FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
DECEMBER 28, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
COMMISSION FILE NUMBER 1-12767
CHEMFAB CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 03-0221503
(State of Incorporation) (I.R.S. Employer Identification No.)
701 DANIEL WEBSTER HIGHWAY 03054
MERRIMACK, NEW HAMPSHIRE (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (603) 424-9000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
----------------- ----------------
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
AS OF JANUARY 31, 1998, THE COMPANY HAD 7,868,655 SHARES OF COMMON
STOCK, PAR VALUE $0.10 PER SHARE, OUTSTANDING.
CHEMFAB CORPORATION
-------------------
INDEX
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Part I. Financial Information Page No.
--------
Item 1. Financial Statements
--------------------
Consolidated Balance Sheets at
December 28, 1997 and June 30, 1997 3
Consolidated Statements of Income for the
Three Months and Six Months Ended
December 28, 1997 and December 29, 1996 5
Consolidated Statements of Cash Flows for the
Six Months Ended December 28, 1997 and
December 29, 1996 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations 9
-----------------------------------
Part II. Other Information
Item 4. Submission of matters to a Vote of Security Holders 12
---------------------------------------------------
Item 5. Other Matters 13
-------------
Item 6. Exhibits and Reports on Form 8-K 13
--------------------------------
Signatures 15
<TABLE>
<S><C>
CHEMFAB CORPORATION
-------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
(in thousands)
December 28, June 30,
1997 1997
----------- ----------
(Unaudited)
Current assets:
Cash and cash equivalents $ 5,650 $ 8,055
Receivables:
Trade 19,696 17,078
Other 96 425
Costs and estimated earnings in excess of
billings on uncompleted contracts 1,013 1,741
Inventories 17,909 16,373
Prepaid expenses, and other current assets 1,385 1,174
Deferred tax assets 772 770
----------- ---------
Total current assets 46,521 45,616
Property, plant and equipment, at cost 46,351 43,937
Less: accumulated depreciation 24,067 22,465
----------- ---------
Property, plant and equipment, net 22,284 21,472
Goodwill, net 10,368 10,740
Other assets 2,612 2,737
----------- ---------
Total assets $ 81,785 $ 80,565
=========== ==========
See accompanying notes to Consolidated Financial Statements.
CHEMFAB CORPORATION
-------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
(in thousands)
December 28, June 30,
1997 1997
----------- -----------
(Unaudited)
Current liabilities:
Accounts payable and accrued
expenses $ 8,964 $ 10,169
Accrued income taxes 2,511 2,119
Billings in excess of costs and
estimated earnings on
uncompleted contracts 97 102
--------- ---------
Total current liabilities 11,572 12,390
Deferred tax liabilities 1,790 1,790
Shareholders' equity:
Preferred stock, par value $.50:
authorized - 1,000,000 shares,
none issued - -
Common stock, par value $.10:
authorized - 15,000,000 shares;
issued 8,629,376 at December 28, 1997
and 8,521,000 at June 30, 1997 863 852
Additional paid-in capital 24,093 22,749
Retained earnings 54,695 50,104
Treasury stock, at cost
(742,144 shares at December 28, 1997
and 547,719 at June 30, 1997) (12,111) (8,007)
Foreign currency translation
adjustment 883 687
--------- ---------
Total shareholders' equity 68,423 66,385
--------- ---------
Total liabilities and shareholders Equity $ 81,785 $ 80,565
========= =========
See accompanying notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
<S><C>
CHEMFAB CORPORATION
-------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(Unaudited)
(in thousands)
Three Months Ended Six Months Ended
---------------------------- ----------------------------
12/28/97 12/29/96 12/28/97 12/29/96
-------- -------- -------- --------
Net sales $ 25,902 $ 22,127 $ 48,055 $ 42,065
Cost of sales 17,168 14,669 31,762 27,860
------------ ----------- ------------ -----------
Gross profit 8,734 7,458 16,293 14,205
Selling, general and
administrative expenses 4,271 3,832 8,240 7,516
Research and development 763 663 1,422 1,225
Other expense (income) 32 (111) 48 (132)
Interest income, net (78) (47) (160) (18)
------------ ----------- ------------ -----------
Income before income taxes 3,746 3,121 6,743 5,614
Provision for income taxes 1,197 996 2,156 1,789
------------ ----------- ------------ -----------
Net income $ 2,549 $ 2,125 $ 4,587 $ 3,825
============ =========== ============ ===========
Earnings per share:
- Basic $0.32 $0.26 $0.58 $0.48
- Diluted $0.31 $0.26 $0.56 $0.46
Weighted average common share outstanding:
- Basic 7,926 8,033 7,947 8,021
- Diluted 8,251 8,246 8,263 8,248
See accompanying notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
<S><C>
CHEMFAB CORPORATION
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CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Unaudited)
(in thousands)
Six Months Ended
----------------
Dec. 28, 1997 Dec. 29, 1996
--------------- ---------------
Cash flows from operating activities:
Net income $ 4,587 $ 3,825
Adjustments to reconcile net income to net
cash provided by operations:
Depreciation and amortization 2,370 2,125
Change in assets and liabilities:
Receivables (2,204) 651
Costs and estimated earnings in excess
of billings on uncompleted contract, net 723 (181)
Inventories (1,527) (1,321)
Prepaid expenses and other (233) (283)
Other assets (117) (227)
Accounts payable and accrued expense (1,216) (1,044)
Income taxes 370 354
Deferred tax assets and liabilities (2) 69
------------- -------------
Total adjustments (1,836) 143
------------- -------------
Net cash provided by operating activities 2,751 3,968
Cash flows from investing activities:
Capital expenditures, net (2,476) (1,492)
------------- -------------
Net cash used in investing activities (2,476) (1,492)
------------- -------------
Cash flows from financing activities:
Proceeds from exercise of stock options 1,401 1,843
Purchase of treasury shares (4,104) (1,450)
Repayment of long-term debt - (2,447)
------------- -------------
Net cash used in financing activities (2,703) (2,054)
------------- -------------
Effect of exchange rate changes on cash 23 (23)
------------- -------------
Net (decrease) increase in cash and cash equivalents (2,405) 399
Cash and cash equivalents at beginning of year 8,055 5,017
------------- -------------
Cash and cash equivalents at end of period $ 5,650 $ 5,416
============= =============
Interest paid $ - $ 106
Income taxes paid $ 1,611 $ 928
See accompanying notes to the Consolidated Financial Statements.
</TABLE>
CHEMFAB CORPORATION
-------------------
Notes to Consolidated Financial Statements
-----------------------------------------
December 28, 1997
-----------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements of Chemfab Corporation (the Company)
included in this report reflect all adjustments (consisting of only
normally recurring accruals) which, in the opinion of management, are
necessary for a fair presentation of the consolidated financial position at
December 28, 1997 and June 30, 1997 and the consolidated statements of
income and cash flows for the three months and six months ended December
28, 1997 and December 29, 1996. The unaudited results of operations for
the interim periods reported are not necessarily indicative of results to
be expected for the year.
Certain notes and other information have been condensed or omitted from
these interim financial statements. The statements, therefore, should be
read in conjunction with the consolidated financial statements and related
notes included in the Chemfab Corporation Annual Report on Form 10-K for
the year ended June 30, 1997 (file no. 0-12767).
NOTE 2 - INVENTORIES:
Inventories consisted of the following:
December 28, 1997 June 30, 1997
----------------- -------------
(in thousands)
Finished Goods $ 6,433 $ 6,153
Work in Process 6,444 5,597
Raw Materials 5,032 4,623
------ -------
$17,909 $16,373
======= =======
NOTE 3 - COMMITMENTS AND CONTINGENCIES:
In connection with the CERCLA litigation pertaining to the Bennington
Landfill Superfund Site described in Part 1, Item 3 in the Company's 1997
Form 10-K, the District Court has approved the Consent Decree and the
settlement payment has been made.
Various other lawsuits and claims are pending or have been asserted against
the Company, including matters previously disclosed by the Company in its
Form 10-K for the year ended June 30, 1997. Although the outcome of such
matters cannot be predicted with certainty and some lawsuits or claims may
be disposed of unfavorably to the Company, management believes that their
disposition, to the extent not covered by insurance, will not have a
material adverse effect on the Company's financial condition and results of
operations.
NOTE 4 - EARNINGS PER SHARE
During 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings per Share (SFAS 128) which
is effective for periods ending after December 15, 1997, including interim
periods. SFAS 128 replaces APB Opinion 15 and related interpretations (APB
15). The new standard attempts to simplify the computation of earnings per
share (EPS) by replacing the presentation of primary earnings per share
with a presentation of basic EPS. Basic EPS includes no dilution and is
computed by dividing net income by the weighted-average number of common
shares outstanding for the period. Diluted EPS reflects the potential
dilution of securities that could share in the earnings of an entity,
similar to fully diluted EPS under APB 15. All earnings per share amounts
for all periods have been presented, and where necessary, restated to
conform to the SFAS 128 requirement.
The following table sets forth the computation of basic and diluted earnings per
share for the quarter and year-to-date, respectively:
THREE MONTHS ENDED SIX MONTHS ENDED
12/28/97 12/29/96 12/28/97 12/29/96
-----------------------------------------
( in thousands)
NUMERATOR:
Net income for both basic and
diluted earnings per share $ 2,549 $ 2,125 $ 4,587 $ 3,825
======= ======= ======= =======
DENOMINATOR:
Denominator for basic earnings
per share - weighted average
outstanding shares 7,926 8,033 7,947 8,021
Effect of dilutive securities:
Stock options to employees,
directors and consultants 325 213 316 227
--- --- --- ---
Potential dilutive
common shares 325 213 316 227
Denominator for diluted earnings
per share - adjusted weighted
average shares and effects of
assumed conversions 8,251 8,246 8,263 8,248
===== ===== ===== =====
Basic earnings per share $ 0.32 $ 0.26 $ 0.58 $ 0.48
====== ====== ====== ======
Diluted earnings per share $ 0.31 $ 0.26 $ 0.56 $ 0.46
====== ====== ====== ======
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- ------- ---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
THREE MONTHS ENDED DECEMBER 28, 1997
NET SALES
- ---------
The Company's consolidated net sales for the three months ended December 28,
1997, the second quarter of fiscal 1998, increased 17% to $25,902,000 from
$22,127,000 in the same quarter last year. Shipments of the Company's
engineered products worldwide increased 4% over the year earlier period while
shipments of architectural products rose 198%. Had mainland European currencies
and the Pound Sterling remained at the same exchange rates as last year,
consolidated revenue would have increased by 19% and Worldwide engineered
product sales would have increased by 6% over the previous year.
Engineered Products - Americas Business Group sales (which include all non-
architectural product sales to customers in North America and South America)
increased 7% to $12,637,000 from $11,800,000 for the same quarter last year.
This sales increase resulted principally from strength in the Company's food
processing, protective systems, and general distributor markets offsetting lower
sales in the electrical and electronic markets. It is expected that revenues
from sales of engineered products into the Americas will remain relatively
strong through the end of the fiscal year.
Engineered Products - European Business Group sales (which include all non-
architectural product sales to customers in Europe, India, the Middle East and
Africa) declined 9% to $6,687,000 from $7,368,000 in the same quarter last year.
During the fiscal 1998 quarter, reported revenue was adversely impacted by
weaker mainland European currencies relative to the British Pound Sterling. Had
these currency exchange rates remained unchanged from the prior year, European
Business Group sales for the quarter, prior to translation into U.S. dollars,
sales would have decreased 3% over the same quarter a year ago. Since the
British Pound is expected to remain generally strong relative to mainland Europe
currencies for some time to come, management has taken several steps to
mitigate, to the extent possible, the resulting adverse effect on the European
Business Group margins and profits.
Engineered Products - Asia Pacific Business Group sales (which include all non-
architectural product sales to customers in the Far East and Australia)
increased 40% to $1,988,000 from $1,419,000 in the same quarter last year. This
increase was the result of a continued marketing emphasis and sales focus into
this geographic area since the establishment of this business group
approximately two years ago. Percentage revenue growth from industrial product
shipments into the Asia Pacific region is expected to remain strong through the
fiscal year.
Architectural Product sales increased 198% to $4,590,000 from $1,540,000 in the
same quarter last year. This increase in revenues was the result of an increase
in sizable projects underway to-date this year versus last year. The Company
expects that architectural product sales for the remainder of the year will be
significantly above the levels achieved last year.
GROSS PROFIT MARGINS
- --------------------
Gross profit margins as a percentage of consolidated net sales were 33.7% for
the quarter, consistent with last year. The Company maintained its gross
margin percentage despite continued margin pressures in Europe due the strong
British Pound and other competitive price pressures in Europe.
SELLING, ADMINISTRATIVE, RESEARCH AND DEVELOPMENT EXPENSES
- ----------------------------------------------------------
Selling, general and administrative expenses increased 11% to $4,271,000 from
$3,832,000 in the same quarter last year. This increase resulted from the
combined effects of the higher cost structure in place to support the Company's
newly established subsidiary operations in Japan as well as normal increases in
salaries and other costs. Selling, general and administrative expenses as a
percentage of sales was 16%, down slightly from the second quarter of last year.
Research and development expenses were $763,000 compared to last year's level of
$663,000. This level of spending, at approximately 3% of total revenues, is
consistent with recent, as well as planned, levels of research and development
spending. The higher costs are primarily attributable to new product
development activities.
INTEREST INCOME
- ----------------
The Company had net interest income of $78,000 for the quarter compared to
$47,000 for the same quarter last year. The increase is mainly a result of a
higher average cash balance during this fiscal year.
OTHER (INCOME) EXPENSE
- ----------------------
The company had net other expense of $32,000 for the three months ended December
28, 1997 compared to $111,000 of net other income for the same period last year.
Included in the year-earlier period is $95,000 of income related to a fire
insurance claim.
SIX MONTHS ENDED DECEMBER 28, 1997
NET SALES
- ---------
The Company's consolidated net sales for the six months ended December 28, 1997,
the first half of fiscal 1998, increased 14% to $48,055,000 from $42,065,000 in
the same period last year. The Company continues to be affected by the weak
mainland European currencies. Had mainland European currencies and the Pound
Sterling remained at the same exchange rates as last year, consolidated revenue
would have increased by 16%. Shipments of the Company's engineered products
worldwide increased 7% over the year earlier, while architectural product
shipments increased 84% for the same period.
Engineered Products - Americas Business Group sales (which include all non-
architectural product sales to customers in North America and South America)
increased 11% to $23,996,000 from $21,645,000 for the same period last year.
This sales increase resulted principally from strength in the Company's food
processing, lab test and general distributor markets, offsetting lower sales in
the electrical and electronic markets.
Engineered Products - European Business Group sales (which include all non-
architectural product sales to customers in Europe, India, the Middle East and
Africa) for the first half of the fiscal year decreased 5% to $12,853,000 from
$13,507,000 in the same period last year. As stated above, the European
Business Group's reported revenue continues to be affected by the weak mainland
European currencies and competitive price pressures. Measured in constant
currency rates, prior to translation into U.S. dollars, sales would have
increased 1% over the same period last year.
Engineered Products - Asia Pacific Business Group sales (which include all non-
architectural product sales to customers in the Far East and Australia)
increased 29% to $3,488,000 from $2,714,000 in the same period last year. This
increase was the result of a strong marketing and sales focus into this
geographic area since the establishment of operations in China and Japan within
the last two years. Sales from the Company's newly established China subsidiary
were not significant during the first six months of fiscal 1997.
Architectural Product sales increased 84% to $7,718,000 from $4,199,000 in the
same period last year. This increase in revenues was the result of an increase
in sizable projects underway to-date this year versus last year.
GROSS PROFIT MARGINS
- --------------------
Gross profit margins as a percentage of consolidated net sales improved slightly
to 33.9% for the six months ended December 28, 1997, up from 33.8% for the first
half of last year. Strengthened margins in the Americas Business Group and Asia
Pacific Business Group helped to mitigate margin pressures in Europe due to
competitive pressures and strong British Pound.
SELLING, ADMINISTRATIVE, RESEARCH AND DEVELOPMENT EXPENSES
- ----------------------------------------------------------
Selling, general and administrative expenses increased 10% to $8,240,000 from
$7,516,000 in the same period last year. Increased selling, general and
administration expenditures resulted from the combined effects of the higher
cost structure in place to support the Company's newly established subsidiary
operations in Japan (that was established after the first half of last year), as
well as normal increases in salaries and other costs. Selling, general and
administrative expenses as a percentage of sales were 17%, down slightly from
last year's level of 18%.
Research and development expenses were $1,422,000 compared to last year's level
of $1,225,000. This level of spending, at approximately 3% of total revenues,
is consistent with recent, as well as planned, levels of research and
development spending. The higher spending is primarily attributed to new
product development activities.
OTHER (INCOME) EXPENSE
- -----------------------
The Company had net other expense of $48,000 for the six months ended December
28, 1997 compared to $132,000 of net other income in the year-earlier period.
Included in the year-earlier period is $95,000 of income related to a fire
insurance claim.
INTEREST INCOME
- ----------------
The Company had net interest income of $160,000 for the six months ended
December 28, 1997 compared to net interest income of $18,000 for the same period
last year. The increase is the result of surplus cash during the period ended
December 28, 1997 compared with bank debt and lower cash balances during the
period ended December 29, 1996.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended December 28, 1997, the Company generated $2,751,000
of cash from operations, down from $3,968,000 in the same period of the prior
year. The reduction is the result of additional working capital needed to
support the higher revenues. During the period, the Company invested $2,476,000
in property, plant and equipment additions, and expended $4,104,000 to
repurchase stock under its share repurchase program. The Company also received
$1,401,000 in cash proceeds and related tax benefits from the exercise of stock
options during this period.
Working capital increased to $34,949,000 from $33,226,000 at the end of fiscal
1997. As of December 28, 1997, the Company had approximately $21,000,000 of
additional credit available under its domestic and international borrowing
facilities. Management believes that the combination of cash on hand, cash
expected to be generated from operations, and available credit facilities, will
be adequate to finance operations during fiscal 1998 and to deal with any
liabilities or contingencies described in Note 3 to the Consolidated Financial
Statements.
FORWARD-LOOKING STATEMENTS
Except for the historical information contained herein, the matters discussed in
this form 10-Q are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Investors are cautioned that forward-
looking statements are inherently uncertain. Actual performance and results may
differ materially from those projected or suggested due to certain risks and
uncertainties. Additional information concerning certain risks and
uncertainties that could cause actual results to differ materially from those
projected or suggested is contained in the Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 1997 which has been filed with the Securities
and Exchange Commission. The forward-looking statements contained herein
represent the Company's judgment as of the date of this filing, and the Company
cautions readers not to place undue reliance on such statements.
PART II. OTHER INFORMATION
---------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- -----------------------------------------------------------
On October 30,1997, at the Company's Annual Meeting of Shareholders, the
Company's shareholders met to consider and vote upon the following three
proposals:
(1) A proposal to elect seven directors to serve for a one-year term
and until their respective successors have been duly qualified and
elected.
(2) 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.
(3) A proposal to ratify the appointment of Ernst & Young LLP as the
independent auditor for the Company for the fiscal year ending June 30,
1998.
Results with respect to the voting on each of the above proposals were as
follows:
Proposal 1:
-----------
Directors For Withhold Authority Abstentions
--------- --- ------------------ -----------
Paul M. Cook 5,876,488 496,920 0
Warren C. Cook 5,885,508 487,900 0
Robert E. McGill III 5,885,508 487,900 0
James E. McGrath 5,885,508 487,900 0
Duane C. Montopoli 5,881,008 492,400 0
Nicholas Pappas 5,885,508 487,900 0
John W. Verbicky 5,885,508 487,900 0
Proposal 2:
-----------
3,370,702 Votes For
1,043,718 Votes Against
319,267 Abstentions
Proposal 3:
-----------
6,350,709 Votes For
15,554 Votes Against
7,145 Abstentions
ITEM 5. OTHER MATTERS
- ----------------------
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- ----------------------------------------------
The Company's Board of Directors (with Dr. Pappas absent and abstaining)
negotiated and, upon recommendation of its Audit Committee, approved entering
into a consulting relationship with Dr. Nicholas Pappas, who currently serves as
Chairman of the Company's Board of Directors. On October 30, 1997, the Company
accordingly entered into a Consulting Agreement with Dr. Pappas to reflect the
terms negotiated and approved by the Board. The Consulting Agreement requires
that Dr. Pappas provide various on-going strategic consulting services to the
Company commencing on October 30, 1997. In consideration for these consulting
services, Dr. Pappas was awarded a one-time, non-qualified stock option award to
purchase 20,000 shares of the Company's Common Stock at a price of $21.125 per
share (the closing price on the date the Board of Directors approved the
Consulting Agreement). This option vests at a rate of 25% per year, commencing
with the first 25% on October 30, 1997 and continuing on each anniversary of
that date for the next three years. The Consulting Agreement also requires the
Company to pay Dr. Pappas $10,000 quarterly with the first payment being made on
December 30, 1997. The Consulting Agreement may be mutually canceled by
either party with thirty days notice.
On December 1, 1997, the Company entered into a contract (the "Contract") for a
twelve month research project with Virginia Polytechnic Institute and State
University and Virginia Tech Intellectual Properties ("VPI"). Under the terms
of the Contract, the Company is required to pay VPI $60,000 over twelve months
to cover facilities and equipment costs and the costs of time and materials for
the research services rendered by VPI graduate students supervised by Drs.
McGrath and Wilkes (an associate of Dr. McGrath). The agreement between the
parties does not contemplate that any compensation or any other consideration
will be paid to Dr. McGrath or Dr. Wilkes. The Company has the right under
the Contract, upon payment of additional consideration, to acquire exclusive
license(s) for inventions and other intellectual property conceived (in whole
or in part) by VPI from this Contract. Dr. McGrath is the Ethyl Chaired
Professor of Chemistry at VPI and serves as Director of the Company. The
Board of Directors (with Dr. McGrath abstaining), upon the recommendation of
its Audit Committee, believes that the Contract with VPI is in the Company's
best interests, and has approved and ratified its execution.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) EXHIBITS
--------
The exhibit numbers in the following list correspond to the number
assigned to such exhibits in the Exhibit Table of Item 601 of
Regulation S-K:
10(a)(16) Form of Stock Option Agreements under Plan, for Officers,
Directors, Director Consultants, and Non-Officer Employees, relative
to options issued on or after the effective date of Amendment No.2 to
the Plan (see Exhibit 10(a)(12) to the Company's Quarterly Report on
Form 10Q for the quarter ended September 28, 1997)
10(a)(17)Amendment No.3 dated as of October 30, 1997, to the Second
Amended and Restated 1991 Stock Option Plan as amended, (the "Plan")
increasing number of shares for which Officer/director/employee
shares may issue to 1,950,000.
10(b)(9) Consulting Agreement dated October 30, 1997 between Chemfab
Corporation and Chemfab Director Dr. Nicholas Pappas.
10(b)(10)Memorandum of Agreement dated as of December 1, 1997 between
Chemfab Corporation and Virginia Polytechnic Institute and State
University and Virginia Tech Intellectual Properties.
(b) REPORTS ON FORM 8-K
-------------------
None.
SIGNATURES
-----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CHEMFAB CORPORATION
Date: February 10, 1998 /s/ John W. Verbicky
---------------------------------------------
John W. Verbicky, President,
Chief Executive Officer and Director
(Principal Executive Officer)
Date: February 10, 1998 /s/ Moosa E. Moosa
------------------
Moosa E. Moosa
Vice President Finance, Treasurer
and Chief Financial Officer
(Principal Financial Officer)
Date: February 10, 1998 /s/ Hilary A. Arwine
---------------------
Hilary A. Arwine
Controller
(Principal Accounting Officer)
Exhibit 10 (A) (16)
Chemfab Corporation
NONSTATUTORY STOCK OPTION AGREEMENT
-----------------------------------
UNDER THE
--------
SECOND AMENDED AND RESTATED 1991 STOCK OPTION PLAN
--------------------------------------------------
OFFICER FORM
------------
NONSTATUTORY STOCK OPTION AGREEMENT, dated October 30, 1997 (this
"Agreement"), beteen Chemfab Corporation (the "Company"), and _____________
__________________ presently residing at _____________________ ,
__________________ (the "Optionee").
WHEREAS, the Stock Option Committee of the Board of Directors of the
Company has determined that it is to the advantage and interest of the Company
and its stockholders to grant to the Optionee the nonstatutory stock option
provided for herein as an inducement to remain in the service of the Company and
its subsidiaries and as an incentive for increased effort during such service;
and
WHEREAS, the Optionee is engaged in the service of the Company and/or its
subsidiary corporations ("Related Corporations");
NOW, THEREFORE, the parties agree as follows:
1. Optionee's Continued Service. The Optionee shall remain continuously
(subject to the exceptions in Sections 2 and 4) in the service of the Company or
one or more of its Related Corporations in the capacity of employee, director
and/or consultant for a period of at least one year from the Grant Date and
shall, during such service, devote his or her time, energy and skill to the
service of the Company or one or more of its Related Corporations. Nothing
herein contained shall be deemed to confer upon the Optionee any right to
continue in the service of the Company or one or more of its Related
Corporations in any particular capacity or in general, nor to interfere in any
way with the right of the relevant corporation or corporations to terminate any
employment, consultancies and/or directorship of the Optionee at any time. If
the Optionee's service as an employee, consultant and director with the Company
and all its Related Corporations shall terminate prior to the earlier of the
first anniversary of the Grant Date or the day immediately preceding the date of
the Sellout Event (as defined in Section 2 hereof), the Optionee shall have no
rights whatsoever under this Agreement.
2. Grant of Option. Subject to the terms and conditions set forth herein,
the Company has granted to the Optionee on August 5, 1997 (the "Grant Date") an
option (the "Option") to purchase from the Company shares (the
"Optioned Shares") of the Company's common stock, par value $.10 per share (the
"Stock"). The Option is not intended to be treated as an "incentive stock
option" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), but as a nonstatutory stock option within the meaning
of the Code. On each of the following dates (each a "Vesting Date" and
collectively the "Vesting Dates"), but only if the Optionee remains an employee,
director or consultant of the Company or one or more Related Corporations at
such Vesting Date (with the status of any corporation as a Related Corporation
to be determined as of such Vesting Date), the stated number of shares shall
become purchasable hereunder:
Date Number of Shares
---- -----------------
August 1, 1997 (25%)
August 1, 1998 (25%)
August 1, 1999 (25%)
August 1, 2000 (25%)
Notwithstanding the foregoing, if, before any Vesting Date, substantially all of
the outstanding voting stock or substantially all the assets of the Company is
or are acquired by any person or group of persons, or the Company is party to a
merger or consolidation of which the Company is not in economic substance the
predominant surviving entity, then the day immediately preceding the date of
such acquisition, merger or consolidation (the "Sellout Event") shall be
substituted for such of the Vesting Dates as may be the same as or later than
the date of the Sellout Event.
The Option must be exercised, if ever, before the tenth anniversary of the Grant
Date or within such shorter period as may result from the operation of Section
4.
3. Exercise Price. The exercise price to be paid for the Optioned Shares
shall be per share.
4. Termination of Option; Disgorgement of Certain Profits. (a) If all the
Optionee's service to the Company and all its Related Corporations as employee,
consultant and/or director terminates for any reason, other than death or
retirement from employment (but including termination of affiliation between the
Company and the Related Corporation with which Optionee is serving as employee,
consultant or director), the Option, to the extent exercisable on the date of
such termination, may be exercised by the Optionee at any time within 90 days
after termination, but only before the tenth anniversary of the Grant Date. If
the Optionee dies or retires from employment, the Option may be exercised, to
the extent exercisable on the date of such retirement or death, at any time by
the Optionee or his executor or administrator, as the case may be, but only
before the earlier of the first anniversary of the date of death or retirement
or the tenth anniversary of the Grant Date. Options which are not exercisable
at the time of termination of the Optionee's relationship with the Company and
all its Related Corporations as an employee, director and/or consultant or which
are so exercisable but are not exercised within the time periods described
above, shall terminate. Leave of absence for military service, illness or other
bona fide purpose shall not be deemed a termination for purposes of this Section
4 provided that it does not exceed the longer of 90 days or the period during
which the absent Optionee's rights are guaranteed by statute or by contract. If
the Optionee does not so return, his relationship with the Company and all its
Related Corporations as an employee, director and/or consultant shall be deemed
to have ended on the next day of such leave of absence.
(b) The Optionee covenants and agrees with the Company that 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 Related
Corporation, 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 Related Corporation (each of the foregoing, a
"Disgorgement Event"), then 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 this
Option 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.
(c) The Optionee agrees and acknowledges that, because of the nature and
purpose of the grant of this Option, and because of the Optionee's position
with, and access to information of, the Company and/or one or more Related
Corporations, the consequences described in Section 4(b) constitute essential
terms of and are inseparable from the other terms and conditions of this Option
and are necessary for the protection and benefit of the Company. The Optionee
further agrees and acknowledges that the extent of harm to the Company that
would be caused by the Optionee in the event of a Disgorgement Event is not now
and will not be, at such time, precisely determinable and that the Company would
be without an adequate remedy in the event of a Disgorgement Event caused by the
Optionee absent the provisions of this Section 4.
5. Exercise of Option. (a) The Optionee may exercise the Option by giving
written notice in the manner provided in Section 11. The notice shall specify
the number of shares of the Stock which the Optionee elects to purchase. For
all shares which the Optionee elects to purchase, the Optionee shall except as
otherwise permitted by Section 5(b) below, deliver to the Company a personal
check equal to the exercise price. The Company shall deliver or cause to be
delivered to the Optionee a certificate for the number of shares 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 Optionee to take any action in connection with shares
being purchased upon exercise of the Option, exercise of the Option and delivery
of the certificate or certificates for such shares shall be postponed until
completion of the necessary action, which shall be taken at the Company's
expense. Whenever shares are to be issued in satisfaction of an Option granted
hereunder, the Company shall have the right to require the Optionee to remit to
the Company an amount sufficient to satisfy federal, state and local withholding
tax requirements prior to the delivery of any certificate or certificates for
such shares, if and to the extent required by law. The Option shall be reduced
by one share for each share of the Stock purchased upon exercise of the Option.
(b) In lieu of enclosing a personal check together with the written notice
of exercise as described in Section 5(a) above, the Optionee, if at the time of
exercise he/she 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, may, unless prohibited by applicable law, elect to effect payment by
including with the written notice of exercise referred to in Section 5(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 Optionee further
elects, the Optionee's withholding obligations under Section 5(a) 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 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 Optionee has so elected, the amount of such withholding
obligations.
6. Transfer of Option. During the lifetime of the Optionee, the Option
may be exercised only by the Optionee and then, except as otherwise provided in
Section 4, only if the Optionee has been continuously in the service as an
employee, director or consultant of the Company and/or one or more of its
Related Corporations from the Grant Date until the date 90 days before the date
of exercise. Except by will or by the laws of descent and distribution, the
Option and all rights granted hereunder may not be transferred, assigned,
pledged, or hypothecated (whether by operation of law or otherwise) and shall
not be subject to execution, attachment or similar process. Any attempted
transfer, attachment, pledge, hypothecation or other disposition of the Option
or of such rights contrary to the provisions hereof and the levy of any
attachment or similar process upon the Option or such rights, shall be void.
7. Capital Changes. 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 this 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 and the exercise price shall be proportionately and appropriately
adjusted. 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 shall have the right, immediately prior
to such event, to exercise the Option, to the extent then vested and not
theretofore exercised. No fraction of a share shall be purchasable or
deliverable, but in the event any adjustment of the number of shares 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.
8. Reservation of Shares. The Company shall at all times during the term
of this Agreement reserve and keep available such number of shares of the Stock
as will be sufficient to satisfy the requirements of this Agreement and shall
pay all taxes, fees and expenses necessarily incurred by the Company in
connection with this Agreement and the issuance of Optioned Shares.
9. Limitation of Rights in Optioned Shares. The Optionee shall not be
deemed for any purpose to be a stockholder of the Company with respect to any of
the Optioned Shares except to the extent that the Option shall have been
exercised and, in addition, a stock certificate shall have been issued and
delivered to the Optionee. Any stock issued pursuant to the Option shall be
subject to all restrictions upon the transfer thereof which may be now or
hereafter imposed by the Certificate of Incorporation or By-laws of the Company.
10. Company's Powers. The existence of the Option shall not diminish the
right or power of the Company or its stockholders to make or authorize any or
all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Stock or the rights thereof, or dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceedings, whether of a
similar character or otherwise. The Option confers upon the Optionee no right
to continue in the service of the Company or its Related Corporations, nor
interferes in any way with the right of the Company and its Related Corporations
to terminate the employment, directorships and/or consultancies of the Optionee
at any time.
11. Notices. Any communication or notice required or permitted to be
given under this Agreement shall be in writing, and mailed by registered or
certified mail or delivered in hand, if to the Company, to its Treasurer at
Daniel Webster Highway, P.O. Box 1137, Merrimack, New Hampshire 03054 and, if to
the Optionee, to the address set forth on the first page of this Agreement, or
such other address, in each case, as the addressee shall last have furnished to
the communicating party.
12. Terms and Conditions of Plan. The option granted hereunder is subject
to all the terms and conditions set forth in the Company's Second Amended and
Restated 1991 Stock Option Plan, receipt of a copy of which is hereby
acknowledged by the Optionee.
13. Governing Law; Payment of Expenses: This Agreement shall be governed
by and construed in accordance with the internal and substantive laws of the
State of Delaware. The Company and the Optionee agree that, in connection with
any award entered by any court or arbitrator with respect to any dispute
relating to or arising out of this Agreement (including, without limitation, any
action brought by the Company to enforce the provisions of Section 4), the non-
prevailing party shall pay all of the prevailing party's reasonable costs,
including attorneys' fees (collectively, "Dispute Resolution Expenses"). In
rendering its judgment, decision, award, order, verdict and/or decree, the court
or arbitrator, as the case may be, shall provide for the payment by the non-
prevailing party of the prevailing party's Dispute Resolution Expenses.
Judgment upon an award rendered by an arbitrator may be entered in any court of
competent jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
CHEMFAB CORPORATION
By ___________________________
John W. Verbicky
Executive Vice President
___________________________
Optionee
Chemfab Corporation
NONSTATUTORY STOCK OPTION AGREEMENT
-----------------------------------
UNDER THE
--------
SECOND AMENDED AND RESTATED 1991 STOCK OPTION PLAN
--------------------------------------------------
DIRECTOR FORM
--------------
NONSTATUTORY STOCK OPTION AGREEMENT dated as of October 30, 1997 (this
"Agreement"), by and between Chemfab Corporation (the "Company"), and _________
________________________ presently residing at ________________________________
(the "Optionee").
WHEREAS, the Company's Second Amended and Restated 1991 Stock Option Plan,
as amended (the "Plan") provides that whenever a director is elected or re-
elected to the Board of Directors at an annual shareholders meeting or special
meeting in lieu of an annual meeting, or continues to serve as a director after
such meeting, that director is automatically granted certain nonstatutory stock
options;
WHEREAS, the Optionee has been elected or re-elected as a director of the
Company at an annual meeting of shareholders held on October 30, 1997;
NOW, THEREFORE, the parties agree as follows:
1. Optionee's Continued Service. Nothing herein contained shall be
deemed to confer upon the Optionee any right to continue as a director of the
Company nor to interfere in any way with the right of the Company to terminate
its relationship with the Optionee at any time.
2. Grant of Option. Subject to the terms and conditions set forth
herein, the Company has granted to the Optionee on October 30, 1997 (the "Grant
date") an option (the "Option") to purchase from the Company shares (the
"Optioned Shares") of the Company's common stock, par value $.10 per share (the
"Stock"). The Option shall become exercisable in four (4) equal installments,
of 25% each, on each of the following dates, but only if the Optionee remains a
director of the Company at that date:
Grant date: October 30, 1997
The last day of the Company's second fiscal quarter of fiscal year 1998
The last day of the Company's third fiscal quarter of fiscal year 1998
The last day of the Company's fourth fiscal quarter of fiscal year 1998
The Option must be exercised, if ever, before the tenth (10th) anniversary of
the Grant Date or within such shorter period as may result from the operation of
Section 4.
3. Exercise Price. The exercise price to be paid for the Optioned
Shares shall be per share.
4. Termination of Option: Disgorgement of Certain Profits. (a) If the
Optionee ceases to serve as a director of the Company for any reason, other than
death, the Option may be exercised, to the extent exercisable on the date of
such termination, by the Optionee at any time within 90 days after such
termination, but only before the tenth (10th) anniversary of the Grant Date. If
the Optionee dies, the Option may be exercised, to the extent exercisable on the
date of death, at any time by the Optionee's executor or administrator, but only
before the earlier of the first (1) anniversary of the date of death or the
tenth (10th) anniversary of the Grant Date. Options which are not exercisable
at the time of termination of the Optionee's relationship with the Company or
which are exercisable but not exercised within the time periods described above
shall terminate. A leave of absence for military service, illness or other bona
fide purpose shall not be deemed a termination for purposes of this Section 4
provided that it does not exceed the longer of ninety (90) days or the period
during which the rights of the absent director are guaranteed by statute or by
contract. If the Optionee does not so return, his relationship with the Company
shall be deemed to have ended on the next day of such leave of absence.
(b) The Optionee covenants and agrees with the Company that 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 Related
Corporation, 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 Related Corporation (each of the foregoing, a
"Disgorgement Event"), then 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 this
Option 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.
(c) The Optionee agrees and acknowledges that, because of the nature and
purpose of the grant of this Option, and because of the Optionee's position
with, and access to information of, the Company and/or one or more Related
Corporations, the consequences described in Section 4(b) constitute essential
terms of and are inseparable from the other terms and conditions of this Option
and are necessary for the protection and benefit of the Company. The Optionee
further agrees and acknowledges that the extent of harm to the Company that
would be caused by the Optionee in the event of a Disgorgement Event is not now
and will not be, at such time, precisely determinable and that the Company would
be without an adequate remedy in the event of a Disgorgement Event caused by the
Optionee absent the provisions of this Section 4.
5. Exercise of Option. (a) The Optionee may exercise this Option by
giving written notice in the manner provided in Section 11. The notice shall
specify the number of shares of the Stock which the Optionee elects to purchase.
For all shares which the Optionee elects to purchase, the Optionee shall except
as otherwise permitted by Section 5(b) below, deliver to the Company a personal
check equal to the exercise price. The Company shall deliver or cause to be
delivered to the Optionee a certificate for the number of shares 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 Optionee to take any action in connection with shares
being purchased upon exercise of the Option, exercise of the Option and delivery
of the certificate or certificates for such shares shall be postponed until
completion of the necessary action, which shall be taken at the Company's
expense. The Option shall be reduced by one share for each share of the Stock
purchased upon exercise of the Option.
(b) In lieu of enclosing a personal check together with the written notice
of exercise as described in Section 5(a) above, the Optionee, if at the time of
exercise he/she 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, may, unless prohibited by applicable law, elect to effect payment by
including with the written notice of exercise referred to in Section 5(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, together with irrevocable
instructions to such broker to sell such shares and to remit directly to the
Company such aggregate option price. 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.
6. Transfer of Option. During the lifetime of the Optionee, the Option
may be exercised only by the Optionee and then, except as otherwise provided in
Section 4, only if the Optionee has continuously served as a director of the
Company from the Grant Date until the date 90 days before the date of exercise.
Except by will or by the laws of descent and distribution, the Option and all
rights granted hereunder may not be transferred, assigned, pledged, or
hypothecated (whether by operation of law or otherwise) and shall not be subject
to execution, attachment or similar process. Any attempted transfer,
attachment, pledge, hypothecation or other disposition of the Option or of such
rights contrary to the provisions hereof and the levy of any attachments or
similar process upon the Option or such rights, shall be void.
7. Capital Changes. 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 this 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 and the exercise price shall be proportionately and appropriately
adjusted. 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 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 shall be
purchasable or deliverable, but in the event any adjustment of the number of
shares 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.
8. Reservation of Shares. The Company shall at all times during the
term of this Agreement reserve and keep available such number of shares of the
Stock as will be sufficient to satisfy the requirements of this Agreement and
shall pay all taxes, fees and expenses necessarily incurred by the Company in
connection with this Agreement and the issuance of Optioned Shares.
9. Limitation of Rights in Optioned Shares. The Optionee shall have no
rights as a stockholder of the Company with respect to any of the Optioned
Shares except to the extent that the Option shall have been exercised, payment
as herein provided shall have been made in full, and a stock certificate shall
have been issued and delivered to the Optionee. Any stock issued pursuant to
the Option shall be subject to all restrictions upon the transfer thereof which
may be now or hereafter imposed by the Certificate of Incorporation or By-laws
of the Company.
10. Company's Powers. The existence of the Option shall not diminish
the right of power of the Company or its stockholders to make or authorize any
or all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Stock or the rights thereof, or dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceedings, whether of a
similar character or otherwise.
11. Notices. Any communication or notice required to or permitted to be
given under this Agreement shall be in writing, and mailed by registered or
certified mail or delivered in hand, if to the Company, to its Treasurer at
Daniel Webster Highway, P.O. Box 1137, Merrimack, New Hampshire 03054 and, if to
the Optionee, to the address set forth on the first page of this Agreement, or
such other address, in each case, as the addressee shall last have furnished to
the communicating party.
12. Terms and Conditions of Plan. The option granted hereunder is
subject to all the terms and conditions set forth in the Plan, receipt of a copy
of which is hereby acknowledged by the Optionee.
13. Governing Law; Payment of Expenses: This Agreement shall be governed
by and construed in accordance with the internal and substantive laws of the
State of Delaware. The Company and the Optionee agree that, in connection with
any award entered by any court or arbitrator with respect to any dispute
relating to or arising out of this Agreement (including, without limitation, any
action brought by the Company to enforce the provisions of Section 4), the non-
prevailing party shall pay all of the prevailing party's reasonable costs,
including attorneys' fees (collectively, "Dispute Resolution Expenses"). In
rendering its judgment, decision, award, order, verdict and/or decree, the court
or arbitrator, as the case may be, shall provide for the payment by the non-
prevailing party of the prevailing party's Dispute Resolution Expenses.
Judgment upon an award rendered by an arbitrator may be entered in any court of
competent jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
CHEMFAB CORPORATION
By ________________________
John W. Verbicky
Executive Vice President
------------------------
Optionee
Chemfab Corporation
NONSTATUTORY STOCK OPTION AGREEMENT
-----------------------------------
UNDER THE
--------
SECOND AMENDED AND RESTATED 1991 STOCK OPTION PLAN
--------------------------------------------------
DIRECTOR CONSULTANT FORM
------------------------
NONSTATUTORY STOCK OPTION AGREEMENT dated October 30, 1997 (this
"Agreement"), between Chemfab Corporation (the "Company"), and ________________
presently residing at _____________________, _____________ (the "Optionee").
WHEREAS, the Option/Compensation Committee of the Board of Directors of the
Company has determined that it is to the advantage and interest of the Company
and its stockholders to grant to the Optionee the nonstatutory stock option
provided for herein as an inducement to provide and continue to provide
consulting services to the Company and its subsidiaries and as an incentive for
increased effort during such service; and
WHEREAS, the Optionee is engaged in the provision of consulting services to
the Company and/or its subsidiary corporations ("Related Corporations");
NOW, THEREFORE, the parties agree as follows:
1. Optionee's Continued Service. Nothing herein contained shall be deemed
to confer upon the Optionee any right to continue as a consultant the Company or
one or more of its Related Corporations in any particular capacity or in
general, nor to interfere in any way with the right of the relevant corporation
or corporations to terminate any employment, consultancies and/or directorship
of the Optionee at any time
2. Grant of Option. Subject to the terms and conditions set forth herein,
the Company has granted to the Optionee on October 30, 1997 (the "Grant Date")
an option (the "Option") to purchase from the Company shares (the
"Optioned Shares") of the Company's common stock, par value $.10 per share (the
"Stock"). The Option is not intended to be treated as an "incentive stock
option" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), but as a nonstatutory stock option within the meaning
of the Code. On each of the following dates (each a "Vesting Date" and
collectively the "Vesting Dates"), but only if the Optionee remains both as a
director and a consultant of the Company or one or more Related Corporations at
such Vesting Date (with the status of any corporation as a Related Corporation
to be determined as of such Vesting Date), the stated number of shares shall
become purchasable hereunder:
Date Number of Shares
---- -----------------
October 30, 1997 (25%)
October 30, 1998 (25%)
October 30, 1999 (25%)
October 31, 2000 (25%)
The Option must be exercised, if ever, before the tenth anniversary of the Grant
Date or within such shorter period as may result from the operation of Section
4.
3. Exercise Price. The exercise price to be paid for the Optioned Shares
shall be per share.
4. Termination of Option; Disgorgement of Certain Profits. (a) If the
Optionee ceases to serve as a consultant and/or director to the Company and all
its Related for any reason, other than death, the Option, to the extent
exercisable on the date of such termination, may be exercised by the Optionee at
any time within 90 days after termination, but only before the tenth anniversary
of the Grant Date. If the Optionee dies, the Option may be exercised, to the
extent exercisable on the date of death, at any time by the Optionee or his
executor or administrator, as the case may be, but only before the earlier of
the first anniversary of the date of death or retirement or the tenth
anniversary of the Grant Date. Options which are not exercisable at the time of
termination of the Optionee's relationship with the Company and all its Related
Corporations as a director and/or consultant or which are so exercisable but are
not exercised within the time periods described above, shall terminate. Leave
of absence for military service, illness or other bona fide purpose shall not be
deemed a termination for purposes of this Section 4 provided that it does not
exceed the longer of 90 days or the period during which the absent Optionee's
rights are guaranteed by statute or by contract. If the Optionee does not so
return, his relationship with the Company and all its Related Corporations as an
employee, director and/or consultant shall be deemed to have ended on the next
day of such leave of absence.
(b) The Optionee covenants and agrees with the Company that if, during the
twelve-month period following the cessation of Optionee's directorship of,
and/or consultancy for, the Company or any Related Corporation, 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
Related Corporation (each of the foregoing, a "Disgorgement Event"), then 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 this Option 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.
(c) The Optionee agrees and acknowledges that, because of the nature and
purpose of the grant of this Option, and because of the Optionee's position
with, and access to information of, the Company and/or one or more Related
Corporations, the consequences described in Section 4(b) constitute essential
terms of and are inseparable from the other terms and conditions of this Option
and are necessary for the protection and benefit of the Company. The Optionee
further agrees and acknowledges that the extent of harm to the Company that
would be caused by the Optionee in the event of a Disgorgement Event is not now
and will not be, at such time, precisely determinable and that the Company would
be without an adequate remedy in the event of a Disgorgement Event caused by the
Optionee absent the provisions of this Section 4.
5. Exercise of Option. (a) The Optionee may exercise the Option by giving
written notice in the manner provided in Section 11. The notice shall specify
the number of shares of the Stock which the Optionee elects to purchase. For
all shares which the Optionee elects to purchase, the Optionee shall except as
otherwise permitted by Section 5(b) below, deliver to the Company a personal
check equal to the exercise price. The Company shall deliver or cause to be
delivered to the Optionee a certificate for the number of shares 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 Optionee to take any action in connection with shares
being purchased upon exercise of the Option, exercise of the Option and delivery
of the certificate or certificates for such shares shall be postponed until
completion of the necessary action, which shall be taken at the Company's
expense. Whenever shares are to be issued in satisfaction of an Option granted
hereunder, the Company shall have the right to require the Optionee to remit to
the Company an amount sufficient to satisfy federal, state and local withholding
tax requirements prior to the delivery of any certificate or certificates for
such shares, if and to the extent required by law. The Option shall be reduced
by one share for each share of the Stock purchased upon exercise of the Option.
(b) In lieu of enclosing a personal check together with the written notice
of exercise as described in Section 5(a) above, the Optionee, if at the time of
exercise he/she 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, may, unless prohibited by applicable law, elect to effect payment by
including with the written notice of exercise referred to in Section 5(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 Optionee further
elects, the Optionee's withholding obligations under Section 5(a) 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 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 Optionee has so elected, the amount of such withholding
obligations.
6. Transfer of Option. During the lifetime of the Optionee, the Option
may be exercised only by the Optionee and then, except as otherwise provided in
Section 4, only if the Optionee has been continuously in the service as a
director and consultant of the Company and/or one or more of its Related
Corporations from the Grant Date until the date 90 days before the date of
exercise. Except by will or by the laws of descent and distribution, the Option
and all rights granted hereunder may not be transferred, assigned, pledged, or
hypothecated (whether by operation of law or otherwise) and shall not be subject
to execution, attachment or similar process. Any attempted transfer,
attachment, pledge, hypothecation or other disposition of the Option or of such
rights contrary to the provisions hereof and the levy of any attachment or
similar process upon the Option or such rights, shall be void.
7. Capital Changes. 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 this 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 and the exercise price shall be proportionately and appropriately
adjusted. 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 shall have the right, immediately prior
to such event, to exercise the Option, to the extent then vested and not
theretofore exercised. No fraction of a share shall be purchasable or
deliverable, but in the event any adjustment of the number of shares 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.
8. Reservation of Shares. The Company shall at all times during the term
of this Agreement reserve and keep available such number of shares of the Stock
as will be sufficient to satisfy the requirements of this Agreement and shall
pay all taxes, fees and expenses necessarily incurred by the Company in
connection with this Agreement and the issuance of Optioned Shares.
9. Limitation of Rights in Optioned Shares. The Optionee shall not be
deemed for any purpose to be a stockholder of the Company with respect to any of
the Optioned Shares except to the extent that the Option shall have been
exercised and, in addition, a stock certificate shall have been issued and
delivered to the Optionee. Any stock issued pursuant to the Option shall be
subject to all restrictions upon the transfer thereof which may be now or
hereafter imposed by the Certificate of Incorporation or By-laws of the Company.
10. Company's Powers. The existence of the Option shall not diminish the
right or power of the Company or its stockholders to make or authorize any or
all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Stock or the rights thereof, or dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceedings, whether of a
similar character or otherwise. The Option confers upon the Optionee no right
to continue in the service of the Company or its Related Corporations, nor
interferes in any way with the right of the Company and its Related Corporations
to terminate the employment, directorships and/or consultancies of the Optionee
at any time.
11. Notices. Any communication or notice required or permitted to be
given under this Agreement shall be in writing, and mailed by registered or
certified mail or delivered in hand, if to the Company, to its Treasurer at
Daniel Webster Highway, P.O. Box 1137, Merrimack, New Hampshire 03054 and, if to
the Optionee, to the address set forth on the first page of this Agreement, or
such other address, in each case, as the addressee shall last have furnished to
the communicating party.
12. Terms and Conditions of Plan. The option granted hereunder is subject
to all the terms and conditions set forth in the Company's Second Amended and
Restated 1991 Stock Option Plan, receipt of a copy of which is hereby
acknowledged by the Optionee.
13. Governing Law; Payment of Expenses: This Agreement shall be governed
by and construed in accordance with the internal and substantive laws of the
State of Delaware. The Company and the Optionee agree that, in connection with
any award entered by any court or arbitrator with respect to any dispute
relating to or arising out of this Agreement (including, without limitation, any
action brought by the Company to enforce the provisions of Section 4), the non-
prevailing party shall pay all of the prevailing party's reasonable costs,
including attorneys' fees (collectively, "Dispute Resolution Expenses"). In
rendering its judgment, decision, award, order, verdict and/or decree, the court
or arbitrator, as the case may be, shall provide for the payment by the non-
prevailing party of the prevailing party's Dispute Resolution Expenses.
Judgment upon an award rendered by an arbitrator may be entered in any court of
competent jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
CHEMFAB CORPORATION
By ____________________________
John W. Verbicky
Executive Vice President
____________________________
Optionee
Chemfab Corporation
NONSTATUTORY STOCK OPTION AGREEMENT
-----------------------------------
UNDER THE
--------
SECOND AMENDED AND RESTATED 1991 STOCK OPTION PLAN
--------------------------------------------------
NONSTATUTORY STOCK OPTION AGREEMENT dated October 30, 1997 (this
"Agreement"), between Chemfab Corporation (the "Company"), and
presently residing at , (the
"Optionee").
WHEREAS, the Stock Option Committee of the Board of Directors of the
Company has determined that it is to the advantage and interest of the Company
and its stockholders to grant to the Optionee the nonstatutory stock option
provided for herein as an inducement to remain in the service of the Company and
its subsidiaries and as an incentive for increased effort during such service;
and
WHEREAS, the Optionee is engaged in the service of the Company and its
subsidiary corporations ("Related Corporations");
NOW, THEREFORE, the parties agree as follows:
1. Optionee's Continued Employment. The Optionee shall remain
continuously (subject to the exception in Section 4) in the employ of the
Company or one or more of its Related Corporations for a period of at least one
year from the Grant Date and shall, during such employment, devote his or her
time, energy and skill to the service of the Company or one or more of its
Related Corporations. Nothing herein contained shall be deemed to confer upon
the Optionee any right to continue in the employ of the Company or one or more
of its Related Corporations nor to interfere in any way with the right of the
employing corporation or corporations to terminate the employment of the
Optionee at any time. If the Optionee's employment with the Company and all of
its Related Corporations shall terminate within one year from the Grant Date,
the Optionee shall have no rights whatsoever under this Agreement.
2. Grant of Option. Subject to the terms and conditions set forth herein,
the Company has granted to the Optionee on August 5, 1997 (the "Grant Date") an
option (the "Option") to purchase from the Company shares (the
"Optioned Shares") of the Company's common stock, par value $.10 per share (the
"Stock"). The Option is not intended to be treated as an "incentive stock
option" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), but as a nonstatutory stock option within the meaning
of the Code. On each of the following dates, but only if the Optionee remains
an employee of the Company or a Related Corporation at that date (with the
status of any Corporation as a Related Corporation to be determined as of that
date), the stated number of shares shall become purchasable hereunder:
Date Number of Shares
-------- ----------------
August 5, 1998 . (25%)
August 5, 1999 . (25%)
August 5, 2000 . (25%)
August 5, 2001 . (25%)
The Option must be exercised, if ever, before the tenth anniversary of the Grant
Date or within such shorter period as may result from the operation of Section
4.
3. Exercise Price. The exercise price to be paid for the Optioned Shares
shall be per share.
4. Termination of Option; Disgorgement of Certain Profits. (a) If the
Optionee's employment by the Company and its Related Corporations terminates for
any reason, other than death or retirement (but including termination of
affiliation between the Company and the Related Corporation with which Optionee
is serving as an employee), after the first anniversary of the Grant Date, the
Option, to the extent exercisable on the date of such termination, may be
exercised by the Optionee at any time within 90 days after termination, but only
before the tenth anniversary of the Grant Date. If the Optionee dies or retires
after the first anniversary of the Grant Date, the Option may be exercised, to
the extent exercisable on the date of retirement or death, at any time by the
Optionee or his executor or administrator, as the case may be, but only before
the earlier of the first anniversary of the date of death or retirement or the
tenth anniversary of the Grant Date. Options which are not exercisable at the
time of termination of the Optionee's employment or which are so exercisable but
are not exercised within the time periods described above shall terminate.
Leave of absence for military service, illness or other bona fide purpose shall
not be deemed a termination of employment provided that it does not exceed the
longer of 90 days or the period during which the absent employee's reemployment
rights are guaranteed by statute or by contract. If the Optionee does not so
return, his employment shall be deemed to have ended on the next day of such
leave of absence.
(b) The Optionee covenants and agrees with the Company that 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 Related
Corporation, 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 Related Corporation (each of the foregoing, a
"Disgorgement Event"), then 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 this
Option 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.
(c) The Optionee agrees and acknowledges that, because of the nature and
purpose of the grant of this Option, and because of the Optionee's position
with, and access to information of, the Company and/or one or more Related
Corporations, the consequences described in Section 4(b) constitute essential
terms of and are inseparable from the other terms and conditions of this Option
and are necessary for the protection and benefit of the Company. The Optionee
further agrees and acknowledges that the extent of harm to the Company that
would be caused by the Optionee in the event of a Disgorgement Event is not now
and will not be, at such time, precisely determinable and that the Company would
be without an adequate remedy in the event of a Disgorgement Event caused by the
Optionee absent the provisions of this Section 4.
5. Exercise of Option. (a) The Optionee may exercise the Option by giving
written notice in the manner provided in Section 11. The notice shall specify
the number of shares of the Stock which the Optionee elects to purchase. For
all shares which the Optionee elects to purchase, the Optionee shall except as
otherwise permitted by Section 5(b) below, deliver to the Company a personal
check, equal to the exercise price. The Company shall deliver or cause to be
delivered to the Optionee a certificate for the number of shares 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 Optionee to take any action in connection with shares
being purchased upon exercise of the Option, exercise of the Option and delivery
of the certificate or certificates for such shares shall be postponed until
completion of the necessary action, which shall be taken at the Company's
expense. Whenever shares are to be issued in satisfaction of an Option granted
hereunder, the Company shall have the right to require the Optionee to remit to
the Company an amount sufficient to satisfy federal, state and local withholding
tax requirements prior to the delivery of any certificate or certificates for
such shares, if and to the extent required by law. The Option shall be reduced
by one share for each share of the Stock purchased upon exercise of the Option.
(b) In lieu of enclosing a personal check together with the written notice
of exercise as described in Section 5(a) above, the Optionee may, unless
prohibited by applicable law, elect to effect payment by including with the
written notice of exercise referred to in Section 5(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 Optionee further elects, the
Optionee's withholding obligations under Section 5(a) 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 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 Optionee has so elected, the amount of such withholding
obligations.
6. Transfer of Option. During the lifetime of the Optionee, the Option
may be exercised only by the Optionee and then, except as otherwise provided in
Section 4, only if the Optionee has been continuously in the full time employ of
the Company and/or one or more of its Related Corporations from the Grant Date
until the date 90 days before the date of exercise. Except by will or by the
laws of descent and distribution, the Option and all rights granted hereunder
may not be transferred, assigned, pledged, or hypothecated (whether by operation
of law or otherwise) and shall not be subject to execution, attachment or
similar process. Any attempted transfer, attachment, pledge, hypothecation or
other disposition of the Option or of such rights contrary to the provisions
hereof and the levy of any attachment or similar process upon the Option or such
rights, shall be void.
7. Capital Changes. 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 this 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 and the exercise price shall be proportionately and appropriately
adjusted. 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 shall have the right, immediately prior
to such event, to exercise the Option, to the extent then vested and not
theretofore exercised. No fraction of a share shall be purchasable or
deliverable, but in the event any adjustment of the number of shares 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.
8. Reservation of Shares. The Company shall at all times during the term
of this Agreement reserve and keep available such number of shares of the Stock
as will be sufficient to satisfy the requirements of this Agreement and shall
pay all taxes, fees and expenses necessarily incurred by the Company in
connection with this Agreement and the issuance of Optioned Shares.
9. Limitation of Rights in Optioned Shares. The Optionee shall not be
deemed for any purpose to be a stockholder of the Company with respect to any of
the Optioned Shares except to the extent that the Option shall have been
exercised and, in addition, a stock certificate shall have been issued and
delivered to the Optionee. Any stock issued pursuant to the Option shall be
subject to all restrictions upon the transfer thereof which may be now or
hereafter imposed by the Certificate of Incorporation or By-laws of the Company.
10. Company's Powers. The existence of the Option shall not diminish the
right or power of the Company or its stockholders to make or authorize any or
all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Stock or the rights thereof, or dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceedings, whether of a
similar character or otherwise. The Option confers upon the Optionee no right
to continue in the employment of the Company and its Related Corporations or
interferes in any way with the right of the Company and its Related Corporations
to terminate the employment of the Optionee at any time.
11. Notices. Any communication or notice required or permitted to be
given under this Agreement shall be in writing, and mailed by registered or
certified mail or delivered in hand, if to the Company, to its Treasurer at
Daniel Webster Highway, P.O. Box 1137, Merrimack, New Hampshire 03054 and, if to
the Optionee, to the address set forth on the first page of this Agreement, or
such other address, in each case, as the addressee shall last have furnished to
the communicating party.
12. Terms and Conditions of Plan; Shareholder Approval. The option
granted hereunder is subject to all the terms and conditions set forth in the
Company's Second Amended and Restated 1991 Stock Option Plan, receipt of a copy
of which is hereby acknowledged by the Optionee.
13. Governing Law; Payment of Expenses: This Agreement shall be governed
by and construed in accordance with the internal and substantive laws of the
State of Delaware. The Company and the Optionee agree that, in connection with
any award entered by any court or arbitrator with respect to any dispute
relating to or arising out of this Agreement (including, without limitation, any
action brought by the Company to enforce the provisions of Section 4), the non-
prevailing party shall pay all of the prevailing party's reasonable costs,
including attorneys' fees (collectively, "Dispute Resolution Expenses"). In
rendering its judgment, decision, award, order, verdict and/or decree, the court
or arbitrator, as the case may be, shall provide for the payment by the non-
prevailing party of the prevailing party's Dispute Resolution Expenses.
Judgment upon an award rendered by an arbitrator may be entered in any court of
competent jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
CHEMFAB CORPORATION
By _________________________
John W. Verbicky
Executive Vice President
_________________________
Optionee
Exhibit 10 (A) (17)
CHEMFAB CORPORATION
Amendment No. 3 to Second Amended and Restated 1991 Stock Option Plan
--------------------------------------------------------------------
Section 5 of the Plan was duly amended by resolutions of the Shareholders and
the Board of Directors of the Company, effective as of October 30, 1997, to
increase the number of shares of Common Stock authorized for issuance from
1,500,000 to 1,950,000 as follows:
Section 5 of the Plan is amended in its entirety to read as follows:
5. Stock Subject to the Plan. The Plan covers 1,950,000 shares of the
Stock, subject, however, to the provisions of Section 12 of the Plan. The
number of shares of the Stock purchase 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.
Exhibit 10 (B) (9)
CONSULTING AGREEMENT
--------------------
This Consulting Agreement (this "Agreement"), dated as of the 30th day of
October, 1997, is by and between Chemfab Corporation, a Delaware Corporation
with its principal place of business at 701 Daniel Webster Highway, Merrimack,
New Hampshire, on behalf of itself and each of its subsidiaries (hereinafter,
individually and collectively, the "Company"), and Dr. Nicholas Pappas, an
individual residing at 606 Swallow Hollow Road, Wilmington, Delaware 19807
(hereinafter, "Consultant").
WHEREAS, the Company desires to extend and broaden its technologies,
business operations and commercial activities to improve and expand its existing
products; develop new applications and markets for its existing technologies;
and develop or acquire materials, products, processes, applications and
capabilities that are materially different from, but synergistic with, those
currently produced, sold, practiced, and used by the Company (such initiatives
collectively herein the "Growth Initiatives").
WHEREAS, the Company recognizes that such Growth Initiatives will likely
best be achieved over time from various sources that are both internal and
external to the Company, through, for example, one or more Diversifying
Arrangements (as defined in Section 1.1 below);
WHEREAS, the Company further recognizes that the Growth Initiatives will
involve substantial attention to strategic planning in all aspects of the
Company's business;
WHEREAS, Consultant is highly qualified to assist the Company in evaluating
strategic considerations and developing strategic plans (herein "Strategic
Planning") due to his experience, knowledge and contacts in the field of
materials science and in the plastics industry;
WHEREAS, Consultant has been providing Strategic Planning advice to the
Company since approximately the beginning of September 1997, and the Company
desires formaly to engage the services of Consultant to assist it in Strategic
Planning; and
WHEREAS, Consultant desires to provide said services to the Company as an
independent contractor to the Company;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
undertakings hereinafter set forth, the parties hereto agree as follows:
Section 1. Definitions. For the purposes of this Agreement, the
following words and expressions shall have the following meanings:
Section 1.1 "Diversifying Arrangement" shall mean any Strategic Alliance
that materially diversifies or extends the Company's technologies, business
operations and/or commercial activities to include materials, products,
processes, applications and/or capabilities that are materially different from,
but synergistic with, those that are produced, sold, practiced, and used by the
Company as of the date hereof.
Section 1.2 "Strategic Alliance" shall mean transactions such as, but
not limited to, business acquisitions, joint ventures and other strategic
alliances, licenses, joint development arrangements, joint marketing
arrangements or similar arrangements.
Section 2. Consulting Relationship.
-----------------------
Section 2.1 Freedom to Contract. Consultant represents that he is free
to enter into this Agreement, that he has not made and will not make any
agreements in conflict with this Agreement, and will not disclose to the
Company, or use for the Company's benefit, any trade secrets or confidential
information now or hereafter in Consultant's possession which is the property of
any other party.
Section 2.2 Independent Contractor. This Agreement shall be construed
as an independent contractor's agreement for all purposes. Consultant shall be
independent and not an employee of the Company or of any affiliate of the
Company, and subject to the provisions of Section 3, Consultant shall control
the location and timing of the performance of his services hereunder.
Consultant and the Company are not partners or joint ventures with each other
with respect to the matters subject to this Agreement and nothing herein shall
be construed so as to make them such partners or joint ventures or to impose any
obligation or liability as such on them.
Section 3. Services Provided.
-----------------
Section 3.1 Consulting Services. In accordance with the provisions of
this Agreement, Consultant shall provide consulting services upon request of the
Company at mutually convenient time or times (at an expected average monthly
time commitment of approximately 20 hours), specifically by providing
suggestions, direction, evaluation and assistance to the Company in Strategic
Planning. These consulting services shall be separate from and in addition to
Consultant's duties as a Director of the Company, whether as Chairman of the
Board, as a Board committee member, or otherwise. Consultant shall provide
these consulting services to the Company primarily through telephonic and other
communications (and, when convenient for both parties, meetings with the
Executive Vice President or the Chief Executive Officer of the Company, and such
other Officers as designated by either of them). Consultant hereby accepts such
engagement upon the terms and conditions set forth herein.
Section 3.2 Secretarial Support. The Company shall provide secretarial
and administrative support to Consultant on a limited, as-needed basis,
particularly during such times as Consultant is performing services at the
Company's offices, but only to the extent that such support is reasonably
available from existing resources within the Company.
Section 4. Compensation, Expenses and Taxes.
--------------------------------
Section 4.1 Consultant Fee and Expenses. The Company shall pay
Consultant $10,000 per fiscal quarter for each quarter during which Consultant
provides consulting services hereunder, payable in arrears, commencing with the
fiscal quarter ending December 28, 1997. For the term of this Agreement, the
Company shall reimburse Consultant for documented, reasonable out-of-pocket
expenses incurred in the performance of consulting services hereunder, provided
that Consultant's requests for reimbursement (together with reasonable
supporting documentation) are submitted to the Company within forty-five (45)
days after the date on which such expenses were incurred.
Section 4.2 Grant of Options.
----------------
(a) As of October 30, 1997, the Company hereby grants Consultant,
subject to Sections 4.2(b) and 4.3 below, a non-qualified option (the "Option")
to purchase twenty thousand (20,000) shares of the Company's Common Stock, to
vest in accordance with the following schedule:
Date Number of Shares
-------------- -----------------
October 30, 1997 5,000 (25%)
October 30, 1998 5,000 (25%)
October 30, 1999 5,000 (25%)
October 30, 2000 5,000 (25%)
(b) The Option granted however is subject to the terms and conditions
of (I) the Company's Second Amended and Restated 1991 Stock Option Plan, as
amended (the "Plan"), (ii) the separate Nonstatutory Stock Option Agreement
(Director Consultant form) dated as of October 30, 1997 between the Company and
the Consultant; and (iii) the other terms and conditions herein. No Option
granted hereunder shall vest after the effective date hereof unless Consultant
(x) continues to serve as of the pertinent vesting date set forth in Section
4.2(a) above (herein, a "Vesting Date"), both as a consultant to the Company and
as Chairman of the Board, and (y) in his capacity as Consultant, a director of
the Company, or otherwise, is eligible on the date of vesting of such Option to
exercise non-qualified stock options under the Plan in effect on such date. The
number of shares for which Options are granted pursuant to this Section 4.2, and
the number of shares for which any Option is exercisable, shall be automatically
adjusted, as appropriate, to account for any stock dividends, stock splits or
contractions, reclassifications, or similar changes in the Company's Common
Stock.
Section 4.3 Terms of the Option. Any Option shall (i) be granted
pursuant to the Plan as a non-qualified option, (ii) have an exercise price
equal to $21.125 and (iii) vest pursuant to Section 4.2(a) above.
Section 4.4 Responsibility for Taxes. All compensation (including the
grant of Options) to be paid to Consultant hereunder shall be paid without
deduction or withholding of any federal, state, local or foreign taxes, and
Consultant shall be solely responsible for and pay all federal, state, local and
foreign taxes due with respect thereto and all other deductions required by law.
Consultant agrees to indemnify the Company and hold it harmless from and against
any liability, cost or expense (including, without limitation, court costs and
attorney's fees) resulting from Consultant's breach of his obligations under
this Section 4.4. The Company shall have the right to set off against any
payments owing to Consultant any amounts owed to the Company by Consultant as a
result of any breach of Consultant's obligations under this Section 4.4.
Section 5. Term.
-----
Section 5.1 General. This Agreement shall take effect as of the date
first above written, and shall remain in effect for so long as Consultant
continue to serve both as a Consultant to the Company and as a director, or
until earlier terminated under the provisions of this Section 5. This Agreement
may be renewed or extended by mutual written agreement of the parties.
Section5.2 Survival of Certain Provisions. The provisions of the
following sections shall survive the termination of this Agreement: 5 and 7.
Furthermore, termination of this Agreement shall not affect any other
obligations of either party that have accrued prior to or as of the date of
termination.
Section5.3 Termination. The Company shall have the right upon thirty
(30) days' notice to terminate this Agreement without cause (as defined below),
and immediately upon notice to terminate this Agreement with cause (as defined
below), with no compensation to accrue or to be owing in respect of any period
after the effective date of such termination and no liability of any kind to
accrue on account of such termination. For the purposes of this Section 5.3,
the term "cause" shall mean a breach of this Agreement by Consultant.
Section6. Confidentiality and Assignment of Inventions. Simultaneously
with the execution of this Agreement, the parties hereto shall enter into an
Independent Contractor Confidentiality and Assignment of Inventions Agreement,
substantially in the form of Exhibit A hereto (the "Confidentiality Agreement").
Such Confidentiality Agreement shall survive any termination of this Agreement.
Section7. Provisions of General Application.
---------------------------------
Section7.1 Governing Law. This Agreement and the rights and
obligations of the parties hereunder shall be construed, interpreted and
determined in accordance with the laws of the State of New Hampshire.
Section7.2 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original and all of which, taken
together, shall constitute one and the same instrument. In making proof of this
Agreement it shall not be necessary to produce or account for more than one such
counterpart.
Section7.3 Entire Agreement. This Agreement, including the
Confidentiality Agreement, represents the entire understanding and agreement
between the parties as to the subject matter hereof. No prior, concurrent or
subsequent agreement, whether written or oral, shall be construed to change,
amend, alter, repeal or invalidate this Agreement, unless this Agreement is
specifically identified in and made subject to such other written agreement.
Section7.4 Amendment. This Agreement may be amended only by a written
instrument executed in one or more counterparts by the parties hereto.
Section7.5 Waiver. No consent to or waiver of any breach or default in
the performance of any obligation hereunder shall be deemed or construed to be a
consent to or waiver of any other breach or default in the performance of any of
the same or any other obligation hereunder. Failure on the part of either party
to complain of any act or failure to act of the other party or to declare the
other party in default, irrespective of the duration of such failure, shall not
constitute a waiver of rights hereunder and no waiver hereunder shall be
effective unless it is in writing, executed by the party waiving the breach or
default hereunder.
Section7.6 Headings. The headings of sections and subsections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement or to affect the meaning of any of its
provisions.
Section7.7 Severability. If any provision of this Agreement shall, in
whole or in part, prove to be invalid for any reason, such invalidity shall
affect only the portion of such provision which shall be invalid, and in all
other respects this Agreement shall stand as if such invalid provision, or the
invalid portion thereof, had not been a part hereof.
Section7.8 Notices and Other Communications. All notices and other
communications required hereunder shall be effective if in writing and if
delivered by hand or set via U.S. mail or telecopier (a) if to Consultant, at
his residence address first set forth above, and (b) if to the Company, at its
principal business address first set forth above, or to such other persons or
addresses as the parties hereto may specify by a written notice to the other
from time to time.
IN WITNESS WHEREOF, this Agreement has been executed by the Company, by its
duly authorized officer, and by Consultant, as of the date first above written.
CHEMFAB CORPORATION
By: /s/ John W. Verbicky
------------------------------------------
John W. Verbicky
Executive Vice President and
Chief Operating Officer
CONSULTANT
By: /s/ Dr. Nicholas Pappas
----------------------------------------
Dr. Nicholas Pappas, Individually
Exhibit 10 (B) (10)
FIRM FIXED PRICE
MEMORANDUM OF AGREEMENT
This Memorandum of Agreement dated as of December 1, 1997 documents and confirms
the agreement under which Chemfab Corporation (hereinafter called Sponsor) will
support, and Virginia Polytechnic Institute and State University and Virginia
Tech Intellectual Properties (hereinafter jointly called University) will
conduct, an effort entitled: "Characterization of Fluoroelastomer Fluoroplastic
Blends" (herein the "Project"), which is described in the letter dated September
18, 1997 from Dr. John Effenberger of Sponsor to Dr. James McGrath of the
University (the "Project Description") (attached hereto as Exhibit 1 and
incorporated as a part hereof), to which Project the University has assigned its
Research Proposal Number 98-0489-10.
1. CONTENTS: This Memorandum of Agreement consists of this cover page and 11
additional pages, including the 5-page Project Description. This Memorandum of
Agreement constitutes the definitive agreement contemplated by that certain
letter agreement dated December 1, 1997 (and referenced exhibits) (the "Letter
Agreement") between Sponsor and University, and supersedes the Letter Agreement,
provided that the related executed Confidentiality and Non-Use Agreement dated
as of December 1, 1997 (the "Confidentiality Agreement") remains in full force
and effect.
2. PERIOD OF PERFORMANCE: The Research project shall be performed during the
period December 1, 1997 through November 30, 1998 (the "Term").
3. AMOUNT OF AGREEMENT: $60,000.
4. UNIVERSITY PRINCIPAL INVESTIGATORS: Professors James E. McGrath and Garth
L. Wilkes (herein the "Professors"), and post-doctoral students enrolled at the
University selected by them ("Students") (collectively, "Researchers").
2
5. EXECUTION: In confirmation of their acceptance of the terms of this
Agreement, the parties have caused this Memorandum of Agreement to be executed
by their duly authorized representative.
CHEMFAB CORPORATION
By: /s/ John W. Verbicky Dec 31, 1998
-------------------------------- -----------
John W. Verbicky, Exec. VP Date
VIRGINIA POLYTECHNIC INSTITUTE AND STATE UNIVERSITY
VIRGINIA TECH INTELLECTUAL PROPERTIES
By: /s/ H. T. Hurd Jan 9, 1998
--------------------------------- -----------
H. T. Hurd, Director Date
Office of Sponsored Programs
A. EFFORT TO BE PERFORMED
The University, through the Researchers, shall perform the research
Project described in the Project Description. The Professors shall
determine the specific conduct of the research Project, and the Students,
subject to the general supervision of the Professors, shall undertake that
research. The Professors shall coordinate with and give written reports
to Dr. Effenberger or other designated person(s) of Sponsor regarding
progress of, modifications to, or additional leads on or focus of the
research effort, provided, however, the University shall approve any major
deviation from the Project Description
B. PERIOD OF PERFORMANCE
i. The University is expected to complete the research Project under
this agreement within the time-frame specified on the cover page of
this Agreement. The University shall provide the Sponsor with
written notification at any time it becomes apparent that the effort
will not be completed on schedule. This written notification shall
provide an explanation of the delay and shall provide a new
completion date.
ii. Specific delivery dates of reports and other deliverables, if any,
shall be agreed on by the Professors and Sponsor.
C. CONSIDERATION AND PAYMENT
i. For full and complete performance of the Project under this
Agreement, the University shall be paid the sum of Sixty Thousand
Dollars ($60,000), which shall cover stipends paid to the Students,
and any and all direct and indirect costs and expenses of the
Professors and of materials, equipment and facilities of the
University. This amount shall be payable on the following schedule:
on the first day of each month, commencing on January 1, 1998 and
thereafter for the next 11 months.
ii. The University shall invoice for all payments when due and all
payments shall be made to "Treasurer, Virginia Tech" and mailed to:
"Virginia Tech, Attn: Director, Office of Sponsored Programs, 301
Burruss Hall, Blacksburg, Virginia 24061."
D. CHANGES AND SUBCONTRACTING
No changes in the amount, terms or conditions of this Agreement shall
become effective until such change is reduced to writing and signed by
duly authorized representatives of both parties to this Memorandum of
Agreement. Subject to Paragraph A above, the University shall not
subcontract any portion of the effort without the prior written
concurrence of the Sponsor.
E. CONFIDENTIAL MATERIAL
i. In the Project Description and during the performance of this
Agreement, the Sponsor has and may from time-to-time furnish material
to the University and Researchers (collectively, "Recipients") that
Sponsor considers to be of a confidential nature (herein "Sponsor
Confidential Information"). The Recipients have signed the
Confidentiality Agreement, under which they will safeguard all such
material in accordance therewith. Confidential material not consumed
in the performance of the research Project shall be returned to, or
disposed of, as directed by the Sponsor. Confidential material will
not be published by the University in student theses, scholarly
dissertations, or otherwise without prior written consent of the
Sponsor (and in any event will only be published subject to the
conditions in Paragraph F. below).
ii. Sponsor hereby grants a license to Recipients to use Sponsor
Confidential Information for the limited and sole purpose of carrying
out the research goals of the Project (the "Research License"),
subject to the terms and conditions of the Confidentiality Agreement.
The Research License shall automatically expire at the end of the
Term. The Research License does not include the grant of any
license, right or interest in or to Sponsor Confidential Information,
the information in the Project Description, or other Sponsor
Intellectual Property (as defined in Paragraph G. below). Sponsor
expressly retains all other rights in Sponsor Intellectual Property,
including the exclusive right to commercially exploit the same.
F. PUBLICATION
i. The Sponsor acknowledges that a major consideration in the University
entering into this Agreement is the ability to publish Student theses
and scholarly papers derived from the research for the Project
(herein, "Project Research"). University acknowledges that major
considerations for the Sponsor in entering into this Agreement are
for Sponsor (a) to preserve the patentability of Sponsor's ideas and
inventions set forth in or contemplated by the Project Description or
conceived in whole or in part by Sponsor from the Project; (b) to
preserve the confidentiality of Sponsor Confidential Information and
Sponsor's other trade secrets; and (c) to retain the exclusive right
to exploit such ideas, inventions, and other Sponsor Intellectual
Property (as defined in Paragraph G. below). Accordingly, University
and Sponsor have agreed on the conditions set forth in clauses ii. -
v. of this Paragraph F to set forth their agreement about publication
rights for Project Research.
ii. There shall be no publication by University or any Researcher of any
Project Research before December 16, 1998 (the "Earliest Publication
Date"). In addition, (a) there shall be no publication of Invention-
Related Research (as hereinafter defined) except in accordance with
clauses iii., iv. and v. below; (b) there shall be no publication of
Project Research other than Invention-Related Research (herein "Other
Project Research") except in accordance with clause v. below; and (c)
in the event research includes information that is both Invention-
Related Research and Other Project Research, it shall be deemed for
purposes of this Agreement to be Invention-Related Research.
iii. After the expiration of the Term and subject to Paragraph G.i.
below,, Sponsor shall make reasonable efforts to inform University
whether Sponsor regards any of Sponsor's Inventions and/or Joint
Inventions (each as defined in Paragraph G. below) as patentable and
whether Sponsor desires to perfect, or reserve the right to perfect,
patents therefor.
iv. If University or any of the Researchers desire to publish any
information relating, directly or indirectly, to the Sponsor's
Inventions, Joint Inventions and/ or related Project Research
(collectively herein, "Invention-Related Research"), it/he/she shall
give Sponsor written notice (the "Publication Notice"), not before
the Earliest Publication Date and at least nine months prior to the
desired publication, in order to give Sponsor sufficient time to
prepare and file patent applications, perfect such patents, and take
other measures to protect Sponsor Intellectual Property. Any and all
Publication Notices shall identify the specific Invention and
Invention-Related Research that are the subject of the desired
publication. During (each) such ninth month period, neither the
University nor any of the Researchers shall publish (or otherwise
disclose) any such Invention-Related Research.
v. Subject to (x) the Earliest Publication Date provision in clause ii.
above, and (y) the conditions in clauses iii. and iv. above with
respect to Invention-Related Research, Sponsor agrees not to unduly
restrict publication of Project Research; provided that, the
University shall provide drafts of all articles and other documents
to the Sponsor for review prior to publication. Such review shall be
for the purposes of ensuring that the publication does not disclose
Sponsor Confidential Information or impair Sponsor Intellectual
Property, and for providing appropriate protection for Inventions.
The Sponsor shall provide the University with the results of its
review within 60 days. Subject to the conditions in clauses ii.-iv
above, the University may assume de facto agreement to publishing if
no comments are received within this period.
vi. Sponsor may publish, either jointly with University or one or more
Researchers, or on its own, any part or all of the Project Research,
after giving at least 30 days advance written notice to University;
provided that, if during such thirty (30) day period University
and/or Researcher(s) give written notice to Sponsor of their desire
to collaborate in such Sponsor publication, Sponsor shall make
reasonable efforts to reach agreement on the terms of such
collaboration with University and/or Researcher(s), as the case may
be; provided further that, if the parties agree to collaborate on
such publication, it shall be subject in any event to clauses ii.-v.
above.
G. PATENTS , INVENTIONS AND INTELLECTUAL PROPERTY
i. For purposes of this Agreement, the term "Inventions" means any and
all patentable inventions, ideas and conceptions (whether for
products, processes, or both) set forth in or derived from the
Project Description and/or the Project. Each of Sponsor and
University, and each of the Researchers, shall keep and preserve
contemporaneous notes and other customary records in reasonable
detail of all Inventions. After the expiration of the Term and upon
request of either party, each party shall provide to the other (a) a
list of all Inventions; and (b) its characterization of each
Invention as one of the following: a Sponsor's Invention (as defined
in clause (ii) below), a Joint Invention (as defined in clause (v)
below), or University Project IP (as defined in clause (iv) below).
Thereafter, if either party questions the other's characterization of
one or more Inventions, the other party shall promptly submit a
written explanation of its reasons for each such characterization(s).
The parties shall work in good faith to agree on the appropriate
characterization of any Invention(s) about which a dispute may arise.
ii. For purposes of this Agreement, the term "Sponsor Intellectual
Property" means Sponsor Confidential Information; Inventions
conceived or created solely by Sponsor (herein "Sponsor's
Inventions"); and Sponsor's other trade secrets, proprietary
information and other intellectual property (whether owned, acquired
or developed prior to, during or after the Term).
iii. Except for the limited Research License granted in Paragraph E.ii.
above, Sponsor retains all title, ownership, and exclusive right to
exploit Sponsor Intellectual Property.
iv. With respect to Inventions and other intellectual property conceived
or created solely by the Researchers or University in connection with
or as the result of the Project (herein, "University Project IP"),
University shall retain title and ownership of the same. At its
election, Sponsor shall acquire, and University shall grant to
Sponsor, a worldwide exclusive perpetual license to exploit and use
the University Project IP pursuant to one of the two options set
forth in subclause (a) or (b) below:
(a) Sponsor may acquire a paid-up license, wherein following
completion of the Project but in any event before commercial
exploitation of the University Project IP, Sponsor shall pay
University a single lump-sum amount of $120,000; or
(b) Sponsor may acquire a license, in consideration for such other
license or royalty fee (whether paid-up, calculated on a
percentage basis, or otherwise) on which the parties may reach
agreement in the future following good faith negotiation but
before commercial exploitation of the University Project IP.
In any event, if the University Project IP for which Sponsor seeks a
license is patentable, Sponsor shall pay all patenting costs
therefor.
v. With respect to Inventions and other intellectual property conceived or
created jointly by the Sponsor, on the one hand, and the Researchers
and/or University, on the other hand (such Inventions herein "Joint
Inventions", and such intellectual property herein "Joint IP"), Sponsor
and University shall jointly own the Joint Inventions and other Joint IP.
At its election, Sponsor shall acquire, and University shall grant to
Sponsor, a worldwide exclusive perpetual license to exploit and use the
Joint Inventions and other Joint IP (herein a "Joint IP License") pursuant
to one of the two options set forth in subclause (a) or (b) below:
(a) Sponsor may acquire a paid-up license, wherein following
completion of the Project but in any event before commercial
exploitation of the Joint Inventions or other Joint IP (as the
case may be), Sponsor shall pay University a single lump-sum
amount of $60,000; or
(b) Sponsor may acquire a license, in consideration for such other
license or royalty fee (whether paid-up, calculated on a
percentage basis, or otherwise) on which the parties may reach
agreement in the future following good faith negotiation but
before commercial exploitation of the Joint Inventions or other
Joint IP (as the case may be).
Except in the event Sponsor duly elects and acquires a Joint IP License
pursuant to subclause (a) or (b) above, Sponsor and University shall have
the joint right to exploit Joint Inventions and other Joint IP.
For purposes of this clause v., it is understood and agreed that any and
all Inventions and/or other intellectual property embodied in the Project
Description constitute Sponsor Intellectual Property, and shall not be
deemed to be Joint Inventions or other Joint IP.
In any event, if the Joint Invention(s) for which Sponsor seeks a Joint IP
License is/are patentable, Sponsor shall pay all patenting costs therefor.
H. PUBLICITY
Neither party to this Agreement shall mention the other party in
advertising or publicity of any manner without first obtaining the written
permission of the other party, which party shall have the right in its
discretion to withhold or grant permission, or to grant its permission
subject to conditions it deems appropriate.
I. TERMINATION
Either party may terminate this Agreement "for cause", if the breach of
the other party's obligation(s) or other "cause" has not been cured by the
other party after thirty (30) days written notice specifying the breach,
event or other cause and demanding its cure. In the event of termination,
the University will take immediate action to mitigate the costs incurred
under this Agreement and, the Sponsor shall pay all reasonable costs (up
to, but not exceeding, the amount accrued under the schedule in Paragraph
C.i. of this Agreement) incurred by the University prior to the effective
date of termination. Reasonableness of cost shall be determined by
applying those rules in Office of Management and Budget (OMB) Circular A-
21 in effect at the date of last signature of this Agreement. In the
event the payments by the Sponsor exceed the reasonable cost or accrued
scheduled payments, the University shall promptly reimburse the excess
payments to the Sponsor.
J. LIMITS OF LIABILITY
The University is and will be acting as an independent contractor in the
performance of this Agreement, and it shall be solely responsible where
found liable for the payment of any and all claims for loss, personal
injury, death, property damage, or otherwise, arising out of any act or
omission of its employees or agents, including the Researchers, in
connection with the performance of this Agreement.
K. AUTHORSHIP AND SPONSORSHIP
The Sponsor's support of this research Project shall be given appropriate
recognition in any publication of results by the University, subject to
the publication restrictions in Paragraph F. In the event of Sponsor's
cooperation in the performance of the Project, such cooperation shall be
given appropriate recognition in any publication by the University, again
subject to the publication restrictions in Paragraph F.
L. GOVERNING LAW
This Agreement shall be governed and construed under the laws of the
Commonwealth of Virginia.
January 29, 1998
Dr. James McGrath
Virginia Polytech Institute
Dear Jim:
Attached for your consideration is an R&D concept whose execution at VPI could
significantly advance our understanding of cure chemistries and composite
morphology for fluoroelastomer/fluoroplastic microparticulate blends.
This work may well be one that could be conducted by a graduate student with the
available analytical and processing resources and expertise available at VPI,
resources which we do not presently have.
I hope we can discuss that possibility during my visit to VPI with John Verbicky
on Friday, September 19, 1997.
Best regards,
John Effenberger
Director of R&D
PROPOSED PROGRAM: CHEMFAB/VPI STUDIES OF MICROPARTICULATE BLENDS OF
FLUOROPOLYMERS
Background
The potential for obtaining new forms of polymeric compositions with novel and
commercially attractive performance features by blending separately polymerized
polymers in aqueous microparticulate (sub-micron sized) forms is under
investigation at Chemfab Corporation. Such simple blends lend themselves to
isolation by removal of water to yield processible solids in physical forms such
as thin cast films (including multi-layer films) and coarse, but readily
compressible agglomerates, both of which can be further processed through
relatively low temperature, low pressure forming (such as compression molding or
extrusion at 100 degrees C). Such blending facilitates the incorporation of
elastomeric and/or thermoplastic polymers with each other, as well as with
homogeneously distributed, finely divided, fillers or reactive chemicals, (e.g.
rubber curatives or co-agents).
It is believed that such a process can yield attractive combinations of elasto-
plastic mechanical behavior in finished parts while exhibiting a broad range of
physical properties including wear, abrasion, and frictional characteristics,
chemical resistance and thermal range in end-use.
Since the reactivity of elastomeric constituents with curative components is
likely to play a significant role in determining both finished properties and
process rheology, it is desirable to identify preferred curatives for specific
polymeric compositions and to observe their effect on both process rheology and
morphological changes taking place during the process.
Program
Fixing polymeric composition to include a single fluoroelastomer (Fluorel (R)
terpolymer) and no more than two fluoroplastics (PTFE and FEP), at a fixed
relative abundance of fluoroelastomer (60 weight percent), it is an objective
to identify at least two preferred curatives for such blended compositions: one
should be water soluble for compatibility with solids isolation from an aqueous
colloid, and the other should be water insoluble It is highly desirable that
good compression set in "finished" (cured sheet) parts be an important criteria
of acceptable curative performance. CHEMFAB will provide the latex and
dispersion raw materials. VPI will identify and procure curatives.
It is also an objective that initial isolation of processible solids from
blended aqueous systems include two isolation methodologies to yield cast film
and "coagulated powder", respectively. Procedures for both of these isolation
methodologies will be proved by CHEMFAB.
Evaluation of properties of "finished" compositions can be obtained on simple
compression-molded slabs (30-60 mils in thickness). It is anticipated that the
selection of curative chemistry types will be important determinants of the
actual molding conditions and it is expected that VPI will identify/optimize
them.
Rheological characterization of the isolated solids should include "typical
rubber processing" information (e.g. oscillating disk rheology) as well as
"typical plastic processing information" (e.g. capillary rheology data).
Extrudates from such rheometry can also serve to provide specimens to examine
changes in morphology as a function of shear rate and temperature. It is
anticipated that important changes in the PTFE morphology ("fibrillation"
and/or orientation) will be observable and to some degree quantifiable as will
the crystalline conditions of the PTFE and FEP.
Slabs of the "finished" compositions can be used for such observations as well
as for characterization of properties such as tensile stress/strain behavior,
degree of swell in methanol, wear and abrasion behavior, durometer, etc., for
both "as made" and heat-aged specimens.
It is hoped that CHEMFAB's initial exploratory efforts and current understanding
of such systems up through isolation of solids will allow VPI to focus on
curative selection and morphological structure as it affects process and
finished part performance.
It is our objective to advance such understanding substantially over the next
four to six months or sooner if possible. Our own investigations will continue;
we expect from time to time to submit specimens for your morphological
characterization to guide our own efforts as well.
We look forward to a mutually beneficial relationship, and especially to new,
commercially valuable materials.
<TABLE>
<S><C>
CHEMFAB / VPI STUDIES OF MICROPARTICULATE BLENDS OF FLUOROPOLYMERS
- -------------------------------------------------------------------
SCHEMATIC FLOWCHART
Aqueous Compatible ------ Cast Isolation ----Molded Part
Cure System Process
|
|
Fluoroplastic ------|
(PTFE) |
| |
| Aqueous Incompatible ---- Coagulation -------Molded Part
| Cure System Isolation Process
|
Continuous Phase Polymer ------|
(Fluoroelastomer) |
|
| Aqueous Compatible ------ Cast Isolation ----Molded Part |
| Cure System Process
| |
Fluoroplastic ------|
(FEP) |
|
|
Aqueous Incompatible ---- Coagulation ------Molded Part
Cure System Isolation Process
</TABLE>
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