or sick leave shall not be deemed a termination under this
Section 14 provided that it does not exceed the longer of 90 days or
the period during which the rights of the absent employee, director or
consultant are guaranteed by statute or by contract.
(b) If, during the twelve-month period following the cessation of
an Optionee's employment with, and/or directorship of, and/or
consultancy for, the Company or any of its subsidiaries, as the case
may be, and regardless of the reason or absence of reason for such
cessation (the date of which cessation hereinafter, a "Cessation
Date"), said Optionee engages directly or indirectly in any business,
activity or enterprise which diverts business from, is in conflict
with, causes a competitive disadvantage to, or otherwise adversely
affects the interests or business of, the Company or any of its
subsidiaries, the Optionee shall automatically owe to the Company, and
shall promptly and without demand pay to the Company, with respect to
each share of Stock issued to the Optionee upon the full or partial
exercise of each Option exercised by the Optionee from and after that
date which is nine (9) months prior to the Optionee's Cessation Date,
an amount equal to the excess of Market Value of such share on the
date of exercise over the Option Price paid by the Optionee for such
share; provided that, on a case by case basis, a majority of
disinterested members of the Board of Directors or the Committee may,
in their sole discretion, waive enforcement of this provision, in
whole or in part; and provided further that no such waiver shall be
deemed a waiver of enforcement in any other instance. The provisions
of this Section 14(b) shall be applicable only with respect to Options
granted on or after August 5, 1997.
CHEMFAB CORPORATION
AMENDMENT NO. 1 TO
SECOND AMENDED AND RESTATED
1991 STOCK OPTION PLAN
1. Effective as of May 1, 1997, subsection (c) of Section 6 of the
Corporation's Second Amended and Restated 1991 Stock Option Plan (the "1991
Plan") was deleted in its entirety.
2. Effective as of May 1, 1997, the following sentence was inserted
following the last sentence of Section 20 of the 1991 Plan:
The deletion of Section 6(c), which did not require shareholder
approval, was approved by the Board of Directors on May 1, 1997.
CHEMFAB CORPORATION
SECOND AMENDED AND RESTATED 1991 STOCK OPTION PLAN
1. DEFINITIONS. As used in this Second Amended and Restated 1991 Stock
Option Plan of Chemfab Corporation, the following terms shall have the following
meanings:
ANNUAL SHAREHOLDERS MEETING shall have the meaning ascribed to it in
Section 6.
AS ADJUSTED means as appropriately adjusted for stock dividends payable in
the Stock, split-ups and contractions of the Stock, reclassifications of the
Stock, or similar changes of the outstanding shares of the Stock which occur
after the date of adoption of this Second Amended and Restated 1991 Stock Option
Plan by the Board of Directors.
AUTOMATIC GRANT DATE shall have the meanings ascribed to it in Section
6(a) and (b), as applicable.
BOARD OF DIRECTORS means the Company's board of directors.
CODE means the Federal Internal Revenue Code of 1986, as amended.
COMMITTEE means a committee comprised of two or more Nonemployee
Directors, appointed by the Board of Directors, responsible for the
administration of the Plan, as provided in Section 4; provided, that the Board
of Directors itself may at any time, in its sole discretion, exercise any or all
functions and authority of the Committee, except that the Committee shall have
exclusive authority to exercise its functions and authority in respect of
selection of officers and directors who are not Nonemployee Directors for
participation in and decisions concerning a grant or award of an Option to any
of such persons and the matters set forth in clauses (b) through (h) of Section
4 (and any other matters concerning the timing, pricing and amount of a grant or
award) in respect of any such persons.
COMPANY means Chemfab Corporation, a Delaware corporation.
GRANT DATE means the date on which an Option is granted, as specified in
Section 8 or, as applicable, in Section 6.
INCENTIVE OPTION means an Option which by its terms is to be treated as an
"incentive stock option" within the meaning of Section 422 of the Code.
MARKET VALUE means the closing price for a share of the Stock on any date.
NONEMPLOYEE DIRECTOR means a director of the Company who is not an officer
or employee of the Company.
NONSTATUTORY OPTION means any Option that is not an Incentive Option.
OPTION means an option to purchase shares of the Stock granted under the
Plan.
OPTION AGREEMENT means an agreement between the Company and an Optionee,
setting forth the terms and conditions of an Option.
OPTION PRICE means the price paid or to be paid by an Optionee for a share
of Stock upon exercise of an Option.
OPTIONEE means a person eligible to receive an Option, as provided in
Section 7, to whom an Option shall have been granted under the Plan.
PLAN means this Second Amended and Restated 1991 Stock Option Plan of the
Company.
STOCK means common stock, par value $.10 per share, of the Company.
TEN PERCENT OWNER means a person who owns, or is deemed within the meaning
of Section 422(b)(6) of the Code to own, stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company (or its
parent or subsidiary corporations). Whether a person is a Ten Percent Owner
shall be determined with respect to each Option based on the facts existing
immediately prior to the Grant Date of such Option.
VESTING YEAR for any portion of any Incentive Option means the calendar
year in which that portion of the Option first becomes exercisable.
2. PURPOSE. The Plan is intended to encourage ownership of the Stock by
key employees and directors of, and consultants to, the Company and its
subsidiaries and to provide additional incentive for them to promote the success
of the Company's business. The Plan is intended to qualify as an incentive
stock option plan within the meaning of Section 422 of the Code and to provide
for the grant of Incentive Options and Nonstatutory Options.
3. TERM OF THE PLAN. Options under the Plan may be granted not later
than August 27, 2001.
4. ADMINISTRATION. The Plan shall be administered by the Committee.
Subject to the provisions of the Plan (including, without limitation, the
provisions of Sections 6, 9 and 10), the Committee shall have complete
authority, in its discretion, to make the following determinations with respect
to each Option to be granted by the Company: (a) the key employee, director or
consultant to receive the Option; (b) whether the Option (if granted to an
employee) will be an Incentive Option or a Nonstatutory Option; (c) the time of
granting the Option; (d) the number of shares of the Stock subject to the
Option; (e) the Option Price; (f) the vesting schedule, if any, over which the
Option shall become exercisable; (g) the expiration date of the Option (which
may not be more than ten (10) years after the date of grant thereof); and (h)
the restrictions, if any, to be imposed upon transfer of shares of the Stock
purchased by the Optionee upon the exercise of the Option. Subject to the
provisions of Section 6, the Committee shall have complete authority to
interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to it, to determine the terms and provisions of the respective Option
Agreements (which need not be identical), and to make all other determinations
necessary or advisable for the administration of the Plan. The Committee's
determination on the matters referred to in this Section 4 shall be conclusive.
5. STOCK SUBJECT TO THE PLAN. The Plan covers 1,500,000 shares of the
Stock, subject, however, to the provisions of Section 15 of the Plan. The
number of shares of the Stock purchased pursuant to the exercise of Options and
the number of shares of the Stock subject to outstanding Options shall be
charged against the shares covered by the Plan; but shares of the Stock subject
to Options which terminated without being exercised shall not be so charged.
Shares of the Stock to be issued upon the exercise of Options may be either
authorized but unissued shares or shares held by the Company in its treasury.
If any Option expires or terminates for any reason without having been exercised
in full, the shares not purchased thereunder shall again be available for
Options thereafter to be granted.
6. AUTOMATIC GRANTS OF OPTIONS TO NONEMPLOYEE DIRECTORS.
(a) DIRECTORS ELECTED OR RE-ELECTED AT ANNUAL SHAREHOLDERS MEETING OR
SPECIAL MEETING IN LIEU OF ANNUAL MEETING. Each individual who is not an
officer or employee of the Company who is elected or re-elected to the Board of
Directors at an annual shareholders meeting or special meeting in lieu of annual
meeting (an "Annual Shareholders Meeting"), or continues to serve as a director
after such Annual Shareholders Meeting, is hereby granted, on the date of such
meeting (as used in or with reference to this Section 6(a), an "Automatic Grant
Date"), a Nonstatutory Option to purchase 6,000 shares of the Stock (As
Adjusted). Each Nonstatutory Option granted to an Optionee under this
Section 6(a) shall (1) have an exercise price equal to 100% of the Market Value
of the Stock on the Automatic Grant Date, and (2) become exercisable in four (4)
equal installments as follows: 25% on the Automatic Grant Date, an additional
25% on the last day of the fiscal quarter which includes the Automatic Grant
Date (unless the Automatic Grant Date is itself the last day of a fiscal
quarter, in which case this second 25% portion shall become exercisable on the
last day of the immediately subsequent fiscal quarter), and an additional 25% on
the last day of each of the next two fiscal quarters, if the Optionee remains a
director of the Company on such dates.
(b) DIRECTORS ELECTED AT OTHER TIMES. Each individual who is not an
officer or employee of the Company who is elected to the Board of Directors on a
date other than the day of an Annual Shareholders Meeting (as used in or with
reference to this Section 6(b), such date being an "Automatic Grant Date") is
hereby granted, on the Automatic Grant Date, a Nonstatutory Option to purchase
the number of shares of the Stock set forth below, based on the number of
quarters remaining in the fiscal year during which he or she is so elected,
which option shall become exercisable if the Optionee remains a director of the
Company as set forth below:
(1) If such individual is elected after the day of an Annual
Shareholders Meeting but on or before December 31, he or she is hereby granted a
Nonstatutory Option to purchase 4,500 shares of the Stock (As Adjusted), 33 1/3%
of which shall become exercisable on each of December 31, March 31 and June 30
of the fiscal year of such director's election if he or she remains a director
on such dates.
(2) If such individual is elected on or after January 1 but on or
before March 31, he or she is hereby granted a Nonstatutory Option to purchase
3,000 shares of the Stock (As Adjusted), 50% of which shall become exercisable
on each of March 31 and June 30 of the fiscal year of such director's election
if he or she remains a director on such dates.
(3) If such individual is elected on or after April 1 but on or
before June 30, he or she is hereby granted a Nonstatutory Option to purchase
1,500 shares of the Stock (As Adjusted) which shall become fully exercisable on
June 30 of the fiscal year of such director's election if he or she remains a
director on such date.
Each Option granted to a director under this Section 6(b) shall have an exercise
price equal to 100% of the Market Value of the Stock on the Automatic Grant
Date.
(c) LIMITATION ON NUMBER OF OPTIONS. Notwithstanding anything else herein
contained, no individual, in his or her capacity as a member of the Board of
Directors who is not an officer or employee of the Company, shall receive grants
of Options under this Section 6 to purchase an aggregate number of shares in
excess of 60,000 shares of Stock (As Adjusted).
7. ELIGIBILITY. An Option may be granted only to a key employee,
director or consultant of the Company or one or more of its subsidiaries,
provided that no Options may be granted to any Nonemployee Director except
pursuant to the provisions of Section 6, and provided, further, that Incentive
Options may be granted only to a key employee of the Company or one or more of
its subsidiaries.
8. TIME OF GRANTING OPTIONS. Subject to the provisions of Section 6, the
granting of an Option shall take place at the time specified by the Committee.
Only if expressly so provided by the Committee shall the Grant Date be the date
on which an Option Agreement shall have been duly executed and delivered by the
Company and the Optionee.
9. OPTION PRICE. The Option Price under each Incentive Option shall be
not less than 100% of the Market Value of the Stock on the Grant Date, or not
less than 110% of the Market Value of the Stock on the Grant Date if the
Optionee is a Ten Percent Owner. The Option Price under each Nonstatutory
Option shall not be so limited by reason of this Section 9, and need not be fair
market value.
10. OPTION PERIOD. No Incentive Option may be exercised later than the
fifth anniversary of the Grant Date if the Optionee is a Ten Percent Owner. The
option period under any Nonstatutory Option shall not be so limited by reason of
this Section 10.
11. LIMIT ON INCENTIVE OPTION CHARACTERIZATION. No Incentive Option shall
be considered an Incentive Option to the extent that pursuant to its terms it
would permit the Optionee to purchase for the first time in any Vesting Year
under that Incentive Option more than the number of shares of Stock calculated
by dividing the current limit by the Option Price. The current limit for any
Optionee for any Vesting Year shall be $100,000 minus the aggregate Market Value
at the date of grant of the number of shares of Stock available for purchase for
the first time in the Vesting Year under each other Incentive Option granted to
the Optionee under the Plan and each other incentive stock option granted to the
Optionee after December 31, 1986 under any other incentive stock option plan of
the Company (and any parent and subsidiary corporations).
12. EXERCISE OF OPTION.
(a) Unless the Committee otherwise determines, and except as otherwise
provided in Section 6, all Options shall permit the Optionee to exercise,
cumulatively, 25% of the option shares on each of the first four anniversary
dates of the Grant Date. The Optionee shall give written notice of exercise to
the Company. The notice shall specify the number of shares of the Stock which
the Optionee elects to purchase. For shares of the Stock which the Optionee
elects to purchase, the Optionee shall, except as otherwise permitted by Section
12(c) below, enclose a personal check equal to the aggregate option price
payable with respect to such shares. Subject to, and promptly after, the
Optionee's compliance with all of the provisions of this Section 12(a), the
Company shall deliver or cause to be delivered to the Optionee a certificate for
the number of shares of the Stock then being purchased by him or her. If any
law or applicable regulation of the Securities and Exchange Commission or other
body having jurisdiction in the premises shall require the Company or the
Optionee to take any action in connection with shares of the Stock being
purchased upon exercise of the Option, exercise of the Option and delivery of
the certificate or certificates for such shares (including, without limitation,
any exercise of the Option and delivery of the certificate or certificate for
such shares in accordance with the procedures set forth in Section 12(c) below)
shall be postponed until completion of the necessary action, which shall be
taken at the Company's expense. Each outstanding Option shall be reduced by one
share for each share of the Stock purchased upon exercise of the Option.
(b) The Company's obligation to deliver shares of Stock upon exercise of
an Option shall be subject to the Optionee's satisfaction of all applicable
federal, state and local income and employment tax withholding obligations. The
Optionee shall satisfy such obligations by making a payment of the requisite
amount in cash or by check, unless the Optionee is entitled to and has elected
to effect such payment through a "cashless" exercise in accordance with Section
12(c) below.
(c) In lieu of enclosing a personal check together with the written notice
of exercise as described in Section 12(a) above, an Optionee that is not subject
to the provisions of Section 16 of the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder (a "Qualified
Optionee"), may, unless prohibited by applicable law, elect to effect payment by
including with the written notice of exercise referred to in Section 12(a) above
irrevocable instructions to deliver for sale to a registered securities broker
acceptable to the Company a number of shares of Stock subject to the Option
being exercised sufficient, after brokerage commissions, to cover the aggregate
option price payable with respect to such shares and, if the Qualified Optionee
further elects, the Qualified Optionee's withholding obligations under Section
12(b) with respect to such exercise, together with irrevocable instructions to
such broker to sell such shares and to remit directly to the Company such
aggregate option price and, if the Qualified Optionee has so elected, the amount
of such withholding obligations. The Company shall not be required to deliver
to such securities broker any stock certificate for such shares until it has
received from the broker such aggregate option price and, if the Qualified
Optionee has so elected, the amount of such withholding obligations.
13. TRANSFERABILITY OF OPTIONS. Options shall not be transferable,
otherwise than by will or the laws of descent and distribution, and may be
exercised during the life of the Optionee only by the Optionee.
14. TERMINATION OF EMPLOYMENT, ETC. If an Optionee ceases to be an
employee, director or consultant of the Company for any reason other than
retirement of an employee or death of an Optionee, any Option held by that
Optionee may be exercised by the Optionee at any time within 90 days after the
termination of such relationship, but only to the extent exercisable at
termination and in no event after the option period. If an Optionee enters
retirement from employment or dies, any Option held by that Optionee may be
exercised by the Optionee or the Optionee's executor or administrator at any
time within the shorter of the option period or 12 months after the date of
retirement or death, but only to the extent exercisable at retirement or death.
Options which are not exercisable at the time of termination of such
relationship or which are so exercisable but are not exercised within the time
periods described above shall terminate. Military or sick leave shall not be
deemed a termination under this Section 14 provided that it does not exceed the
longer of 90 days or the period during which the rights of the absent employee,
director or consultant are guaranteed by statute or by contract.
15. ADJUSTMENT OF NUMBER OF SHARES; FRACTIONAL SHARES. Each Option
Agreement shall provide that in the event of any stock dividend payable in the
Stock or any split-up or contraction in the number of shares of the Stock, or
any reclassification or change of outstanding shares of the Stock, in each case
occurring after the date of such Option Agreement and prior to the exercise in
full of the Option, the number and kind of shares for which the Option may
thereafter be exercised shall be proportionately and appropriately adjusted.
Each Option Agreement shall further provide that upon any consolidation or
merger of the Company with or into another company, or any sale or conveyance to
another company or entity of the property of the Company as a whole, or the
dissolution or liquidation of the Company, the Option shall terminate, but the
Optionee (if at the time an employee, director or consultant of the Company, or
any of its subsidiaries, as appropriate) shall have the right, immediately prior
to such event, to exercise the Option, to the extent then exercisable by its
terms and not theretofore exercised. No fraction of a share of the Stock shall
be purchasable or deliverable, but in the event any adjustment of the number of
shares of the Stock covered by the Option shall cause such number to include a
fraction of a share, such fraction shall be adjusted to the nearest smaller
whole number of shares. In the event of changes in the outstanding Stock by
reason of any stock dividend, split-up, contraction, reclassification, or change
of outstanding shares of the Stock of the nature contemplated by this Section 15
after the date of adoption of this Plan by the Board of Directors, the number of
shares of the Stock available for the purpose of the Plan as stated in Section 5
and the exercise price per share of each Option shall be correspondingly
adjusted.
16. STOCK RESERVED. The Company shall at all times during the term of the
Options reserve and keep available such number of shares of the Stock as will be
sufficient to satisfy the requirements of this Plan and shall pay all other fees
and expenses necessarily incurred by the Company in connection therewith.
17. LIMITATION OF RIGHTS IN OPTION STOCK. The Optionee shall have no
rights as stockholder in respect of shares of the Stock as to which his or her
Option shall not have been exercised, certificates issued and delivered and
payment as herein provided made in full, and shall have no rights with respect
to such shares not expressly conferred by this Plan.
18. PURCHASE FOR INVESTMENT. The Optionee shall make such representations
with respect to investment intent and the method of disposal of optioned shares
of the Stock as the Board of Directors may deem advisable in order to assure
compliance with applicable securities laws.
19. TERMINATION AND AMENDMENT OF PLAN. The Board of Directors may at any
time terminate the Plan or make such modifications of the Plan as it shall deem
advisable, provided, that the Board of Directors may not (a) except as provided
in Section 15, without approval by the holders of a majority of the shares
represented within twelve (12) months after the adoption of such amendment by
the Board of Directors, increase the maximum number of shares available for
option under the Plan or extend the period during which Options may be granted
or exercised or (b) more than once in any six (6) month period, amend the Plan
so as to (1) modify Section 6 or (2) otherwise provide for or permit the grant
of Options to Nonemployee Directors, provided, however, that the Board of
Directors may make a modification of the type set forth in clause (b)(1) or
(b)(2) above which is made to comport with changes in the Code, the Employee
Retirement Income Security Act of 1974, as amended, or the rules and regulations
under either such statute. No termination or amendment of the Plan may, without
the consent of the Optionee to whom any Option shall theretofore have been
granted, adversely affect the rights of that Optionee under that Option.
20. EFFECTIVE DATE. The Company's 1991 Stock Option Plan was initially
adopted by the Board of Directors on August 28, 1991, and was approved by the
stockholders of the Company on October 31, 1991. The Company's Amended and
Restated 1991 Stock Option Plan was approved by the Board of Directors on
September 8, 1993, and was approved by the stockholders of the Company on
October 27, 1993. The First Amendment to the Company's Amended and Restated
1991 Stock Option Plan was approved by the Board of Directors on August 3, 1995,
and was approved by the stockholders of the Company on October 26, 1995. The
addition of Section 6(c), which did not require shareholder approval, was
approved by the Board of Directors on October 27, 1993. The 3-for-2 stock split
of the Stock (effected on February 22, 1996) and the Second Amendment to the
Company's Amended and Restated 1991 Stock Option Plan, neither of which required
shareholder approval, were approved by the Board of Directors on February 1,
1996.
ANNEX
FORM OF PROXY CARD
{SIDE ONE}
CHEMFAB CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR
1997 ANNUAL MEETING OF SHAREHOLDERS ON OCTOBER 30, 1997
The undersigned hereby appoints Duane C. Montopoli and Thomas C. Platt III
and each of them proxies, each with power of substitution, to vote at the 1997
Annual Meeting of Shareholders of CHEMFAB CORPORATION to be held on October 30,
1997 (including any adjournments or postponements thereof), with all the powers
the undersigned would possess if personally present, as specified on the reverse
side of this ballot on the election of directors, proposal respecting
ratification of amendment to the Second Amended and Restated 1991 Stock Option
Plan and the selection of auditors and, in accordance with their discretion, on
any other business that may come before the meeting, and revokes all proxies
previously given by the undersigned with respect to the shares covered hereby.
(TO BE CONTINUED AND SIGNED ON THE OTHER SIDE)
{SIDE TWO}
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders
CHEMFAB CORPORATION
October 30, 1997
Please Detach and Mail in the Envelope Provided
A [X] PLEASE MARK YOUR
VOTE AS IN THIS
EXAMPLE.
FOR ALL NOMINEES WITHHOLD
LISTED AT RIGHT AUTHORITY
(EXCEPT AS WITHHELD IN (TO VOTE FOR
THE SPACE BELOW) NOMINEES LISTED
AT RIGHT) NOMINEES: Paul M. Cook
Warren C. Cook
1. ELECTION [ ] [ ] Robert E. McGill, III
OF James E. McGrath
DIRECTORS Duane C. Montopoli
Nicholas Pappas
John W. Verbicky
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NAME IN
THE SPACE PROVIDED BELOW.
- ---------------------------------------------------
2. AMENDMENT TO SECOND AMENDED FOR AGAINST ABSTAIN
AND RESTATED 1991 STOCK OPTION PLAN: [ ] [ ] [ ]
The Board of Directors recommends a vote
FOR the proposal to: Ratify the adoption
and approval of the amendment to the
Corporation's Second Amended and Restated
1991 Stock Option Plan.
3. SELECTION OF AUDITORS: [ ] [ ] [ ]
The Board of Directors recommends a
vote FOR the proposal to Approve the
selection of Ernst & Young LLP as
independent auditors.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE SHAREHOLDER. IF NO CONTRARY SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES OF THE BOARD OF DIRECTORS, FOR THE PROPOSAL
RESPECTING THE AMENDMENT TO THE CORPORATION'S SECOND AMENDED AND RESTATED 1991
STOCK OPTION PLAN AND FOR THE PROPOSAL RESPECTING SELECTION OF THE AUDITORS AND
UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING IN THE
APPOINTED PROXIES' DISCRETION.
PLEASE DATE, SIGN AS NAME APPEARS HEREON, AND RETURN THIS PROXY IN THE ENCLOSED
ENVELOPE, WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING. YOU MAY NEVERTHELESS
VOTE IN PERSON IF YOU DO ATTEND.
THE UNDERSIGNED HEREBY ACKNOWLEDGE(S) RECEIPT OF A COPY OF THE ACCOMPANYING
NOTICE OF 1997 ANNUAL MEETING OF SHAREHOLDERS AND RELATED PROXY STATEMENT.
SIGNATURE___________________DATE__________SIGNATURE__________________DATE______
NOTE: (Executors, administrators, trustees, custodians, etc. should indicate
capacity in which signing. When stock is held in the name of more than one
person, each person should sign the proxy.)
