CFM TECHNOLOGIES INC, S-1/A, 1996-05-17

CFM TECHNOLOGIES INC
S-1/A, 1996-05-17

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 17, 1996

REGISTRATION NO. 33-80359

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SECURITIES AND EXCHANGE COMMISSION

----------------

AMENDMENT NO. 1 TO FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

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CFM TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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PENNSYLVANIA 3559 23-2298698
(PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
(STATE OR OTHER CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
JURISDICTION OF
INCORPORATION OR
ORGANIZATION)

1336 ENTERPRISE DRIVE
WEST CHESTER, PENNSYLVANIA 19380
(610) 696-8300
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

LORIN J. RANDALL, VICE PRESIDENT
CFM TECHNOLOGIES, INC.

1336 ENTERPRISE DRIVE
WEST CHESTER, PENNSYLVANIA 19380
(610) 696-8300
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)

----------------
COPIES OF COMMUNICATIONS TO:

BARRY M. ABELSON, ESQUIRE
JUSTIN P. KLEIN, ESQUIRE
BALLARD SPAHR ANDREWS & INGERSOLL PEPPER, HAMILTON & SCHEETZ
1735 MARKET STREET 3000 TWO LOGAN SQUARE
PHILADELPHIA, PA 19103 PHILADELPHIA, PA 19103

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED BE REGISTERED(1) PER SHARE OFFERING PRICE(2) REGISTRATION FEE
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock........... 57,500 shares $15.00 $3,335,000 $1,150.00
</TABLE>
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(1) Consists of an increase in the number of shares to be offered.

(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933. Consists of
$2,472,500, the amount by which the proposed maximum aggregate offering
price was underestimated at the time of filing the registration statement,
and $862,500, representing the proposed maximum aggregate offering price
of the additional shares being offered.

----------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SECTION 8(A), MAY DETERMINE.

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<PAGE>

CFM TECHNOLOGIES, INC.

CROSS REFERENCE SHEET

PURSUANT TO ITEM 501(B) OF REGULATION S-K
ITEMS OF FORM S-1 REQUIRED IN THE PROSPECTUS

<TABLE>
<CAPTION>
ITEM NUMBER LOCATION IN PROSPECTUS
- ----------- ----------------------
<S> <C>
1. Forepart of the Registration Cover of Registration Statement; Cross-
Statement and Outside Front Reference Sheet; Outside Front Cover Page of
Cover Page of Prospectus Prospectus
2. Inside Front and Outside Back Inside Front and Outside Back Cover Pages of
Cover Pages of Prospectus Prospectus; Additional Information
3. Summary Information, Risk Prospectus Summary; Summary Financial
Factors and Ratio of Earnings Information; Risk Factors
to Fixed Charges
4. Use of Proceeds Prospectus Summary; Use of Proceeds
5. Determination of Offering Underwriting
Price
6. Dilution Dilution
7. Selling Security Holders Principal and Selling Shareholders
8. Plan of Distribution Outside Front Cover Page of Prospectus;
Underwriting
9. Description of Securities to Description of Capital Stock
be Registered
10. Interests of Named Experts Not Applicable
and Counsel
11. Information with Respect to Prospectus Summary; The Company; Use of
the Registrant Proceeds; Dividend Policy; Capitalization;
Selected Financial Data; Management's
Discussion and Analysis of Financial
Condition and Results of Operations;
Business; Management; Certain Relationships
and Related Transactions; Principal and
Selling Shareholders; Description of Capital
Stock; Consolidated Financial Statements
12. Disclosure of Commission Not Applicable
Position on Indemnification
for Securities Act
Liabilities
</TABLE>
<PAGE>

EXPLANATORY NOTE

This Registration Statement contains two forms of prospectus: one to be used
in connection with an offering in the United States and Canada (the "U.S.
Prospectus") and one to be used in connection with a concurrent offering
outside the United States and Canada (the "International Prospectus"). The
U.S. Prospectus and the International Prospectus will be identical in all
respects except for the alternate and additional pages that follow the form of
the U.S. Prospectus. Each of the alternate and additional pages for the
International Prospectus included herein is labeled accordingly.
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED MAY 17, 1996

2,200,000 SHARES

LOGO
COMMON STOCK

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Of the 2,200,000 shares of Common Stock offered, 1,760,000 are being offered
hereby in the United States (the "U.S. Shares") and 440,000 shares are being
offered in a concurrent international offering outside the United States and
Canada. The price to the public and aggregate underwriting discounts and
commissions per share will be identical for both offerings. See "Underwriting."

Of the 2,200,000 shares of Common Stock offered, 2,138,461 shares are being
offered by CFM Technologies, Inc. ("CFM" or the "Company") and 61,539 shares
are being offered by certain shareholders of the Company (the "Selling
Shareholders"). See "Principal and Selling Shareholders." The Company will not
receive any proceeds from the sale of shares by the Selling Shareholders. Prior
to this offering, there has been no public market for the Common Stock of the
Company. It is currently anticipated that the initial public offering price of
the Common Stock will be between $13.00 and $15.00 per share. See
"Underwriting" for a discussion of the factors considered in determining the
initial public offering price. The Common Stock of the Company has been
approved for quotation on The Nasdaq Stock Market under the symbol "CFMT."

THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING
ON PAGE 5 OF THIS PROSPECTUS FOR INFORMATION THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS.

-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
================================================================================
Underwriting Proceeds to
Price Discounts and Proceeds to Selling
to Public Commissions(1) Company(2) Shareholders
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<S> <C> <C> <C> <C>
Per Share.................. $ $ $ $
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Total...................... $ $ $ $
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Total Assuming Full Exercise
of Over-Allotment
Option(3)................. $ $ $ $
</TABLE>
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(1) See "Underwriting."

(2) Before deducting expenses estimated at $800,000, which are payable by the
Company.

(3) Assuming exercise in full of the 30-day option granted by the Company to
the U.S. Underwriters to purchase up to 330,000 additional shares on the
same terms, solely to cover over-allotments. See "Underwriting."

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The U.S. Shares of Common Stock are offered by the U.S. Underwriters, subject
to prior sale, when, as and if delivered to and accepted by the U.S.
Underwriters, and subject to their right to reject orders in whole or in part.
It is expected that delivery of the Common Stock will be made in New York City
on or about , 1996.

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PAINEWEBBER INCORPORATED

DONALDSON, LUFKIN & JENRETTE

SECURITIES CORPORATION

MONTGOMERY SECURITIES

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THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE>

"This fully-enclosed,flow-optimized processing chamber (shown here in a
cutaway view) provides improved performance in critical semiconductor and flat
panel display manufacturing processes, avoiding many of the deficiencies
associated with traditional wet processing equipment such as contamination
producing air-liquid interfaces, uncontrolled growth of silicon oxides,
watermarks and excessive water usage."

[DIAGRAM APPEARS HERE DEPICITING A CUTAWAY VIEW OF THE COMPANY'S FULL-FLOW
PROCESSING VESSEL, PARTIALLY LOADED WITH WAFERS OR SUBSTRATES FOR PROCESSING.]

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ STOCK MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

"The Full-Flow product platform features the Company's proprietary
Direct-Displacement(TM) drying technology and principally consists of the vessel
module, including a fully-enclosed wafer processing chamber, and associated
robotic handling equipment as seen here in a dual-vessel installation. Because
the Company's Full-Flow systems may be flush mounted in the cleanroom wall, use
of expensive cleanroom space can be limited to a small operator access area."

[PHOTOGRAPH APPEARS HERE DEPICTING A DUAL VESSEL FULL FLOW SYSTEM FLUSH
MOUNTED IN THE WALL, WITH OPERATOR ACCESS AREA MOUNTED ON THE WALL.]

[PHOTOGRAPH APPEARS HERE DEPICTING TWO OF THE COMPANY'S FULL-FLOW SYSTEMS
INSTALLED IN A SEMICONDUCTOR FABRICATION FACILITY. ALSO APPEARING IN THE
PHOTOGRAPH ARE TWO SYSTEM OPERATORS.]

"Multiple Full-Flow installation in a large semiconductor fab in Europe."

[PHOTOGRAPH APPEARS HERE DEPICTING AN INDIVIDUAL OPERATING A FULL-FLOW SYSTEM
IN THE COMPANY'S APPLICATIONS LABORATORY.]

"Company personnel test new processes and equipment in the Company's recently
completed applications laboratory which features a Full-Flow System capable of
processing 100 8" wafers."
2
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements and related notes appearing elsewhere in
this Prospectus. The shares of Common Stock offered hereby involve a high
degree of risk. Investors should carefully consider the information set forth
under "Risk Factors."

THE COMPANY

CFM Technologies, Inc. ("CFM" or the "Company") designs, manufactures and
markets advanced wet processing equipment for sale to the worldwide
semiconductor and flat panel display ("FPD") industries. The Company's products
are based on its patented Full-Flow enclosed processing and Direct-Displacement
drying technologies and are designed to perform various critical cleaning and
etching and photoresist stripping process steps in the manufacture of
semiconductors and FPDs.

According to VLSI Research Inc., total sales of semiconductor process
equipment grew from $2.2 billion in 1980 to $30.9 billion in 1995, with sales
of wet processing equipment totaling approximately $1.4 billion in 1995. As
integrated circuits ("ICs") become increasingly complex and linewidths continue
to decrease, the cost of advanced fabrication equipment escalates. Therefore,
semiconductor manufacturers are increasingly focused on the cost of owning a
particular piece of process equipment compared to competing systems.
Determining such cost of ownership ("COO") involves measuring a variety of
factors, including acquisition and installation costs, yield, throughput and
the use of consumables and facility floor space.

The Company believes that its patented Full-Flow enclosed processing and
Direct-Displacement drying technologies enable it to provide wet processing
systems that address a variety of limitations inherent in conventional systems,
including wet benches and spray tools, resulting in a significantly lower COO
for the Company's Full-Flow systems. The Company's Full-Flow systems
automatically load wafers or FPD substrates into a fully-enclosed, flow-
optimized processing vessel, which isolates them during processing from the
damaging effects of exposure to cleanroom air and associated contaminants. As a
result, particle contamination is substantially reduced, watermark defects and
native oxide growth are substantially eliminated and process control is
improved. In addition, the fully-enclosed processing vessel substantially
reduces the use of water and process chemicals. Also, the modular design of the
Full-Flow system enables flush mounting in the cleanroom wall, with the
majority of the floor space occupied by the system components located outside
the cleanroom environment, minimizing the use of expensive cleanroom floor
space.

In 1990, the Company sold its first Full-Flow system for use in a
semiconductor production line. To date, the Company has sold over 70 Full-Flow
systems to more than 20 semiconductor manufacturers. The Company's customers
include: GEC Plessey, LG International, Motorola, National Semiconductor,
Samsung, SGS-Thomson, Siemens, Texas Instruments and Tower Semiconductor. Full-
Flow systems can currently be configured with either one or two vessels that
are capable of processing 50 8-inch wafers each. The Company recently completed
development of an enhanced Full-Flow system that provides a two-fold increase
in capital productivity by offering vessels capable of processing 100 8-inch
wafers. This enhanced system, which the Company began to ship in April 1996,
addresses the cost-sensitive photoresist strip market as well as other wet
processing applications. In addition, the Company believes its Full-Flow
technology is particularly well-suited for cleaning and precise etching
applications in the manufacture of FPDs, and provides significant COO
advantages over competing FPD wet processing technologies. The Company has
developed and shipped in April 1996 a high-throughput FPD processing system
based on its Full-Flow platform.

The Company's objective is to capitalize on the inherent COO advantages of
its Full-Flow systems to become a leading supplier of advanced wet processing
equipment to the worldwide semiconductor and FPD industries. The Company's
Full-Flow systems are based on a modular design and can be configured using a
variety of process and support modules. By basing new process applications on
its proprietary Full-Flow platform, the Company can focus primarily on the
development and optimization of the applications' process recipes, which the
Company believes significantly reduces the time and cost associated with
entering new wet processing market segments.

3
<PAGE>

THE OFFERING

<TABLE>
<S> <C>
Common Stock Offered by the Company........................... 2,138,461 shares
Common Stock Offered by the Selling Shareholders.............. 61,539 shares
</TABLE>
------
<TABLE>
<S> <C>
Total Offering................................ 2,200,000 shares
Common Stock to be Outstanding after the
Offering....................................... 5,941,724 shares(1)
Use of Proceeds................................. For debt repayment, expansion
of facilities, upgrade of
systems and general corporate
purposes, including working
capital.
Nasdaq Stock Market Symbol...................... CFMT
</TABLE>

SUMMARY FINANCIAL INFORMATION

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEAR ENDED
YEAR ENDED TEN MONTHS ENDED ENDED OCTOBER 31, APRIL 30,
DECEMBER 31, OCTOBER 31, ----------------------- --------------
1991 1992(2) 1993 1994 1995 1995 1996
------------ ---------------- ------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME
DATA:
Net sales............... $4,943 $5,939 $11,840 $15,937 $23,430 $9,331 $19,697
Operating income........ 1,141 793 2,095 1,573 2,278 454 2,293
Net income.............. 259 145 883 538 1,402 253 1,351
Net income per
share(3)............... $ 0.35 $ 0.06 $ 0.34
Weighted average common
and common equivalent
shares(3).............. 4,016 4,016 4,016
</TABLE>

<TABLE>
<CAPTION>
APRIL 30, 1996
----------------------
ACTUAL AS ADJUSTED(4)
------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................ $ 649 $21,361
Working capital...................................... 7,205 33,407
Total assets......................................... 27,291 47,617
Long-term debt, less current portion................. 3,219 2,379
Shareholders' equity................................. 11,126 38,168
</TABLE>
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(1) Excludes 654,021 shares of Common Stock issuable upon the exercise of
outstanding stock options as of April 30, 1996, of which options to
purchase 395,360 shares were then exercisable. See Note 10 of the Notes to
Consolidated Financial Statements.
(2)In 1992, the Company changed its fiscal year end from December 31 to October
31.
(3)See Note 2 of the Notes to Consolidated Financial Statements for an
explanation of the computation of net income per share.

(4) Adjusted to reflect the sale by the Company of 2,138,461 shares of Common
Stock offered hereby at an assumed initial public offering price of $14.00
per share and the application of the estimated net proceeds therefrom. See
"Use of Proceeds."

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Unless otherwise indicated, (a) all references to fiscal years of the Company
in this Prospectus refer to fiscal years ended on October 31 and (b) the
information in this Prospectus (i) assumes no exercise of the Underwriters'
over-allotment option and (ii) has been adjusted to reflect a 3.326-for-one
split of the Common Stock effective immediately prior to the date hereof.

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Major risks which may affect the Company's business include management of
growth, volatility of the semiconductor industry and reliance on international
sales. For a description of these and other risks, see "Risk Factors" beginning
on page 5.

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"CFM," "Full-Flow," "Direct-Displacement," "Vapor-Flow" and the logo on the
cover of this Prospectus are trademarks of CFM Technologies, Inc. This
Prospectus also contains trademarks of other companies.

4
<PAGE>

RISK FACTORS

An investment in the shares of Common Stock offered hereby involves a high
degree of risk. Prospective investors should consider carefully the following
risk factors in addition to the other information presented in this Prospectus
before purchasing the shares of Common Stock offered hereby. This Prospectus
contains forward-looking statements which involve risks and uncertainties. The
Company's actual results may differ significantly from the results discussed
in forward-looking statements. Factors that might cause such a difference
include, but are not limited to, those discussed below.

FLUCTUATIONS IN OPERATING RESULTS

The Company has derived substantially all of its net sales from the sale of
a limited number of wet processing systems which typically have list prices
ranging from $0.9 million to $2.5 million per system. At the Company's current
revenue level, each sale or failure to make a sale can have a material effect
on the Company. A cancellation, rescheduling or delay in a shipment near the
end of a particular quarter may cause net sales in that quarter to fall
significantly below the Company's expectations and thus may materially
adversely affect the Company's operating results for such quarter. Other
factors which may lead to fluctuations in the Company's quarterly and annual
operating results include: market acceptance of the Company's systems and its
customers' products; the number of systems being manufactured during any
particular period; the geographic mix of sales; the mix of sales by
distribution channel; the timing of announcement and introduction of new
systems by the Company and its competitors; a downturn in the market for
personal computers or other products incorporating semiconductors; variations
in the configuration of systems sold; product discounts and changes in
pricing; delays in deliveries from suppliers; delays in orders due to
customers' financial difficulties; and volatility in the semiconductor and FPD
industries and the markets served by the Company's customers. Also, customers
may face competing capital budget considerations, thus making the timing of
customer orders uneven and difficult to predict. Many of the factors listed
above are beyond the control of the Company. In addition, continued
investments in research, development and engineering and the development of a
worldwide sales, marketing and customer satisfaction organization will result
in significantly higher fixed costs. There can be no assurance that the
Company will be able to achieve a rate of growth or level of sales in any
future period commensurate with its level of expenses. The impact of these and
other factors on the Company's operating results in any future period cannot
be forecast with any degree of certainty. Due to the foregoing factors, it is
likely that in some future quarter or quarters the Company's operating results
may be below the expectations of analysts and investors. In such event, the
price of the Company's Common Stock would likely be materially adversely
affected. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business--Industry Background."

ACCEPTANCE BY CUSTOMERS OF NEW TECHNOLOGY

The Company's products all rely upon proprietary technology to accomplish
wet chemical processing during semiconductor or FPD manufacturing, which
technology is significantly different than the technological approaches in
current usage for these processes. Most of the Company's competitors make use
of established technology with competitive product variations. The
semiconductor industry is especially resistant to the introduction of changes
in process or approach in a manufacturing cycle which is quite long (up to
twelve weeks), consists of many separate process events (up to 300 or more)
and suffers from limited control measurement points during the overall
fabrication process. Accordingly, managers of semiconductor fabrication
facilities ("fabs") have exhibited a strong resistance to changing equipment
and have been reluctant to embrace new technology, including the Company's
Full-Flow systems. Because a substantial investment is required by
semiconductor manufacturers to install and integrate capital equipment into a
semiconductor production line, these manufacturers will tend to choose
semiconductor equipment suppliers based on past relationships, product
compatibility and proven operating performance. Once a manufacturer has
selected a particular vendor's capital equipment, the Company believes that
the manufacturer generally relies upon that equipment for a specific
production line application and frequently will attempt to consolidate related
capital equipment purchases with the same vendor, to the degree that such
consolidation is possible. Many semiconductor manufacturers continue to
extract marginal improvements from existing wet processing technology in order
to address issues such as increases in feature density, reductions in
linewidth and planned increases in wafer size. There can be no assurance that
the Company's products will achieve broad market acceptance. See "Business--
Industry Background" and "Business--Products."

5
<PAGE>

CUSTOMER CONCENTRATION

Historically, relatively few customers have accounted for a substantial
portion of the Company's net sales. Sales to IBM, Texas Instruments, GEC
Plessey and Siemens accounted for approximately 22.6%, 17.2%, 13.1% and 10.6%,
respectively, of net sales in fiscal 1995, and sales to IBM accounted for
approximately 30.5% and 43.1% of net sales in fiscal 1993 and 1994,
respectively. Sales to SGS-Thomson and Motorola accounted for approximately
32.3% and 23.8%, respectively, of net sales in the six months ended April 30,
1996. In addition, at April 30, 1996, orders from LG International represented
approximately $11.6 million or 73.7% of the Company's backlog. There can be no
assurance that any additional orders will be received from LG International or
that these orders will not be delayed or otherwise changed. In February 1996,
Motorola, orders from which had represented a significant percentage of the
Company's backlog as of November 30, 1995, cancelled an order for a Full-Flow
system. There can be no assurance that Motorola will order additional systems
from the Company or that other significant customers will not cancel or delay
orders in the future. The Company expects a significant portion of its future
sales to remain concentrated within a limited number of customers. The
Company's arrangements with its customers are generally on a purchase order
basis and not pursuant to long-term contracts. There can be no assurance that
the Company will be able to retain its major customers or that such customers
will not cancel or reschedule orders or that cancelled orders will be replaced
by other sales. A reduction or delay in orders from any of the Company's
significant customers, including reductions or delays due to market, economic
or competitive conditions in the semiconductor or FPD industries, or the loss
of any such customers, could have a material adverse effect upon the Company's
results of operations. See "Business--Customers."

SOLE OR LIMITED SOURCES OF SUPPLY

The Company relies to a substantial extent on outside vendors to manufacture
and supply many of the components and subassemblies used in the Company's
systems. Certain of these components and subassemblies are obtained from a
sole supplier or a limited group of suppliers, many of which are small,
independent companies. Moreover, the Company believes that certain of these
components and subassemblies can only be obtained from its current suppliers.
The Company's reliance on outside vendors generally, and a sole or a limited
group of suppliers in particular, involves several risks, including a
potential inability to obtain an adequate supply of required components and
reduced control over pricing, timely delivery and quality of components. The
Company has experienced and continues to experience some reliability and
quality problems with certain key components and subassemblies provided by
single source suppliers. Because the manufacture of certain of these
components and subassemblies is a complex process and requires long lead
times, there can be no assurance that delays or shortages caused by suppliers
will not occur. The process of obtaining and qualifying replacement suppliers
could be lengthy, and no assurance can be given that any additional sources
would be available to the Company on a timely basis. Any inability to obtain
adequate deliveries of components and subassemblies which conform to the
Company's reliability and quality requirements or any other circumstance that
would require the Company to seek alternative sources of supply or, if
possible, to manufacture such components internally could delay the Company's
ability to ship its systems and could have a material adverse effect on the
Company. See "Business--Manufacturing."

DEPENDENCE ON LIMITED PRODUCT OFFERINGS

To date, substantially all of the Company's net sales have consisted of
sales of Full-Flow systems to the semiconductor industry. The Company has
recently developed a version of its Full-Flow system for use in FPD
manufacturing. The ability of the Company to diversify its operations through
the introduction and sale of system enhancements with new applications is
dependent upon the success of the Company's continuing research, development
and engineering activities, as well as its marketing efforts. The Company's
continued sales growth will depend upon achieving market acceptance of its
Full-Flow systems and future products. There can be no assurance that the
Company will be able to develop, introduce or market new systems or system
enhancements in a timely or cost-effective manner or that any such systems or
enhancements will achieve market acceptance. See "Business--Products."

DEPENDENCE UPON PRODUCT DEVELOPMENT

6
<PAGE>

remain competitive in the future, the Company will need to develop and
commercialize additional cleaning and etching processes based on its Full-Flow
platform. Further, the Company will need to develop new products which are
capable of supporting customers' increasingly complex process requirements and
which compete effectively on the basis of overall COO, including process
performance and capital productivity. The market for FPD manufacturing
equipment presents an additional challenge as the technology is at an earlier
stage and subject to more rapid evolution. The success of new system
introductions is dependent on a number of factors, including timely completion
of new system designs, system performance and market acceptance, and may be
adversely affected by manufacturing inefficiencies associated with the start
up of such new introductions and the challenge of producing systems in volume
which meet customer requirements. Because it is generally not possible to
predict the time required and costs involved in reaching certain research,
development and engineering objectives, actual development costs could exceed
budgeted amounts and estimated product development schedules may require
extension. Any delays or additional development costs could have a material
adverse effect on the Company's business and results of operations. There can
be no assurance that the Company will successfully develop and introduce new
products or enhancements to its existing products on a timely basis or in a
manner which satisfies customers or achieves widespread market acceptance.

Because of the large number of components in, and the complexity of, the
Company's systems, significant delays can occur between the introduction of
systems or system enhancements and the commencement of commercial shipments.
The Company has from time to time experienced delays in the introduction of,
and certain technical and manufacturing difficulties with, certain of its
systems and enhancements, and may experience such delays and technical and
manufacturing difficulties in future introductions or volume production of new
systems or enhancements. The Company's inability to overcome such
difficulties, to meet the technical specifications of any new systems or
enhancements, or to manufacture and ship these systems or enhancements in
volume and in a timely manner, would materially adversely affect the Company's
business and results of operations, as well as its customer relationships. In
addition, the Company from time to time incurs unanticipated costs to ensure
the functionality and reliability of its products early in their life cycles,
which costs can be substantial. If new products or enhancements experience
reliability or quality problems, the Company could encounter a number of
difficulties, including reduced orders, higher manufacturing costs, delays in
collection of accounts receivable and additional service and warranty
expenses, all of which could materially adversely affect the Company's
business and results of operations. See "Business--Products" and "Business--
Research, Development and Engineering."

MANAGEMENT OF GROWTH

The Company is currently undergoing a period of rapid growth. To accommodate
this growth, the Company is in the process of implementing a variety of new
and upgraded operating and financial systems, procedures and controls. There
can be no assurance that such efforts can be accomplished successfully, or
that the Company's systems, procedures and controls will be adequate to
support the Company's operations. The Company also faces the task of
identifying, recruiting, training and integrating new employees quickly enough
to keep pace with its rapid growth. Many of the positions which are critical
to supporting the Company's growth require experience with semiconductor
capital equipment. The recent overall growth of the semiconductor capital
equipment industry has made the recruitment of such experienced personnel
difficult. The Company's growth may also strain the Company's management,
manufacturing, financial and other resources. Any failure to expand these
areas in an efficient manner could have a material adverse effect on the
Company. The Company has recently leased an additional facility and may be
required to secure additional facilities in the future. The need to acquire
additional remote facilities could be disruptive and could have a material
adverse effect on the Company. See "Business--Employees" and "Business--
Facilities."

DEPENDENCE UPON KEY PERSONNEL

The success of the Company depends to a large extent upon the efforts of key
managerial and technical employees, such as Christopher F. McConnell, the
Company's Chairman and co-founder, Roger A. Carolin, President and Chief
Executive Officer, Huw K. Thomas, Executive Vice President, Alan E. Walter,
Senior Vice

7
<PAGE>

President and co-founder, Steven Bay, Chief Technical Officer, and Steven
Verhaverbeke, Senior Process Scientist. The loss of the services of any of
these persons could have a material adverse effect on the Company. The Company
has not entered into written employment agreements with any of its executive
officers other than its chief financial officer, nor does the Company maintain
key man life insurance on any of its personnel. The success of the Company
will also depend upon its ability to attract and retain qualified employees,
particularly highly skilled design and process engineers involved in the
manufacture of existing systems, the development of new applications and
systems and the installation, training and maintenance related to those
systems already installed at customer sites. There can be no assurance that
the Company will be successful in retaining or recruiting, training and
integrating the necessary key personnel to support its anticipated growth,
which could have a material adverse effect on the Company's results of
operations. See "Business--Employees" and "Management--Directors and Executive
Officers."

LENGTHY SALES CYCLE

Sales of the Company's systems depend, in significant part, upon the
decision of a prospective customer to increase manufacturing capacity, which
typically involves a significant capital commitment. The amount of time from
the initial contact with the customer to the first order is typically one to
two years. The Company's ability to obtain orders from potential customers has
depended in the past and may continue to depend in the future upon customers
purchasing a new system in order to evaluate Full-Flow and Direct-Displacement
drying technologies as an alternative to existing wet processing technologies.
For many potential customers, decisions to undertake such evaluations occur
infrequently. The Company often experiences delays in finalizing further
system sales while the customer evaluates and receives approvals for the
purchase of additional systems. Such delays may include the time necessary to
plan, design or complete a new or expanded fab. Due to these factors, the
Company's systems typically have a lengthy sales cycle during which the
Company may expend substantial funds and management effort. There can be no
assurance that any of these expenditures or efforts on the part of the Company
will result in sales. See "Business--Products" and "Business--Competition."

VOLATILITY OF THE SEMICONDUCTOR INDUSTRY

The Company's business depends, in significant part, upon capital
expenditures by manufacturers of semiconductor devices, which in turn depend
upon the current and anticipated market demand for such devices and the
products utilizing such devices. The semiconductor industry has been highly
volatile and historically has experienced periods of oversupply, resulting in
significantly reduced demand for capital equipment, including wet processing
systems. In recent years, the semiconductor industry has experienced
significant growth well above its historical trend, which has resulted in a
corresponding growth in the capital equipment industry. Recently, a number of
semiconductor manufacturers have experienced a reduction in order growth and,
in a few instances, a reduction in overall orders. These events have caused
certain semiconductor manufacturers to postpone or cancel equipment deliveries
to previously planned expansion or new fab construction projects. In February
1996, the Company experienced the cancellation of an order for one Full-Flow
system, and there can be no assurance that further order cancellations or
reductions in order growth or overall orders for semiconductors will not have
a material adverse effect upon the Company's business or results of
operations. The Company believes that the FPD market may be similarly
volatile. The need for continued investment in research, development and
engineering, marketing and customer satisfaction activities may limit the
Company's ability to reduce expenses in response to future downturns in the
semiconductor or FPD industries. The Company's net sales and results of
operations could be materially adversely affected if downturns or slowdowns in
the semiconductor or FPD markets occur in the future.

HIGHLY COMPETITIVE INDUSTRY

8
<PAGE>

processing technology, and have broader product lines, more experience with
high volume manufacturing, broader name recognition, substantially larger
installed bases and significantly greater financial, technical and marketing
resources than the Company. In the semiconductor wet processing market, the
Company competes primarily with Dainippon Screen, FSI International, Santa
Clara Plastics, Steag MicroTech, SubMicron Systems, Tokyo Electron Limited and
Verteq. In the FPD wet processing market, the Company competes primarily with
Dainippon Screen and Semitool. There can be no assurance that the Company will
overcome the established positions of these competitors or that the Company's
competitors will not develop enhancements to or future generations of
competitive products that will offer price and performance features that are
superior to the Company's systems. The Company believes that in order to
remain competitive, it must invest significant financial resources in
developing new product features and enhancements and in maintaining customer
satisfaction worldwide. In marketing its products, the Company will face
competition from suppliers employing new technologies in order to extend the
capabilities of competitive products beyond their current limits or increase
their productivity. In addition, increased competitive pressure could lead to
intensified price-based competition, resulting in lower prices and margins,
which would materially adversely affect the Company's business and results of
operations. See "Business--Competition."

INTELLECTUAL PROPERTY RIGHTS

The Company relies on a combination of patents, copyrights, trademarks and
trade secrets, non-disclosure agreements and other forms of intellectual
property protection to protect its proprietary technology. Although the
Company believes that its patents and trademarks may have value, the Company
believes that its future success will depend primarily on the innovation,
technical expertise and marketing abilities of its personnel. The Company
currently holds 12 patents in the United States and 20 international patents
and has patent applications pending or under evaluation in the United States
and various foreign jurisdictions. The Company is currently asserting its
patent rights in litigation against three defendants, alleging inducement of
infringement and contributory infringement of one of the Company's patents.
The defendants have denied infringement and asserted, among other things, that
the patent at issue is invalid, and one of the defendants has asserted that
the patent is unenforceable. There can be no assurance that any claim in the
subject patent will be adjudged to be sufficiently broad to encompass the
defendants' products or that the subject patent will not be found to be
unenforceable or invalid during prosecution of the actions. A finding of
invalidity or unenforceability could result in the Company's competitors
developing products using the Company's proprietary technology, which in turn
could have a material adverse effect on the Company. The Company believes that
these actions, even if completely successful, will be costly to the Company in
terms of both financial and management resources.

There can be no assurance that additional patents will be issued on the
Company's pending applications or that competitors will not be able
legitimately to ascertain proprietary information embedded in the Company's
products which is not covered by patent or copyright. In such case, the
Company may be precluded from preventing its competitors from making use of
such information. There are no pending lawsuits or claims against the Company
regarding infringement of any existing patents or other intellectual property
rights of others. There can be no assurance, however, that such infringement
claims will not be asserted in the future, nor can there be any assurance, if
such claims are made, that the Company will be able to defend such claims
successfully or, if necessary, obtain licenses on reasonable terms. Adverse
determinations in any litigation naming the Company could subject the Company
to significant liabilities to third parties, require the Company to seek
licenses from third parties and prevent the Company from manufacturing and
selling its systems. Any of these events could have a material adverse effect
on the Company. See "Business--Intellectual Property."

ENVIRONMENTAL REGULATION

The Company is subject to a variety of federal, state and local laws, rules
and regulations relating to the use, storage, discharge and disposal of
hazardous chemicals used during its research, development and engineering
activities. The Company believes that it is currently in compliance in all
material respects with such laws, rules and regulations. However, failure to
so comply could result in substantial liability to the Company,

9
<PAGE>

suspension or cessation of the Company's operations, restrictions on the
Company's ability to expand its operations or requirements for the acquisition
of additional equipment or other significant expense. See "Business--
Manufacturing."

INTERNATIONAL SALES

Sales to customers located outside the United States accounted for
approximately 51.7% of the Company's net sales in each of fiscal 1994 and 1995
and 43.4% in the six months ended April 30, 1996. The Company anticipates that
such international sales will continue to account for a significant percentage
of the Company's net sales. International sales are subject to numerous risks,
including United States and international regulatory requirements and policy
changes, political and economic instability, increased installation costs,
difficulties in accounts receivable collection, exchange rates, tariffs and
other barriers, extended payment terms, difficulty in staffing and managing
international operations, dependence on and difficulties in managing
international distributors or representatives and potentially adverse tax
consequences. Furthermore, although the Company endeavors to meet technical
standards established by foreign regulatory bodies, there can be no assurance
that the Company will be able to comply with such standards in the future. In
addition, the laws of certain other countries may not protect the Company's
intellectual property to the same extent as the laws of the United States. As
part of its efforts to penetrate the East Asia market, the Company entered
into a sales agency agreement with P.K. Ltd. (formerly ANAM S&T Co., Ltd.)
("PK") in Korea in 1991 and a distribution agreement with Innotech Corporation
("Innotech") in Japan in 1992. Although management believes that it maintains
good relationships with PK and Innotech, there can be no assurance that these
relationships will continue. In the event of a termination of any of the
Company's existing representation, agency or distribution arrangements, the
Company's strategy to expand international sales could be adversely affected.
Although the Company's sales during fiscal 1995 were predominantly denominated
in United States dollars, to the extent that the Company expands its
international operations or changes its pricing practices to denominate prices
in international currencies, the Company will be exposed to increased risks of
currency fluctuation. Additionally, a strengthening in the value of the United
States dollar in relation to international currencies may adversely affect the
Company's future sales to international customers. There can be no assurance
that any of these factors will not have a material adverse effect on the
Company. See "Business--Sales and Marketing."

EFFECT OF CERTAIN ANTI-TAKEOVER PROVISIONS

The Company's Articles of Incorporation, as amended, and the Pennsylvania
Business Corporation Law contain certain provisions which could delay or
impede the removal of incumbent directors and could make more difficult a
merger, tender offer or proxy contest involving the Company, even if such a
transaction would be beneficial to the interests of the shareholders, or could
discourage a third party from attempting to acquire control of the Company.
The Company has authorized 1,000,000 shares of Preferred Stock, which the
Company could issue without further shareholder approval and upon such terms
and conditions, and having such rights, privileges and preferences, as the
Board of Directors may determine. The Company has no current plans to issue
any Preferred Stock. In addition, provisions of the Pennsylvania Business
Corporation Law prohibit the Company from engaging in certain business
combinations and allow holders of the Company's voting stock to "put" their
stock to an acquiror for fair value in the event of a control transaction (the
acquisition of 20% of the voting stock of the Company). These provisions could
have the effect of delaying, deferring or preventing a change in control of
the Company and may adversely affect the voting and other rights of holders of
Common Stock. Further, the Company's Articles of Incorporation, as amended,
and Amended and Restated By-Laws include provisions to reduce the personal
liability of the Company's directors for monetary damages resulting from
breaches of their fiduciary duty and to permit the Company to indemnify its
directors and officers to the fullest extent permitted by Pennsylvania law.
See "Description of Capital Stock--Anti-Takeover Provisions."

CONTINUED EXISTENCE OF A CONTROL GROUP

Upon completion of this offering, Christopher F. McConnell, the Company's
Chairman of the Board, and all of the executive officers and directors of the
Company, collectively, will beneficially own approximately

10
<PAGE>

20.4% and 40.3%, respectively, of the Common Stock (or 19.3% and 38.3%,
respectively, if the Underwriters' over-allotment option is exercised in
full). Existing management will hold sufficient voting power to enable it to
continue to control the business and affairs of the Company for the
foreseeable future. Such concentration of ownership may also have the effect
of delaying, deferring or preventing a change in control of the Company. See
"Principal and Selling Shareholders."

ABSENCE OF PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

There has been no prior public market for the Company's Common Stock.
Consequently, the initial public offering price has been determined by
negotiations between the Company and the Representatives of the Underwriters.
See "Underwriting." There can be no assurance that an active public market for
the Common Stock will develop or be sustained after this offering or that the
market price of the Common Stock will not decline below the initial public
offering price. The Company believes that a variety of factors could cause the
price of the Company's Common Stock to fluctuate, perhaps substantially,
including: announcements of developments related to the Company's business;
quarterly fluctuations in the Company's actual or anticipated operating
results and order levels; general conditions in the semiconductor and FPD
industries or the worldwide economy; announcements of technological
innovations; new products or product enhancements by the Company or its
competitors; developments in patents or other intellectual property rights and
litigation; and developments in the Company's relationships with its
customers, distributors and suppliers. In addition, in recent years the stock
market in general, and the market for shares of small capitalization and
semiconductor industry-related stocks in particular, have experienced extreme
price fluctuations which have often been unrelated to the operating
performance of affected companies. Any such fluctuations in the future could
adversely affect the market price of the Company's Common Stock.

DILUTION AND BENEFIT TO EXISTING SHAREHOLDERS

The proposed initial public offering price is substantially higher than the
net tangible book value per share of Common Stock as of April 30, 1996. As a
result, investors participating in this offering will incur immediate and
substantial net tangible book value dilution. After giving effect to the sale
of 2,138,461 shares of Common Stock by the Company in this offering, the net
tangible book value of the Company as of April 30, 1996 would have been
$37,916,000 or $6.38 per share. This represents an immediate increase in such
net tangible book value of $3.52 per share to existing shareholders and an
immediate dilution of $7.62 per share to new investors purchasing shares in
this offering. See "Dilution."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of shares of Common Stock in the public market following this offering
by existing shareholders or option holders could adversely affect the market
price of the Common Stock. Upon the completion of this offering, 3,741,724
outstanding shares of Common Stock will be "restricted securities" within the
meaning or Rule 144 under the Securities Act of 1933, as amended (the
"Securities Act"). The beneficial owners of 3,598,721 shares of Common Stock
and options to purchase 539,881 shares of Common Stock, including the
Company's executive officers and directors, have agreed not to sell any of
their shares until 180 days after the date of this Prospectus without the
prior written consent of PaineWebber Incorporated. Under Rule 144 as currently
in effect, these shares will not be eligible for public sale until at least
November 1, 1996, and then will be subject to the volume limitations and other
conditions imposed by Rule 144. No prediction can be made as to the effect, if
any, that future sales of Common Stock, or the availability of Common Stock
for future sale, will have on the market price of the Common Stock prevailing
from time to time. See "Shares Eligible for Future Sale."

11
<PAGE>

THE COMPANY

The Company was incorporated in Pennsylvania in November 1994 under the name
"The CFM Technology Corporation" in connection with the reorganization of the
Company's operations into a holding company structure. Pursuant to the
reorganization, the Company issued shares of Common Stock to the shareholders
of CFM Technologies, Inc., a Pennsylvania corporation incorporated in May 1984
("CFM Sub"), in exchange for all of the issued and outstanding capital stock
of CFM Sub, and CFM Sub became the wholly-owned operating subsidiary of the
Company. In December 1995, the Company changed its name to "CFM Technologies,
Inc." and CFM Sub changed its name to "CFM Technologies, Incorporated." The
Company has four other wholly owned subsidiaries: CFMT, Inc., a Delaware
investment holding company incorporated in 1992; CFM International Corp., a
foreign sales corporation incorporated in Guam in 1995; CFM Technologies
Limited, incorporated in Scotland in 1995; and CFM Technologies, S.A.,
incorporated in France in 1996. As used in this Prospectus, references to the
"Company" and "CFM" refer to CFM Technologies, Inc. and its consolidated
subsidiaries. The Company's principal executive offices are located at 1336
Enterprise Drive, West Chester, Pennsylvania 19380. The Company's telephone
number is (610) 696-8300.

USE OF PROCEEDS

The net proceeds to the Company from the sale of the shares of Common Stock
by the Company in this offering are estimated to be $27,042,762 ($31,339,362
if the Underwriters' over-allotment option is exercised in full) at an assumed
initial public offering price of $14.00 and after deducting underwriting
discounts and commissions and estimated offering expenses. The Company intends
to use approximately $6.0 million to repay short-term working capital
borrowings under its revolving line of credit with a commercial bank. This
indebtedness bears interest at a rate equal to the lending bank's prime rate
and is payable upon the demand of the bank. In addition, the Company intends
to use approximately $1.5 million to expand its manufacturing facility and
approximately $1.5 million to construct a flat panel applications laboratory.
Further, the Company intends to use approximately $1.1 million to repay
certain long-term indebtedness of the Company incurred in October 1995 in
order to finance the Company's existing applications laboratory. This
indebtedness bears interest at a rate equal to the lending bank's prime rate
plus 0.25% and matures on November 1, 1998. The Company also intends to use
approximately $0.8 million of the net proceeds to expand its information
systems infrastructure, including purchases of sophisticated automated design
software and workstations. The balance of the net proceeds will be used for
working capital and general corporate purposes, including possible
acquisitions of or investments in complementary businesses or products or the
right to use complementary technologies. The Company is not currently engaged
in any negotiations with respect to such acquisitions or investments. Pending
such uses, the proceeds from this offering will be invested in deposits with
banks and in short-term, investment grade, interest bearing securities.

DIVIDEND POLICY

The Company has never declared or paid cash dividends on its Common Stock
and does not anticipate paying any cash dividends in the foreseeable future.
The Company currently intends to retain its earnings, if any, for the
development of its business.

12
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company as of April
30, 1996 and as adjusted to give effect to the sale of the 2,138,461 shares of
Common Stock by the Company in this offering at an assumed initial public
offering price of $14.00 and the application of the estimated net proceeds
therefrom (after deduction of underwriting discounts and commissions and
estimated offering expenses).

<TABLE>
<CAPTION>
APRIL 30, 1996
-------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt, less current portion....................... $3,219 $ 2,379
------- -------
Shareholders' equity:
Preferred stock, no par value; 1,000,000 shares
authorized; no shares issued and outstanding; no shares
issued and outstanding, as adjusted..................... -- --
Common stock, no par value; 10,000,000 shares authorized;
3,803,263 issued and outstanding; 5,941,724 shares
issued and outstanding, as adjusted(1).................. 9,616 36,658
Retained earnings........................................ 1,510 1,510
------- -------
Total shareholders' equity............................. 11,126 38,168
------- -------
Total capitalization................................. $14,345 $40,547
======= =======
</TABLE>
- --------

(1) Excludes 654,021 shares of Common Stock issuable upon the exercise of
stock options outstanding on April 30, 1996, of which options to purchase
395,360 shares were then exercisable. See Note 10 of the Notes to
Consolidated Financial Statements.

13
<PAGE>

DILUTION

As of April 30, 1996, the net tangible book value of the Company was
$10,874,000, or $2.86 per share of Common Stock. "Net tangible book value" per
share is equal to the Company's net tangible book value (total tangible assets
less total liabilities) divided by the number of outstanding shares of Common
Stock. After giving effect to the sale of the 2,138,461 shares of Common Stock
by the Company in this offering (after deduction of underwriting discounts and
commissions and estimated offering expenses), the net tangible book value of
the Company at April 30, 1996 would have been $37,916,000, or $6.38 per share
of Common Stock, representing an immediate increase in such net tangible book
value of $3.52 per share to existing shareholders and an immediate dilution of
$7.62 per share to investors in this offering. The following table illustrates
this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price.......................... $14.00
Net tangible book value per share before this offering....... $2.86
Increase attributable to investors in this offering.......... 3.52
-----
Net tangible book value per share after this offering.......... 6.38
------
Dilution to investors in this offering......................... $ 7.62
======
</TABLE>

The foregoing computations and table assume no exercise of the Underwriters'
over-allotment option or stock options. As of April 30, 1996, options to
purchase 654,021 shares of Common Stock were outstanding, with a weighted
average exercise price of $4.60. If all such options were exercised, the
dilution to investors in this offering would be $7.94 per share. See
"Capitalization," "Management--1992 Stock Option Plan," "Description of
Capital Stock" and Note 10 of the Notes to Consolidated Financial Statements.

The following table summarizes on a pro forma basis, as of April 30, 1996,
the differences between existing shareholders and purchasers of shares in this
offering with respect to the number of shares of Common Stock purchased from
the Company, the total consideration paid and the average price per share
paid:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
----------------- ------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing
shareholders(1)(2)..... 3,803,263 64.0% $ 9,616,000 24.3% $ 2.53
Investors in this
offering(1)............ 2,138,461 36.0 29,938,454 75.7 14.00
--------- ----- ----------- -----
Total................... 5,941,724 100.0% $39,554,454 100.0%
========= ===== =========== =====
</TABLE>
- --------

(1) Sales by the Selling Shareholders in this offering will reduce the number
of shares held by existing shareholders to 3,741,724 or 63.0% of the total
number of shares of Common Stock outstanding after this offering (59.7% if
the Underwriters' over-allotment option is exercised in full), and will
increase the number of shares held by investors in this offering to
2,200,000, or 37.0% of the total number of shares of Common Stock
outstanding after this offering (40.3% if the Underwriters' over-allotment
option is exercised in full).

(2) The above table assumes no exercise of options outstanding as of April 30,
1996. Assuming the exercise of all such options, the total number of
shares held by existing shareholders would be 4,457,284, or 67.6% of the
shares outstanding. The total consideration paid by existing shareholders
would be $12,626,325, or 29.7% of the total consideration, and the average
price per share for all existing shareholders would be $2.83.

14
<PAGE>

SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The following table contains certain selected consolidated financial data of
the Company and is qualified by the more detailed Consolidated Financial
Statements and Notes thereto included elsewhere in this Prospectus. The
consolidated statement of income data for the fiscal years ended October 31,
1993, 1994 and 1995 and the consolidated balance sheet data as of October 31,
1994 and 1995 have been derived from the Consolidated Financial Statements of
the Company which have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report included elsewhere in this
Prospectus. The consolidated statement of income data for the year ended
December 31, 1991, the ten months ended October 31, 1992 and the six months
ended April 30, 1995 and 1996 and the consolidated balance sheet data as of
December 31, 1991, October 31, 1992 and 1993 and April 30, 1996 are derived
from unaudited financial statements. The unaudited financial statements
include all adjustments, consisting only of normal adjustments, that the
Company considers necessary for a fair presentation of the results of
operations for such periods. This data should be read in conjunction with the
Consolidated Financial Statements and Notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere herein.

<TABLE>
<CAPTION>
TEN MONTHS SIX MONTHS
ENDED FISCAL YEAR ENDED
YEAR ENDED OCTOBER ENDED OCTOBER 31, APRIL 30,
DECEMBER 31, 31, ----------------------- --------------
1991 1992(1) 1993 1994 1995 1995 1996
------------ ---------- ------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME
DATA:
Net sales............... $4,943 $5,939 $11,840 $15,937 $23,430 $9,331 $19,697
Cost of sales........... 2,795 3,626 6,752 9,114 13,463 5,594 10,637
------ ------ ------- ------- ------- ------ -------
Gross profit.......... 2,148 2,313 5,088 6,823 9,967 3,737 9,060
Operating expenses:
Research, development
and engineering...... 158 327 720 2,100 1,717 811 2,092
Selling, general and
administrative....... 849 1,193 2,273 3,150 5,972 2,472 4,675
------ ------ ------- ------- ------- ------ -------
Total operating
expenses........... 1,007 1,520 2,993 5,250 7,689 3,283 6,767
------ ------ ------- ------- ------- ------ -------
Operating income........ 1,141 793 2,095 1,573 2,278 454 2,293
Interest expense........ 744 615 755 797 173 74 215
------ ------ ------- ------- ------- ------ -------
Income before income
taxes.................. 397 178 1,340 776 2,105 380 2,078
Income taxes............ 138 33 457 238 703 127 727
------ ------ ------- ------- ------- ------ -------
Net income.............. $ 259 $ 145 $ 883 $ 538 $ 1,402 $ 253 $ 1,351
====== ====== ======= ======= ======= ====== =======
Net income per
share(2)............... $ 0.35 $ 0.06 $ 0.34
======= ====== =======
Weighted average common
and common equivalent
shares(2).............. 4,016 4,016 4,016
</TABLE>

<TABLE>
<CAPTION>
OCTOBER 31,
DECEMBER 31, ----------------------------- APRIL 30,
1991 1992 1993 1994 1995 1996
------------ ------ ------ ------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents............. $ 296 $ 51 $ 112 $ 1,106 $ 408 $ 649
Working capital.......... 1,810 2,211 3,118 7,177 8,136 7,205
Total assets............. 5,049 6,062 9,332 16,689 18,454 27,291
Long-term debt, less
current portion......... 4,934 5,493 5,610 7,820 3,005 3,219
Shareholders' equity
(deficit)............... (991) (846) 237 5,109 9,775 11,126
</TABLE>
- --------
(1) In 1992, the Company changed its fiscal year end from December 31 to
October 31.
(2) See Note 2 of the Notes to Consolidated Financial Statements for an
explanation of the computation of net income per share.

15
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

CFM designs, manufactures and markets advanced wet processing equipment for
sale to the worldwide semiconductor and flat panel display manufacturing
industries. The Company was founded in 1984 and began commercial operations in
1990 following a period of technology and product development, during which
time the Company's patented Full-Flow enclosed processing and Direct-
Displacement drying technologies were developed. Sales of Full-Flow systems
have accounted for substantially all of the Company's net sales over the last
three fiscal years. Since 1991, the Company has also designed, manufactured
and sold a number of systems under the Vapor-Flow trade name, including two
such systems for use by flat panel display manufacturers. Because the Vapor-
Flow System supports limited applications, the Company recently developed a
flat panel display wet processing system based on its Full-Flow platform, and
has discontinued offering the Vapor-Flow system.

The Company has derived substantially all of its revenues from the sale of a
relatively small number of its systems, which typically range in price from
$0.9 million to $2.5 million. Although the Company recorded losses in certain
quarters in fiscal 1993 and 1994, the Company was profitable for each of these
fiscal years. While the Company has experienced profitable operations for the
past seven fiscal quarters, there can be no assurance that the Company will be
able to continue this quarterly profitability. The Company has significantly
increased its expense levels to support its recent growth and intends to
expand its sales and marketing and customer satisfaction activities worldwide
and to continue to make significant investments in research, development and
engineering. There can be no assurance that the Company will be able to
achieve a rate of growth or level of sales in any future period commensurate
with its level of expenses. Future results will depend upon a variety of
factors, including the timing of significant orders, the ability of the
Company to bring new systems to market, the timing of new product releases by
the Company's competitors, patterns of capital spending by the Company's
customers, market acceptance of new or enhanced versions of the Company's
systems, changes in pricing by the Company or its competitors and the
volatility of the semiconductor and flat panel display industries and of the
markets served by the Company's customers.

The Company sells its systems worldwide and records a significant portion of
its sales to customers outside the United States. In fiscal 1993, 1994 and
1995 and the six months ended April 30, 1996, international sales constituted
25.3%, 51.7%, 51.7% and 43.4% of net sales, respectively. The Company's
international sales have occurred in Europe, Japan, Korea and Israel. While
gross margins on international sales made by the Company's Korean sales agent
are frequently higher than those on other sales, the net contribution to the
Company's profitability for such sales is similar to sales made in other
territories due to the commissions payable in connection with such sales.
However, installation costs (which impact gross margins) are typically higher
with respect to international sales. The Company anticipates that
international sales will continue to account for a significant portion of net
sales, although the percentage of international sales is expected to fluctuate
from period to period.

16
<PAGE>

RESULTS OF OPERATIONS

The following table sets forth the components of the Company's statements of
income for the fiscal years ended October 31, 1993, 1994 and 1995 and the six
months ended April 30, 1995 and 1996, expressed as a percentage of net sales.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
OCTOBER 31, SIX MONTHS ENDED APRIL 30,
------------------- --------------------------
1993 1994 1995 1995 1996
----- ----- ----- ---- ----
<S> <C> <C> <C> <C> <C>
Net sales................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales............... 57.0 57.2 57.5 60.0 54.0
----- ----- ----- ----- -----
Gross profit............ 43.0 42.8 42.5 40.0 46.0
Operating expenses:
Research, development and
engineering.............. 6.1 13.2 7.3 8.7 10.6
Selling, general and
administrative........... 19.2 19.7 25.5 26.5 23.7
----- ----- ----- ----- -----
Total operating
expenses............... 25.3 32.9 32.8 35.2 34.3
----- ----- ----- ----- -----
Operating income............ 17.7 9.9 9.7 4.8 11.7
Interest expense............ 6.4 5.0 0.7 0.7 1.1
----- ----- ----- ----- -----
Income before income taxes.. 11.3 4.9 9.0 4.1 10.6
Income taxes................ 3.9 1.5 3.0 1.4 3.7
----- ----- ----- ----- -----
Net income.................. 7.4% 3.4% 6.0% 2.7% 6.9%
===== ===== ===== ===== =====
</TABLE>

Net Sales. Net sales increased 34.7% from $11.8 million in fiscal 1993 to
$15.9 million in fiscal 1994 and 47.2% to $23.4 million in fiscal 1995. Net
sales for the six months ended April 30, 1996 increased 111.1% to $19.7
million from $9.3 million for the six months ended April 30, 1995. These
increases resulted primarily from increased demand for the Company's Full-Flow
systems by the semiconductor industry as the Company's customers equipped new
facilities or expanded facilities, resulting in multiple systems purchases by
some of the Company's major customers, including new customers. With regard to
the flat panel display industry, the Company sold one system in each of fiscal
1993 and 1994 and two systems in the six months ended April 30, 1996 and
expects to have additional net sales in the remainder of fiscal 1996.
International sales represented 25.3%, 51.7%, 51.7% and 43.4% of total net
sales in fiscal 1993, 1994 and 1995 and the six months ended April 30, 1996,
respectively. The number of international customers receiving shipments of the
Company's systems increased in fiscal 1995 and in the six months ended April
30, 1996. The Company expects international sales to continue to represent a
significant portion of its net sales as a result of the Company's planned
expansion of its international marketing efforts.

Gross Profit. Gross profit as a percentage of net sales remained
substantially constant from fiscal 1993 through fiscal 1995. Efficiencies
gained through increased production volume during these periods were more than
offset by increased recruiting and training costs as the Company significantly
increased the size of its production, installation and service staffs to
support the increased level of shipments. Gross profit for the six months
ended April 30, 1996 increased to 46.0% of net sales from 40.0% of net sales
for the six months ended April 30, 1995. This increase was attributable to
increases in sales prices, changes in product mix and manufacturing
efficiencies resulting from the expansion of the Company's manufacturing
facilities.

Research, Development and Engineering. Research, development and engineering
expenses increased from $0.7 million or 6.1% of net sales in fiscal 1993 to
$2.1 million or 13.2% of net sales in fiscal 1994, and decreased to $1.7
million or 7.3% of net sales in fiscal 1995. Research, development and
engineering expenses increased by 158.0% from $0.8 million, or 8.7% of net
sales, in the six months ended April 30, 1995 to $2.1 million, or 10.6% of net
sales, in the six months ended April 30, 1996. The increase in fiscal 1994 was
primarily attributable to two major development projects. In 1993, the Company
was awarded a contract by SEMATECH, a consortium of semiconductor
manufacturers, to develop and produce an advanced semiconductor wet processing
system. Early development work on this project took place during fiscal 1993,
and system production,

17
<PAGE>

delivery and extensive process validation took place during fiscal 1994.
Simultaneously in fiscal 1994, the Company also began developing an improved
wet processing system for flat panel display manufacturing. This development
project resulted in the production of a system which was delivered in late
fiscal 1994. The decline in research, development and engineering expenses in
fiscal 1995 was primarily attributable to the completion of these two major
development projects early in fiscal 1995. SEMATECH provided research and
development funding to the Company in the amount of approximately $1.7 million
in each of fiscal 1993 and fiscal 1994. These amounts were recorded as a
reduction to research, development and engineering expenses in those fiscal
years. See Note 2 of the Notes to Consolidated Financial Statements. The
substantial increase in research, development and engineering spending in the
six months ended April 30, 1996 over the same period in the prior year is
attributable to the Company's completion in March 1996 of the prototype Full-
Flow system configured to process 100 wafers per vessel and the preparation
and release of this system's design to the Company's manufacturing division.
The first production unit of this 100-wafer system was shipped in April 1996.
In addition, during the six months ended April 30, 1996, the Company incurred
substantial research, development and engineering expenses in support of the
development of its first Full-Flow system for use in the manufacture of flat
panel displays. The first FPD system was shipped in April 1996. The Company
has received orders for four other Full-Flow FPD systems for delivery during
the remainder of 1996. The Company believes that a substantial investment in
research, development and engineering is critical to maintaining a strong
technological position and that such expenses will continue to increase in the
remainder of fiscal 1996 over the 1995 level.

Selling, General and Administrative. Selling, general and administrative
expenses increased from $2.3 million or 19.2% of net sales in fiscal 1993 to
$3.2 million or 19.7% of net sales in fiscal 1994, and to $6.0 million or
25.5% of net sales in fiscal 1995. Selling, general and administrative
expenses increased by 89.1% from $2.5 million in the six months ended April
30, 1995 to $4.7 million in the six months ended April 30, 1996, while
selling, general and administrative expenses decreased as a percentage of net
sales to 23.7% of net sales in the six months ended April 30, 1996 from 26.5%
of net sales in the comparable prior year period. The increase in fiscal 1994
was primarily attributable to increases in sales and marketing costs resulting
from expansion of the sales and marketing staff and the formal organization of
the Company's customer service function. The increases in fiscal 1995 and the
six months ended April 30, 1996 resulted primarily from (i) increases in sales
and marketing costs related to increased customer support, (ii) administrative
costs related to increases in staff in the accounting and finance functions
and (iii) legal expenses related to litigation undertaken by the Company to
protect one of the Company's patents. See "Business--Intellectual Property."
The Company believes that selling, general and administrative expenses,
including legal expenses related to the patent litigation, will increase in
fiscal 1996 and beyond, as increased personnel and sales and support expenses
are expected in connection with the Company's efforts to increase its net
sales.

Interest Expense. Interest expense, net of interest income, remained
approximately constant from fiscal 1993 to fiscal 1994 at $0.8 million, which
represented 6.4% of net sales in fiscal 1993 and 5.0% of net sales in fiscal
1994, and decreased to $0.2 million or 0.7% of net sales in fiscal 1995.
Interest expense, net of interest income, increased 190.5% from $0.1 million,
or 0.7% of net sales, in the six months ended April 30, 1995 to $0.2 million,
or 1.1% of net sales, in the six months ended April 30, 1996. In each of
fiscal 1993 and 1994, interest expense was primarily attributable to interest
of $0.7 million on the Company's obligation to two related-party limited
partnerships which provided the Company with research and development funding
in 1984 and 1985. The decrease in net interest expense in fiscal 1995 was
primarily attributable to the elimination on November 1, 1994 of the Company's
obligation to these limited partnerships. See Note 8 of the Notes to
Consolidated Financial Statements. The Company incurred interest expenses due
to intra-period borrowings on its revolving line of credit during fiscal 1995
and experienced a substantial increase in interest expense in the six months
ended April 30, 1996 as borrowings on the Company's line of credit increased
to support increased working capital requirements.

Income Taxes. The Company's effective tax rate decreased from 34.1% of
income before income taxes in fiscal 1993 to 30.6% in fiscal 1994, and
increased to 33.4% in fiscal 1995. The rate for fiscal 1994 was affected

18
<PAGE>

by recognition of a research and development tax credit. The rate for fiscal
1995 reflects a reduction in the research and development tax credit because
of lower research, development and engineering expenses. The Company recorded
income tax expense at an effective rate of 35.0% of income before income taxes
during the six months ended April 30, 1996.

QUARTERLY RESULTS OF OPERATIONS

The following tables present certain unaudited consolidated quarterly
financial information for each quarter in the fiscal years ended October 31,
1994 and 1995 and the first two quarters of fiscal 1996. In the opinion of the
Company's management, this information has been prepared on the same basis as
the Consolidated Financial Statements appearing elsewhere in this Prospectus
and includes all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the financial results set forth herein. Results of
operations for any previous quarter are not necessarily indicative of results
for any future period.

<TABLE>
<CAPTION>
FISCAL 1994 FISCAL 1995 FISCAL 1996
-------------------------------------- ------------------------------------ -----------------
JAN. 31 APRIL 30 JULY 31 OCT. 31 JAN. 31 APRIL 30 JULY 31 OCT. 31 JAN. 31 APRIL 30
-------- --------- ------- -------- ------- --------- ------- -------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME
DATA:
Net sales............... $3,808 $1,641 $4,136 $6,352 $4,171 $5,160 $6,601 $7,498 $9,611 $10,086
Cost of sales........... 1,631 1,205 2,086 4,192 2,506 3,088 3,848 4,021 5,555 5,082
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Gross profit........... 2,177 436 2,050 2,160 1,665 2,072 2,753 3,477 4,056 5,004
Operating expenses:
Research, development
and engineering....... 59 305 733 1,003 255 556 426 480 1,046 1,046
Selling, general and
administrative........ 692 765 1,253 440 1,304 1,168 1,531 1,969 1,821 2,854
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Total operating
expenses.............. 751 1,070 1,986 1,443 1,559 1,724 1,957 2,449 2,867 3,900
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Operating income
(loss)................. 1,426 (634) 64 717 106 348 796 1,028 1,189 1,104
Interest expense........ 209 203 224 161 31 43 46 53 72 143
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Income (loss) before
income taxes........... 1,217 (837) (160) 556 75 305 750 975 1,117 961
Income taxes (benefit).. 373 (256) (49) 170 25 102 251 325 391 336
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Net income (loss)....... $ 844 $ (581) $ (111) $ 386 $ 50 $ 203 $ 499 $ 650 $ 726 $ 625
====== ====== ====== ====== ====== ====== ====== ====== ====== =======
AS A PERCENTAGE OF NET
SALES:
Net sales............... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales........... 42.8 73.4 50.5 66.0 60.1 59.8 58.3 53.6 57.8 50.4
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Gross profit........... 57.2 26.6 49.5 34.0 39.9 40.2 41.7 46.4 42.2 49.6
Operating expenses:
Research, development
and engineering....... 1.5 18.6 17.7 15.8 6.1 10.8 6.4 6.4 10.9 10.4
Selling, general and
administrative........ 18.2 46.6 30.3 6.9 31.3 22.7 23.2 26.3 18.9 28.3
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Total operating
expenses.............. 19.7 65.2 48.0 22.7 37.4 33.5 29.6 32.7 29.8 38.7
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Operating income
(loss)................. 37.5 (38.6) 1.5 11.3 2.5 6.7 12.1 13.7 12.4 10.9
Interest expense........ 5.5 12.4 5.4 2.5 0.7 0.8 0.7 0.7 0.7 1.4
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Income (loss) before
income taxes........... 32.0 (51.0) (3.9) 8.8 1.8 5.9 11.4 13.0 11.6 9.5
Income tax (benefit).... 9.8 (15.6) (1.2) 2.7 0.6 2.0 3.8 4.3 4.1 3.3
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Net income (loss)....... 22.2% (35.4)% (2.7)% 6.1% 1.2% 3.9% 7.6% 8.7% 7.6% 6.2%
====== ====== ====== ====== ====== ====== ====== ====== ====== =======
</TABLE>

Net Sales. The Company's net sales have varied significantly from quarter to
quarter as a result of the relatively high average selling price of the
Company's systems in relation to the amount of the Company's overall sales in
any quarter, the Company's lengthy sales cycles, its customer concentration
and the pattern and timing of orders received from the Company's customers.
Increasing sales volume began to reduce the impact of this variability during
the fiscal year ended October 31, 1995.

Gross Profit. Installation and warranty costs are recorded as costs of sales
at the time of revenue recognition based upon historical experience. These
costs tend to be higher for the first system at each customer site as the
training and familiarization of customer personnel represent a major portion
of this activity. In

19
<PAGE>

addition, while gross margins on sales in Korea are frequently higher, the net
contribution to the Company's profitability for such sales is similar to sales
made in other territories due to the increase in selling, general and
administrative expenses resulting from commissions paid on such sales. Higher
sales volume, increased experience in anticipating installation and warranty
expenses and the absence of major sales by commissioned sales agents resulted
in a reduction in the quarterly variation in gross profit as a percent of net
sales during fiscal 1995 and the six months ended April 30, 1996.

Research, Development and Engineering. During fiscal 1994, the Company was
involved in its SEMATECH and FPD development projects, which resulted in
substantial research, development and engineering expenses. Expense levels in
these programs were high during prototype development and testing and were
relatively lower early during the planning phase and later in process
validation. Research, development and engineering expenses during fiscal 1995
and the six months ended April 30, 1996 were predominantly in support of the
development of a single vessel system capable of processing up to 100 8-inch
wafers.

Selling, General and Administrative. Selling, general and administrative
expenses are impacted by increases in the Company's sales and marketing and
finance and administration staffs and their respective activities. Certain of
these activities are not necessarily recurring and therefore contribute to
variability from quarter to quarter. Advertising, patent litigation costs,
customer support and development activities and sales commissions each
contribute to this variability. The Company expects that increased sales
volume will reduce this quarter-to-quarter variability.

LIQUIDITY AND CAPITAL RESOURCES

Since its inception, the Company has funded its capital requirements through
funding from two research and development limited partnerships, the sale of
private equity securities and, to a lesser extent, bank borrowings and
equipment leases. As of April 30, 1996 the Company had $0.6 million in cash
and $7.2 million in working capital.

Net cash used in operating activities was $2.8 million, $0.4 million, $0.4
million and $3.0 million for fiscal 1994 and 1995 and the six months ended
April 30, 1995 and 1996, respectively. Increases in accounts receivable and
inventories were $2.3 million and $0.8 million, respectively, in fiscal 1994
and $2.9 million and $0.4 million, respectively, in fiscal 1995. In the six
months ended April 30, 1995, accounts receivable decreased by $0.3 million
while inventories increased by $0.7 million. In the six months ended April 30,
1996, accounts receivable increased by $4.2 million and inventories increased
by $1.7 million. Purchases of property, plant and equipment were $2.6 million,
$1.3 million, $0.1 million and $2.3 million for fiscal 1994 and 1995 and the
six months ended April 30, 1995 and 1996, respectively. These expenditures
consisted primarily of the acquisition of the Company's manufacturing and
office facility in fiscal 1994 and expenditures related to facility
improvements and the establishment of the Company's applications laboratory in
fiscal 1995 and the six months ended April 30, 1996.

The Company has a relationship with a commercial bank which includes a
mortgage on the Company's manufacturing and current office facility in the
amount of $1.0 million, a term note in the amount of $0.2 million, a term loan
facility in the amount of $1.1 million used to finance the Company's
applications laboratory and a revolving demand line of credit which was
increased from $3.0 million to $5.0 million in October 1995 and to $7.5
million in April 1996. The mortgage bears interest at an annual rate of 8.9%.
The term note is secured by certain assets of the Company and bears interest
at such bank's prime rate plus 1.0%. The term loan facility commenced in
October 1995 and matures on November 1, 1998 with payments based upon five-
year amortization and interest at a rate equal to such bank's prime rate plus
0.25%. The line of credit is secured by a first lien on substantially all of
the Company's assets with advances of up to 80% of qualified accounts
receivable and 25% of qualified purchase orders up to a sub-limit of $2.5
million at an interest rate equal to such bank's prime rate. As of April 30,
1996, $5.3 million was outstanding under the Company's line of credit.

The Company also has mortgage notes payable to the Pennsylvania Industrial
Development Authority in the amount of $0.6 million bearing interest at 2.0%
and to the Chester County Development Council in the amount of $0.1 million
bearing interest at 5.0%.

20
<PAGE>

The Company has leased a 38,400 square foot office facility in the same
industrial park as its owned manufacturing facility and has incurred
approximately $0.6 million in expenses to outfit and furnish such facility,
which houses the Company's engineering, customer satisfaction, sales and
marketing and administration functions. The Company has also incurred
approximately $0.2 million in expenses related to the expansion of its
manufacturing facilities and approximately $0.1 million in expenses related to
the improvement of the Company's information processing infrastructure. The
Company has incurred commitments totaling approximately $0.4 million for
equipment for use in the Company's applications laboratory and for computer
hardware and software to support its engineering design functions.

The Company had outstanding accounts receivable of approximately $8.9
million and $13.1 million as of October 31, 1995 and April 30, 1996,
respectively. No allowance for doubtful accounts receivable has been recorded
because the Company believes that all such accounts receivable are fully
realizable.

The Company believes that existing cash balances and its available line of
credit, as well as the net proceeds from this offering, will be sufficient to
meet the Company's cash requirements during the next 12 months. However,
depending upon its rate of growth and profitability, the Company may require
additional equity or debt financing to meet its working capital requirements
or capital expenditure needs. There can be no assurance that additional
financing, if needed, will be available when required or, if available, will
be on terms satisfactory to the Company.

21
<PAGE>

BUSINESS

The Company designs, manufactures and markets advanced wet processing
equipment for sale to the worldwide semiconductor and FPD industries. The
Company believes that its patented Full-Flow enclosed processing and Direct-
Displacement drying technologies enable it to provide wet processing systems
that address a variety of limitations inherent in conventional systems,
including wet benches and spray tools, resulting in a significantly lower COO
for the Company's Full-Flow systems. The Company's customers include: GEC
Plessey, LG International, Motorola, National Semiconductor, Samsung, SGS-
Thomson, Siemens, Texas Instruments and Tower Semiconductor.

INDUSTRY BACKGROUND

Market Overview

The worldwide market for semiconductors has experienced significant growth
in recent years and, according to VLSI Research Inc. ("VLSI"), exceeded $153
billion in 1995. VLSI projects this market to reach approximately $349 billion
by 2000. Increasing demand for ICs has resulted from the growth of existing
markets, the emergence of new markets such as wireless communications, mobile
computing and multimedia, and the increasing use of microprocessors in many
common consumer products such as automobiles, kitchen appliances and
audio/video equipment. This increased demand has been driven in large part by
the semiconductor industry's ability to provide increasingly complex, higher
performance ICs at a declining cost per function and with lower power
consumption. These improvements in the ratio of price to performance have been
driven generally by advancements in semiconductor process technology, which
have enabled the cost-effective production of high density ICs with linewidths
below 0.5 micron.

In response to the growing demand for ICs, semiconductor manufacturers are
increasing capacity by expanding and updating existing fabs and constructing
new fabs. According to VLSI, the semiconductor capital equipment market has
grown from an estimated $2.2 billion in 1980 to $30.9 billion in 1995. VLSI
further estimates that sales of wet processing equipment represented $1.4
billion of this market in 1995. Moreover, based on industry data, the Company
believes that there are more than 110 fabs under construction, under expansion
or scheduled to commence construction. The increasing complexity of ICs has
resulted in an increase in both the number and cost of process tools (such as
steppers, etchers, furnaces and wet processors) required to manufacture
semiconductors. In a typical fab in the 1980s, the cost of equipment
represented approximately 50-55% of the total facility costs. Today, the total
cost of an advanced fab can exceed $1 billion, of which equipment costs can
account for 65-75%. Recently, a number of semiconductor manufacturers have
experienced a reduction in order growth and, in a few instances, a reduction
in overall orders. These events have caused certain semiconductor
manufacturers to postpone or cancel equipment deliveries to previously planned
expansion or new fab construction projects.

Semiconductor manufacturers place great pressure on process equipment
manufacturers to decrease the COO of their products. The principal elements of
COO are yield, throughput, capital costs and direct costs. Yield is primarily
determined by contamination levels and process uniformity. Throughput is
primarily a function of the time required to complete a process cycle and the
handling time between process steps. Capital costs include the cost of
acquisition and installation of the process equipment. Direct costs primarily
include consumables used in the manufacturing process and costs of cleanroom
space occupied by the equipment. Semiconductor device manufacturers must also
address environmental costs such as water usage and costs related to the
control and disposal of chemical waste and emissions associated with operating
a fab. Maintaining an acceptable level of COO becomes increasingly challenging
as manufacturing processes become more complex and process tolerances narrow.

Wet Processing in Semiconductor Manufacturing

The manufacture of semiconductors requires a large number of complex process
steps during which layers of electrically insulating or conducting materials
are created or deposited on the surface of a silicon wafer. Before and after
many of these steps, it is necessary to clean, etch, strip or otherwise
condition the surface of the wafer in order to remove unwanted material or
surface contamination in preparation for a subsequent process step.

22
<PAGE>

SEMATECH has estimated that up to 300 fabrication steps are required to
manufacture advanced logic ICs, and that approximately 50 of these steps are
accomplished by wet processing.

The following table identifies the typical wet processing steps in
semiconductor manufacturing.

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
CRITICAL CLEANING APPLICATIONS CRITICAL ETCHING APPLICATIONS PHOTORESIST STRIP APPLICATIONS
<S> <C> <C>

Initial wafer clean Silicon oxide etch
Pre-diffusion clean Polysilicon etch Aqueous chemistry resist strip/
Pre-oxidation clean Silicon nitride etch post-ash clean
Pre-thin films deposition clean Solvent chemistry resist strip/
Post-CMP clean post-ash clean
Solvent chemistry clean
- ----------------------------------------------------------------------------------------------------
</TABLE>

The above wet processing steps have traditionally been accomplished using
wet benches and spray tools. Advanced wet benches utilize a succession of open
chemical baths and extensive robotic automation to move wafers from one
chemical or rinse bath to the next. Spray tools subject wafers to sequential
spray applications of chemicals as the wafers are spun inside an enclosed
chamber. The Company believes that these traditional wet processing methods
are subject to a number of inherent limitations, including:

Particle Contamination. Submicron ICs are extremely sensitive to small
amounts of particle contamination which can result in poor device
performance or even failure. As device geometries become smaller, the
reduction of particle contamination has become an increasingly critical
factor in maximizing yield. Open-bath wet benches are exposed to the
cleanroom environment and therefore are susceptible to external
contamination. Since particles tend to reside on the surfaces of liquids
due to surface tension, the movement of wafers in and out of liquids can
result in the transfer of particles to the wafer surfaces through a
"skimming" effect. The tendency to add particles from air-liquid
transitions is inherent in wet benches due to multiple immersions and
withdrawals and in spray processing where each spray droplet striking the
wafer surface can act as a separate miniature immersion and withdrawal.

Watermark Defects and Native Oxide Growth. Both wet benches and spray
tools subject the surface of wafers to repeated wetting and evaporative
drying, creating watermark defects and oxidation on the silicon surface
that can significantly impact device performance and interfere with
subsequent process steps.

Process Control Limitations. Process liquids in wet benches and spray
tools are subject to evaporation and absorption of atmospheric gases. As a
result, it is difficult to achieve precise repeatability of process
results. Additionally, wafers in a wet bench must be robotically
transferred from bath to bath through the cleanroom atmosphere. This gap in
processing during transport adds variability due to the effects of wafer
exposure to the cleanroom atmosphere.

Large Physical Size. The cost of cleanroom space is a significant
component in the overall COO calculation for a specific piece of equipment.
Wet benches configured for the multiple-step wet processes required by many
manufacturers can be up to 30 feet in length. Increases in process
complexity or in wafer size will likely require even larger wet benches.

Environmental Impact. Due to the large volume of the open baths which
comprise a wet bench and the need for multiple wet processing steps to
manufacture increasingly complex ICs, wet benches typically consume large
quantities of water during processing. A typical wet bench can consume more
than 20 gallons of water per wafer, and a recent study has estimated that
water costs can comprise up to one-third of the total cost of cleaning.
Additionally, in many wet bench processes, large amounts of chemicals are
utilized. The open nature of the baths in a typical wet bench necessitates
expensive ventilation and filtration systems in order to remediate chemical
fume emissions. As a result, municipalities and environmental authorities
are increasingly concerned by water consumption and chemical fume emissions
by fabs.

Due to the continuing reduction of semiconductor device geometries and the
escalating cost of leading edge fabs, the Company believes that semiconductor
manufacturers are becoming increasingly sensitive to the foregoing limitations
inherent in traditional wet processing methods.

23
<PAGE>

THE CFM SOLUTION

The Company's systems are based on its proprietary Full-Flow wet processing
technology and are used to perform various cleaning and etching process steps
in the manufacture of semiconductors and FPDs. In the Company's Full-Flow wet
processing system, up to 100 wafers automatically load into a fully-enclosed,
flow-optimized vessel that has a lower fluid inlet and an upper fluid outlet.
Once a selected process is begun, the vessel is completely filled with fluid
at all times, with fluids flowing through the vessel one directly after
another without exposing the wafers to air.

CFM FULL-FLOW VESSEL MODULE AND AUTOMATION

[DIAGRAM APPEARS HERE, DEPICTING A CFM FULL-FLOW VESSEL MODULE AND AUTOMATION
AND POINTING OUT SEVERAL COMPONENTS OF THE MODULE, INCLUDING THE VESSEL, THE
VESSEL MODULE, THE PRE-LOAD WAFER STATIONS AND THE WAFER LOADING ROBOT.]

The Company believes that its patented Full-Flow enclosed processing and
Direct-Displacement drying technologies result in superior process performance
and lower COO by offering the following advantages over conventional wet
processing systems:

Reduced Particle Contamination. Full-Flow processing takes place in a
fully-enclosed processing vessel which isolates the wafers from the
external cleanroom environment and associated contaminants. Additionally,
particle contamination through particle skimming is substantially reduced.
Since the Full-Flow system is capable of directly displacing one chemical
or rinse step with the next without draining the vessel, it can eliminate
the air-liquid interfaces (where particles tend to reside) that normally
occur in wet benches and spray tools. The wafers are kept completely
immersed in fluid until they are ready to be dried using the Company's
patented in situ Direct-Displacement drying technology.

Substantial Elimination of Watermark Defects and Native Oxide Growth. The
formation of watermarks is substantially eliminated through the prevention
of water evaporation from the wafer surface.

24
<PAGE>

Once the chemical treatment of the wafers is completed, drying is
accomplished using CFM's patented Direct-Displacement drying technology.
With this technique, the final rinse water is directly displaced with
highly purified isopropyl alcohol ("IPA") vapor and substantially all water
is forced off the surface of the wafer before it is exposed to an air
environment. Additionally, native oxide growth is suppressed by
degassifying the water immediately before it enters the vessel. Since the
vessel itself is totally enclosed, the ultra pure water in the vessel is
not able to absorb oxygen and carbon dioxide from the cleanroom
environment. As a result, the gas content of the water at the surface of
the wafers is much lower than that typically found in a wet bench or spray
tool.

Tight Process Control. Process precision and repeatability result in
large part from the ability to control accurately the physical and chemical
properties of the processing liquids as well as the transition between
process steps. Full-Flow processing is performed in a completely enclosed
vessel, thereby substantially reducing variability of the processing
liquids such as water and chemical evaporation and absorption of
atmospheric gases. Additionally, because one process liquid directly
displaces the previous one, there is no gap in time and no exposure to the
cleanroom atmosphere between process steps.

Cleanroom Space Savings. The Full-Flow system has been designed to
consume a minimum amount of cleanroom space. System support modules can be
located outside the cleanroom and away from the main system. In many fabs,
this means that these support modules can be located in the basement,
further reducing the amount of square footage that is required on the main
floor of the fab where space is at a premium. A dual vessel Full-Flow
system capable of processing 100 8-inch wafers in each of two vessels
requires only 13 linear feet of cleanroom wall space and no direct usage of
cleanroom floor space when flush-mounted. This is significantly less than
the space requirements of a wet bench with similar processing capabilities,
which the Company believes can require up to 350 square feet of total floor
space and approximately 35 linear feet of cleanroom wall space.

COMPARISON OF FULL-FLOW DUAL VESSEL SYSTEM WITH TRADITIONAL WET BENCH SYSTEM

[DIAGRAM APPEARS HERE, DEPICTING A SCHEMATIC OF A CFM FULL-FLOW DUAL VESSEL
SYSTEM NEXT TO A WET BENCH SYSTEM. THE DIAGRAM SHOWS THAT THE BULK OF THE FULL-
FLOW SYSTEM'S MODULES MAY BE LOCATED OUTSIDE OF THE CLEANROOM, RESULTING IN LESS
TOTAL CLEANROOM FLOOR SPACE BEING OCCUPIED AS COMPARED WITH A WET BENCH WITH
SIMILAR PROCESSING CAPABILITIES. THE DIAGRAM INCLUDES THE APPROXIMATE DIMENSIONS
OF THE FULL-FLOW SYSTEM AND THE WET BENCH.]

Environmental Advantages. The Company believes that the Full-Flow system
utilizes less than one-half of the water required by traditional wet bench
systems performing similar processing steps because most

25
<PAGE>

of the water in wet bench systems flows around the wafer carrier rather
than across the surface of the wafers. In the Company's flow-optimized
Full-Flow systems, substantially less water is lost as bypass flow. The
fully-enclosed Full-Flow system also reduces the amount of process
chemicals consumed and the equipment and related costs of remediation of
chemical fume emissions associated with traditional wet processing.

STRATEGY

The Company's objective is to become a leading supplier of advanced wet
processing equipment to the worldwide semiconductor and FPD industries. The
Company intends to achieve this objective by focusing on the following key
elements of its strategy.

Increase Current Market Share. The Company seeks to continue to expand its
share of the semiconductor critical cleaning and etching wet processing market
through significant expansion of its sales and marketing and customer
satisfaction efforts. The Company also intends to continually improve its
existing Full-Flow platform in order to offer enhanced technical capabilities
and lower COO benefits for currently served critical wet processing
applications. For example, in April 1996, the Company shipped a new version of
its Full-Flow system that doubles the throughput and capital productivity of
its predecessor system by enabling the processing of up to 100 8-inch wafers
in a single vessel. Other development projects are underway to further
increase the throughput and capital productivity of future versions of the
Full-Flow system.

Leverage Full-Flow Platform. The Company intends to leverage its Full-Flow
platform to address additional wet processing applications in the
semiconductor manufacturing process where it believes its proprietary Full-
Flow technology can provide important benefits over competing wet processing
technologies. By basing new process applications on this platform, the Company
is able to focus primarily on the development and optimization of the
applications' process recipes, which the Company believes significantly
reduces the time and cost associated with entering new wet processing market
segments. Additional wet processing applications identified by the Company
include solvent-based cleaning and photoresist stripping, in which CFM's
fully-enclosed Full-Flow processing vessel would provide the important benefit
of controlling chemical fume emissions.

Penetrate FPD Market. The Company intends to continue to develop wet
processing equipment for use in the fabrication of FPDs. The Company believes
that its Full-Flow platform is particularly well-suited for cleaning and
precise etching applications in the manufacture of FPDs due to its advanced
process capabilities, its significantly lower use of water and chemicals
relative to comparable wet bench processes and its substantially smaller
footprint which saves increasingly valuable cleanroom floor space. The Company
believes that the FPD market represents a significant opportunity for
increasing sales of its systems, as evidenced by its recent shipments of Full-
Flow systems to Xerox and Motorola and its recent receipt of equipment orders
from LG International. The Company believes that further validation of the
applicability of the Company's Full-Flow technology to the FPD manufacturing
process was provided in February 1996, when the Company was selected by the
United States Display Consortium (the "USDC") to develop an advanced wet
processing system for use in the manufacture of future generation FPDs.

Focus on Customer Satisfaction. The Company believes that its commitment to
customer satisfaction has been a critical factor in its success to date. To
ensure a high level of customer satisfaction, the Company provides
comprehensive customer service and support, thorough customer training and
ongoing process consultation. The Company has already developed a
comprehensive customer service and support organization, and intends to
continue to invest in this area by locating direct sales and service staff in
Europe and East Asia in 1996. The Company also intends to increase the
utilization of its applications laboratory to design and test new processes
and equipment features and to provide customer training services.

Continue Commitment to Worldwide Markets. The Company believes that its
long-term success is substantially dependent on its ability to compete on a
worldwide basis. As such, the Company intends to continue to focus on
expanding its sales activities in each of the primary worldwide markets for
semiconductor and FPD capital equipment. To date, the Company has achieved
considerable success in selling to customers outside the United States, with
such customers accounting for approximately one-half of its net sales in each
of the last two fiscal years and approximately 43% of its net sales in the six
months ended April 30, 1996. The Company intends to build upon this success in
1996 and has hired direct sales personnel covering Europe and East Asia in
support of this intent.

26
<PAGE>

PRODUCTS

The Full-Flow Product Platform

The Company's proprietary Direct-Displacement drying technology is embodied
in its Full-Flow platform, which principally consists of a fully-enclosed
processing vessel incorporating megasonic technology and associated systems
software, hardware and control electronics. Megasonic technology utilizes high
frequency sonic energy to enhance particle removal from the surface of
semiconductor wafers and FPD substrates during wet processing, enabling a
quicker process cycle and a significant reduction in the quantity of process
chemicals used. The Company believes that its Full-Flow platform offers
significant improvements in process performance and a lower COO relative to
competing technologies. Conventional wet bench processes used for many wet
processing applications rely on a succession of open chemical baths and
extensive robotic automation to move semiconductor wafers or FPD substrates
from one chemical bath to the next, which exposes them to contamination.

In the Company's Full-Flow systems, wafers or FPD substrates are loaded
automatically into a fully-enclosed, flow-optimized processing vessel that has
a lower fluid inlet and an upper fluid outlet. They are completely isolated
from cleanroom air and accompanying contaminants as a succession of process
fluids are introduced into the processing vessel one directly after another,
flowing over the wafers or substrates to complete the desired process
application. Once processing is completed, wafers or substrates are dried in
situ using the Company's patented Direct-Displacement drying process. With
this technique, the final rinse water is directly displaced with highly
purified IPA vapor and substantially all water is forced off the surface of
the wafers or substrates before they are exposed to an air environment. This
process substantially eliminates evaporative drying defects such as
watermarks, inhibits native oxide growth and significantly reduces particle
contamination compared to competing technologies, where the wafers or
substrates are exposed to evaporative drying within the cleanroom atmosphere
prior to completion of the drying process. The optimized flow characteristics
of the Full-Flow processing vessel and the advanced process control and
monitoring capabilities of the Full-Flow platform provide process uniformity
and repeatability. Also, the Company's Full-Flow systems can be flush-mounted
in the cleanroom wall, with the majority of the floor space needed by the
system components located outside the cleanroom environment. Due to this
flush-mounting and the Full-Flow system's comparatively smaller size, it
requires significantly less expensive cleanroom floor space than competing wet
bench systems. The Company's Full-Flow systems are based on a modular design
and can be configured to accomplish a broad range of wet processing
applications using a variety of process and support modules offered by the
Company. By basing new process applications on its proprietary Full-Flow
platform, the Company can focus primarily on the development and optimization
of the applications' process recipes, which the Company believes significantly
reduces the time and cost associated with developing new products to address
additional market opportunities.

The following tables list the Company's product offerings.

CFM FULL-FLOW PLATFORM CONFIGURATIONS

<TABLE>
<CAPTION>
FULL-FLOW MARKETS CONFIGURATION CAPACITY LIST PRICE RANGE
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Semiconductor Single vessel 50 wafer $0.9 - 1.2 million
Single vessel 100 wafer $1.0 - 1.3 million
Dual vessel 100 wafer $1.2 - 1.6 million
Dual vessel 200 wafer $1.5 - 2.0 million
- -------------------------------------------------------------------------------------
Flat panel display Single vessel 50 panel $1.5 - 1.7 million
Dual vessel 100 panel $1.7 - 2.5 million
- -------------------------------------------------------------------------------------
</TABLE>

27
<PAGE>

CFM FULL-FLOW SYSTEM MODULES AND FEATURES
<TABLE>
<CAPTION>
STANDARD MODULES AND FEATURES

<C> <S> <C>
Vessel Module Includes a single, fully-enclosed
process vessel for chemical, rinse
and drying processes
Control Module Generates, receives and interlocks all
control signals required to operate
the system hardware
Injection Module Measures and dispenses the appropriate
amount of each chemical concentrate
into the deionized water
IPA Recovery Module Generates and subsequently reclaims
and repurifies processed IPA vapor
for Direct-Displacement IPA drying
Deionized Water Mixing Module Blends combinations of hot and cold
deionized water together to meet
process recipe requirements
Transfer Automation Loads and unloads wafers and FPD
substrates to and from the Full-Flow
process vessel
Touch Screen Graphical Interface Provides operator control of the
system through a user-friendly
graphics touch screen interface

<CAPTION>
OPTIONAL MODULES AND FEATURES

<C> <S> <C>
Pumping Module Circulates, heats, filters, dispenses
and recovers a mixture of sulfuric
acid and ozone used to remove organic
contamination and to perform
photoresist stripping and post-ash
cleans
Ozone Module Generates ozone for use in the Pumping
Module
Selective Etch Module Circulates, heats, filters, dispenses
and recovers chemicals used in
selective etching processes
Tri-Dispense Module Supplies a user-selectable mixture of
concentrated chemicals to the
Selective Etch Module
Degassifier Module Removes entrained bubbles and
dissolved oxygen from the deionized
water supply for improved process
control
Mini-environment Encloses the wafers and automation in
a Class 1 environment
Megasonic Capability Provides high-power, high-frequency
sonic energy for enhanced cleaning
capability
Sonic Flow Meters Measures deionized water flow using a
non-contact sonic energy method
Deionized Water Heater Generates a continuous supply of hot
deionized water for use by the Full-
Flow system
Deionized Water Reclaim System Incorporates drain valving and
software to divert deionized water to
a reclaim system
Uninterruptable Power Supply Supplies up to 30 minutes of back-up
power to the Full-Flow system in the
event of a facility power failure
Dilute Chemistries Allows the user to switch solution
concentration operating ranges
without affecting standard
chemistries
Core Maintenance Provides touch screens and keyboards
used primarily for maintenance
functions in remote locations
SMIF Automation Interface Integrates Standard Mechanical
Interface robotics and wafer handling
equipment with the Full-Flow system
GEM 3.0 Compliance Software Allows the fab's host computer control
system to interface with the Full-
Flow system for transfer of critical
process information
Emulation Package Software Simulates the actual operation and
command signals of the Full-Flow
system
Data Logging Software Records significant system events
including alarms, interlocks, process
states and operator actions
- -------------------------------------------------------------------------------
</TABLE>

28
<PAGE>

Semiconductor Manufacturing Applications

The Company first introduced its Full-Flow systems for use in semiconductor
manufacturing research and development facilities in 1988, and shipped its
first systems for use in semiconductor production lines in 1990. To date, the
Company has sold over 70 Full-Flow systems to more than 20 semiconductor
manufacturers. Full-Flow systems can currently be configured with either one
or two vessels, each of which can be designed to accommodate 4-inch, 5-inch,
6-inch or 8-inch wafers. The Company recently completed development of an
enhanced Full-Flow system that doubles capital productivity by enabling
customers to process up to 100 8-inch wafers per vessel, or up to 200 8-inch
wafers simultaneously assuming a dual vessel configuration. This enhanced
system began shipping in April 1996.

A flush-mounted Full-Flow system configured with dual processing vessels
requires approximately 170 square feet of total floor space and approximately
13 linear feet of cleanroom wall space. Assuming similar throughput
capabilities and the same wet process, the Company believes that a competing
wet bench system can require up to 350 square feet of total floor space and
approximately 35 linear feet of cleanroom wall space. Additionally, the
Company believes that its Full-Flow systems can typically achieve a greater
than 50% reduction in the usage of water and chemicals compared to wet benches
performing similar applications. List prices for the Company's Full-Flow
systems offered for sale to the semiconductor industry range from $0.9 million
to $2.0 million depending on system configuration.

SEMATECH has estimated that up to 300 fabrication steps are required to
manufacture advanced logic ICs, and that approximately 50 of these steps are
accomplished by wet processing. The following table identifies the typical wet
processing steps in semiconductor manufacturing and indicates those performed
by the Company's Full-Flow systems (in bold).

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
CRITICAL CLEANING APPLICATIONS CRITICAL ETCHING APPLICATIONS PHOTORESIST STRIP APPLICATIONS
<S> <C> <C>

INITIAL WAFER CLEAN SILICON OXIDE ETCH
PRE-DIFFUSION CLEAN POLYSILICON ETCH AQUEOUS CHEMISTRY RESIST STRIP/
PRE-OXIDATION CLEAN Silicon nitride etch POST-ASH CLEAN (FRONT-END)
PRE-THIN FILMS DEPOSITION
CLEAN Solvent chemistry resist
Post-CMP clean strip/ post-ash clean (back-end)
Solvent chemistry clean
(back-end)
- ----------------------------------------------------------------------------------------------------
</TABLE>

For classification purposes, the process to fabricate a semiconductor die
(without testing or packaging) is divided into two major phases referred to as
"front-end" and "back-end." Front-end steps are those that are performed to
fabricate individual components within an IC, such as transistors. Back-end
steps are those that involve the creation of metal patterns on the wafers in
order to connect these individual components to create the IC. For a high-
performance logic IC, approximately 60% of the wet processing steps are front-
end and the balance are back-end.

Critical Cleaning Applications. Critical cleans are those wet processing
steps that are performed in the front-end to remove surface contamination
prior to performing highly sensitive fabrication steps such as gate oxidation
or diffusion. The Company believes that approximately 40% of the wet
processing operations in the front-end fall into this category. To date, most
of the Company's Full-Flow systems have been purchased by semiconductor
manufacturers for use in these applications.

Critical Etching Applications. Wet processing is also commonly used in the
front-end to etch the surface of the wafer to remove silicon dioxide or other
surface material. It is generally important to tightly control the exact
amount of material removed and the uniformity of the etch. The Company
believes that approximately 20% of the wet processing steps in the front-end
involve etching. These etching steps are often performed as part of a wet
clean rather than as stand-alone operations, and as such, most of the Full-
Flow systems sold by the Company to date are also performing critical etching
applications.

29
<PAGE>

Photoresist Strip Applications. Photoresist stripping operations involve the
removal of either virgin or ashed photoresist from the surface of wafers after
a patterning step has been completed. Resist stripping is performed in both
the front-end and the back-end, and the Company believes that it represents
approximately 40% of the wet processing operations in each area. Front-end
cleans and resist strips are generally performed with aqueous chemistries.
However, back-end cleans and resist strips must be accomplished with different
chemistries that utilize solvents, since front-end water-based chemistries are
incompatible with the metal present on wafers in the back-end.

In both cases, resist stripping operations are driven as much by cost as by
process performance. Production shipments of the Company's enhanced throughput
Full-Flow system, capable of processing up to 100 8-inch wafers per vessel,
began in April 1996. For a nominally higher system sales price, this new
system provides all the advantages of Full-Flow technology with double the
throughput of its predecessor. Since the Full-Flow system already utilizes the
chemistries required for front-end stripping, the Company believes that the
throughput and other COO advantages provided by this enhanced system make it
attractive for use in front-end resist strip applications. In April 1996, the
Company delivered such a system for use in front-end applications including
resist stripping. Other development projects are currently underway to further
increase the throughput and capital productivity of future versions of the
Full-Flow system.

Future Applications. Approximately 40% of semiconductor wet processing
operations are performed in the back-end and are comprised primarily of
solvent-based cleans and solvent-based resist strips. The Company believes
that its Full-Flow systems offer a range of attractive benefits for these
applications as process requirements become more demanding and regulatory
restrictions on the release of chemical fumes become more stringent.
Furthermore, the Company believes that its proprietary Direct-Displacement
drying method is well suited for drying wafers with complex topographies that
often exist in the back-end.

FPD Manufacturing Applications

As consumers demand increasingly smaller and lighter electronic devices with
improved functionality, the demand for FPDs continues to increase due to
inherent advantages over cathode ray tubes ("CRTs") with respect to size,
weight and power consumption. Users of desktop displays require high
resolution which translates to increased device density on the glass of the
screen. In order to support the required device density on the screen and
still allow substantial light transmission through the screen (brightness),
significant reductions in feature size will be required. The Company believes
that the superior etch uniformity and cleaning performance possible using a
Full-Flow system may enable manufacturers to meet this combined goal of device
density and brightness.

Despite substantial decreases in price, FPDs continue to be predominantly
used in laptop computers and other low-volume, high-value applications.
According to the Flat Panel Display Forecast Roundtable of the February 1996
USDC Business Conference (the "FPD Roundtable"), however, further decreases in
FPD prices to a premium of $50 or less over the price of desktop CRT-based
displays are expected to shift substantially all of the CRT market to FPDs.
The FPD Roundtable anticipates that such declines in FPD prices may occur
within the next 12 to 18 months. According to Stanford Resources, the market
for FPDs was $8.9 billion in 1995 and is projected to grow to nearly $16
billion by 2000. Like semiconductors, FPDs are manufactured using numerous
process steps, including photolithography, deposition, etching and cleaning.
However, unlike semiconductor wafers, each of which may contain several
hundred individual ICs, a single FPD substrate may contain as few as two
laptop computer displays. Therefore, defects in the manufacturing process tend
to have a much greater impact on FPD yields than on semiconductor yields.

The Company believes that its Full-Flow platform is particularly well-suited
for cleaning and etching applications in the manufacture of FPDs due to its
advanced process capabilities, its significantly lower use of water and
chemicals relative to competing wet bench systems and its substantially
smaller footprint. The Company initially addressed the FPD market with its
Vapor-Flow system, a modified version of its Full-Flow system in which the
process fluids enter the process vessel via an inlet located on the bottom,
like the Full-Flow

30
<PAGE>

system, but exit the vessel on the side, unlike the Full-Flow system in which
process fluids exit at the top. The Company introduced its first Vapor-Flow
system in 1990, and has sold 13 systems to seven customers, including systems
to two manufacturers of FPDs.

To address the rapidly increasing demand for FPDs, the Company has developed
a high-throughput FPD processing system based on its Full-Flow platform and has
discontinued offering its Vapor-Flow system. This Full-Flow FPD system, which
was first shipped in April 1996, has been designed to process up to 50 FPD
substrates per vessel and will be available in a dual vessel configuration
capable of processing up to 100 substrates simultaneously. Each of these FPD
substrates may contain up to four 10.2-inch diagonal laptop computer screens.
The Company believes that this Full-Flow FPD system will address the present
manufacturing requirements of most FPD manufacturers. The Company has an
ongoing program to develop systems which address the FPD market's emerging
requirements for increased substrate size. List prices for the Company's Full-
Flow FPD products range from $1.5 million to $2.5 million depending on system
configuration.

In February 1996, the USDC awarded the Company a development contract to
produce a wet processing system to support both cleaning and etching
requirements during the manufacture of advanced technology FPDs. The Company
will own all of the technology which is developed as a result of this contract.

CUSTOMERS

The Company sells its systems to leading semiconductor manufacturers located
in the United States, Europe and East Asia. The following is a list of certain
end-user customers that have purchased one or more systems from the Company
since the beginning of the 1995 fiscal year:

<TABLE>
<S> <C>
GEC Plessey Semiconductors Limited SGS-Thomson Microelectronics Srl
LG International (America), Inc. Siemens Microelectronics Center GmbH
Motorola, Inc. Texas Instruments, Inc.
National Semiconductor Corporation Tower Semiconductor Ltd.
Samsung America, Inc.
</TABLE>

Sales to IBM, Texas Instruments, GEC Plessey and Siemens accounted for
approximately 22.6%, 17.2%, 13.1% and 10.6%, respectively, of net sales in
fiscal 1995, and sales to IBM accounted for approximately 30.5% and 43.1% of
net sales in fiscal 1993 and 1994, respectively. Sales to SGS-Thomson and
Motorola accounted for approximately 32.3% and 23.8%, respectively, of net
sales in the six months ended April 30, 1996. In addition, at April 30, 1996,
orders from LG International represented approximately $11.6 million or 73.7%
of the Company's backlog. The Company expects to ship the majority of these
orders to a single LG International fab during 1996.

The Company expects a significant portion of its future sales to remain
concentrated within a limited number of customers. The Company's results of
operations could be materially adversely affected by any loss of business from,
the cancellation of orders by, or decreases in prices of systems sold to, any
of its major customers. The Company's arrangements with its customers are
generally on a purchase order basis and not pursuant to long term contracts. A
reduction or delay in orders from any of the Company's significant customers,
including reductions or delays due to market, economic or competitive
conditions in the semiconductor or FPD industries, or the loss of any such
customers, could have a material adverse effect upon the Company's results of
operations. Recently, a number of semiconductor manufacturers have experienced
a reduction in order growth and, in a few instances, a reduction in overall
orders. These events have caused certain semiconductor manufacturers to
postpone or cancel equipment deliveries to previously planned expansion or new
fab construction projects. In February 1996, the Company experienced the
cancellation of an order for one Full-Flow system and subsequently has
experienced the rescheduling of delivery of several other systems as a result
of these events. Certain of the Company's customers, however, have continued or
accelerated the timing of their orders for additional systems in support of
their growth plans. There can be no assurance, however, that industry trends
will improve or that existing orders will not be canceled or postponed. While
the Company actively pursues new customers, there can be no assurance that the
Company will be successful in its efforts, and any significant weakening in
customer demand would have a material adverse effect on the Company.

SALES AND MARKETING

The Company sells its systems through a combination of a direct sales force,
manufacturers' sales representatives, a Korean sales agent and a Japanese
distributor. The Company's field service personnel support its sales force. In
North America, the Company utilizes a combination of a direct sales force and
manufacturers' representatives. In addition to the direct sales force at the
Company's headquarters in West Chester,

31
<PAGE>

Pennsylvania, the Company has direct sales personnel located in Marietta,
Georgia and Austin, Texas. The Company has historically sold its products in
the European market through its North American direct sales force, and has
recently hired a direct salesperson in Paris, France. The Company is also
devoting greater resources to expand the adoption of its products in East Asia
and has recently hired a director of sales and marketing for East Asia,
excluding Japan. The Company signed agreements with PK, which markets in Korea
and Taiwan, and Innotech, the Company's distributor in Japan, in 1991 and
1992, respectively. The Company is continuing to evaluate expanding its sales
effort in the remainder of East Asia through additional distributor or agent
arrangements. The Company intends to substantially increase its expenditures
during fiscal 1996 for sales and sales support.

Although the Company believes that it has good relationships with its
manufacturers' sales representatives, sales agents and distributors, there can
be no assurance that these relationships will continue. In the event of a
termination of any of the Company's existing representation, agency or
distribution arrangements, the Company's strategy of worldwide expansion could
be adversely affected.

To date the Company's marketing efforts have principally involved
advertising in trade magazines and trade show participation. The Company
anticipates a substantial increase in its marketing expenditures during fiscal
1996.

CUSTOMER SATISFACTION

The Company believes that high quality customer support, customer training
and process consultation are key elements in the creation of customer
satisfaction. The Company also believes that product reliability, as it is
perceived by the individual customer technician, manager and executive, is
strongly correlated with customer satisfaction and the resulting decisions to
select the Company's technology and its products for broad application within
that individual customer's area of personal authority. The Company has made
substantial investments in its customer support, customer training, customer
communication and reliability engineering and testing programs and intends to
continue to make such investments in the future.

The Company's customer satisfaction organization is headquartered in West
Chester, Pennsylvania, with additional employees and consultants located in
Arizona, California, Colorado, Idaho, New York, Oregon, Texas, Vermont,
France, Germany and the United Kingdom. The Company uses local support
personnel where there are multiple installed systems. Innotech and PK provide
service to customers located in Japan and Korea, respectively. The Company's
support personnel generally have prior technical backgrounds in the
mechanical, electronic or chemical processing industries and prior experience
or training in semiconductor manufacturing processes. These field personnel
are supported by the Company's manufacturing and engineering personnel during
system installation and initial process validation. Field support personnel
also perform warranty and after-warranty service and sales support.

The Company's products are typically sold with a 12 month warranty covering
all parts and labor, which commences upon completion of installation and final
acceptance.

BACKLOG

The Company manages its production forecast using both backlog and projected
system orders. The Company includes in backlog only customer purchase orders
which have been accepted by the Company and for which shipment dates have been
assigned within the following 12 months. Orders are generally subject to delay
without penalty, but may contain cancellation penalties. As of April 30, 1995
and 1996, the Company's backlog was approximately $4.8 million and $15.7
million, respectively. All of the Company's backlog at April 30, 1995
consisted of orders for systems to be used in semiconductor manufacturing,
while the backlog at April 30, 1996 was comprised of orders aggregating
approximately $7.8 million for systems to be used in semiconductor
manufacturing and approximately $7.9 million for systems to be used in FPD
manufacturing. The Company expects a majority of the April 30, 1996 backlog to
be filled during the current fiscal year. However, because of the possible
changes in delivery schedules and cancellations of orders, the Company's
backlog at any particular date is not necessarily representative of actual
sales for any succeeding period.

RESEARCH, DEVELOPMENT AND ENGINEERING

CFM maintains an applications laboratory in West Chester, Pennsylvania to
test new equipment and processes, design new features and train customer and
Company personnel. By basing new applications on its

32
<PAGE>

proprietary Full-Flow platform, the Company can reduce substantially the time
and cost required to develop new process applications by focusing primarily on
the optimization of the applications' process recipes. The Company is
currently focusing its research, development and engineering efforts on
equipment to support additional wet process applications such as photoresist
strip processes. The Company believes that its Full-Flow systems offer a range
of attractive benefits for these applications as process requirements become
more demanding and regulatory restrictions on the release of chemical fumes
become more stringent. In addition, the Company recently completed the
development of a system capable of processing 100 8-inch wafers per vessel, or
200 8-inch wafers simultaneously, which the Company began shipping in April
1996. This configuration represents a doubling in system throughput and
capital productivity compared to the predecessor system, and the Company
believes that the high productivity of this new configuration in comparison to
competing alternatives makes it attractive for cost sensitive applications
such as front-end resist stripping. The Company is currently designing new
vessels capable of processing FPDs which are larger than those processed
presently. The Company believes that products with these capabilities will be
available for shipment during 1997. See "Risk Factors--Dependence Upon Product
Development."

The markets in which the Company and its customers compete are characterized
by rapidly changing technology, evolving industry standards and continuous
improvements in products and services. Because of continual changes in these
markets, the Company believes that its future success will depend, in part,
upon its ability to continue to improve its systems and its process
technologies and to develop new system applications which compete effectively
on the basis of COO, including yield, throughput, capital and direct costs and
system performance. In addition, the Company must adapt its systems and
processes to technological changes and to support the standards required by
emerging target markets. The success of new system introductions is dependent
on a number of factors, including timely completion of new system designs,
ultimate system performance achieved by those designs and market acceptance.
There can be no assurance that the Company will be able to improve its
existing systems and process technologies or develop new system applications.

The Company's research, development and engineering expenses for the 1993,
1994 and 1995 fiscal years and the six months ended April 30, 1996 were $0.7
million, $2.1 million, $1.7 million and $2.1 million, respectively,
representing 6.1%, 13.2%, 7.3% and 10.6% of net sales, respectively.

COMPETITION

The Company faces substantial competition in its market segments from both
established competitors and potential new entrants. The Company believes that
the primary competitive factors in the markets in which the Company competes
are yield, throughput, capital and direct costs, system performance, size of
installed base, breadth of product line and customer satisfaction. The Company
believes that it competes favorably with respect to each of these factors. The
Company also faces the challenge posed by semiconductor and FPD manufacturers'
commitment to competing technologies. Most of the Company's competitors have
been in business longer than the Company, offer traditional wet processing
technology, and have broader product lines, more experience with high volume
manufacturing, broader name recognition, substantially larger installed bases
and significantly greater financial, technical and marketing resources than
the Company. In the semiconductor wet processing market, the Company competes
primarily with Dainippon Screen, FSI International, Santa Clara Plastics,
Steag MicroTech, SubMicron Systems, Tokyo Electron Limited and Verteq. See
"Business--Intellectual Property." In the FPD wet processing market, the
Company competes primarily with Dainippon Screen and Semitool. There can be no
assurance that these competitors will not also develop enhancements to or
future generations of competitive products that will offer price or
performance features that are superior to the Company's systems or that the
Company will gain market acceptance. See "Risk Factors--Acceptance by
Customers of New Technology."

The Company believes that in order to remain competitive, it must invest
significant financial resources in developing new product features and
enhancements and in maintaining customer satisfaction worldwide. In marketing
its products, the Company will face competition from suppliers employing new
technologies in order to extend the capabilities of competitive products
beyond their current limits or increase their productivity. Once a
manufacturer has selected a particular vendor's capital equipment, the Company
believes that the manufacturer

33
<PAGE>

generally relies upon that equipment for a specific production line
application and frequently will attempt to consolidate related capital
equipment requirements with the same vendor, to the degree that such
consolidation is possible. In addition, increased competitive pressure could
lead to intensified price-based competition, resulting in lower prices and
margins, which would materially adversely affect the Company's business and
results of operations.

MANUFACTURING

The Company's manufacturing operations are based in West Chester,
Pennsylvania and consist of procurement, assembly and test engineering. The
Company recently completed an expansion of its manufacturing operations, which
resulted in a manufacturing facility with 250% of the production capacity of
the prior facility. An additional expansion is now in the planning phase. The
Company's Full-Flow systems are based upon a common set of modules, enabling
the Company to reduce manufacturing costs by using a large number of common
subassemblies and components. Many of the major subassemblies are purchased
complete from outside sources. The Company focuses its manufacturing efforts
on carefully documented assembly and integration activities which the Company
has determined to be critical to the successful operation of its products. The
Company was awarded a contract in 1993 by SEMATECH to design and build an
advanced wet processing system for semiconductor manufacturing. As a part of
that project, the Company implemented a Company-wide quality program based
upon SEMATECH measurement and improvement methodologies and is presently
preparing to apply for ISO 9001 certification.

Certain of the Company's components and subassemblies are obtained from sole
suppliers or limited groups of suppliers, which are often small, independent
companies. Moreover, the Company believes that certain of these components and
subassemblies can only be obtained from its current suppliers. The Company
generally acquires such components on a purchase order basis and not under
long-term supply contracts. The Company's reliance on outside vendors
generally, and on sole suppliers in particular, involves several risks,
including a potential inability to obtain an adequate supply of required
components and reduced control over pricing, timely delivery and quality of
components. The Company has experienced and continues to experience some
reliability and quality problems with certain key components and subassemblies
provided by single source suppliers. Because the manufacture of certain of
these components and subassemblies is a complex process and can require long
lead times, there can be no assurance that delays or shortages caused by
suppliers will not occur. Historically the Company has not experienced any
significant delays in manufacturing due to an inability to obtain components
and is not currently aware of any specific problems regarding the availability
of components which might significantly delay the manufacturing of its systems
in the future. However, any inability to obtain adequate deliveries or any
other circumstance that would require the Company to seek alternative sources
of supply or, if possible, to manufacture such components internally could
delay the Company's ability to ship its systems and could have a material
adverse effect on the Company.

The Company is subject to a variety of federal, state and local laws, rules
and regulations relating to the use, storage, discharge and disposal of
hazardous chemicals used in its research, development and engineering
activities. The Company believes that it is currently in compliance in all
material respects with such laws, rules and regulations. However, failure to
so comply could result in substantial liability to the Company, suspension or
cessation of the Company's operations, restrictions on the Company's ability
to expand at its present location or requirements for the acquisition of
additional equipment or other significant expense. To date, compliance with
environmental rules and regulations has not had a material effect on the
Company's operations.

INTELLECTUAL PROPERTY

The Company relies on a combination of patent, copyright, trademark and
trade secret laws, non-disclosure agreements and other forms of intellectual
property protection to protect its proprietary technology. The Company
currently holds 12 patents in the United States, four patents in Japan, one
patent in Korea and 15 patents in various European countries. The Company also
has multiple patent applications pending or under evaluation in the United
States and various foreign jurisdictions. Certain of these patents cover the
Company's Full-Flow process and Direct-Displacement drying technologies on
which the Company's current product offerings are based. While the Company
believes that these patents have significant value, the Company also believes
that the innovative skills,

34
<PAGE>

technical expertise and know-how of its personnel in applying the art
reflected in these patents would be difficult, costly and time consuming to
reproduce. The Company has asserted its patent rights against three
defendants, Steag MicroTech, Inc., Steag Microtech GmbH Donaueschingen and
YieldUP International Corp., in actions commenced in July and September 1995,
respectively, in the United States District Court for the District of
Delaware. The Company's complaints in these actions allege inducement of
infringement and contributory infringement of one of the Company's patents and
seek damage awards and to permanently enjoin further infringement. The
defendants have denied infringement and have asserted, among other things,
that the subject patent is invalid. In addition, one of the defendants has
asserted that the patent is unenforceable. There can be no assurance that any
of the claims of the patent cited in these actions will be found to be
sufficiently broad to encompass the competitors' products or that the subject
patent will not be found to be unenforceable or invalid during prosection of
the actions. A finding of invalidity or unenforceability could result in the
Company's competitors being able to develop products using the Company's
proprietary technology, which in turn could have a material adverse effect on
the Company. Further, there can be no assurance that any rights granted under
any of the Company's patents will provide adequate protection to the Company,
or that the Company will have sufficient resources to continue to prosecute
its rights in the current actions or others.

Although there are no pending lawsuits against the Company regarding
infringement of any existing patents or other intellectual property rights or
any claims that the Company is infringing intellectual property rights of
others, there can be no assurance that such infringement claims will not be
asserted by third parties in the future. There also can be no assurance in the
event of such claims of infringement that the Company will be able to obtain
licenses on reasonable terms. The Company's involvement in any patent dispute
or other intellectual property dispute or action to protect trade secrets and
know-how, including the actions brought by the Company presently pending,
could result in a material adverse effect on the Company's business. Adverse
determinations in the current litigation or any other litigation in which the
Company may become involved could subject the Company to significant
liabilities to third parties, require the Company to grant licenses to or seek
licenses from third parties and prevent the Company from manufacturing and
selling its products. Any of these situations could have a material adverse
effect on the Company.

EMPLOYEES

As of April 30, 1996, the Company had 218 employees, of which 159 were full-
time and the balance temporary or contract employees. There were 91 employees
in manufacturing operations, 54 in research, development and engineering,
including 9 chemical engineers, 12 in sales and marketing, 45 in customer
satisfaction and field support and 16 in general administrative and finance
positions. The Company plans to hire additional personnel in each of the above
areas during the next 12 months.

While the Company has generally been able to find qualified candidates to
fill new positions, substantial growth throughout the semiconductor capital
equipment industry has made it more difficult to recruit qualified candidates
for certain positions in design, field support, testing and process
engineering. Once recruited, the Company then faces the task of training and
integrating new employees quickly enough to keep pace with its rapid growth.
There can be no assurance that the Company will be successful in retaining or
recruiting, training and integrating the necessary key personnel to support
its anticipated growth, and any failure to expand these areas in an efficient
manner could have a material adverse effect on the Company's results of
operations.

None of the Company's employees is represented by a labor union and the
Company has never experienced a work stoppage, slowdown or strike. The Company
considers its relationships with its employees to be good.

FACILITIES

The Company conducts its manufacturing in a 26,000 square foot facility
which it owns in West Chester, Pennsylvania. In January 1996, the Company
commenced occupancy of a 38,400 square foot leased office building located in
the same industrial park to serve as the new location for its engineering,
sales and marketing, customer satisfaction and administration activities.
These functions were previously located in the facility owned by the Company,
which is now devoted entirely to manufacturing. The lease expires in December
2000 and includes both an option to purchase and an option for early
cancellation in December 1998. While the Company believes that these
facilities will be adequate to support the Company's growth through 1998, more
rapid growth than presently anticipated may require that the Company secure
additional space. The Company believes that suitable additional space, if
needed, will be available on terms acceptable to the Company.

35
<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information concerning the Company's
directors and executive officers:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Christopher F.
McConnell.............. 42 Chairman of the Board of Directors
Roger A. Carolin........ 40 President, Chief Executive Officer and Director
Huw K. Thomas........... 31 Executive Vice President
Alan E. Walter.......... 42 Senior Vice President
Joseph Berger........... 38 Vice President--Worldwide Sales and Marketing
Heinrich S. Erhardt..... 52 Vice President--Engineering
John Posta.............. 54 Vice President--Manufacturing
Lorin J. Randall........ 52 Vice President--Finance, Chief Financial Officer, Secretary and Treasurer
Steven Bay.............. 39 Chief Technical Officer
James J. Kim............ 60 Director(1)
Brad Mattson............ 41 Director
Burton E. McGillivray... 39 Director(1)(2)
Milton S. Stearns,
Jr. ................... 72 Director(2)
</TABLE>
- --------
(1) Member of Executive Compensation and Stock Option Committee.
(2) Member of Audit Committee.

CHRISTOPHER F. MCCONNELL founded the Company in May 1984 and served as
President and Chief Executive Officer until October 1990 when he was named
Chairman of the Board of Directors. Prior to forming the Company, Mr.
McConnell held various technical and marketing positions with Dow Chemical.
Mr. McConnell received his BS and MS degrees in Chemical Engineering from
Dartmouth College and Purdue University, respectively, and his MBA from
Harvard Business School. Mr. McConnell is a named inventor on all of the
Company's patents. See "Certain Relationships and Related Transactions."

ROGER A. CAROLIN has served the Company as a director since its inception in
1984 and as President and Chief Executive Officer since October 1990. From
June 1984 to October 1990 Mr. Carolin was Senior Vice President of The Mills
Group, Inc., a real estate development firm. Previously, Mr. Carolin was with
The General Electric Company and Honeywell, Inc. in a variety of technical
positions. Mr. Carolin received his BS in Electrical Engineering from Duke
University and his MBA from Harvard Business School.

HUW K. THOMAS has been with the Company since 1986 and has served as
Executive Vice President since November 1, 1995. Mr. Thomas has served the
Company in a variety of technical and managerial positions, including software
development manager from 1986 to 1989, project development manager from 1987
to 1991 and Vice President--Customer Satisfaction from 1991 until November
1995. Mr. Thomas received his BS in Electronic Engineering from the University
of London.

ALAN E. WALTER co-founded the Company in 1984 and currently serves as Senior
Vice President, with primary responsibility for the Company's marketing
efforts in the FPD industry. Prior to joining the Company, he was with the
Cochrane Division of Crane Company, a producer of ultra-high purity water
systems. Mr. Walter received his BS in Chemical Engineering from the
University of Delaware. He is a named inventor on ten of the Company's
patents.

JOSEPH BERGER joined the Company in June 1993 and has served as Vice
President--Worldwide Sales and Marketing since December 1995. Mr. Berger
served as the Company's Director of Sales and Marketing from June 1995 to
December 1995, and as Program Director from June 1993 to June 1995. Mr. Berger
served as Director of

36
<PAGE>

Sales for A.E. Staley Manufacturing Co., a manufacturer of corn sweeteners and
starches, from 1990 until May 1993.

HEINRICH S. ERHARDT joined the Company in January 1992 as Vice President--
Engineering. Prior to joining the Company, Mr. Erhardt served as Vice
President of Operations for Image Storage/Retrieval Systems, a supplier of
high-density data storage systems, from January to December 1991, and as
President of HEA, Inc., a computer maintenance service and consulting company,
from October 1989 to December 1990. Mr. Erhardt received his BS in Mechanical
Engineering from City University of New York and his MS in Engineering Science
from The Pennsylvania State University.

JOHN POSTA joined the Company in October 1993 as Vice President--
Manufacturing. Mr. Posta served as a consulting engineer to the Company from
August 1993 to October 1993 and as a manufacturing consultant from August 1989
to October 1993. Mr. Posta served as Vice President of Operations for Hercules
Aerospace Display Systems from May 1988 to August 1989, and as Director of
Manufacturing and Director of Materials for Commodore Business Machines, Inc.
from September 1984 to May 1988. Mr. Posta received his BS in Industrial
Management from Fairleigh Dickinson University.

LORIN J. RANDALL joined the Company in January 1995 as Vice President--
Finance, Chief Financial Officer, Secretary and Treasurer. From May 1994 to
June 1995, Mr. Randall served as the President and Chief Executive Officer of
Greenwich Pharmaceuticals Incorporated, a drug development company where from
September 1991 to May 1994, he served as Vice President--Finance and Chief
Financial Officer. From April 1990 to March 1991, Mr. Randall served as
President and Chief Executive Officer of Surgilase, Inc., a supplier of
surgical laser equipment. Mr. Randall received his BS in Accounting from The
Pennsylvania State University and his MBA from Northeastern University. Mr.
Randall is a director of Quad Systems Corporation.

STEVEN BAY joined the Company in April 1992 as Director of Technology and
Marketing/Far East, and has served as Chief Technical Officer since September
1994. From 1990 until April 1992, Mr. Bay was employed by Bridgetek, Inc. of
San Jose, California, which was the manufacturer's representative for the
Company in California and the Pacific Northwest. Mr. Bay received his BA in
Chemistry from St. Louis University.

JAMES J. KIM has been a director of the Company since 1991. Mr. Kim is the
founder, Chairman and Chief Executive Officer of AMKOR Electronics, a leading
semiconductor assembly company. He also founded and serves as Chairman and
Chief Executive Officer of The Electronics Boutique, an electronics products
retailer, and as Chairman of ANAM Group, the parent of PK, the Company's
Korean distributor. Mr. Kim is a director of VLSI Technology, Inc.

BRAD MATTSON has been a director of the Company since December 1995. Mr.
Mattson founded Mattson Technology, Inc., a manufacturer of semiconductor
fabrication equipment, and has served as its Chief Executive Officer,
President and a Director since its inception in November 1988. Mr. Mattson was
the founder of Novellus, a semiconductor equipment company, and formerly
served as its President, Chief Executive Officer and Chairman. He has also
held executive positions at Applied Materials and LFE Corporation, both
semiconductor equipment companies.

BURTON E. MCGILLIVRAY has been a director of the Company since 1990. Since
January 1994, Mr. McGillivray has served as Managing Director of First Chicago
Equity Capital, a venture capital firm. From January to December 1993, Mr.
McGillivray was a Chicago-based private investor, and from September 1984 to
December 1992, Mr. McGillivray was employed by Continental Illinois Venture
Corporation and Continental Equity Capital Corporation, serving as Managing
Director of both from 1989 to 1992. Mr. McGillivray received his AB from
Harvard University and his MBA from Harvard Business School. Mr. McGillivray
is a member of the board of directors of Three-Five Systems, Inc.

MILTON S. STEARNS, JR. has been a director of the Company since December
1994. Since 1972, Mr. Stearns has been President of Charter Financial Company,
a corporate financial consulting company. Mr. Stearns has been a director of
five public companies and a number of private ones. In addition, from 1976 to
1987, he was Chairman and Chief Executive Officer of Judson Infrared Inc., a
manufacturer of infrared detectors for military

37
<PAGE>

and telecommunications companies. Mr. Stearns received his BS from Harvard
University and his MBA from Harvard Business School.

All directors hold office until the next annual meeting of shareholders or
until their successors have been elected and qualified. Officers are appointed
by the Board of Directors and serve at the discretion of the Board.

COMPENSATION OF DIRECTORS

The Company reimburses directors for expenses incurred in connection with
attendance at meetings of the Board of Directors and committees. In March
1991, the Company and Mr. McGillivray entered into a Stock Option Agreement
(the "McGillivray Agreement") pursuant to which the Company granted to Mr.
McGillivray four-year options to purchase up to 832 shares of Common Stock, at
an exercise price of $2.41 per share, for each meeting of the Board of
Directors attended by Mr. McGillivray during a two year period beginning in
December 1990. This agreement was amended in June 1993 to provide for
additional grants of options to purchase 832 shares of Common Stock for each
meeting of the Board of Directors attended by Mr. McGillivray during the
period from March 1993 to December 1997. The amendment also extended the term
of the options previously granted to ten years. The McGillivray Agreement was
also amended in September 1994 to provide an exercise price of $7.52 per share
with respect to all stock options granted under the McGillivray Agreement
after January 6, 1994. In December 1994, the Company and Mr. Stearns entered
into a Stock Option Agreement (the "Stearns Agreement") pursuant to which the
Company granted to Mr. Stearns ten-year options to purchase up to 832 shares
of Common Stock, at an exercise price of $7.52 per share, for each meeting of
the Board of Directors attended by Mr. Stearns during a one year period
beginning in December 1994. This agreement was amended in November 1995 to
provide for additional grants of options to purchase 832 shares of Common
Stock, at an exercise price of $7.52 per share, for each meeting of the Board
of Directors attended by Mr. Stearns during the period from November 1995 to
October 1997. Messrs. McGillivray and Stearns will continue to be compensated
for their service on and attendance at meetings of the Board of Directors
through stock option grants to be made pursuant to the terms of the
McGillivray Agreement and the Stearns Agreement, respectively. Upon the
respective terminations of the McGillivray Agreement and the Stearns
Agreement, Messrs. McGillivray and Stearns will be compensated for their
service on the Board of Directors pursuant to the Non-Employee Directors'
Stock Option Plan described below.

In March 1996, the Board of Directors granted options to purchase up to
3,000 shares of Common Stock to each of John N. McConnell, Sr. and Vincent L.
Verdiani in connection with the appointment of these individuals as Honorary
Lifetime Directors of the Company. The exercise price of these ten-year
options is $7.52 per share and such options were fully exercisable on the date
of grant. Honorary Lifetime Directors are not elected by the Company's
shareholders, do not receive any compensation for their service as such and
are not voting members of the Board of Directors.

Also in March 1996, the Board of Directors granted to Mr. Mattson ten-year
options to purchase up to 2,000 shares of Common Stock at an exercise price of
$7.52 per share, which will be exercisable in full commencing on March 3,
1997. These options were granted as compensation for Mr. Mattson's service as
a consultant to the Company during the term of the options. In March 1996, Mr.
Mattson also received a grant of options to purchase up to 10,000 shares of
Common Stock at an exercise price of $7.52 per share pursuant to the Company's
Non-Employee Directors' Stock Option Plan. One-third of these options will
vest on each of the first three anniversaries of the date of grant, and the
options will expire upon the earlier of the tenth anniversary of their grant
or twelve months after Mr. Mattson ceases to be a director of the Company.

In the future, the Company may compensate directors for their service as
directors through cash compensation, stock options or stock grants. See "Non-
Employee Directors' Stock Option Plan."

38
<PAGE>

EXECUTIVE COMPENSATION

The following table sets forth information concerning the annual and long-
term compensation for services in all capacities to the Company for the fiscal
year ended October 31, 1995 of those persons who during such fiscal year (i)
served as the Company's chief executive officer or (ii) were the four most
highly-compensated executive officers (other than the chief executive officer)
(collectively, the "Named Executive Officers"):

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL
COMPENSATION LONG TERM
--------------------- COMPENSATION ALL OTHER
AWARDS
------------
SECURITIES
NAME AND PRINCIPAL UNDERLYING
POSITION SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)
------------------ --------- -------- ------------ ---------------
<S> <C> <C> <C> <C>
Christopher F. McConnell..... $103,551 $33,088 -- $4,231(1)
Chairman of the Board of
Directors
Roger A. Carolin............. 103,551 30,000 -- 4,420(1)
President and Chief
Executive Officer
Huw K. Thomas................ 88,551 26,697 -- 1,922(1)
Executive Vice President
Lorin J. Randall............. 101,563(2) 15,000 39,916 256(3)
Vice President--Finance,
Secretary and Treasurer
Alan E. Walter............... 79,800 25,588 -- 3,131(1)
Senior Vice President
</TABLE>
- --------
(1) Consists of: (a) 401(k) plan matching contributions in the following
amounts: $1,903 for Mr. McConnell; $1,813 for Mr. Carolin; $430 for Mr.
Thomas; and $175 for Mr. Walter; and (b) life insurance premiums in the
following amounts: $2,328 for Mr. McConnell; $2,607 for Mr. Carolin;
$1,492 for Mr. Thomas; and $2,956 for Mr. Walter.
(2) Mr. Randall joined the Company in January 1995. His annual salary is
$125,000.
(3) Consists of life insurance premiums.

The following table contains information regarding stock option grants made
to each of the Named Executive Officers during the fiscal year ended October
31, 1995:

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(1)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ---------------------
NAME GRANTED FISCAL YEAR PER SHARE DATE 5% 10%
---- ---------- ------------ --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Christopher F.
McConnell.............. -- -- -- -- -- --
Roger A. Carolin........ -- -- -- -- -- --
Huw K. Thomas........... -- -- -- -- -- --
Lorin J. Randall........ 39,916 19.3% $7.52 12/14/04 $ 188,668 $ 478,123
Alan E. Walter.......... -- -- -- -- -- --
</TABLE>
- --------
(1) The potential realizable value is based on the term of the option at the
time of grant (ten years). Potential gains are net of the exercise price
but before taxes associated with the exercise. Amounts represent
hypothetical gains that could be achieved for the respective options if
exercised at the end of the relevant

39
<PAGE>

option term. The assumed 5% and 10% rates of stock appreciation are based on
appreciation from the exercise price per share established at the relevant
grant date. These rates are provided in accordance with the rules of the
Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future Common Stock price. Actual gains, if
any, on stock option exercises are dependent on the future financial
performance of the Company, overall market conditions and the option
holders' continued employment through the vesting period. This table does
not take into account any appreciation in the price of the Common Stock from
the date of grant to the date of this Prospectus, other than the columns
reflecting assumed rates of appreciation of 5% and 10%.

The following table sets forth the number of shares covered by exercisable
and unexercisable options held by the Named Executive Officers on October 31,
1995 and the aggregate gains that would have been realized had these options
been exercised on October 31, 1995, even though these options were not
exercised, and the unexercisable options could not have been exercised on
October 31, 1995. No stock options were exercised by the Named Executive
Officers during the fiscal year ended October 31, 1995.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR END(#) AT FISCAL YEAR END($)(1)
--------------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
Christopher F.
McConnell.............. -- -- -- --
Roger A. Carolin........ 192,928 -- $985,862 --
Huw K. Thomas........... 33,264 -- 84,990 --
Lorin J. Randall........ -- 39,916 -- --
Alan E. Walter.......... -- -- -- --
</TABLE>
- --------

(1) Options are in-the-money if the market value of the shares covered thereby
is greater than the option exercise price. Calculated based on the fair
market value at fiscal year end of $7.52 per share, less the exercise
price. If calculated based on the assumed initial public offering price of
$14.00 per share, the value of unexercised in-the-money options at fiscal
year end would be $2,236,036, $300,540 and $258,656 for Messrs. Carolin,
Thomas and Randall, respectively.

1992 STOCK OPTION PLAN

The Company's 1992 Stock Option Plan (the "Option Plan") was adopted by the
Company in 1992 and was amended and restated and was approved by the Company's
shareholders in May 1995. The purposes of the Option Plan are to attract and
retain qualified personnel, to provide additional incentives to employees and
officers of and consultants to the Company and to promote the success of the
Company's business. Options to purchase an aggregate of 606,250 shares of the
Company's Common Stock have been granted under the Option Plan, and no
additional options will be granted thereunder. The Option Plan is administered
by the Executive Compensation and Stock Option Committee of the Board of
Directors (the "Committee"), which Committee has complete discretion to
determine which eligible individuals are to receive option grants, the number
of shares subject to each such grant, the vesting schedule to be in effect for
the option grant and the maximum term for which any granted option is to remain
outstanding.

Each option granted under the Option Plan has a maximum term of ten years (or
five years with respect to holders of more than 10% of the voting power of the
Company's outstanding stock), subject to earlier termination following the
optionee's cessation of service with the Company. Options granted under the
Option Plan may be exercised only for fully vested shares. The exercise price
of options granted under the Option Plan must be at least 100% of the fair
market value of the stock subject to the option on the date of grant (or 110%
with respect to holders of more than 10% of the voting power of the Company's
outstanding stock). The Executive Compensation and Stock Option Committee
determines the fair market value of the Common Stock from time to time. The
option exercise price is payable in cash upon the exercise of the option.

The Committee may amend or modify the Option Plan at any time, provided that
no such amendment or modification may adversely affect the rights and
obligations of the participants with respect to their outstanding

40
<PAGE>

options or unvested shares without their consent. In addition, no amendment of
the Option Plan may, without the approval of the Company's shareholders, (i)
modify the class of individuals eligible for participation, (ii) increase the
number of shares available for issuance, except in the event of certain
changes to the Company's capital structure or (iii) extend the term of the
Option Plan.

ANNUAL PROFIT SHARING PLAN

In March 1995, the Company's Board of Directors adopted an Annual Profit
Sharing Plan (the "Profit Sharing Plan") pursuant to which certain eligible
employees of the Company may receive annual distributions, in cash or Common
Stock at the election of the employee, based upon the Company's operating
profit for the most recent fiscal year. Holders of options to purchase Common
Stock are not eligible to participate in the Profit Sharing Plan. For the 1995
fiscal year, $65,000 was paid to eligible employees under the Profit Sharing
Plan.

1995 INCENTIVE PLAN

In December 1995, the Company's Board of Directors adopted, and in January
1996, the Company's shareholders approved, the 1995 Incentive Plan (the
"Incentive Plan"). Under the Incentive Plan, the Company is authorized to
award up to 400,000 shares of Common Stock to employees of the Company and its
subsidiaries. The Committee administers the Incentive Plan. Under the terms of
the Incentive Plan, the Committee is required to be composed of two or more
directors, each of whom shall be a "disinterested person" within the meaning
of Rule 16b-3 under the Securities Exchange Act of 1934, as amended. The
Committee has the authority to interpret the Incentive Plan and to determine
and designate the persons to whom awards shall be made and the terms,
conditions and restrictions applicable to each award (including, but not
limited to, the price, any restriction or limitation, any vesting schedule or
acceleration thereof and any forfeiture restrictions).

The Incentive Plan contains provisions for granting various stock-based
awards, including incentive stock options as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), nonqualified stock
options and Restricted Stock (as further described below). The term of the
Incentive Plan is ten years, subject to earlier termination or amendment.

Stock Options. The Incentive Plan provides for the grant of "incentive stock
options," as defined in Section 422 of the Code, to employees of the Company.
The Incentive Plan also provides for the grant of stock options that do not
qualify as incentive stock options under the Code ("non-qualified stock
options") to employees of the Company, including directors who are employees
of the Company. The exercise price of any incentive stock option granted under
the Incentive Plan may not be less than 100% of the fair market value of the
Company's Common Stock on the date of grant. Options granted under the
Incentive Plan may be exercised for cash, by reduction of the number of shares
of Common Stock issuable upon such exercise or, to the extent determined by
the Committee, in exchange for shares of Common Stock owned by the option
holder having a fair market value on the date of exercise equal to the option
exercise price. The aggregate fair market value, determined on the date of
grant, of the shares with respect to which incentive stock options are
exercisable for the first time by an employee during any calendar year may not
exceed $100,000.

Under the Incentive Plan, each option is exercisable for the full amount or
for any part thereof at such intervals or in such installments as the
Incentive Committee shall determine at the time it grants an option. However,
no award shall be exercisable with respect to any shares of Common Stock later
than ten years after the date of the grant of such option. All options are
non-transferable by the optionee except upon death. The shares subject to
expired options or terminated options which remain unexercised become
available for future grants.

If an optionee ceases to be employed by the Company for any reason other
than death, disability or retirement, any option exercisable on the date of
such termination generally may be exercised for a period of 90 days from the
date of such termination or until the expiration of the stated term of the
option, whichever period is shorter. In the event of termination of employment
by reason of death or retirement, any option exercisable at

41
<PAGE>

the date of such termination generally may be exercised for a period of one
year from the date of termination or until the expiration of the stated term
of the option, whichever period is shorter. In the event of termination of
employment by reason of disability, all options outstanding at the date of
such termination will become immediately exercisable and generally may be
exercised for a period of one year from the date of termination or until the
expiration of the stated term of the option, whichever period is shorter. In
the event of a change of control of the Company, the Incentive Plan provides
that all outstanding options will become immediately exercisable.

Restricted Stock. "Restricted Stock" consists of shares of the Company's
Common Stock granted to an employee for no consideration, which will be
forfeited to the Company if the grantee ceases to be an employee of the
Company during a restriction period specified by the Committee at the time it
grants the Restricted Stock. In the event of death or disability, the
restrictions will lapse with respect to that percentage of Restricted Stock
held by the grantee that is equal to the percentage of the restriction period
that had elapsed as of the date of death or commencement of disability. In the
event of a change of control of the Company, all restrictions on shares of
Restricted Stock will lapse. Shares of Restricted Stock that are forfeited
become available for future grants.

NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

In December 1995, the Company's Board of Directors adopted, and in January
1996, the Company's shareholders approved, the Non-Employee Directors' Stock
Option Plan (the "Directors' Plan"), under which options to purchase up to
150,000 shares of Common Stock may be granted to non-employee directors. The
purposes of the Directors' Plan are to attract and retain independent
directors and to strengthen the mutuality of interests between such directors
and the Company's shareholders.

The Directors' Plan is administered by the Company's Board of Directors.
Under the terms of the Directors' Plan, the option exercise price shall be
100% of the fair market value of the shares on the date of grant and each
option generally expires upon the earlier of twelve months after the optionee
ceases to be a director of the Company or ten years.

Each independent director elected at an annual meeting of shareholders will
automatically be granted an option on the date of such meeting of shareholders
to purchase 3,000 shares of Common Stock, which option will vest on the date
of the next succeeding annual meeting of shareholders. Each independent
director elected to fill a vacancy on the Board of Directors will
automatically be granted an option on the date of election to purchase 10,000
shares of Common Stock, one-third of which shall vest on each of the first
three anniversaries of the date of grant.

Under the Directors' Plan, no award shall be exercisable with respect to any
shares of Common Stock later than ten years after the date of the grant of
such option. All options are non-transferable by the optionee except upon
death. The shares subject to expired options or terminated options which
remain unexercised become available for future grants.

If an optionee ceases to be a member of the Board of Directors for any
reason other than death, disability or retirement, any option exercisable on
the date of such termination generally may be exercised for a period of 90
days from the date of such termination or until the expiration of the stated
term of the option, whichever period is shorter. In the event of termination
of Board membership by reason of death or retirement, any option exercisable
at the date of such termination generally may be exercised for a period of one
year from the date of termination or until the expiration of the stated term
of the option, whichever period is shorter. In the event of termination of
Board membership by reason of disability, all options outstanding at the date
of such termination will become immediately exercisable and generally may be
exercised for a period of one year from the date of termination or until the
expiration of the stated term of the option, whichever period is shorter.

The Board of Directors of the Company may make any amendments to the
Directors' Plan which it deems necessary or advisable.

42
<PAGE>

EMPLOYEE STOCK PURCHASE PLAN

In December 1995, the Company's Board of Directors adopted, and in January
1996, the Company's shareholders approved, an Employee Stock Purchase Plan
(the "Purchase Plan"), which allows all full-time employees of the Company,
subject to certain limitations, to purchase shares of the Company's Common
Stock at a discount from the prevailing market price at the time of purchase.
Such shares may be purchased on the open market or may be newly issued shares
of Common Stock. Any employee owning five percent or more of the voting power
or value of the Company is not eligible to participate in the Purchase Plan. A
maximum of 300,000 shares of the Company's Common Stock may be purchased under
the Purchase Plan.

An eligible employee will be able to specify an amount to be withheld from
his or her paycheck and credited to an account established for him or her (the
"Participation Account"). Amounts in the Participation Account will be applied
to the purchase of shares of the Company's Common Stock on the termination
date of each offering made under the Purchase Plan. The price for such shares
will be equal to 85% of the market price of the Common Stock, as determined
pursuant to the Purchase Plan. Only whole shares of Common Stock may be
purchased. Amounts withheld from an employee's paycheck and not applied to the
purchase of whole shares of Common Stock will, at the election of the
employee, either remain credited to the employee's Participation Account or be
returned to the employee.

Upon termination of an employee's employment for any reason other than death
or an approved leave of absence, all amounts credited to such employee's
Participation Account shall be returned to him or her. Upon termination of an
employee's employment because of death, his or her successor-in-interest shall
have the right to elect before the earlier of the offering termination date or
the 60th day following the employee's date of death either to withdraw the
amount credited to his or her Participation Account or to apply such amounts
to the purchase of Common Stock.

The Purchase Plan is administered by the Board of Directors, which may
delegate responsibility for such administration to a committee of the Board of
Directors. The Board of Directors may amend or terminate the Purchase Plan at
any time. The Purchase Plan is intended to comply with the requirements of
Section 423 of the Code.

Following the date hereof, the Company intends to commence the Purchase
Plan.

401(K) PLAN

In November 1993, the Company adopted a deferred 401(k) salary savings plan
(the "401(k) Plan") for the benefit of its employees and their beneficiaries,
which was amended in April 1995. Generally, any employee who has completed six
months of service and is over 21 years of age is eligible to participate in
the 401(k) Plan. Each eligible employee may elect to contribute to the 401(k)
Plan through payroll deductions up to 15% of his or her eligible compensation.
Participants are 100% vested in their contributions immediately. The Company
matches contributions up to certain levels.

EMPLOYMENT CONTRACTS

The Company has entered into a written employment agreement with Lorin J.
Randall, its Vice President--Finance and Chief Financial Officer. The
agreement continues until terminated pursuant to its terms. The agreement
provides for a base salary of $125,000 and for such employee benefits as are
made available to other employees of the Company. In addition, pursuant to the
agreement, Mr. Randall received a non-qualified option to purchase 39,916
shares of Common Stock of the Company for $7.52 per share under the Company's
1992 Stock Option Plan. In the event the Company terminates the agreement
without "cause" (as defined in the agreement), Mr. Randall will be entitled to
continue to receive his then-current base salary for six months following such
termination, or until the date he commences permanent, full-time employment
elsewhere, whichever first occurs.

Except as set forth above, the Company does not have employment agreements
with any of its executive officers.

43
<PAGE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Executive Compensation and Stock Option Committee of the Company's Board
of Directors was formed in November 1991 and the members of this committee are
Messrs. Kim and McGillivray. Neither of these individuals was at any time
during the fiscal year ended October 31, 1995 or at any other time an officer
or employee of the Company. No executive officer of the Company serves as a
member of the board of directors or compensation committee of any entity which
has one or more executive officers serving as a member of the Company's Board
of Directors or Executive Compensation and Stock Option Committee.

LIMITATION OF OFFICERS' AND DIRECTORS' LIABILITY

The Company's Articles of Incorporation, as amended, and By-Laws include
provisions (i) to reduce the personal liability of the Company's directors for
monetary damages resulting from breaches of their fiduciary duty and (ii) to
permit the Company to indemnify its directors and officers to the fullest
extent permitted by Pennsylvania law.

At present there is no pending litigation or proceeding involving any
director, officer, employee or agent of the Company where indemnification will
be required or permitted. The Company is not aware of any threatened
litigation or proceeding that might result in a claim for such
indemnification.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In 1984 and 1985, the Company entered into research and development
agreements with two related party limited partnerships (together, the
"Partnerships"), in which the Company was the general partner. A significant
number of the limited partners were also significant shareholders of the
Company. In April 1987 and September 1988, the Company exercised its options
to purchase the Partnerships' technologies, which resulted in an initial
purchase obligation in the amount of $2,184,000. Through the end of the 1994
fiscal year, the Company had made aggregate payments of $1,612,000 to the
Partnerships. On November 1, 1994, the Company exchanged 408,339 shares of
Common Stock for the assets of the Partnerships, which consisted primarily of
the balance of the purchase obligation. Of that number, 73,805 shares were
issued to John N. McConnell, Sr. and 23,711 shares were issued to Vincent
Verdiani, both of whom were directors of the Company at the time and currently
serve as Honorary Lifetime Directors of the Company. See Note 8 of the Notes
to Consolidated Financial Statements. John N. McConnell is the father of
Christopher F. McConnell, the Chairman of the Company's Board of Directors.
Two shareholders owning 31,614 shares of Common Stock acquired in connection
with the November 1, 1994 exchange have objected to that transaction and its
valuation, alleging that the Company breached certain duties and violated
certain laws in connection therewith. The Company believes that such
shareholders' objections and allegations are without merit and that any
resolution of such matter will not have a material adverse effect on the
Company.

In October 1994, the Company sold 332,633 shares of Common Stock of the
Company to PK, a company controlled by Mr. James Kim, a director of the
Company, for $6.02 per share. PK acts as the Company's sales agent in the
Republic of Korea. The Company believes that the terms of the sale of these
shares of Common Stock to PK are no less favorable than could have been
obtained from other large investors. During fiscal 1994 and 1995 and the six
months ended April 30, 1996, sales commissions accrued by the Company pursuant
to the PK sales agency agreement aggregated $430,173, $282,100 and $626,998,
respectively. The terms of the commissions to PK were no less favorable than
would have been obtained from unrelated third parties.

44
<PAGE>

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth, as of May 15, 1996 and as adjusted to
reflect the sale of 2,200,000 shares offered by this Prospectus, information
with respect to the beneficial ownership of the Common Stock of the Company by
(i) each person known to the Company to own 5% or more of the outstanding
shares of Common Stock, (ii) each of the Company's directors, (iii) each of
the Named Executive Officers, (iv) all of the directors and executive officers
as a group and (v) the Selling Shareholders.

<TABLE>
<CAPTION>
SHARES
BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED AFTER THE
OFFERING(1)(2) OFFERING(1)(2)
----------------- SHARES TO -----------------------
NAME* NUMBER PERCENT BE SOLD NUMBER PERCENT
----- --------- ------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Christopher F.
McConnell(3)............. 1,213,619 31.9% -- 1,213,619 20.4%
Alan E. Walter............ 365,896 9.6 -- 365,896 6.2
James J. Kim(4)........... 347,602 9.1 33,264 314,338 5.3
P.K. Ltd. ................ 306,022 8.0 33,264 272,758 4.6
493-3 Sung Sung-Dong
Cheon-An, Choong-Nam
Korea, 330-300
Roger A. Carolin(5)....... 276,087 6.9 -- 276,087 4.5
John N. McConnell,
Sr.(6)................... 247,779 6.5 -- 247,779 4.2
Stacey Willits
McConnell(7)............. 200,645 5.3 -- 200,645 3.4
Huw K. Thomas(8).......... 182,949 4.8 -- 182,949 3.1
Burton E. McGillivray(9).. 43,244 1.1 -- 43,244 **
David D. Kim Trust........ 41,580 1.1 8,316 33,264 **
1235 Enterprise Drive
West Chester, PA 19380
John T. Kim Trust......... 41,580 1.1 8,316 33,264 **
1235 Enterprise Drive
West Chester, PA 19380
Susan Y. Kim Trust........ 41,580 1.1 8,316 33,264 **
1235 Enterprise Drive
West Chester, PA 19380
Milton S. Stearns,
Jr.(10).................. 38,254 1.0 -- 38,254 **
Lorin J. Randall(11)...... 14,969 ** -- 14,969 **
Myron S. Gelbach, Jr. .... 9,979 ** 3,327 6,652 **
P.O. Box 298
Lafayette Hill, PA 19444
Brad Mattson.............. -- -- -- -- --
All directors and
executive officers as a
group (13 persons)(12)... 2,567,434 61.8 33,264 2,534,170 40.3
</TABLE>
- --------

* Unless otherwise indicated, the business address of each shareholder named
in this table is CFM Technologies, Inc., 1336 Enterprise Drive, West
Chester, PA 19380.
** Less than 1%.
(1) Unless otherwise indicated in the footnotes to this table, the persons
named in the table have sole voting and investment power with respect to
all shares beneficially owned.

(2) Based on 3,803,263 shares outstanding prior to this offering and
5,941,724 shares to be outstanding after this offering, except that
shares underlying options exercisable within 60 days are deemed to be
outstanding for purposes of calculating the percentage owned by the
holder of such options.

(3) Includes 38,919 shares owned by Mr. McConnell's wife, 3,154 shares owned
jointly with Mr. McConnell's wife and 26,624 shares held in trust for Mr.
McConnell's children.

(4) Includes 306,022 shares owned by PK, of which Mr. Kim is, directly and
indirectly, a principal shareholder. The 33,264 shares being sold in this
offering are owned by PK.

45
<PAGE>

(5) Consists of 83,159 shares owned by Mr. Carolin's wife and exercisable
options to purchase 192,928 shares.

(6) Consists of 24,855 shares owned jointly with Mr. McConnell's wife,
219,924 shares held in a limited partnership of which Mr. McConnell and
his wife are the sole general partners and exercisable options to
purchase 3,000 shares.

(7) Consists of 38,918 shares owned by Ms. McConnell individually, 3,154
shares owned jointly with Ms. McConnell's husband, Christopher F.
McConnell, and 158,573 held in a trust for which Ms. McConnell is a
trustee. Does not include shares owned by Ms. McConnell's husband
individually or shares held in trust for Ms. McConnell's children, of
which trusts Mr. McConnell is a trustee, all of which shares are
reflected in the table as beneficially owned by Mr. McConnell.

(8) Includes exercisable options to purchase 33,264 shares.

(9) Includes 16,632 shares owned jointly with Mr. McGillivray's wife and
exercisable options to purchase 18,296 shares.

(10) Includes 3,327 shares held in a trust of which Mr. Stearns is trustee and
exercisable options to purchase 4,990 shares.

(11) Consists of exercisable options.

(12) Includes exercisable options to purchase 349,261 shares.

46
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The Company's authorized capital stock consists of 10,000,000 shares of
Common Stock, no par value per share, and 1,000,000 shares of Preferred Stock,
no par value per share. As of May 15, 1996, 3,803,263 shares of Common Stock
and no shares of Preferred Stock were outstanding. The rights of the Company's
capital stock are defined by the Company's Articles of Incorporation, as
amended (the "Articles"), as described below, as well as by the Company's
Amended and Restated By-Laws (the "By-Laws") and the Pennsylvania Business
Corporation Law, as amended. The following summary of certain provisions of
the capital stock of the Company does not purport to be complete and is
subject to, and qualified in its entirety by, the provisions of the Articles
and By-Laws, which are included as exhibits to the Registration Statement of
which this Prospectus forms a part, and by provisions of applicable law.

COMMON STOCK

The holders of the Common Stock are entitled to one vote per share for each
share held of record on all matters submitted to a vote of shareholders.
Subject to preferential rights with respect to any series of Preferred Stock
that may be issued, holders of the Common Stock are entitled to receive
ratably such dividends as may be declared by the Board of Directors on the
Common Stock out of funds legally available therefor and, in the event of a
liquidation, dissolution or winding-up of the affairs of the Company, are
entitled to share equally and ratably in all remaining assets and funds of the
Company. The holders of the Common Stock have no preemptive rights or rights
to convert shares of the Common Stock into any other securities and are not
subject to future calls or assessments by the Company. All outstanding shares
of the Common Stock are fully paid and nonassessable by the Company.

PREFERRED STOCK

The Company, by resolution of the Board of Directors and without any further
vote or action by the shareholders, has the authority to issue up to 1,000,000
shares of Preferred Stock in one or more series and to fix from time to time
the number of shares to be included in each such series and the designations,
preferences, qualifications, limitations, restrictions and special or relative
rights of the shares of each such series. The ability of the Company to issue
Preferred Stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could adversely affect the voting
power of the holders of the Common Stock and could have the effect of making
it more difficult for a person to acquire, or of discouraging a person from
acquiring, control of the Company. The Company has no present plans to issue
any of the Preferred Stock.

ANTI-TAKEOVER PROVISIONS

Certain provisions of the Articles and By-Laws may discourage certain
transactions involving a change in control of the Company. For example, the
Articles contain a provision which permits the Board to issue "blank check"
Preferred Stock without shareholder approval. Further, provisions of the
Pennsylvania Business Corporation Law prohibit the Company from engaging in
certain business combinations with a holder of 20% or more of the Company's
voting securities without super-majority board or shareholder approval and
allow holders of voting stock of the Company to "put" their stock to an
acquiror for fair value in the event of a control transaction (the acquisition
of 20% of the voting stock of the Company). Fair value is defined as not less
than the highest price paid by the acquiror during a certain 90-day period.
These provisions could have the effect of delaying, deferring or preventing a
change in control of the Company and may adversely affect the voting and other
rights of holders of Common Stock.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company.

47
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, the Company will have 5,941,724 shares of
Common Stock issued and outstanding, of which 3,741,724 will be "restricted
securities" and may be publicly sold only if registered under the Securities
Act or sold in accordance with an applicable exemption from registration, such
as Rule 144. Under Rule 144 as currently in effect, these restricted
securities will not be eligible for public sale until at least November 1,
1996, and then will be subject to the volume limitations and other conditions
imposed by Rule 144.

In general, under Rule 144 as currently in effect, a person who has
beneficially owned his or her shares for at least two years, including persons
who may be deemed "affiliates" of the Company as that term is defined in the
Securities Act, would be entitled to sell within any three month period a
number of shares which does not exceed the greater of 1% of the then
outstanding shares of the Company's Common Stock or the average weekly trading
volume in such shares in The Nasdaq Stock Market during the four calendar
weeks preceding the date on which notice of sale is filed with the Commission.
Sales under Rule 144 are also subject to certain manner of sale limitations,
notice requirements and the availability of current public information about
the Company. Rule 144 also permits, under ordinary circumstances, the sale of
Common Stock without regard to the foregoing limitations by a person (or
persons whose shares are aggregated) who is not an affiliate of the Company
and who has satisfied a three year holding period requirement.

The Company's directors, executive officers and certain shareholders, who
collectively beneficially own an aggregate of 3,598,721 shares of Common Stock
and options to purchase 539,881 shares of Common Stock, have agreed pursuant
to certain agreements that they will not sell any Common Stock owned by them
without the prior written consent of PaineWebber Incorporated for a period of
180 days from the date of this Prospectus.

An aggregate of 1,156,250 shares of Common Stock is reserved for issuance
under employee and director stock option plans. As of May 15, 1996, options
with respect to 654,021 shares of Common Stock had been granted and were
outstanding. See "Management--1992 Stock Option Plan, "Management--1995
Incentive Plan" and "Management--Non-Employee Directors' Stock Option Plan."
The Company intends to file registration statements on Form S-8 under the
Securities Act covering the shares of Common Stock subject to outstanding
options and reserved for issuance under the option plans. Such registration
statements are expected to be filed and become effective as soon as
practicable after the effective date of the Registration Statement.
Accordingly, such registered shares, unless subject to the agreements not to
sell described above, will generally be freely transferable by persons other
than affiliates of the Company. Sales of substantial amounts of Common Stock
in the public market, or the possibility of sales thereof, could adversely
affect prevailing market prices.

48
<PAGE>

UNDERWRITING

The U.S. Underwriters named below, acting through PaineWebber Incorporated,
Donaldson, Lufkin & Jenrette Securities Corporation and Montgomery Securities
as Representatives (the "Representatives"), have severally agreed, subject to
the terms and conditions set forth in the U.S. Underwriting Agreement by and
among the Company, the Selling Shareholders and the Representatives (the "U.S.
Underwriting Agreement"), to purchase from the Company and the Selling
Shareholders, and the Company and the Selling Shareholders have severally
agreed to sell to the U.S. Underwriters, respectively, 1,698,461 shares and
61,539 shares of the Company's Common Stock, which in the aggregate equals the
number of shares of Common Stock (the "U.S. Shares") set forth opposite the
names of such U.S. Underwriters below:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
PaineWebber Incorporated..........................................
Donaldson, Lufkin & Jenrette Securities Corporation...............
Montgomery Securities.............................................

---------
Total......................................................... 1,760,000
=========
</TABLE>

In addition, the International Underwriters (together with the U.S.
Underwriters, the "Underwriters"), in a concurrent offering of the Common
Stock to persons outside the United States and Canada, acting through
PaineWebber International (U.K.) Ltd., Donaldson, Lufkin & Jenrette Securities
Corporation and Montgomery Securities, as International Representatives (the
"International Representatives"), have severally agreed, subject to the terms
and conditions set forth in the International Underwriting Agreement by and
among the Company and the International Representatives (the "International
Underwriting Agreement"), to purchase from the Company, and the Company has
agreed to sell to the International Underwriters, 440,000 shares of Common
Stock, respectively (the "International Shares").

The U.S. Underwriting Agreement provides that the obligation of the U.S.
Underwriters to purchase all of the shares of Common Stock is subject to
certain conditions. The U.S. Underwriters are committed to purchase, and the
Company and the Selling Shareholders are obligated to sell, all of the shares
of Common Stock offered by this Prospectus, if any of the shares of Common
Stock being sold pursuant to the U.S. Underwriting Agreement are purchased.
The offering price and underwriting discounts and commissions under both
underwriting agreements are identical. In general, the closing with respect to
the sale of the shares of Common Stock pursuant to the U.S. Underwriting
Agreement is a condition to the closing with respect to the sale of the shares
of Common Stock pursuant to the International Underwriting Agreement and vice
versa. PaineWebber International (U.K.) Ltd. is an affiliate of PaineWebber
Incorporated.

The Company and the Selling Shareholders have been advised by the
Representatives that the U.S. Underwriters propose to offer the shares of
Common Stock to the public initially at the public offering price set forth on
the cover page of this Prospectus, and to certain securities dealers at such
price less a concession not in excess of $ per share. The U.S. Underwriters
may allow, and such dealers may reallow, a discount not in excess of $ per
share. After the initial public offering, the public offering price and the
concessions and discounts may be changed by the Representatives.

49
<PAGE>

Each U.S. Underwriter has agreed that, as part of the distribution of the
U.S. Shares, (a) it is not purchasing any U.S. Shares for the account of
anyone other than a U.S. or Canadian Person and (b) it has not offered or
sold, and will not offer to sell, directly or indirectly, any U.S. Shares or
distribute this Prospectus to any person outside the U.S. or to anyone other
than a U.S. or Canadian Person. Each International Underwriter has agreed
that, as part of the distribution of the International Shares, (a) it is not
purchasing any International Shares for the account of any U.S. or Canadian
Person and (b) it has not offered or sold, and will not offer to sell,
directly or indirectly, any International Shares or distribute the
International Prospectus to any person within the U.S. or Canada or to any
U.S. or Canadian Person. The foregoing limitations do not apply to
stabilization transactions or to certain other transactions specified in the
Agreement Between U.S. and International Underwriters described below. As used
herein, "U.S. or Canadian Person" means any individual who is a resident of
the United States or Canada, any corporation, pension, profit-sharing or other
trust or other entity organized under or governed by the laws of the United
States or Canada or any political subdivision of either thereof (other than a
foreign branch of any U.S. or Canadian Person) and any U.S. or Canadian branch
of a person who is not otherwise a U.S. or Canadian Person.

The U.S. Underwriters and the International Underwriters have entered into
an Agreement Between U.S. and International Underwriters that provides for the
coordination of their activities. Pursuant to the Agreement Between U.S. and
International Underwriters, sales may be made between the U.S. Underwriters
and the International Underwriters of such number of shares of Common Stock as
may be mutually agreed upon. The per share price of any shares so sold shall
be the public offering price set forth on the cover page of this Prospectus,
less an amount not greater than the per share amount of the concession to
dealers set forth above. To the extent there are sales between the U.S.
Underwriters and the International Underwriters, the number of shares of
Common Stock initially available for sale by the U.S. Underwriters or by the
International Underwriters may be more or less than the amount appearing on
the cover page of this Prospectus.

The Company has granted an option to the U.S. Underwriters, exercisable
during the 30-day period after the date of this Prospectus, to purchase up to
330,000 additional shares of Common Stock at the initial public offering price
less the underwriting discount and commissions set forth on the cover page of
this Prospectus. The U.S. Underwriters may exercise such option only to cover
over-allotments in the sale of the shares that the U.S. Underwriters have
agreed to purchase. To the extent that the U.S. Underwriters exercise such
option, each of the U.S. Underwriters will become obligated, subject to
certain conditions, to purchase approximately the same percentage of such
additional shares as is approximately the percentage of shares of Common Stock
that it is obligated to purchase of the total number of the U.S. Shares under
the U.S. Underwriting Agreement and as shown in the table set forth above.

The Company and the Selling Shareholders have agreed to indemnify the U.S.
Underwriters and International Underwriters against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments
that the U.S. Underwriters and the International Underwriters may be required
to make in respect thereof.

Prior to this offering, there has been no public market for the Common Stock
of the Company. Accordingly, the initial public offering price was determined
by negotiations between the Company and the Representatives of the
Underwriters. Among the factors considered in determining the initial public
offering price were the Company's record of operations, its current financial
condition, its future prospects, the market for its products, the experience
of its management, the economic conditions of the Company's industry in
general, the general condition of the equity securities market, the demand for
similar securities of companies considered comparable to the Company and other
relevant factors.

50
<PAGE>

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Ballard Spahr Andrews & Ingersoll, Philadelphia,
Pennsylvania. Certain legal matters relating to this offering will be passed
upon for the Underwriters by Pepper, Hamilton & Scheetz, Philadelphia,
Pennsylvania.

EXPERTS

The consolidated balance sheets as of October 31, 1994 and 1995 and the
consolidated statements of income, shareholders' equity and cash flows for
each of the three fiscal years in the period ended October 31, 1995, included
in this Prospectus have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
giving said reports.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. 20549, a Registration Statement on Form S-1
(the "Registration Statement") under the Securities Act with respect to the
Common Stock offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to the Company and the
Common Stock, reference is made to the Registration Statement and the exhibits
and schedules thereto. Statements contained in this Prospectus as to the
contents of any contract or other document are not necessarily complete and,
in each instance where such contract or document is filed as an exhibit to the
Registration Statement, reference is made to the copy of such contract or
document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference. Copies of the
Registration Statement, including exhibits filed therewith, may be inspected
without charge at the public reference facilities maintained by the Commission
at its principal office at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at regional offices of the Commission located at
Northwestern Atrium Center, Suite 1400, 500 West Madison Street, Chicago,
Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New York
10048. Copies of such materials may be obtained from the Public Reference
Section of the Commission, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and its public reference facilities in Chicago,
Illinois and New York, New York, at prescribed rates.

The Company intends to furnish to its shareholders annual reports containing
consolidated financial statements audited by its independent public
accountants and quarterly reports containing unaudited consolidated financial
statements for the first three quarters of each fiscal year.

In September 1994, the Board of Directors of the Company approved the
engagement of Arthur Andersen LLP as its independent public accountants and
the dismissal of the Company's former auditors. The consolidated balance
sheets as of October 31, 1994 and 1995 and the consolidated statements of
income, stockholders' equity and cash flows for each of the three fiscal years
in the period ended October 31, 1995 included in this Prospectus have been
audited by Arthur Andersen LLP. See "Experts." The former auditors' reports on
the Company's financial statements did not contain an adverse opinion or
disclaimer of opinion and were not modified as to uncertainty, audit scope or
accounting principles. There were no disagreements with the former auditors on
any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure at the time of the change or with
respect to the Company's financial statements which, if not resolved to the
former auditors' satisfaction, would have caused them to make reference to the
subject matter of the disagreement in connection with their report. Prior to
retaining Arthur Andersen LLP, the Company had not consulted with Arthur
Andersen LLP regarding accounting principles.

51
<PAGE>

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Report of Independent Public Accountants................................... F-3
Consolidated Balance Sheets as of October 31, 1994 and 1995 and April 30,
1996...................................................................... F-4
Consolidated Statements of Income for the fiscal years ended October 31,
1993, 1994 and 1995 and the six months ended April 30, 1995 and 1996...... F-6
Consolidated Statements of Shareholders' Equity for the fiscal years ended
October 31, 1993, 1994 and 1995 and the six months ended April 30, 1996... F-7
Consolidated Statements of Cash Flows for the fiscal years ended October
31, 1993, 1994 and 1995 and the six months ended April 30, 1995 and 1996.. F-8
Notes to Consolidated Financial Statements................................. F-9
</TABLE>

F-1
<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]

F-2
<PAGE>

After the recapitalization transactions discussed in Note 9 to the
Consolidated Financial Statements are effected, we expect to be in a position
to render the following audit report.

Arthur Andersen LLP

Philadelphia, Pa.

May 14, 1996

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To CFM Technologies, Inc.:

We have audited the accompanying consolidated balance sheets of CFM
Technologies, Inc. (a Pennsylvania corporation) and subsidiaries as of October
31, 1994 and 1995, and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three years in the period
ended October 31, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of CFM Technologies, Inc. and
subsidiaries as of October 31, 1994 and 1995, and the results of their
operations and their cash flows for each of the three years in the period
ended October 31, 1995, in conformity with generally accepted accounting
principles.

F-3
<PAGE>

CFM TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
OCTOBER 31 APRIL 30
---------------- ------------
1994 1995 1996
------- ------- -----------
(UNAUDITED)
-----------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.................. $ 1,106 $ 408 $ 649
Accounts receivable........................ 5,999 8,886 13,112
Inventories................................ 3,342 3,700 5,390
Prepaid expenses and other................. 297 184 303
Deferred income taxes...................... 193 529 592
------- ------- -------
Total current assets..................... 10,937 13,707 20,046
------- ------- -------
PROPERTY, PLANT AND EQUIPMENT:
Land....................................... 540 540 540
Building and improvements.................. 1,966 2,205 2,929
Machinery and equipment.................... 516 1,640 2,854
Furniture and fixtures..................... 345 412 820
------- ------- -------
3,367 4,797 7,143
Less--Accumulated depreciation and amorti-
zation.................................... (198) (406) (642)
------- ------- -------
Net property, plant and equipment........ 3,169 4,391 6,501
------- ------- -------
OTHER ASSETS:
Deferred income taxes...................... 2,305 -- --
Patents, net of accumulated amortization of
$41, $57 and $66.......................... 221 251 252
Other...................................... 57 105 492
------- ------- -------
Total other assets....................... 2,583 356 744
------- ------- -------
$16,689 $18,454 $27,291
======= ======= =======
</TABLE>

The accompanying notes are an integral part of these statements.

F-4
<PAGE>

CFM TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
OCTOBER 31 APRIL 30
---------------- ------------
1994 1995 1996
------- ------- -----------
(UNAUDITED)
-----------
<S> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt............... $ 389 $ 574 $ 652
Line of credit.................................. -- -- 5,250
Accounts payable................................ 1,493 2,537 3,451
Accrued expenses................................ 1,047 2,373 3,488
Customer deposits............................... 831 87 --
------- ------- -------
Total current liabilities..................... 3,760 5,571 12,841
------- ------- -------
LONG-TERM LIABILITIES:
Long-term debt.................................. 2,218 3,005 3,219
Obligation to related party partnerships........ 5,602 -- --
Deferred income taxes........................... -- 103 105
------- ------- -------
Total long-term liabilities................... 7,820 3,108 3,324
------- ------- -------
COMMITMENTS AND CONTINGENCIES (Note 16)
SHAREHOLDERS' EQUITY:
Preferred stock, no par value; 1,000,000
authorized shares; no shares issued or
outstanding.................................... -- -- --
Common stock, no par value; 10,000,000
authorized shares; 3,392,928, 3,803,263 and
3,803,263 shares issued and outstanding........ 6,352 9,616 9,616
Retained earnings (deficit)..................... (1,243) 159 1,510
------- ------- -------
Total shareholders' equity.................... 5,109 9,775 11,126
------- ------- -------
$16,689 $18,454 $27,291
======= ======= =======
</TABLE>

The accompanying notes are an integral part of these statements.

F-5
<PAGE>

CFM TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED OCTOBER 31 APRIL 30
----------------------- ----------------
1993 1994 1995 1995 1996
------- ------- ------- ----------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET SALES......................... $11,840 $15,937 $23,430 $ 9,331 $ 19,697
COST OF SALES..................... 6,752 9,114 13,463 5,594 10,637
------- ------- ------- ------- --------
Gross profit.................. 5,088 6,823 9,967 3,737 9,060
------- ------- ------- ------- --------
OPERATING EXPENSES:
Research, development and
engineering.................... 720 2,100 1,717 811 2,092
Selling, general and
administrative................. 2,273 3,150 5,972 2,472 4,675
------- ------- ------- ------- --------
Total operating expenses...... 2,993 5,250 7,689 3,283 6,767
------- ------- ------- ------- --------
Operating income.............. 2,095 1,573 2,278 454 2,293
INTEREST EXPENSE (including
related party interest of $728
annually in 1993 and in 1994).... 755 797 173 74 215
------- ------- ------- ------- --------
Income before income taxes.... 1,340 776 2,105 380 2,078
INCOME TAXES...................... 457 238 703 127 727
------- ------- ------- ------- --------
NET INCOME........................ $ 883 $ 538 $ 1,402 $ 253 $ 1,351
======= ======= ======= ======= ========
NET INCOME PER SHARE.............. $ 0.35 $ 0.06 $ 0.34
======= ======= ========
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES................ 4,016 4,016 4,016
======= ======= ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-6
<PAGE>

CFM TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
COMMON STOCK RETAINED
----------------- EARNINGS
SHARES AMOUNT (DEFICIT) TOTAL
--------- ------ --------- -------
<S> <C> <C> <C> <C>
BALANCE, OCTOBER 31, 1992................ 2,670,284 $1,818 $(2,664) $ (846)
Exercise of stock options.............. 103,948 205 -- 205
Purchase of common stock............... (16,632) (5) -- (5)
Net income............................. -- -- 883 883
--------- ------ ------- -------
BALANCE, OCTOBER 31, 1993................ 2,757,600 2,018 (1,781) 237
Proceeds from sale of common stock..... 670,254 4,533 -- 4,533
Exercise of stock options.............. 6,653 2 -- 2
Purchase of common stock............... (41,579) (201) -- (201)
Net income............................. -- -- 538 538
--------- ------ ------- -------
BALANCE, OCTOBER 31, 1994................ 3,392,928 6,352 (1,243) 5,109
Common stock issued for services....... 1,996 15 -- 15
Exchange of common stock for
Partnership interests (Note 8)........ 408,339 3,249 -- 3,249
Net income............................. -- -- 1,402 1,402
--------- ------ ------- -------
BALANCE, OCTOBER 31, 1995................ 3,803,263 9,616 159 9,775
Net income (unaudited)................. -- -- 1,351 1,351
--------- ------ ------- -------
BALANCE, APRIL 30, 1996 (unaudited)...... 3,803,263 $9,616 $ 1,510 $11,126
========= ====== ======= =======
</TABLE>

The accompanying notes are an integral part of these statements.

F-7
<PAGE>

CFM TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED OCTOBER 31 APRIL 30
------------------------- -----------------
1993 1994 1995 1995 1996
------- ------- ------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income...................... $ 883 $ 538 $ 1,402 $ 253 $ 1,351
Adjustments to reconcile net
income to net cash provided by
(used in) operating
activities--
Depreciation and
amortization................. 69 134 224 106 245
Deferred income tax benefit... (116) (261) (251) (147) (61)
(Increase) decrease in--
Accounts receivable......... (1,578) (2,326) (2,887) 311 (4,226)
Inventories................. (1,141) (809) (358) (720) (1,690)
Prepaid expenses and other
current assets............. (111) (46) (12) 109 (119)
Other assets................ (175) 10 (94) (7) (397)
Increase (decrease) in--
Accounts payable............ 815 80 1,044 380 914
Accrued expenses............ 1,011 (276) 1,311 (30) 1,115
Customer deposits........... 564 201 (744) (670) (87)
------- ------- ------- ------- --------
Net cash provided by (used
in) operating
activities............... 221 (2,755) (365) (415) (2,955)
------- ------- ------- ------- --------
INVESTING ACTIVITIES:
Purchases of property, plant and
equipment...................... (137) (2,623) (1,311) (95) (2,346)
------- ------- ------- ------- --------
FINANCING ACTIVITIES:
Net proceeds (repayments) on
line of credit................. (180) -- -- -- 5,250
Payments on long-term debt...... (48) (250) (388) (239) (268)
Proceeds from long-term debt.... -- 2,212 1,241 36 560
Proceeds from sale of common
stock.......................... 205 4,410 125 125 --
------- ------- ------- ------- --------
Net cash provided by (used
in) financing
activities............... (23) 6,372 978 (78) 5,542
------- ------- ------- ------- --------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS............. 61 994 (698) (588) 241
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR................ 51 112 1,106 1,106 408
------- ------- ------- ------- --------
CASH AND CASH EQUIVALENTS, END OF
YEAR............................. $ 112 $ 1,106 $ 408 $ 518 $ 649
======= ======= ======= ======= ========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid for interest expense.. $ 613 $ 745 $ 197 $ 62 $ 176
Cash paid for income taxes...... 98 528 730 557 1,117
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING
ACTIVITIES:
Machinery acquired under capital
leases......................... $ 24 $ 316 $ 398 $ 10 $ 560
Common stock issued for stock
subscriptions receivable....... -- 125 -- -- --
Common stock issued for
Partnership interests.......... -- -- 3,249 3,249 --
Common stock issued for
services....................... -- -- 15 15 --
Note payable issued for common
stock purchases................ -- 201 -- -- --
</TABLE>

The accompanying notes are an integral part of these statements.

F-8
<PAGE>

CFM TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(INFORMATION AS OF APRIL 30, 1996 AND FOR THE SIX MONTH PERIODS ENDED APRIL
30, 1995 AND 1996 IS UNAUDITED)

1. DESCRIPTION OF BUSINESS:

CFM Technologies, Inc., formerly The CFM Technology Corporation (the
Company), designs, manufactures and markets advanced wet processing equipment
for sale to the worldwide semiconductor and flat panel display industries.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation

The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. All significant intercompany balances and
transactions have been eliminated.

Interim Financial Statements

The financial statements as of April 30, 1996 and for the six months ended
April 30, 1995 and 1996 are unaudited and, in the opinion of management,
include all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of results for these interim periods. The
results for the six months ended April 30, 1996 are not necessarily indicative
of the results to be expected for the entire year.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents. As of
October 31, 1995, the Company's cash and cash equivalents consist of bank and
money market accounts.

Inventories

Inventories are valued at the lower of first-in, first-out cost or market.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Significant improvements
are capitalized and expenditures for maintenance and repairs are charged to
expense as incurred. Upon the sale or retirement of these assets, the cost and
related accumulated depreciation are removed from the accounts and any gain or
loss is included in income.

Depreciation and amortization are provided using straight-line and
accelerated methods based on the estimated useful lives of the assets as
follows:

<TABLE>
<S> <C>
Building and improvements....................................... 40 years
Machinery and equipment......................................... 3-10 years
Furniture and fixtures.......................................... 5-10 years
</TABLE>

As of October 31, 1995 and April 30, 1996, the Company has construction in
progress of $208,000 and $0 included in building and improvements and $772,000
and $1,151,000 included in machinery and equipment, respectively.

F-9
<PAGE>

CFM TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION AS OF APRIL 30, 1996 AND FOR THE SIX MONTH PERIODS

ENDED APRIL 30, 1995 AND 1996 IS UNAUDITED)
Patents

The cost of patents acquired are being amortized on a straight-line basis
over 17 years. Amortization expense was $9,000, $13,000, $17,000, $8,000 and
$9,000 in fiscal 1993, 1994 and 1995 and the six months ended April 30, 1995
and 1996, respectively.

Revenue Recognition

Net sales are generally recognized upon shipment of the equipment and, if
recognized prior to shipment, upon completion of customer inspection where
risks of ownership are transferred to the customer. The estimated costs of
equipment installation and warranty are accrued when the related sale is
recognized.

Research, Development and Engineering Expenses

Research, development and engineering expenses are charged to expense as
incurred. Research, development and engineering expenses were net of
reimbursement of $1,713,000, $1,835,000, $232,000, $132,000 and $412,000 in
fiscal 1993, 1994 and 1995 and the six months ended April 30, 1995 and 1996,
respectively. Engineering expenses consist of costs related to the development
of new products and the integration of existing products into application-
specific systems.

Income Taxes

The Company accounts for income taxes under Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." SFAS No.
109 requires the liability method of accounting for deferred income taxes.
Deferred tax assets and liabilities are determined based on the difference
between the financial statement and tax bases of assets and liabilities.
Deferred tax assets or liabilities at the end of each period are determined
using the tax rate expected to be in effect when taxes are actually paid or
recovered.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration
of credit risk are accounts receivable. The Company's customer base
principally comprises companies within the semiconductor industry, which
historically has been volatile. The Company does not require collateral from
its customers.

Net Income Per Share

Net income per share was calculated by dividing net income by the weighted
average number of common shares outstanding for the respective period adjusted
for the dilutive effect of common stock equivalents, which consist of stock
options using the treasury stock method. Pursuant to the requirements of the
Securities and Exchange Commission, common stock issued by the Company during
the twelve months immediately preceding the initial public offering, plus the
number of common equivalent shares which became issuable during the same
period pursuant to the grant of common stock options, have been included in
the calculation of the shares used in computing net income per share as if
they were outstanding for all periods presented (using the treasury stock
method and the estimated initial public offering price of $14.00 per share).
Pursuant to the requirements of the Securities and Exchange Commission, the
calculation of shares used in computing net income per share also includes
certain redeemable common stock for which the redemption provisions terminated
immediately prior to the effective date of the initial public offering
contemplated in this Prospectus. Historical net income per share for fiscal
1993 and 1994 is not presented as such data is not meaningful due to the
accretion recorded in each year for the redeemable common stock (see Note 9).

New Accounting Pronouncement

The Financial Accounting Standards Board has issued SFAS No. 123,
"Accounting for Stock-Based Compensation." The Company is required to adopt
this standard for the fiscal year ending October 31, 1996. The Company has
elected to adopt the disclosure requirement of this pronouncement. The
adoption of this pronouncement will have no impact on the Company's financial
position or results of operations.

F-10
<PAGE>

CFM TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION AS OF APRIL 30, 1996 AND FOR THE SIX MONTH PERIODS

ENDED APRIL 30, 1995 AND 1996 IS UNAUDITED)

3. ACCOUNTS RECEIVABLE:

<TABLE>
<CAPTION>
OCTOBER 31 APRIL 30
--------------------- -----------
1994 1995 1996
---------- ---------- -----------
<S> <C> <C> <C>
Billed................................... $4,881,000 $7,162,000 $10,262,000
Unbilled................................. 1,118,000 1,724,000 2,850,000
---------- ---------- -----------
$5,999,000 $8,886,000 $13,112,000
========== ========== ===========
</TABLE>

Unbilled receivables represent final retainage amounts to be billed upon
completion of the installation process.

4. INVENTORIES:

<TABLE>
<CAPTION>
OCTOBER 31 APRIL 30
--------------------- ----------
1994 1995 1996
---------- ---------- ----------
<S> <C> <C> <C>
Raw materials............................. $2,171,000 $1,979,000 $2,314,000
Work in progress.......................... 971,000 1,721,000 3,076,000
Finished goods............................ 200,000 -- --
---------- ---------- ----------
$3,342,000 $3,700,000 $5,390,000
========== ========== ==========
</TABLE>

5. LINE OF CREDIT:

The Company has a $7,500,000 demand line of credit with a bank. The line of
credit does not have a stated maturity or expiration date, and outstanding
borrowings are payable upon demand by the bank. The borrowing base related to
the line of credit is based upon a certain percentage of eligible accounts
receivable and customer signed purchase orders, as defined. Interest is
charged at the bank's prime rate beginning in October 1995 and was charged at
the bank's prime rate plus 1/2% prior to October 1995. The interest rate under
the line of credit was 8.25% and 8.75% at October 31, 1994 and 1995,
respectively. The line also provides for the issuance of letters of credit. As
of October 31, 1994 and 1995, there were no outstanding borrowings on the
line. Borrowings under the line are collateralized by substantially all of the
Company's assets. The line of credit requires the Company to maintain certain
financial and other covenants, including a minimum tangible net worth and
minimum cash flow to debt service coverage ratio.

6. ACCRUED EXPENSES:

<TABLE>
<CAPTION>
OCTOBER 31 APRIL 30
--------------------- ----------
1994 1995 1996
---------- ---------- ----------
<S> <C> <C> <C>
Warranty and installation costs........... $ 386,000 $ 991,000 $1,114,000
Payroll and payroll related............... 362,000 732,000 403,000
Commissions............................... 205,000 250,000 1,050,000
Other..................................... 94,000 400,000 921,000
---------- ---------- ----------
$1,047,000 $2,373,000 $3,488,000
========== ========== ==========
</TABLE>

F-11
<PAGE>

CFM TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION AS OF APRIL 30, 1996 AND FOR THE SIX MONTH PERIODS

ENDED APRIL 30, 1995 AND 1996 IS UNAUDITED)
7. LONG-TERM DEBT:

<TABLE>
<CAPTION>
OCTOBER 31 APRIL 30
----------------------- ----------
1994 1995 1996
---------- ----------- ----------
<S> <C> <C> <C>
Mortgage note payable to bank,
payable in monthly installments of
$6,250 plus interest at 8.9% through
February 2009, collateralized by
land and building................... $1,075,000 $ 1,000,000 $957,000
Mortgage note payable to Pennsylvania
Industrial Development Authority
(PIDA), payable in monthly
installments of $4,294 including
interest at 2% through August 2009,
collateralized by land and
building............................ 627,000 632,000 610,000
Term note payable to bank, payable in
monthly installments of $20,000 plus
interest at the bank's prime rate
plus 0.25% through October 1998,
remaining outstanding principal due
in November 1998, collateralized by
certain building improvements....... -- 1,200,000 1,080,000
Mortgage note payable to Chester
County Development Council, payable
in monthly installments of $1,067
including interest at 5% through
August 2004, collateralized by land
and building........................ 98,000 91,000 86,000
Term notes payable to bank, payable
in monthly installments of $5,834
plus interest at the bank's prime
rate plus 1% through August 1999,
collateralized by certain assets.... 333,000 275,000 225,000
Capitalized lease obligations, lease
periods expiring at various dates
through 2001, interest rates range
from 7% to 12%, collateralized by
the leased assets................... 373,000 381,000 913,000
Other................................ 101,000 -- --
---------- ----------- ----------
2,607,000 3,579,000 3,871,000
Less-Current portion................. (389,000) (574,000) (652,000)
---------- ----------- ----------
$2,218,000 $ 3,005,000 $3,219,000
========== =========== ==========
</TABLE>

Maturities of long-term debt as of October 31, 1995 are as follows:

<TABLE>
<CAPTION>
FISCAL YEAR
-----------
<S> <C>
1996............................................................ $ 574,000
1997............................................................ 551,000
1998............................................................ 528,000
1999............................................................ 713,000
2000............................................................ 128,000
2001 and thereafter............................................. 1,085,000
----------
$3,579,000
==========
</TABLE>

In February 1994, the Company purchased land and a building to be used as
its manufacturing and office facilities. The cost of the land and building was
$2,558,000, including transaction costs and additional costs to renovate the
building to meet the Company's occupancy requirements. The property and
improvements are subject to the three mortgage notes. The mortgage note due to
PIDA contains certain financial covenants, the most restrictive of which
requires minimum levels of shareholders' equity. In addition, this note bears
interest at 2%, assuming the Company can create a specified number of jobs
over a three-year period. If the Company fails to meet the employment
commitment, the interest rate will increase to a market rate of up to 12.5%,
as defined.

F-12
<PAGE>

CFM TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION AS OF APRIL 30, 1996 AND FOR THE SIX MONTH PERIODS

ENDED APRIL 30, 1995 AND 1996 IS UNAUDITED)

In fiscal 1995, the Company issued a term note to a bank in order to finance
an expansion and improvements to the Company's facilities. This term note
requires the Company to maintain certain financial and other covenants,
including a minimum tangible net worth and minimum cash flow to debt service
coverage ratio. This note also contains cross default provisions which include
all outstanding debt obligations of the Company. In addition, in fiscal 1994,
the Company issued several term notes to a bank in order to finance additional
improvements and machinery and equipment necessary for the Company's new
facility.

The Company leases machinery and equipment and furniture and fixtures under
capital leases expiring in various years through 2000. The assets and
liabilities under these leases are recorded at the lower of the present value
of the minimum lease payments or the fair value of the asset. The assets are
depreciated over their estimated useful lives since ownership will transfer
upon lease expiration. The net book value of equipment under capitalized lease
obligations as of October 31, 1995 is $412,000.

8. RESEARCH AND DEVELOPMENT LIMITED PARTNERSHIPS:

In 1984 and 1985, the Company entered into research and development
agreements with two related-party limited partnerships (the Partnerships), in
which the Company was the general partner. A significant number of the
individuals who were limited partners were also significant shareholders of
the Company. Due to this related party relationship, the cash that was paid by
the Partnerships to the Company was recorded as an obligation due to the
Partnerships and interest was accrued thereon. In April 1987 and September
1988, the Company exercised its purchase options to acquire the Partnerships'
technologies, which resulted in an aggregate liability of $2,184,000. The
obligation due to the Partnerships increased by scheduled amounts which
aggregated $5,030,000 through October 31, 1994 and were recorded as interest
expense. In each of fiscal 1993 and fiscal 1994, $728,000 of interest expense
was recorded. The Company made payments to the Partnerships of $1,612,000 on a
cumulative basis through October 31, 1994. As of October 31, 1994, deferred
taxes of $2,353,000 were recorded for differences in financial statement and
income tax reporting with respect to this obligation. On November 1, 1994, the
Company exchanged 408,339 shares of its common stock for the assets of the
Partnerships, which consisted primarily of the Company's obligation to the
Partnerships. The fair value of these common shares approximated the
obligation due to the Partnerships, net of tax. Accordingly, no gain or loss
was recognized as a result of this transaction.

9. SHAREHOLDERS' EQUITY:

On December 19, 1995, the Company's Board of Directors adopted, and on
January 3, 1996, the Company's shareholders approved, an increase in the
number of authorized common shares from 2,000,000 to 10,000,000 and the
authorization of 1,000,000 shares of no par value preferred stock. In
addition, on June , 1996, the Company effected a 3.326-for-1.0 split of its
common stock. All share and stock option data have been restated to reflect
the authorized shares and stock split.

Certain common shareholders had the right to require the Company to redeem
their stock during certain periods and at specified prices. Immediately prior
to the effective date of the initial public offering contemplated in this
Prospectus, these redemption rights terminate and therefore, the related
redemption amounts are included in common stock and shareholders' equity for
all periods presented. The Company recorded the accretion to the redemption
value of $200,000, $200,000 and zero in fiscal 1993, 1994 and 1995,
respectively. The accretion was charged to common stock as the Company had an
accumulated deficit at that time. These amounts are not presented separately
in the statements of shareholders' equity due to the termination of the
redemption rights and are included in common stock for all periods presented.

F-13
<PAGE>

CFM TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION AS OF APRIL 30, 1996 AND FOR THE SIX MONTH PERIODS

ENDED APRIL 30, 1995 AND 1996 IS UNAUDITED)
The Company and certain employee shareholders have entered into an agreement
which requires, upon the death of the shareholder, that the Company purchase
that number of shares which can be purchased with the proceeds from life
insurance policies on these shareholders owned by the Company. The purchase
price is defined in the agreement. This agreement terminates upon the closing
date of the initial public offering contemplated in this Prospectus.

10. STOCK OPTIONS:

The Company has a stock option plan (the 1992 Plan) whereby 748,423 common
shares may be issued to key management personnel, directors and consultants at
exercise prices not less than fair market value. The options have vesting
terms set by the executive compensation and stock option committee of the
Board of Directors and expire 10 years after the date of grant.

On December 19, 1995, the Company's Board of Directors adopted, and on
January 3, 1996, the Company's shareholders approved, (i) the 1995 Incentive
Plan (Incentive Plan), (ii) the Non-Employee Directors' Stock Option Plan
(Directors' Plan) and (iii) the Employee Stock Purchase Plan (Purchase Plan).
The Incentive Plan and the Directors' Plan authorized the granting of up to
400,000 shares of common stock or options to Company employees and up to
150,000 options to purchase common stock to non-employee directors,
respectively. The Purchase Plan allows eligible employees to purchase up to
300,000 shares of common stock at 85% of market, as defined. The Company will
not grant any additional options under the 1992 Plan.

The following table summarizes stock option activity:
<TABLE>
<CAPTION>
NUMBER OF EXERCISE PRICE
SHARES PER SHARE
--------- --------------
<S> <C> <C>
Options outstanding at October 31, 1992.......... 286,899 $ 0.24-$2.41
Granted........................................ 206,232 2.41-7.52
Exercised...................................... (103,947) 0.24-2.41
--------
Options outstanding at October 31, 1993.......... 389,184 0.24-7.52
Granted........................................ 16,632 7.52
Exercised...................................... (6,653) 0.24
--------
Options outstanding at October 31, 1994.......... 399,163 0.24-7.52
Granted........................................ 207,087 7.52
--------
Options outstanding at October 31, 1995.......... 606,250 0.24-7.52
Granted........................................ 48,603 7.52
Canceled....................................... (832) 7.52
--------
Options outstanding at April 30, 1996............ 654,021 0.24-7.52(1)
========
</TABLE>
- --------

(1) The weighted average exercise price per share is $4.60.

As of October 31, 1995, there were 337,213 options vested and exercisable.
As of April 30, 1996, there were 395,360 options vested and exercisable and
507,397 stock options were available for grant under the Company's stock
option plans.

11. EMPLOYEE BENEFIT PLANS:

In fiscal 1994, the Company implemented a defined contribution retirement
plan for the benefit of eligible employees. Management believes that the plan
qualifies under Section 401(k) of the Internal Revenue Code. The plan provides
for matching contributions by the Company at a discretionary percentage of
eligible pretax contributions by the employee. Matching contributions by the
Company were $27,000 and $68,000 in fiscal 1994 and 1995, respectively.

F-14
<PAGE>

CFM TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION AS OF APRIL 30, 1996 AND FOR THE SIX MONTH PERIODS

ENDED APRIL 30, 1995 AND 1996 IS UNAUDITED)

In fiscal 1995, the Company established a profit-sharing plan for the
benefit of eligible employees. The plan provides for a target contribution of
approximately 2% of total planned salaries and wages, with actual payments
based upon certain annual performance results. In fiscal 1995, the Company
recorded profit sharing expense of $65,000.

12. OTHER RELATED PARTY TRANSACTIONS:

The Company recorded commission expense in fiscal 1994 and 1995 and the six
months ended April 30, 1995 and 1996, of $430,000, $282,000, $282,000 and
$627,000, respectively, which related to commissions payable to a distributor
which is also a shareholder of the Company. This distributor is controlled by
an individual who is a director of the Company. See Note 8 for other related
party transactions.

13. INCOME TAXES:

The components of the income tax provision are as follows:

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31
----------------------------
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
Current:
Federal.................................... $546,000 $471,000 $937,000
State...................................... 27,000 28,000 17,000
-------- -------- --------
573,000 499,000 954,000
-------- -------- --------
Deferred:
Federal.................................... (94,000) (235,000) (244,000)
State...................................... (22,000) (26,000) (7,000)
-------- -------- --------
(116,000) (261,000) (251,000)
-------- -------- --------
$457,000 $238,000 $703,000
======== ======== ========
</TABLE>

Income tax expense differs from the amount currently payable because certain
expenses, primarily depreciation and accruals, are reported in different
periods for financial reporting and income tax purposes.

The federal statutory income tax rate is reconciled to the effective income
tax rate as follows:

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31
-------------------------
1993 1994 1995
------- ------- -------
<S> <C> <C> <C>
Federal statutory rate.......................... 34.0% 34.0% 34.0%
State income taxes, net of federal benefit...... 0.4 0.2 0.5
Research and development credit................. -- (3.6) (2.4)
Other........................................... (0.3) -- 1.3
------- ------- -------
34.1% 30.6% 33.4%
======= ======= =======
</TABLE>

F-15
<PAGE>

CFM TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION AS OF APRIL 30, 1996 AND FOR THE SIX MONTH PERIODS

ENDED APRIL 30, 1995 AND 1996 IS UNAUDITED)
The components of the net current and long-term deferred tax assets and
liabilities, measured under SFAS No. 109, are as follows:

<TABLE>
<CAPTION>
OCTOBER 31
--------------------
1994 1995
---------- --------
<S> <C> <C>
Deferred tax assets--
Inventories........................................ $ 33,000 $ 85,000
Warranty and installation accrual.................. 114,000 347,000
Obligation to Partnerships (see Note 8)............ 2,353,000 --
Other.............................................. 46,000 97,000
---------- --------
2,546,000 529,000
Deferred tax liability--
Depreciation....................................... (48,000) (103,000)
---------- --------
Net deferred tax asset........................... $2,498,000 $426,000
========== ========
</TABLE>

14. CUSTOMER AND GEOGRAPHIC INFORMATION:

The Company's operations are conducted in one business segment. Export net
sales were $2,998,000, $8,242,000, $12,102,000, $5,640,000 and $8,555,000 in
fiscal 1993, 1994 and 1995 and the six months ended April 30, 1995 and 1996,
respectively. Export net sales to Europe and East Asia were $1,556,000 and
$1,442,000 in fiscal 1993, $4,625,000 and $3,617,000 in fiscal 1994,
$10,099,000 and $2,033,000 in fiscal 1995, $3,595,000 and $2,045,000 in the
six months ended April 30, 1995 and $5,547,000 and $3,008,000 in the six
months ended April 30, 1996, respectively.

The following table summarizes significant customers with net sales in
excess of 10% of net sales:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED OCTOBER 31 APRIL 30
-------------------------------- --------------------
CUSTOMER 1993 1994 1995 1995 1996
-------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
A.................. $3,616,000 $6,876,000 $5,287,000 $1,825,000 $ *
B.................. 2,314,000 * * * *
C.................. * 2,583,000 * * 6,363,000
D.................. * * 3,075,000 1,421,000 *
E.................. * * 4,041,000 * *
F.................. * * 2,490,000 * *
G.................. 1,504,000 * * * *
H.................. * * * 1,695,000 4,683,000
I.................. * * * 1,063,000 *
J.................. * * * 1,300,000 *
</TABLE>
--------
* Net sales less than 10% of net sales

15. SUPPLIER CONCENTRATION:

The Company relies to a substantial extent on outside vendors to manufacture
and supply many of the components and subassemblies used in the Company's
systems. Certain of these are obtained from a sole supplier or a limited group
of suppliers, many of which are small, independent companies. Moreover, the
Company believes that certain of these components and subassemblies can only
be obtained from its current suppliers. The Company's reliance on outside
vendors generally, and on sole suppliers in particular, involves several
risks, including a potential inability to obtain an adequate supply of
required components and reduced control over pricing, timely delivery and
quality of components.

F-16
<PAGE>

CFM TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION AS OF APRIL 30, 1996 AND FOR THE SIX MONTH PERIODS

ENDED APRIL 30, 1995 AND 1996 IS UNAUDITED)

16. COMMITMENTS AND CONTINGENCIES:

In fiscal 1995, the Company entered into a noncancelable lease effective
December 1, 1995 for office facilities. Future minimum rental payments,
including operating expense allocations, as of October 31, 1995 on this lease
are as follows:

<TABLE>
<CAPTION>
FISCAL YEAR
-----------
<S> <C>
1996............................................................. $485,000
1997............................................................. 548,000
1998............................................................. 548,000
1999............................................................. 548,000
2000............................................................. 548,000
2001............................................................. 46,000
</TABLE>

The Company has asserted certain of its patent rights against three
defendants. One of the defendants has counterclaimed against the Company,
seeking a declaratory judgment that the subject patent is invalid. Although
management believes that the ultimate resolution of these matters will not
have a material impact on the Company's financial position or results of
operations, there can be no assurance in that regard.

Two shareholders owning 31,614 shares of Common Stock acquired in connection
with the November 1, 1994 transaction with the Partnerships (see Note 8) have
objected to that transaction and its valuation, alleging that the Company
breached certain duties and violated certain laws in connection therewith. The
Company believes that such shareholders' objections and allegations are
without merit and that any resolution of such matter will not have a material
adverse effect on the Company.

"First, customer-provided wafer carriers holding 25 wafers each are mated
with the wafer loading module. All the wafers are then removed from each
carrier, in turn, and placed into the Full-Flow vessel. When loaded, the
Full-Flow vessel is moved laterally back into the vessel module where the
upper and lower inlets clamp the vessel into place, completely sealing it.
At the conclusion of processing, the process is reversed and all wafers
are returned to their original wafer carrier, maintaining lot
traceability."

[PHOTOGRAPH APPEARS HERE DEPICTING WAFERS SUSPENDED ABOVE
THE FULL-FLOW VESSEL. ALSO DEPICTED IS AN EMPTY WAFER CARRIER]

[PHOTOGRAPH APPEARS HERE DEPICTING AN OPERATOR USING THE TOUCH SCREEN
GRAPHICAL INTERFACE OF AN INSTALLED FULL-FLOW SYSTEM.]

"Graphical displays provide real-time control information and process
options to operators and engineers while completely isolated from
dangerous processing fluids and vapors."

F-17
<PAGE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING
SHAREHOLDERS OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUB-
SEQUENT TO ITS DATE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH
SUCH OFFER OR SOLICITATION IS UNLAWFUL.

---------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 5
The Company.............................................................. 12
Use of Proceeds.......................................................... 12
Dividend Policy.......................................................... 12
Capitalization........................................................... 13
Dilution................................................................. 14
Selected Financial Data.................................................. 15
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 16
Business................................................................. 22
Management............................................................... 36
Certain Relationships and Related Transactions........................... 44
Principal and Selling Shareholders....................................... 45
Description of Capital Stock............................................. 47
Shares Eligible for Future Sale.......................................... 48
Underwriting............................................................. 49
Legal Matters............................................................ 51
Experts.................................................................. 51
Additional Information................................................... 51
Index to Consolidated Financial Statements............................... F-1
</TABLE>

UNTIL , 1996, ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECU-
RITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DE-
LIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UN-
SOLD ALLOTMENTS OR SUBSCRIPTIONS.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

2,200,000 SHARES

[LOGO OF CFM TECHNOLOGIES INC APPEARS HERE]

COMMON STOCK

---------------

PROSPECTUS

---------------

PAINEWEBBER INCORPORATED

DONALDSON, LUFKIN & JENRETTE

SECURITIES CORPORATION

MONTGOMERY SECURITIES

---------------

, 1996

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED MAY 17, 1996

2,200,000 SHARES

LOGO
COMMON STOCK

-----------

Of the 2,200,000 shares of Common Stock offered, 440,000 are being offered
hereby in an international offering outside the United States and Canada (the
"International Shares") and 1,760,000 shares are being offered in a concurrent
offering in the United States. The price to the public and aggregate
underwriting discounts and commissions per share will be identical for both
offerings. See "Underwriting."

Of the 2,200,000 shares of Common Stock offered, 2,138,461 shares are being
offered by CFM Technologies, Inc. ("CFM" or the "Company") and 61,539 shares
are being offered by certain shareholders of the Company (the "Selling
Shareholders"). See "Principal and Selling Shareholders." The Company will not
receive any proceeds from the sale of shares by the Selling Shareholders. Prior
to this offering, there has been no public market for the Common Stock of the
Company. It is currently anticipated that the initial public offering price of
the Common Stock will be between $13.00 and $15.00 per share. See
"Underwriting" for a discussion of the factors considered in determining the
initial public offering price. The Common Stock has been approved for quotation
on The Nasdaq Stock Market under the symbol "CFMT."

THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING
ON PAGE 5 OF THIS PROSPECTUS FOR INFORMATION THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS.

-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Underwriting Proceeds to
Price Discounts and Proceeds to Selling
to Public Commissions(1) Company(2) Shareholders
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share.................. $ $ $ $
- -------------------------------------------------------------------------------
Total...................... $ $ $ $
- -------------------------------------------------------------------------------
Total Assuming Full Exercise
of Over-Allotment
Option(3)................. $ $ $ $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) See "Underwriting."

(2) Before deducting expenses estimated at $800,000, which are payable by the
Company.

-----------

The International Shares of Common Stock are offered by the International
Underwriters, subject to prior sale, when, as and if delivered to and accepted
by the International Underwriters, and subject to their right to reject orders
in whole or in part. It is expected that delivery of the Common Stock will be
made in New York City on or about , 1996.

-----------

PAINEWEBBER INTERNATIONAL

DONALDSON, LUFKIN & JENRETTE

SECURITIES CORPORATION
MONTGOMERY SECURITIES

-----------

THE DATE OF THIS PROSPECTUS IS , 1996
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY STATE.
<PAGE>

UNITED STATES TAXATION OF NON-U.S. SHAREHOLDERS

GENERAL

The following is a general discussion of certain anticipated United States
federal tax consequences of the ownership, holding and disposition of Common
Stock by a person that, for United States federal income tax purposes, is not
a "United States Person" (a "Non-U.S. Holder"). For these purposes, a "United
States Person" means a citizen or resident of the United States, a
corporation, a partnership or other entity created or organized in or under
the laws of the United States or any state thereof, or an estate or trust, the
income of which is subject to United States federal income taxation regardless
of source.

The following discussion does not address all aspects of United States
federal taxation and does not address tax consequences under state, local or
foreign tax laws. The discussion does not consider specific facts and
circumstances that may be relevant to a particular Non-U.S. Holder's tax
position, including the benefits that may be available to any person under an
applicable tax treaty to which the United States is a party. Specifically,
without limitation, this discussion does not address the United States tax
consequences to any Non-U.S. Holder who at any time owns (directly or through
attribution) more than 5% of the Common Stock or to any Non-U.S. Holder that
is a controlled foreign corporation, a foreign personal holding company, a
foreign private foundation or a foreign government. Furthermore, the following
discussion is based on current provisions of the Code, and on administrative
and judicial pronouncements thereunder, all of which are subject to change
possibly retroactively. Each prospective Non-U.S. Holder is urged to consult a
tax advisor with respect to the United States tax consequences of acquiring,
holding and disposing of Common Stock, as well as any tax consequences that
may arise under the laws of any foreign, state, local or other tax
jurisdiction.

DIVIDENDS

The Company does not anticipate paying dividends in the foreseeable future.
See "Dividend Policy." In the event dividends are paid on shares of Common
Stock, these payments will generally be subject to withholding of United
States federal income tax at a rate of 30% of such payment unless either (i)
such holder is eligible for a reduced tax rate or a tax exemption under an
applicable income tax treaty or (ii) such holder is engaged in the conduct of
a trade or business within the United States and the dividend is effectively
connected with that trade or business. If the dividend is effectively
connected with the conduct of a trade or business within the United States by
a Non-U.S. Holder, the dividend (as adjusted by any applicable deductions)
will be subject to United States federal income tax at regular rates generally
applicable to United States Persons. Any such effectively connected dividends
received by a corporate Non-U.S. Holder may, under certain circumstances, be
subject to an additional "branch profits tax" at a 30% rate or such lower rate
as may be specified by an applicable income tax treaty. Certain certification
requirements may have to be satisfied to claim treaty benefits or exemption
from withholding under the foregoing rules. Non-U.S. Holders that are
partnerships or trusts may be subject to certain additional withholding
requirements and are urged to consult their tax advisors as to the application
of such requirements.

GAIN ON DISPOSITION OF COMMON STOCK

Except as described below, a Non-U.S. Holder will generally not be subject
to United States federal income tax (and no tax will generally be withheld)
with respect to gain recognized on a sale or other disposition of the Common
Stock unless (i) the gain is effectively connected with a trade or business
conducted by the Non-U.S. Holder in the United States (in which case branch
profits tax may also apply), (ii) the Common Stock is disposed of by certain
Non-U.S. Holders who are individuals, who hold the Common Stock as a capital
asset and who are present in the United States for 183 days or more in the
taxable year of the disposition or (iii) the Non-U.S. Holder is subject to tax
pursuant to the provisions of U.S. tax law applicable to certain United States
expatriates.

49
<PAGE>

FEDERAL ESTATE TAXES

Common Stock held by a Non-U.S. Holder who is a non-resident and not a
United States citizen (as specially defined for United States federal estate
tax purposes) at the date of his or her death will be included in his or her
gross estate for United States federal estate tax purposes, unless an
applicable estate tax treaty provides otherwise.

UNITED STATES INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING TAX

The Company must report annually to the Internal Revenue Service and to each
Non-U.S. Holder the amount of dividends and other payments distributed to and
the tax withheld with respect to such holder. These information reporting
requirements apply regardless of whether withholding is reduced or eliminated
by an applicable treaty or is not required because the dividends are
effectively connected with a U.S. trade or business of a Non-U.S. Holder.
Under certain treaties, the Internal Revenue Service may make this information
available to the tax authorities in the country of a Non-U.S. Holder's
residence.

Backup withholding tax (which generally is a withholding tax imposed at the
rate of 31% on certain payments to persons that are not "exempt recipients"
and that fail to furnish certain information under United States information
reporting requirements) and information reporting relating thereto (which is
separate from the reporting requirements described in the preceding paragraph)
generally will not apply to dividends and other payments paid to Non-U.S.
Holders that are either (i) subject to the 30% tax discussed above (under the
heading "Dividends") or (ii) not so subject because a tax treaty applies that
reduces or eliminates such withholding. In addition, under current temporary
United States Treasury regulations, dividends payable at an address located
outside of the United States to a Non-U.S. Holder are generally not subject to
the backup withholding and information reporting rules. These backup
withholding requirements and information reporting rules will apply to the
gross proceeds paid by or through a United States office of a broker to a Non-
U.S. Holder upon the disposition of shares of the Company, unless the Non-U.S.
Holder certifies under penalty of perjury that it is a foreign person (as that
term is defined in applicable regulations) or the Non-U.S. Holder otherwise
establishes an exemption. Under existing regulations, information reporting
but not backup withholding will also apply to the payment of gross proceeds of
a sale or other disposition of Common Stock by or through a foreign office of
a broker with certain United States connections, unless the broker has
documentary evidence that the holder is a Non-U.S. Holder and the broker has
no actual knowledge to the contrary. Any amounts withheld under the backup
withholding rules from a payment to a Non-U.S. Holder will be refunded (or
credited against the Non-U.S. Holder's United States federal income tax
liability, if any), provided that an appropriate claim for refund is filed
with the Internal Revenue Service. These backup withholding and information
reporting requirements are under review by the United States Treasury
Department. Their application to the ownership and disposition of shares of
Common Stock could be changed by future regulations. Specifically, the ability
to rely on an address outside of the United States to preclude backup
withholding and information reporting may be significantly restricted or
completely revoked.

50
<PAGE>

[Alternate Page for International Prospectus]

UNDERWRITING

The International Underwriters named below, acting through PaineWebber
International (U.K.) Ltd., Donaldson, Lufkin & Jenrette Securities Corporation
and Montgomery Securities as International Representatives (the "International
Representatives"), have severally agreed, subject to the terms and conditions
set forth in the International Underwriting Agreement by and among the Company
and the International Representatives (the "International Underwriting
Agreement"), to purchase from the Company, and the Company has agreed to sell
to the International Underwriters, 440,000 shares of the Company's Common
Stock, which equals the sum of the number of shares of Common Stock (the
"International Shares") set forth opposite the names of such International
Underwriters below:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
PaineWebber International (U.K.) Ltd.......................
Donaldson, Lufkin & Jenrette Securities Corporation........
Montgomery Securities......................................
-------
Total.................................................. 440,000
=======
</TABLE>

In addition, the U.S. Underwriters (together with the International
Underwriters, the "Underwriters"), in a concurrent offering of the Common
Stock to U.S. Persons (as defined below), acting through PaineWebber
Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation and
Montgomery Securities as U.S. Representatives (the "U.S. Representatives"),
have severally agreed, subject to the terms and conditions set forth in the
U.S. Underwriting Agreement by and among the Company, the Selling Shareholders
and the U.S. Representatives (the "U.S. Underwriting Agreement"), to purchase
from the Company and the Selling Shareholders, and the Company and the Selling
Shareholders have severally agreed to sell to the U.S. Underwriters, 1,760,000
shares of Common Stock (the "U.S. Shares").

The International Underwriting Agreement provides that the obligation of the
International Underwriters to purchase all of the shares of Common Stock is
subject to certain conditions. The International Underwriters are committed to
purchase, and the Company is obligated to sell, all of the shares of Common
Stock offered by this Prospectus, if any of the shares of Common Stock being
sold pursuant to the International Underwriting Agreement are purchased. The
offering price and underwriting discounts and commissions under both
underwriting agreements are identical. In general, the closing with respect to
the sale of the shares of Common Stock pursuant to the International
Underwriting Agreement is a condition to the closing with respect to the sale
of the shares of Common Stock pursuant to the U.S. Underwriting Agreement and
vice versa. PaineWebber Incorporated is an affiliate of PaineWebber
International (U.K.) Ltd.

The Company has been advised by the International Representatives that the
International Underwriters propose to offer the shares of Common Stock to the
public initially at the public offering price set forth on the cover page of
this Prospectus, and to certain securities dealers at such price less a
concession not in excess of $ per share. The International Underwriters may
allow, and such dealers may reallow, a discount not in excess of $ per
share. After the initial public offering, the public offering price and the
concessions and discounts may be changed by the International Representatives.

51
<PAGE>

[Alternate Page for International Prospectus]

Each International Underwriter has agreed that, as part of the distribution
of the International Shares, (a) it is not purchasing any International Shares
for the account of any U.S. or Canadian Person and (b) it has not offered or
sold, and will not offer to sell, directly or indirectly, any International
Shares or distribute this Prospectus to any person within the U.S. or Canada
or to any U.S. or Canadian Person. Each U.S. Underwriter has agreed that, as
part of the distribution of the U.S. Shares, (a) it is not purchasing any U.S.
Shares for the account of anyone other than a U.S. or Canadian Person and (b)
it has not offered or sold, and will not offer to sell, directly or
indirectly, any U.S. Shares or distribute the U.S. Prospectus to any person
outside the U.S. or to anyone other than a U.S. or Canadian Person. The
foregoing limitations do not apply to stabilization transactions or to certain
other transactions specified in the Agreement Between U.S. and International
Underwriters described below. As used herein, "U.S. or Canadian Person" means
any individual who is a resident of the United States or Canada, any
corporation, pension, profit-sharing or other trust or other entity organized
under or governed by the laws of the United States or Canada or any political
subdivision of either thereof (other than a foreign branch of any U.S. or
Canadian Person) and any U.S. or Canadian branch of a person who is not
otherwise a U.S. or Canadian Person.

Each International Underwriter has represented and agreed not to offer or
sell Common Stock in Great Britain by means of any document except to persons
whose ordinary business it is to buy or sell shares or debentures, whether as
principal or agent (except in circumstances which do not constitute an offer
to the public within the meaning of the Companies Act of 1985 of Great
Britain), and, unless such International Underwriter is a person permitted to
do so under the securities laws of Great Britain, it will not distribute this
Prospectus or any other offering material in respect of any proposed offer or
sale of Common Stock in or from Great Britain other than to persons whose
business involves that acquisition and disposal, or the holding, of
securities, whether as principal or agent.

52
<PAGE>

[Alternate Page for International Prospectus]

the experience of its management, the economic conditions of the Company's
industry in general, the general condition of the equity securities market,
the demand for similar securities of companies considered comparable to the
Company and other relevant factors.

LEGAL MATTERS

EXPERTS

ADDITIONAL INFORMATION

53
<PAGE>

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

financial statements did not contain an adverse opinion or disclaimer of
opinion and were not modified as to uncertainty, audit scope or accounting
principles. There were no disagreements with the former auditors on any matter
of accounting principles or practices, financial statement disclosure or
auditing scope or procedure at the time of the change or with respect to the
Company's financial statements which, if not resolved to the former auditors'
satisfaction, would have caused them to make reference to the subject matter
of the disagreement in connection with their report. Prior to retaining Arthur
Andersen LLP, the Company had not consulted with Arthur Andersen LLP regarding
accounting principles.

54
<PAGE>

================================================================================

[Alternate Page for International Prospectus]

---------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 5
The Company.............................................................. 12
Use of Proceeds.......................................................... 12
Dividend Policy.......................................................... 12
Capitalization........................................................... 13
Dilution................................................................. 14
Selected Financial Data.................................................. 15
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 16
Business................................................................. 22
Management............................................................... 36
Certain Relationships and Related Transactions........................... 44
Principal and Selling Shareholders....................................... 45
Description of Capital Stock............................................. 47
Shares Eligible for Future Sale.......................................... 48
United States Taxation of Non-U.S. Shareholders.......................... 49
Underwriting............................................................. 51
Legal Matters............................................................ 53
Experts.................................................................. 53
Additional Information................................................... 53
Index to Consolidated Financial Statements............................... F-1
</TABLE>

================================================================================

2,200,000 SHARES

[LOGO OF CFM TECHNOLOGIES, INC. APPEARS HERE]

COMMON STOCK

---------------
PROSPECTUS
---------------

PaineWebber INTERNATIONAL

DONALDSON, LUFKIN & JENRETTE

SECURITIES CORPORATION

MONTGOMERY SECURITIES

---------------

, 1996

================================================================================
<PAGE>

PART II

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The estimated expenses in connection with this offering, other than
underwriting discounts and commissions, are set forth below:

<TABLE>
<S> <C>
Securities and Exchange Commission filing fee............... $ 11,382
NASD filing fee............................................. 3,802
Blue Sky fees and expenses.................................. 10,000
Accounting fees and expenses................................ 145,000
Legal fees and expenses..................................... 160,500
Transfer agent and registrar fees and expenses.............. 2,000
Printing expenses........................................... 210,000
Nasdaq listing fee.......................................... 32,355
Directors' and officers' insurance.......................... 220,000
Miscellaneous............................................... 4,961
--------
Total................................................... $800,000
========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The registrant's Articles of Incorporation, as amended, and Amended and
Restated By-Laws include provisions (i) to reduce the personal liability of
the registrant's directors for monetary damages resulting from breaches of
their fiduciary duty and (ii) to permit the registrant to indemnify its
directors and officers to the fullest extent permitted by Pennsylvania law.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Since its incorporation on November 1, 1994, the registrant has sold the
following securities without registration under the Securities Act:

1. In November 1994, in connection with the registrant's organization as
a holding company, the registrant issued an aggregate of 3,392,928 shares
of Common Stock to the shareholders of CFM Technologies, Incorporated ("CFM
Sub") in exchange for an equal number of shares of CFM Sub, representing
100% of the issued and outstanding capital stock of CFM Sub. Also in
connection with such reorganization, the registrant issued options to
purchase an aggregate of 399,163 shares of Common Stock to the holders of
options to purchase an equal number of shares of Common Stock of CFM Sub,
in exchange for the cancellation of such CFM Sub options.

2. Also in November 1994, the registrant issued an aggregate of 408,339
shares of Common Stock to two related-party limited partnerships in which
the registrant was the general partner, in exchange for the assets of the
partnerships. See "Certain Relationships and Related Transactions" in Part
I of this registration statement.

3. In December 1994, the registrant issued options to purchase an
aggregate of 108,107 shares of Common Stock at an exercise price of $7.52
per share to five employees.

4. In January 1995, the registrant issued 1,996 shares of Common Stock as
compensation for executive search services rendered.

5. In October 1995, the registrant issued options to purchase an
aggregate of 98,980 shares of Common Stock at an exercise price of $7.52
per share to 48 employees.

6. In March 1996, the registrant issued options to purchase an aggregate
of 48,603 shares of Common Stock at an exercise price of $7.52 per share to
two employees, two Honorary Lifetime Directors and a director/consultant.

The registrant believes that the transactions described in paragraphs 1
through 5 were exempt from registration under Section 3(b) or 4(2) of the
Securities Act because the subject securities were, respectively, either (i)
issued pursuant to a compensatory benefit plan pursuant to Rule 701 under the
Securities Act or (ii) sold to a limited group of persons, each of whom was
believed to have been a sophisticated investor or to have had a preexisting
business or personal relationship with the registrant or its management and
was purchasing for investment without a view to further distribution.

II-1
<PAGE>

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

EXHIBIT NUMBER

<TABLE>
<C> <S>
1.1 Form of U.S. Underwriting Agreement.*
1.2 Form of International Underwriting Agreement.*
3.1 Articles of Incorporation of CFM Technologies, Inc., as amended.
3.2 Amended and Restated By-Laws of CFM Technologies, Inc.
5 Opinion of Ballard Spahr Andrews & Ingersoll.**
10.1 Employment Agreement dated as of January 9, 1995 by and between CFM
Technologies, Inc. and Lorin Jeffry Randall.*
10.2 Stock Option Agreement dated March 18, 1991 between CFM Technologies,
Inc. and Burton McGillivray, as extended and amended on June 11, 1993
and as amended on September 25, 1994.*
10.3 Stock Option Agreement dated as of December 9, 1994 by and between CFM
Technologies, Inc. and Milton Stearns, as amended on November 3, 1995.*
10.4 CFM Technologies, Inc. Annual Profit Sharing Plan.*
10.5 CFM Technologies, Inc. 1992 Employee Stock Option Plan.*
10.6 CFM Technologies, Inc. 1995 Incentive Plan.
10.7 CFM Technologies, Inc. Non-Employee Directors' Stock Option Plan.
10.8 CFM Technologies, Inc. Employee Stock Purchase Plan.
10.9 Distributor Agreement dated November 28, 1991 by and between ANAM
Semiconductor Design Co., Ltd and CFM Technologies, Incorporated, and
supplement to the Distributor Agreement dated August 26, 1994.*
10.10 Distributor Agreement dated March 3, 1992 by and between Innotech
Corporation and CFM Technologies, Inc., as modified on June 15, 1994.*
10.11 Lease Agreement dated October 10, 1995 by and between Hough/Loew
Construction, Inc. and CFM Technologies, Inc. and Addendum to Lease
Agreement dated October 10, 1995.*
10.12 Loan Agreement dated July 27, 1994 by and between Chester County
Development Council ("CCDC") and CFM Technologies, Incorporated.*
10.13 $100,000 Mortgage dated as of July 27, 1994, from CFM Technologies,
Incorporated to CCDC.*
10.14 $1,200,000 Commercial Promissory Note dated October 13, 1995 from CFM
Technologies, Inc. to CoreStates Bank, N.A. ("CoreStates").*
10.15 Guaranties dated October 13, 1995 executed by CFMT, Inc. and CFM
International Corp. in favor of CoreStates.*
10.16 $1,125,000 Commercial Promissory Note dated February 16, 1994 from CFM
Technologies, Incorporated to CoreStates.*
10.17 Mortgage dated February 16, 1994 between CFM Technologies, Incorporated
and CoreStates.*
10.18 $150,000 Commercial Promissory Note dated September 28, 1994 from CFM
Technologies, Incorporated to CoreStates.*
10.19 $100,000 Commercial Promissory Note dated August 11, 1994 from CFM
Technologies, Incorporated to CoreStates.*
10.20 Assignment of Leases, Rents, Agreements of Sale, Licenses and Permits
dated February 16, 1994 by CFM Technologies, Incorporated to
CoreStates.*
10.21 Letter agreement dated March 25, 1996 between CoreStates Bank, N.A. and
CFM Technologies, Inc. and $7,500,000 Master Demand Note dated April 1,
1996 from CFM Technologies, Inc. to CoreStates Bank, N.A.**
11 Statement re computation of per share earnings.
16 Letter re change in certifying accountant.
21 Subsidiaries of the registrant.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Ballard Spahr Andrews & Ingersoll (included in its opinion
filed as Exhibit 5 hereto).**
24 Power of attorney.*
</TABLE>
- --------

* Previously filed.

** To be filed by amendment.

II-2
<PAGE>

(b) Financial Statement Schedules.

Schedules have been omitted because the information required to be set forth
therein is not applicable or is shown in the financial statements or notes
thereto.

ITEM 17. UNDERTAKINGS.

A. The undersigned registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreement
certificates in such denominations and registered in such names as required by
the underwriter to permit prompt delivery to each purchaser.

B. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to its Articles of Incorporation, as amended, its By-
laws or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.

C. The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-3
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE TOWN OF WEST
CHESTER, COMMONWEALTH OF PENNSYLVANIA, ON MAY 17, 1996.

CFM Technologies, Inc.

By: /s/ Lorin J. Randall
----------------------------------

LORIN J. RANDALL

VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATE INDICATED.

SIGNATURE TITLE DATE

Chairman of the
Christopher F. McConnell* Board of Directors
- -------------------------------------
CHRISTOPHER F. MCCONNELL

President, Chief
Roger A. Carolin* Executive Officer
- ------------------------------------- and Director
ROGER A. CAROLIN (Principal
Executive Officer)

/s/ Lorin J. Randall Vice President,
- ------------------------------------- Chief Financial May 17, 1996
LORIN J. RANDALL Officer, Treasurer
and Secretary
(Principal
Financial Officer
and Principal
Accounting
Officer)

Director
James J. Kim*
- -------------------------------------

JAMES J. KIM

Director
Brad Mattson*
- -------------------------------------
BRAD MATTSON

Director
Burton E. McGillivray*
- -------------------------------------
BURTON E. MCGILLIVRAY

Director
Milton S. Stearns, Jr.*
- -------------------------------------
MILTON S. STEARNS, JR.

May 17, 1996

*By: /s/ Lorin J. Randall
---------------------------

LORIN J. RANDALL

ATTORNEY-IN-FACT

II-4
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<C> <S>
1.1 Form of U.S. Underwriting Agreement.*
1.2 Form of International Underwriting Agreement.*
3.1 Articles of Incorporation of CFM Technologies, Inc., as
amended. ......................................................
3.2 Amended and Restated By-Laws of CFM Technologies, Inc. .........
5 Opinion of Ballard Spahr Andrews & Ingersoll.**
10.1 Employment Agreement dated as of January 9, 1995 by and between
CFM Technologies, Inc. and Lorin Jeffry Randall.*
10.2 Stock Option Agreement dated March 18, 1991 between CFM
Technologies, Inc. and Burton McGillivray, as extended and
amended on June 11, 1993 and as amended on September 25, 1994.*
10.3 Stock Option Agreement dated as of December 9, 1994 by and
between CFM Technologies, Inc. and Milton Stearns, as amended
on November 3, 1995.*
10.4 CFM Technologies, Inc. Annual Profit Sharing Plan.*
10.5 CFM Technologies, Inc. 1992 Employee Stock Option Plan.*
10.6 CFM Technologies, Inc. 1995 Incentive Plan......................
10.7 CFM Technologies, Inc. Non-Employee Directors' Stock Option
Plan............................................................
10.8 CFM Technologies, Inc. Employee Stock Purchase Plan. ...........
10.9 Distributor Agreement dated November 28, 1991 by and between
ANAM Semiconductor Design Co., Ltd and CFM Technologies,
Incorporated, and supplement to the Distributor Agreement dated
August 26, 1994.*
10.10 Distributor Agreement dated March 3, 1992 by and between
Innotech Corporation and CFM Technologies, Incorporated, as
modified on June 15, 1994.*
10.11 Lease Agreement dated October 10, 1995 by and between Hough/Loew
Construction, Inc. and CFM Technologies, Inc. and Addendum to
Lease Agreement dated October 10, 1995.*
10.12 Loan Agreement dated July 27, 1994 by and between Chester County
Development Council ("CCDC") and CFM Technologies,
Incorporated.*
10.13 $100,000 Mortgage dated as of July 27, 1994, from CFM
Technologies, Incorporated to CCDC.*
10.14 $1,200,000 Commercial Promissory Note dated October 13, 1995
from CFM Technologies, Incorporated to CoreStates Bank, N.A.
("CoreStates").*
10.15 Guaranties dated October 13, 1995 executed by CFMT, Inc. and CFM
International Corp. in favor of CoreStates.*
10.16 $1,125,000 Commercial Promissory Note dated February 16, 1994
from CFM Technologies, Incorporated to CoreStates.*
10.17 Mortgage dated February 16, 1994 between CFM Technologies,
Incorporated and CoreStates.*
10.18 $150,000 Commercial Promissory Note dated September 28, 1994
from CFM Technologies, Incorporated to CoreStates.*
10.19 $100,000 Commercial Promissory Note dated August 11, 1994 from
CFM Technologies, Incorporated to CoreStates.*
10.20 Assignment of Leases, Rents, Agreements of Sale, Licenses and
Permits dated February 16, 1994 by CFM Technologies,
Incorporated to CoreStates.*
10.21 Letter agreement dated March 25, 1996 between CoreStates Bank,
N.A. and CFM Technologies, Inc. and $7,500,000 Master Demand
Note dated April 1, 1996 from CFM Technologies, Inc. to
CoreStates Bank, N.A.**
11 Statement re computation of per share earnings..................
16 Letter re change in certifying accountant. .....................
21 Subsidiaries of the registrant..................................
23.1 Consent of Arthur Andersen LLP..................................
23.2 Consent of Ballard Spahr Andrews & Ingersoll (included in its
opinion filed as Exhibit 5 hereto).**
24 Power of attorney.*
</TABLE>

- --------

* Previously filed.

** To be filed by amendment.

<PAGE>

Exhibit 3.1

Microfilm Number 9468-0776 Filed with the Department of State
----------
on November 1, 1994

Entity Number 2605116 /s/ Robert M. Grant
------------- ----------------------------------
Secretary of the Commonwealth

ARTICLES OF INCORPORATION - FOR PROFIT
OF
THE CFM TECHNOLOGY CORPORATION

Indicate type of domestic corporation:

X Business-stock ___ Management
- ---
(15 Pa.C.S. (S) 1306) (15 Pa.C.S. (S) 2702)

___ Business-nonstock ___ Professional
(15 Pa.C.S. (S) 2102) (15 Pa.C.S. (S) 2903)

___ Business-statutory close ___ Insurance
(15 Pa.C.S. (S) 2303) (15 Pa.C.S. (S) 3101)

___ Cooperative (15 Pa.C.S. (S) 7102)

DSCB:15-1306/2102/2303/2702/2903/3101/7102A (Rev. 91)

In compliance with the requirements of the applicable provisions of 15
Pa.C.S. (relating to corporations and unincorporated associations) the
undersigned, desiring to incorporate a corporation for profit hereby, state(s)
that:

1. The name of the corporation is THE CFM TECHNOLOGY CORPORATION.

2. The (a) address of this corporation's initial registered office
in this Commonwealth or (b) name of its commercial registered office provider
and the county of venue is:

(a) 1381 Enterprise Drive, West Chester, Pennsylvania 19381,
Chester County.

(b) N/A

For a corporation represented by a commercial registered office provider, the
county in (b) shall be deemed the county in which the corporation is located for
venue and official publication purposes.

3. The corporation is incorporated under the provisions of the
Business Corporation Law of 1988, as amended.

4. The aggregate number of shares authorized is 2,000,000 Common, no
par.
<PAGE>

5. The name and address, including number and street, if any, of each
incorporator is:

Stacey Willits McConnell
17 West Miner Street
West Chester, PA 19380

6. The specified effective date, if any, is November 1, 1994.

7. Any additional provisions of the articles, if any, attach an 8-
1/2 x 11 sheet. See additional provisions of these Articles on attached sheet.

8. Statutory close corporation only: Neither the corporation nor
any shareholder shall make an offering of any of its shares of any class that
would constitute a "public offering" within the meaning of the Securities Act of
1933 (15 U.S.C. (S) 77a et seq.) - N/A.

9. Cooperative corporations only: (Complete and strike out
inapplicable term.) The common bond of membership among its
members/shareholders is: N/A

IN TESTIMONY WHEREOF, the incorporator(s) has(have) signed these
Articles of Incorporation this 21st day of October, 1994.

/s/ Stacey Willits McConnell
----------------------------------------
Stacey Willits McConnell
Incorporator
<PAGE>

ATTACHMENT TO

ARTICLES OF INCORPORATION

THE CFM TECHNOLOGY CORPORATION

Page 2

7. Additional Provisions of Articles:

A. The Corporation is organized for the following purposes: To engage in
manufacturing, research and development of capital equipment for the
semiconductor industry, as well as any other lawful business and to exercise all
privileges which a business corporation may now or hereafter be authorized to
engage in, do, exercise and enjoy pursuant to the provisions of the Pennsylvania
Business Corporation Law of 1988, as from time to time amended.

B. A director shall not be personally liable, as such, for monetary
damages for any action taken, or any failure to take any action, unless: (i) the
director has breached or failed to perform the duties of his or her office under
15 Pa.C.S. Subch. 17B; and (ii) the breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness.

This article shall not apply to: (i) the responsibility or liability
of a director pursuant to any criminal statute, or (ii) the liability of a
director for the payment of taxes pursuant to Federal, state or local law.

Any repeal, modification or amendment of this article shall be
prospective only and shall not affect any rights of a director then existing.

C. The Shareholders shall not have the right to cumulate their votes for
the election of directors of the Corporation.

D. Whenever any provision of these Articles or a By-Law adopted by the
Shareholders requires for the taking of any action by the Shareholders or a
class of Shareholders a specific number or percentage of votes, the provisions
of the Articles or By-Laws setting forth the requirement shall not be amended or
repealed by any lesser number or percentage of votes of the Shareholders or of
the class of Shareholders unless such Article or By-Law provision provides
otherwise.

E. These Articles of Incorporation may be amended in the manner now or
hereafter prescribed by statute, and all rights conferred upon Shareholders
herein are granted subject to this reservation.
<PAGE>

Microfilm Number 9578-1506 Filed with the Department of State
----------
on December 11, 1995

Entity Number 2605116 /s/ Yvette Kane
------------- ----------------------------------
Secretary of the Commonwealth

ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION

In compliance with the requirements of 15 Pa.C.S. (S) 1915 (relating
to articles of amendment), the undersigned business corporation, desiring to
amend its Articles, hereby states that:

1. The name of the corporation is THE CFM TECHNOLOGY CORPORATION.

2. The (a) address of this corporation's current registered office
in this Commonwealth or (b) name of its commercial registered office provider
and the county of venue is (the Department is hereby authorized to correct the
following information to conform to the records of the Department):

(a) 1381 Enterprise Drive, West Chester, Pennsylvania 19380,
Chester County.

(b) N/A

For a corporation represented by a commercial registered office provider, the
county in (b) shall be deemed the county in which the corporation is located for
venue and official publication purposes.

3. The statute by or under which it was incorporated is:
Pennsylvania Business Corporation Law.

4. The date of its incorporation is: November 1, 1994.

5. (CHECK, AND IF APPROPRIATE COMPLETE, ONE OF THE FOLLOWING):

X The amendment shall be effective upon filing these Articles of
---
Amendment in the Department of State.

___ The amendment shall be effective on: _______________ at
___________________.

6. (CHECK ONE OF THE FOLLOWING):

___ The amendment was adopted by the shareholders (or members)
pursuant to 15 Pa.C.S. (S) 1914(a) and (b).
<PAGE>

X The amendment was adopted by the board of directors pursuant to
---
15 Pa.C.S. (S) 1914(c).

7. (CHECK, AND IF APPROPRIATE COMPLETE, ONE OF THE FOLLOWING):

X The amendment adopted by the corporation, set forth in full, is
---
as follows:

Article 1. is hereby amended to read as follows:

The name of the corporation is CFM Technologies, Inc.

___ The amendment adopted by the corporation as set forth in full
in Exhibit A attached hereto and made a part hereof.

8. (CHECK IF THE AMENDMENT RESTATES THE ARTICLES):

___ The restated Articles of Incorporation supersede the original
Articles and all amendments thereto.

IN TESTIMONY WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be signed by a duly authorized officer thereof this
11th day of December, 1995.

THE CFM TECHNOLOGY CORPORATION

By: /s/ Lorin J. Randall
---------------------------------------

Title: Vice President
<PAGE>

Microfilm Number 9605-1170 Filed with the Department of State
----------
on January 16, 1996

Entity Number 2605116 /s/ Yvette Kane
------------- ----------------------------------
Secretary of the Commonwealth

ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION

In compliance with the requirements of 15 Pa.C.S. (S) 1915 (relating
to articles of amendment), the undersigned business corporation, desiring to
amend its Articles, hereby states that:

1. The name of the corporation is CFM TECHNOLOGIES, INC.

(a) 1381 Enterprise Drive, West Chester, Pennsylvania 19380,
Chester County.

(b) N/A

For a corporation represented by a commercial registered office provider, the
county in (b) shall be deemed the county in which the corporation is located for
venue and official publication purposes.

3. The statute by or under which it was incorporated is:
Pennsylvania Business Corporation Law.

4. The date of its incorporation is: November 1, 1994.

5. (CHECK, AND IF APPROPRIATE COMPLETE, ONE OF THE FOLLOWING):

X The amendment shall be effective upon filing these Articles of
---
Amendment in the Department of State.

___ The amendment shall be effective on: _______________ at
___________________.

6. (CHECK ONE OF THE FOLLOWING):

X The amendment was adopted by the shareholders (or members)
---
pursuant to 15 Pa.C.S. (S) 1914(a) and (b).
<PAGE>

___ The amendment was adopted by the board of directors pursuant
to 15 Pa.C.S. (S) 1914(c).

7. (CHECK, AND IF APPROPRIATE COMPLETE, ONE OF THE FOLLOWING):

___ The amendment adopted by the corporation, set forth in full,
is as follows:

X The amendment adopted by the corporation as set forth in full in
---
Exhibit A attached hereto and made a part hereof.

8. (CHECK IF THE AMENDMENT RESTATES THE ARTICLES):

___ The restated Articles of Incorporation supersede the original
Articles and all amendments thereto.

IN TESTIMONY WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be signed by a duly authorized officer thereof this 5th
day of January, 1996.

CFM TECHNOLOGIES, INC.

By: /s/ Lorin J. Randall
----------------------------------------

Title: Secretary
<PAGE>

CFM TECHNOLOGIES, INC.

EXHIBIT A TO ARTICLES OF AMENDMENT

Article 6. is hereby amended in its entirety to read in full as follows:

"6. (a) The aggregate number of shares which the Corporation shall
have authority to issue is Eleven Million (11,000,000) shares, to be
divided into Ten Million (10,000,000) shares of Common Stock, no par
value per share, and One Million (1,000,000) shares of Preferred
Stock, no par value per share.

(b) The board of directors ("Board of Directors") is authorized,
subject to limitations prescribed by law and the provisions of this
Article 6, to provide for the issuance of the shares of Preferred
Stock in series, and, by filing a statement pursuant to the applicable
law of the Commonwealth of Pennsylvania, to establish from time to
time the number of shares to be included in each such series, and to
fix the designations, powers, preferences and rights of the shares of
each such series and the qualifications, limitations or restrictions
thereof.

The authority of the Board of Directors with respect to each
series shall include, but not be limited to, determination of the
following:

(i) The number of shares constituting that series and the
distinctive designation of that series;

(ii) The dividend rate on the shares of that series,
whether dividends shall be cumulative, and, if so, from which date or
dates, and the relative rights of priority, if any, of payment of
dividends on shares of that series;

(iii) Whether that series shall have voting rights, in
addition to the voting rights provided by law, and, if so, the terms
of such voting rights;

(iv) Whether that series shall have conversion privileges,
and, if so, the terms and conditions of such conversion, including
provision for adjustment of the conversion rate in such events as the
Board of Directors shall determine;

(v) Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such redemption,
including the date or dates upon or after which they shall be
redeemable, and the amount per share payable in case of
<PAGE>

redemption, which amount may vary under different conditions and at
different redemption dates;

(vi) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms
and amount of such sinking fund;

(vii) The rights of the shares of that series in the event
of voluntary or involuntary liquidation, dissolution or winding up of
the Corporation, and the relative rights of priority, if any, of
payment of shares of that series; and

(viii) Any other relative rights, preferences and
limitations of that series.

(c) Dividends on outstanding shares of Preferred Stock shall be
paid or declared and set apart for payment before any dividends shall
be paid or declared and set apart for payment on the Common Stock with
respect to the same dividend period.

(d) If upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the assets for
distribution to holders of shares of Preferred Stock of all series
shall be insufficient to pay such holders the full preferential amount
to which they are entitled, then such assets shall be distributed
ratably among the shares of all series of Preferred Stock in
accordance with the respective preferential amounts (including unpaid
cumulative dividends, if any) payable with respect thereto."

<PAGE>

Exhibit 3.2

AMENDED AND RESTATED

BY-LAWS OF

CFM TECHNOLOGIES, INC.

ARTICLE I
---------

LOCATION OF CORPORATION
-----------------------

Section 1. Principal Office. The principal office of this
----------------------------
Corporation shall be located at 1381 Enterprise Drive, West Chester, PA 19380.

Section 2. Other Offices. This Corporation may also have offices at
-------------------------
such other places within or without the Commonwealth of Pennsylvania as its
Board of Directors may from time designate.

ARTICLE II
----------

SHAREHOLDERS
------------

Section 1. Place of Meeting. Meetings of shareholders shall be held
----------------------------
at the principal office of the Corporation or at such other place within or
without the Commonwealth of Pennsylvania as may be fixed by the Board of
Directors.

Section 2. Annual Meeting. An annual meeting of shareholders for the
--------------------------
election of directors and the transaction of such other business as may properly
come before the meeting shall be held in each calendar year. The Board of
Directors shall, by resolution, set the date, time and place of the annual
meeting. If no date, time and place is set by the Board of Directors, the
annual meeting shall be held on the first day of May in each year, if not a
legal holiday under the laws of Pennsylvania, and, if a legal holiday, then on
the next succeeding business day at 10:00 A.M.

Section 3. Special Meetings. Special meetings of shareholders may be
----------------------------
called at any time by the Board of Directors or by the President, any Vice
President, the Secretary or the Treasurer of the Corporation. At any time, upon
written request of any person who has called a special meeting, it shall be the
duty of the Secretary of the Corporation to fix the time of the meeting which,
if the meeting is called by the Board of Directors, shall be held not more than
60 days after the receipt of the request. If the Secretary neglects or refuses
to fix the
<PAGE>

time of the meeting, the person or persons calling the meeting may do so.

Section 4. Notice. Written notice, stating the place, day and hour
------------------
of each meeting of shareholders and, in the case of a special meeting, the
general nature of the business to be transacted, shall be given by, or at the
direction of, the Secretary of the Corporation to each shareholder of record
entitled to vote at the meeting at least five days prior to the day named for
the meeting, or ten days in the case of a meeting called to consider a
fundamental change under Chapter 19 of the Pennsylvania Business Corporation Law
of 1988, as amended. If the Secretary neglects or refuses to give notice of a
meeting, the person or persons calling the meeting may do so.

Section 5. Quorum and Adjournment. The presence, in person or by
----------------------------------
proxy, of shareholders entitled to cast at least a majority of the votes that
all shareholders are entitled to cast on a particular matter to be acted upon at
the meeting shall constitute a quorum for the purposes of consideration and
action on the matter. Any regular or special meeting of shareholders, including
one at which directors are to be elected, may be adjourned for such period and
to such place as the shareholders present and entitled to vote shall direct.
The shareholders present at a duly organized meeting can continue to do business
until adjournment notwithstanding the withdrawal of enough shareholders to leave
less than a quorum. If a meeting cannot be organized because a quorum has not
attended, those present may adjourn the meeting to such time and place as they
may determine. Notwithstanding the foregoing, (i) those shareholders entitled
to vote who attend a meeting of shareholders at which directors are to be
elected that has been previously adjourned for lack of a quorum, although less
than a quorum as fixed in this section, shall nevertheless constitute a quorum
for the purpose of electing directors and (ii) those shareholders entitled to
vote who attend a meeting that has been previously adjourned for one or more
periods aggregating at least 15 days because of an absence of a quorum, although
less than a quorum as fixed in this section, shall nevertheless constitute a
quorum for the purpose of acting upon any matter set forth in the notice of the
meeting if the notice states that those shareholders who attend the adjourned
meeting shall nevertheless constitute a quorum for the purpose of acting upon
the matter.

Section 6. Telephone Meetings. The Board of Directors may provide by
------------------------------
resolution with respect to a specific meeting or with respect to a class of
meetings that one or more persons may participate in a meeting of the
shareholders of the Corporation by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Participation in a meeting pursuant
<PAGE>

to this section shall constitute presence in person at the meeting.

Section 7. Action by Shareholders. Except as may be otherwise
----------------------------------
required by law or specified in the Articles of Incorporation or in a By-Law
adopted by the shareholders, whenever any corporate action is to be taken by a
vote of the shareholders, it shall be authorized by a majority of the votes cast
at a duly organized meeting of shareholders by the holders of shares entitled to
vote thereon.

Section 8. Written Consent. Any action required or permitted to be
---------------------------
taken at a meeting of the shareholders or of a class of shareholders may be
taken without a meeting, if, prior or subsequent to the action, a consent or
consents in writing, setting forth the action so taken, shall be signed by all
of the shareholders who would be entitled to vote at a meeting for such purpose
and shall be filed with the Secretary of the Corporation.

Section 9. Shareholders List. The officer or agent having charge of
-----------------------------
the transfer books for shares of the Corporation shall make a complete list of
the shareholders entitled to vote at any meeting of shareholders, arranged in
alphabetical order, with the address of and the number of shares held by each
such shareholder. The list shall be produced and kept open at the time and
place of each meeting of shareholders and shall be subject to the inspection of
any shareholder during the meeting for the purposes thereof.

Section 10. Record Date. The Board of Directors may fix a time prior
------------------------
to the date of any meeting of shareholders as a record date for the
determination of the shareholders entitled to notice of, or to vote at, the
meeting, which time, except in the case of an adjourned meeting, shall be not
more than 90 days prior to the date of the meeting of shareholders. Only
shareholders of record on the date fixed shall be so entitled notwithstanding
any transfer of shares on the books of the Corporation after any record date
fixed as provided in this section. The Board of Directors may similarly fix a
record date for the determination of shareholders of record for any other
purpose. When a determination of shareholders of record has been made as
provided in this section for purposes of a meeting, the determination shall
apply to any adjournment thereof unless the Board of Directors fixes a new
record date for the adjourned meeting.

3
<PAGE>

ARTICLE III
-----------

DIRECTORS
---------

Section 1. Board of Directors. Unless otherwise provided by law, all
------------------------------
powers of the Corporation shall be exercised by or under the authority of, and
the business and affairs of the Corporation shall be managed under the direction
of, a Board of Directors. The number of directors of the Corporation shall be
set by resolution of the Board.

Section 2. Election and Term of Office. Except as provided in these
---------------------------------------
By-Laws, directors shall be elected by the shareholders. Each director shall be
a natural person of full age who need not be a resident of Pennsylvania or a
shareholder of the Corporation. Directors shall hold office for one year and
until their successors have been selected and qualified, or until their earlier
death, resignation or removal.

Section 3. Vacancies. Vacancies in the Board of Directors, including
---------------------
vacancies resulting from an increase in the number of directors, shall be filled
by a majority of the remaining directors though less than a quorum, or by a sole
remaining director. A director selected to fill a vacancy shall serve for the
balance of the unexpired term.

Section 4. Annual Meeting. An annual meeting of the Board of
--------------------------
Directors shall be held each year as soon as practicable after the annual
meeting of shareholders, at the place where such meeting of shareholders was
held or at such other place as the Board of Directors may determine, for the
purpose of organization of the Board, election of officers and the transaction
of any other business as may properly be brought before the meeting. No notice
of any kind of the annual meeting of the Board of Directors need be given to
either old or new directors.

Section 5. Regular Meetings. Regular meetings of the Board of
----------------------------
Directors may be held at such times and at such places as the directors may
determine from time to time. Notice of regular meetings need not be given.

Section 6. Special Meetings. Special meetings of the Board of
----------------------------
Directors may be called by the President or by a majority of the directors then
in office. Notice of every special meeting shall be given to each director not
later than the third day immediately preceding the day of such meeting. Such
notice shall state the time, place and purpose or purposes of the meeting.

4
<PAGE>

Section 7. Telephone Meetings. The Board of Directors may
------------------------------
participate in meetings of the Board by conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Directors so participating will be deemed present
at the meeting.

Section 8. Quorum. A majority of the directors in office shall be
------------------
necessary to constitute a quorum for the transaction of business, and the acts
of a majority of the directors present and voting at a meeting at which a quorum
is present shall be the acts of the Board of Directors.

Section 9. Unanimous Consent. Any action required or permitted to be
-----------------------------
taken at a meeting of the directors may be taken without a meeting if, prior or
subsequent to the action, a consent or consents in writing setting forth the
action so taken shall be signed by all the directors in office and shall be
filed with the Secretary of the Corporation.

Section 10. Payments to Directors. The directors may be reimbursed
----------------------------------
for the expenses of attending Board meetings and committee meetings and may be
paid a fixed sum for attendance at each meeting or such other compensation for
their services as may, from time to time, be fixed by the Board of Directors.
No such payment shall preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor.

Section 11. Salaries. The salaries and other compensation of
---------------------
officers and assistants shall be fixed by the Board of Directors.

Section 12. Distributions. The directors may, to the extent
--------------------------
permitted by law, authorize and the Corporation may make distributions from time
to time.

ARTICLE IV
----------

COMMITTEES
----------

Section 1. Establishment and Powers. The Board of Directors may, by
-----------------------------------
resolution adopted by a majority of the directors in office, establish one or
more committees to serve at the pleasure of the Board, consisting in each case
of one or more directors, and may designate one or more directors as alternate
members of such a committee. Any committee, to the extent provided in the
resolution by which it is established, shall have and may exercise all of the
powers and authority of the Board of Directors except that a committee shall not
have any power or authority as to the following:

5
<PAGE>

(a) The submission to shareholders of any action requiring
approval of shareholders under the Business Corporation Law of 1988, as
amended;

(b) The creation or filling of vacancies in the Board of
Directors;

(d) The amendment or repeal of any resolution of the Board of
Directors that by its terms is amendable or repealable only by the Board of
Directors; and

(e) Action on matters committed by a resolution of the Board of
Directors to another committee of the Board of Directors.

In the absence or disqualification of a member and alternate member or members
of a committee, the member or members of the committee present at any meeting
and not disqualified from voting, whether or not they constitute a quorum, may
unanimously appoint another director to act at the meeting in place of the
absent or disqualified member.

Section 2. Quorum. A majority of the directors appointed to a
------------------
committee shall constitute a quorum for the transaction of business, and the
acts of a majority of the directors appointed to a committee present and voting
at a meeting of the committee at which a quorum is present shall be the acts of
the committee.

Section 3. Meetings and Notices. A committee may, by resolution, fix
--------------------------------
regular meeting dates of which no notice need be given to members of the
committee. Special meetings of a committee may be held at the call of the
chairman of the committee upon such notice as is provided in these By-Laws for
special meetings of the Board of Directors. Any action required or permitted to
be taken at a meeting of the members of a committee may be taken without a
meeting if, prior or subsequent to the action, a consent or consents in writing
setting forth the action so taken shall be signed by all the members of the
committee and shall be filed with the Secretary of the Corporation.

6
<PAGE>

ARTICLE V
---------

OFFICERS
--------

Section 1. Number. The officers of the Corporation shall be a
------------------
President, a Secretary, and a Treasurer, or persons who shall act as such,
regardless of the name or title by which they may be designated, elected or
appointed, and, in addition, the Corporation may have one or more Vice
Presidents and such other officers and assistant officers as the Board of
Directors may elect. All officers shall be natural persons of full age. Any
number of offices may be held by the same person. Officers may but need not be
shareholders or members of the Board of Directors.

Section 2. Election. The officers and assistant officers shall be
--------------------
elected or appointed by the Board of Directors at its annual meeting, or as soon
thereafter as possible, and shall hold office for a term of one year and until
their successors are selected and qualified or until their earlier death,
resignation or removal by the Board of Directors.

Section 3. Vacancies. A vacancy by reason of death, resignation or
---------------------
removal of any officer or assistant officer or by reason of the creation of a
new office may be filled by the Board of Directors.

Section 4. General Duties. All officers and assistant officers, as
--------------------------
between themselves and the Corporation, shall have such authority and perform
such duties in the management of the Corporation as may be provided in these By-
Laws and as may be determined by resolution of the Board of Directors not
inconsistent with these By-Laws.

Section 5. President. The President shall be the chief executive
---------------------
officer of the Corporation and shall have active executive management of its
operations, subject, however to the control of the Board of Directors. The
President shall, in general, perform all duties incident to the office of
President and such other duties as may be assigned by the Board of Directors.
The President shall preside at all meetings of the shareholders and of the Board
of Directors.

Section 6. Vice Presidents. The Vice President, or if there shall be
---------------------------
more than one, the Vice Presidents in the order determined by the Board of
Directors, shall, in the absence or disability of the President, perform the
duties and exercise the powers of the President and shall perform such other
duties and have such other powers as the Board of Directors may from time to
time prescribe.

7
<PAGE>

Section 7. Secretary. The Secretary shall be custodian of the books
---------------------
and records of the Corporation other than those in the custody of the Treasurer.
The Secretary shall be custodian of the seal and is hereby authorized to affix
the seal to all documents, the execution and delivery of which are duly
authorized. The Secretary shall record the minutes of all meetings of
shareholders and of the Board of Directors and shall be responsible for the
giving of all notices of such meetings in accordance with these By-Laws. The
Secretary shall, in general, perform such other duties as are incident to the
office of Secretary and as may be assigned by the Board of Directors or by the
President.

Section 8. Treasurer. The Treasurer shall be the financial officer
---------------------
of the Corporation. The Treasurer shall have charge and custody of, and be
responsible for, all funds of the Corporation and the books and records relating
to the same, and shall deposit all such funds in the name of the Corporation in
depositories selected by the Board of Directors. The Treasurer shall render to
the President and the Board of Directors, upon request, an account of all
transactions taken as Treasurer and of the financial condition of the
Corporation. The Treasurer shall, in general, perform such other duties as are
incident to the office of Treasurer and as may be assigned by the Board of
Directors or by the President. The Treasurer shall, if required to do so by the
Board of Directors, furnish bond in such form and amount and to cover such risks
as the Board of Directors may determine.

ARTICLE VI
----------

INDEMNIFICATION OF DIRECTORS, OFFICERS, AND
--------------------------------------------
OTHER AUTHORIZED PERSONS
------------------------

Section 1. Scope of Indemnification.
------------------------------------

(a) General Rule. The Corporation shall indemnify an indemnified
------------
representative against any liability incurred in connection with any
proceeding in which the indemnified representative may be involved as a
party or otherwise by reason of the fact that such person is or was serving
in an indemnified capacity, including, without limitation, liabilities
resulting from any actual or alleged breach or neglect of duty, error,
misstatement or misleading statement, negligence, gross negligence or act
giving rise to strict or products liability, except:

(1) where such indemnification is expressly prohibited by
applicable law;

8
<PAGE>

(2) where the conduct of the indemnified representative has been
finally determined pursuant to Section 6 of this Article or otherwise:

(i) to constitute willful misconduct or recklessness
within the meaning of 15 Pa. C.S. (S)(S) 513(b) and 1746(b) and 42 Pa.
C.S. (S) 8365(b) or any superseding provision of law sufficient in the
circumstances to bar indemnification against liabilities arising from
the conduct; or

(ii) to be based upon or attributable to the receipt by the
indemnified representative from the Corporation of a personal benefit
to which the indemnified representative is not legally entitled; or

(3) to the extent such indemnification has been finally
determined in a final adjudication pursuant to Section 6 of this Article to be
otherwise unlawful.

(b) Partial Payment. If an indemnified representative is entitled to
---------------
indemnification in respect of a portion, but not all, of any liabilities to
which such person may be subject, the Corporation shall indemnify such
indemnified representative to the maximum extent for such portion of the
liabilities.

(c) Presumption. The termination of a proceeding by judgment, order,
-----------
settlement or conviction or upon a plea of nolo contendere or its
---------------
equivalent shall not of itself create a presumption that the indemnified
representative is not entitled to indemnification.

(d) Definitions. For purposes of this Article:
-----------

(1) "indemnified capacity" means any and all past, present and
future service by an indemnified representative in one or more capacities as a
director, officer, employee or agent of the Corporation, or, at the request of
the Corporation, as a director, officer, employee, agent, fiduciary or trustee
of another Corporation, partnership, joint venture, trust, employee benefit plan
or other entity or enterprise;

(2) "indemnified representative" means any and all directors and
officers of the Corporation and any other person designated as an indemnified
representative by the board of directors of the Corporation (which may, but need
not, include any person serving at the request of the Corporation, as a
director, officer, employee, agent, fiduciary or trustee of another Corporation,
partnership, joint venture, trust, employee benefit plan or other entity or
enterprise);

9
<PAGE>

(3) "liability" means any damage, judgment, amount paid in
settlement, fine, penalty, punitive damages, excise tax assessed with respect to
an employee benefit plan, or cost or expense, of any nature (including, without
limitation, attorneys' fees and disbursements); and

(4) "proceeding" means any threatened, pending or completed
action, suit, appeal or other proceeding of any nature, whether civil, criminal,
administrative or investigative, whether formal or informal, and whether brought
by or in the right of the Corporation, a class of its security holders or
otherwise.

Section 2. Proceeding Initiated by Indemnified Representatives.
---------------------------------------------------------------
Notwithstanding any other provision of this Article, the Corporation shall not
indemnify under this Article an indemnified representative for any liability
incurred in a proceeding initiated (which shall not be deemed to include
counter-claims or affirmative defenses) or participated in as an intervenor or
amicus curiae by the person seeking indemnification unless such initiation of or
- ------ ------
participation in the proceeding is authorized, either before or after its
commencement, by the affirmative vote of a majority of the directors in office.
This section does not apply to reimbursement of expenses incurred in
successfully prosecuting or defending an arbitration under Section 6 of this
Article or otherwise successfully prosecuting or defending the rights of an
indemnified representative granted by or pursuant to this Article.

Section 3. Advancing Expenses. The Corporation shall pay the
------------------------------
expenses (including attorneys's fees and disbursements) incurred in good faith
by an indemnified representative in advance of the final disposition of a
proceeding described in Section 1 of this Article or the initiation of or
participation in which is authorized pursuant to Section 2 of this Article upon
receipt of an undertaking by or on behalf of the indemnified representative to
repay the amount if it is ultimately determined pursuant to Section 6 of this
Article that such person is not entitled to be indemnified by the Corporation
pursuant to this Article. The financial ability of an indemnified
representative to repay an advance shall not be a prerequisite to the making of
such advance.

Section 4. Securing of Indemnification Obligations. To further
---------------------------------------------------
effect, satisfy or secure the indemnification obligations provided herein or
otherwise, the Corporation may maintain insurance, obtain a letter of credit,
act as self-insurer, create a reserve, trust, escrow, cash collateral or other
fund or account, enter into indemnification agreements, pledge or grant a
security interest in any assets or properties of the Corporation, or use any
other mechanism or arrangements, pledge or grant a security interest in any
assets or properties

10
<PAGE>

of the Corporation, or use any other mechanism or arrangement whatsoever in such
amounts, at such costs, and upon such other terms and conditions as the board of
directors shall deem appropriate. Absent fraud, the termination of the board of
directors with respect to such amounts, costs, terms and conditions shall be
conclusive against all security holders, officers and directors and shall not be
subject to voidability.

Section 5. Payment of Indemnification. An indemnified representative
--------------------------------------
shall be entitled to indemnification within 30 days after a written request for
indemnification has been delivered to the secretary of the Corporation.

Section 6. Arbitration.
-----------------------

(a) General Rule. Any dispute related to the right to
------------
indemnification, contribution or advancement of expenses as provided under this
Article, except with respect to indemnification for liabilities arising under
the Securities Act of 1933 that the Corporation has undertaken to submit to a
court for adjudication, shall be decided only by arbitration in the metropolitan
area in which the principal executive offices of the Corporation are located at
the time, in accordance with the commercial arbitration rules then in effect of
the American Arbitration Association, before a panel of three arbitrators, one
of whom shall be selected by the Corporation, the second of whom shall be
selected by the indemnified representative and the third of whom shall be
selected by the other two arbitrators. In the absence of the American
Arbitration Association, or if for any reason arbitration under the arbitration
rules of the American Arbitration Association cannot be initiated, or if one of
the parties fails or refuses to select an arbitrator or if the arbitrators
selected by the Corporation and the indemnified representative cannot agree on
the selection of the third arbitrator within 30 days after such time as the
Corporation and the indemnified representative have each been notified of the
selection of the other's arbitrator, the necessary arbitrator or arbitrators
shall be selected by the presiding judge of the court of general jurisdiction in
such metropolitan area.

(b) Burden of Proof. The party or parties challenging the
---------------
right of an indemnified representative to the benefits of this Article shall
have the burden of proof.

(c) Expenses. The Corporation shall reimburse an indemnified
--------
representative for the expenses (including attorneys' fees and disbursements)
incurred in successfully prosecuting or defending such arbitration.

(d) Effect. Any award entered by the arbitrators shall be
------
final, binding and nonappealable and judgment may be

11
<PAGE>

entered thereon by any party in accordance with applicable law in any court of
competent jurisdiction, except that the Corporation shall be entitled to
interpose as a defense in any such judicial enforcement proceeding any prior
final judicial determination adverse to the indemnified representative under
Section 1(a)(2) of this Article in a proceeding not directly involving
indemnification under this Article. This arbitration provision shall be
specifically enforceable.

Section 7. Contribution. If the indemnification provided for in this
------------------------
Article or otherwise is unavailable for any reason in respect of any liability
or portion thereof, the Corporation shall contribute to the liabilities to which
the indemnified representative may be subject in such proportion as is
appropriate to reflect the intent of this Article or otherwise.

Section 8. Mandatory Indemnification of Directors, Officers, etc. To
------------------------------------------------------------------
the extent that an authorized representative of the Corporation has been
successful on the merits or otherwise in defense of any action or proceeding
referred to in 15 Pa. C.S. (S)(S) 1741 or 1742 or in defense of any claim, issue
or matter therein, such person shall be indemnified against expenses (including
attorneys' fees and disbursements) actually and reasonably incurred by such
person in connection therewith.

Section 9. Contract Rights; Amendment or Repeal. All rights under
------------------------------------------------
this Article shall be deemed a contract between the Corporation and the
indemnified representative pursuant to which the Corporation and each
indemnified representative intend to be legally bound. Any repeal, amendment or
modification hereof shall be prospective only and shall not affect any rights or
obligations then existing.

Section 10. Scope of Article. The rights granted by this Article
-----------------------------
shall not be deemed exclusive of any other rights to which those seeking
indemnification, contribution or advancement of expenses may be entitled under
any statute, agreement, vote of shareholders or disinterested directors or
otherwise both as to action in an indemnified capacity and as to action in any
other capacity. The indemnification, contribution and advancement of expenses
provided by or granted pursuant to this Article shall continue as to a person
who has ceased to be an indemnified representative in respect of matters arising
prior to such time, and shall inure to the benefit of the heirs, executors,
administrators and personal representatives of such a person.

Section 11. Reliance or Provisions. Each person who shall act as an
-----------------------------------
indemnified representative of the Corporation shall be deemed to be doing so in
reliance upon the rights provided by this Article.

12
<PAGE>

Section 12. Interpretation. The provisions of this Article are
---------------------------
intended to constitute by-laws authorized by 15 Pa. C.S. (S)(S) 513 and 1746 and
42 Pa. C.S. (S) 8365.

ARTICLE VII
-----------

STOCK CERTIFICATES
------------------

Section 1. Issuance. Stock certificates shall be issued to all
--------------------
shareholders. Stock certificates shall be executed, by facsimile or otherwise,
by the President or any Vice President and the Secretary or Assistant Secretary
or the Treasurer or Assistant Treasurer, or by such other officers as the Board
of Directors may direct. The fact that an officer whose signature, manual or in
facsimile, appears on any stock certificate shall cease to be an officer of the
Corporation, either before or after such certificate is issued, shall not
invalidate such certificate. The signature of a transfer agent or registrar
appearing on a stock certificate may be a facsimile, engraved or printed.

Section 2. Loss or Destruction of Stock Certificates. In case of
-----------------------------------------------------
loss or destruction of a stock certificate, no new certificate shall be issued
in lieu thereof except upon satisfactory proof to the Board of Directors of such
loss or destruction and, in the discretion of the Board of Directors, upon the
posting of a bond or other indemnity in an amount satisfactory to the Board.

ARTICLE VIII
------------

NOTICES
-------

Section 1. Notice. Whenever written notice is required to be given
------------------
to any person by law, the Articles of Incorporation or these By-Laws, it may be
given to such person either personally or by sending a copy thereof by first
class or express mail, postage prepaid, or by telegram (with messenger service
specified), telex or TWX (with answerback received) or courier service, charges
prepaid, or by telecopier, to the address (or the telex, TWX, telecopier or
telephone number) appearing on the books of the Corporation or, in the case of a
director, to the address supplied by the director to the Corporation for the
purpose of notice. If the notice is sent by mail, telegraph or courier service,
it shall be deemed to have been given to the person entitled thereto when
deposited in the United States mail or with a telegraph office or courier
service for delivery to that person or, in the case of telex or TWX, when
dispatched or, in the case of telecopier, when received. A

13
<PAGE>

notice of meeting shall specify the place, day and hour of the meeting and, in
the case of a special meeting of shareholders, the general nature of the
business to be transacted.

Section 2. Waiver of Notice. Whenever any written notice is required
----------------------------
to be given under law, the Articles of Incorporation or these By-Laws, a waiver
thereof in writing, signed by the person or persons entitled to the notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of the notice. Neither the business to be transacted at, nor the
purpose of, a meeting need be specified in the waiver of notice of the meeting.
Attendance of a person at any meeting shall constitute a waiver of notice of the
meeting except where a person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting was not lawfully called or convened.

ARTICLE IX
----------

MISCELLANEOUS PROVISIONS
------------------------

Section 1. Validity. Any note, mortgage, evidence of indebtedness,
--------------------
contract or other document, or any assignment or endorsement thereof, executed
or entered into between the Corporation and any other person, when signed by the
President or any Vice President or the Secretary or the Treasurer of the
Corporation, or by such other officer or officers as the Board of Directors may
from time to time designate, shall be deemed to be properly executed for and in
behalf of the Corporation.

Section 2. Fiscal Year. The fiscal year of the Corporation shall be
-----------------------
fixed by resolution of the Board of Directors.

ARTICLE X
---------

AMENDMENTS
----------

Section 1. Amendment. These By-Laws may be altered, amended or
---------------------
repealed and new By-Laws may be adopted by (i) a majority of the votes cast at a
duly organized meeting of shareholders or (ii) with respect to those matters
that are not by statute committed expressly to the shareholders, by the vote of
a majority of the directors of the Corporation present and voting at any duly
organized meeting of directors. In the case of a meeting of shareholders,
written notice shall be given to each shareholder that the purpose, or one of
the purposes, of the meeting is to consider the adoption, amendment or repeal of
the

14
<PAGE>

By-Laws, and a copy of the proposed amendment or a summary of the changes to be
effected thereby shall be included in, or enclosed with, the notice. No
alteration, amendment or repeal of these By-Laws that limits indemnification
rights, increases the liability of directors or changes the manner or vote
required to make such alteration, amendment or repeal, shall be made except by
the affirmative vote of the shareholders entitled to cast at least a majority of
the votes which all shareholders are entitled to cast thereon.

<PAGE>

Exhibit 10.6

CFM TECHNOLOGIES, INC.

1995 INCENTIVE PLAN

ARTICLE I

PURPOSE

The purpose of the 1995 Incentive Plan (the "Plan") is to enable CFM
Technologies, Inc. (the "Company") to offer employees of and consultants to the
Company and its Subsidiaries equity interests in the Company, options to acquire
equity interest in the Company, and other incentive awards, thereby attracting,
retaining and rewarding such persons, and strengthening the mutuality of
interests between such persons and the Company's shareholders.

ARTICLE II

DEFINITIONS

For purposes of the Plan, the following terms shall have the following
meanings:

2.1 "Award" shall mean an award under the Plan of a Stock Option or
-----
Restricted Stock.

2.2 "Board" shall mean the Board of Directors of the Company.
-----

2.3 "Change of Control" shall mean the occurrence of any one of the
-----------------
following: (i) the Company enters into an agreement of reorganization, merger or
consolidation pursuant to which the Company or a Subsidiary is not the surviving
corporation, (ii) the Company sells substantially all its assets to a purchaser
other than a Subsidiary, or (iii) shares of stock of the Company representing in
excess of 30% of the total combined voting power of all outstanding classes of
stock of the Company are acquired, in one transaction or a series of
transactions, by a single purchaser or group of related purchasers.

2.4 "Code" shall mean the Internal Revenue Code of 1986, as
----
amended.
<PAGE>

2.5 "Committee" shall mean the Executive Compensation and Stock
---------
Option Committee of the Board, consisting of two or more members of the Board,
each of whom shall be a "disinterested person" within the meaning of Rule 16b-3
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended.

2.6 "Common Stock" shall mean the Common Stock, no par value per
------------
share, of the Company.

2.7 "Disability" shall mean a disability that results in a
----------
Participant's Termination of Employment with the Company or a Subsidiary, as
determined pursuant to standard Company procedures.

2.8 "Fair Market Value" for purposes of the Plan, unless otherwise
-----------------
required by any applicable provision of the Code or any regulations issued
thereunder, shall mean, as of any date, the average of the high and low sales
prices of a share of Common Stock as reported on the principal national
securities exchange on which the Common Stock is listed or admitted to trading,
or, if not listed or traded on any such exchange, The Nasdaq Stock Market
("Nasdaq"), or, if such sales prices are not available, the average of the bid
and asked prices per share reported on Nasdaq, or, if such quotations are not
available, the fair market value as determined by the Board, which determination
shall be conclusive.

2.9 "Incentive Stock Option" shall mean any Stock Option awarded
----------------------
under the Plan intended to be and designated as an "Incentive Stock Option"
within the meaning of Section 422 of the Code.

2.10 "Non-Qualified Stock Option" shall mean any Stock Option
--------------------------
granted under the Plan that is not an Incentive Stock Option.

2.11 "Participant" shall mean an employee or consultant to whom an
-----------
Award has been granted.

2.12 "Restricted Stock" shall mean an Award granted pursuant to
----------------
Article VII of the Plan that is subject to forfeiture if the Participant ceases
to be an employee during a specified Restriction Period.

2.13 "Restriction Period" shall have the meaning set forth in
------------------
Section 7.2(c).

2.14 "Stock Option" or "Option" shall mean any option to purchase
------------ ------
shares of Common Stock granted pursuant to Article VI of the Plan.

2
<PAGE>

2.15 "Subsidiary" shall mean any subsidiary of the Company, 80% or
----------
more of the voting stock of which is owned, directly or indirectly, by the
Company.

2.16 "Termination of Employment" shall mean a termination of
-------------------------
employment or a consulting arrangement with the Company and all of its
Subsidiaries for reasons other than a military or personal leave of absence
granted by the Company or any Subsidiary.

ARTICLE III

ADMINISTRATION

3.1 The Committee. The Plan shall be administered and interpreted
-------------
by the Committee.

3.2 Awards. The Committee shall have full authority to grant,
------
pursuant to the terms of the Plan, Stock Options and Restricted Stock to persons
eligible under Article V. In particular, the Committee shall have the authority:

(a) to select the persons to whom Stock Options and Restricted
Stock may from time to time be granted;

(b) to determine whether and to what extent Incentive Stock
Options, Non-Qualified Stock Options and Restricted Stock, or any combination
thereof, are to be granted to one or more persons eligible to receive Awards
under Article V;

(d) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any Award granted hereunder (including, but not
limited to, the option price, the option term, and provisions relating to any
restriction or limitation, any vesting schedule or acceleration, or any
forfeiture restrictions or waiver of the Award).

3.3 Guidelines. Subject to Article VIII hereof, the Committee
----------
shall have the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall, from time to time, deem
advisable; to interpret the terms and provisions of the Plan and any Award
granted under the Plan (and any agreements relating thereto); and to otherwise
supervise the administration of the Plan. The Committee may correct any defect,
supply any omission or reconcile any

3
<PAGE>

inconsistency in the Plan or in any Award in the manner and to the extent it
shall deem necessary to carry the Plan into effect. Notwithstanding the
foregoing, no action of the Committee under this Section 3.3 shall impair the
rights of any Participant without the Participant's consent, unless otherwise
required by law.

3.4 Decisions Final. Any decision, interpretation or other action
---------------
made or taken in good faith by the Committee arising out of or in connection
with the Plan shall be final, binding and conclusive on the Company, all
Participants and their respective heirs, executors, administrators, successors
and assigns.

ARTICLE IV

SHARE LIMITATION

4.1 Shares. The maximum aggregate number of shares of Common Stock
------
that may be issued under the Plan is 400,000 (subject to any increase or
decrease pursuant to Section 4.3), which may be either authorized and unissued
shares of Common Stock or issued Common Stock reacquired by the Company. If any
Option granted under the Plan shall expire, terminate or be cancelled for any
reason without having been exercised in full, the number of unpurchased shares
shall again be available for the purposes of the Plan. Further, if any shares of
Restricted Stock are forfeited, the shares subject to such Award, to the extent
of such forfeiture, shall again be available under the Plan.

4.2 Individual Limit. No employee or consultant may be granted
----------------
Awards covering more than 50,000 shares of Common Stock (subject to increase or
decrease pursuant to Section 4.3) during any calendar year.

4.3 Changes. In the event of any merger, reorganization,
-------
consolidation, recapitalization, dividend (other than a regular cash dividend),
stock split, or other change in corporate structure affecting the Common Stock,
such substitution or adjustment shall be made in the maximum aggregate number of
shares which may be issued under the Plan, the maximum number of shares with
respect to which Awards may be granted to any individual during any year, the
number and option price of shares subject to outstanding Options, and the number
of shares subject to other outstanding Awards, as may be determined to be
appropriate by the Committee, in its sole discretion, provided that the number
of shares subject to any Award shall always be a whole number.

4
<PAGE>

ARTICLE V

ELIGIBILITY

All officers and other employees of the Company and its Subsidiaries
are eligible to be granted Incentive Stock Options, Non-Qualified Stock Options
and Restricted Stock under the Plan. A Director who is an employee of the
Company or a Subsidiary shall be eligible to receive Awards pursuant to this
Article V. Consultants to the Company and its Subsidiaries are eligible to be
granted Non-Qualified Stock Options under this Plan.

ARTICLE VI

STOCK OPTIONS

6.1 Options. Each Stock Option granted under the Plan shall be
-------
either an Incentive Stock Option or a Non-Qualified Stock Option.

6.2 Grants. The Committee shall have the authority to grant to any
------
person eligible under Article V one or more Incentive Stock Options, Non-
Qualified Stock Options, or both types of Stock Options. To the extent that any
Stock Option does not qualify as an Incentive Stock Option (whether because of
its provisions or the time or manner of its exercise or otherwise), such Stock
Option or the portion thereof which does not qualify as an Incentive Stock
Option shall constitute a separate Non-Qualified Stock Option.

6.3 Incentive Stock Options. Anything in the Plan to the contrary
-----------------------
notwithstanding, no term of the Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be exercised, so as to disqualify the Plan under Section
422 of the Code, or, without the consent of the Participants affected, to
disqualify any Incentive Stock Option under such Section 422.

6.4 Terms of Options. Options granted under the Plan shall be
----------------
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of the Plan, as the
Committee shall deem desirable:

(a) Stock Option Contract. Each Stock Option shall be
---------------------
evidenced by, and subject to the terms of, a Stock Option Contract executed by
the Company and the Participant. The

5
<PAGE>

Stock Option Contract shall specify whether the Option is an Incentive Stock
Option or a Non-Qualified Stock Option, the number of shares of Common Stock
subject to the Stock Option, the option price, the option term, and the other
terms and conditions applicable to the Stock Option.

(b) Option Price. Subject to subsection (l) below, the option
------------
price per share of Common Stock purchasable upon exercise of a Stock Option
shall be determined by the Committee at the time of grant, but shall be not less
than 100% of the Fair Market Value of the Common Stock on the date of grant if
the Stock Option is intended to be an Incentive Stock Option. The Committee may,
in its discretion, grant Non-Qualified Options at an option price per share
which is below the Fair Market Value of the Common Stock on the date of grant.

(c) Option Term. Subject to subsection (l) below, the term of
-----------
each Stock Option shall be fixed by the Committee at the time of grant, but no
Stock Option shall be exercisable more than ten years after the date it is
granted.

(d) Exercisability. Stock Options shall be exercisable at
--------------
such time or times and subject to such terms and conditions as shall be
determined by the Committee at the time of grant; provided, however, that the
Committee may waive any installment exercise or waiting period provisions, in
whole or in part, at any time after the date of grant, based on such factors as
the Committee shall deem appropriate in its sole discretion.

(e) Method of Exercise. Subject to such installment exercise
------------------
and waiting period provisions as may be imposed by the Committee, Stock Options
may be exercised in whole or in part at any time during the option term by
delivering to the Company written notice of exercise specifying the number of
shares of Common Stock to be purchased and the option price therefor. The notice
of exercise shall be accompanied by payment in full of the option price and, if
requested, by the representation described in Section 10.2. Payment of the
option price may be made (i) in cash or by check payable to the Company, (ii) to
the extent determined by the Committee on or after the date of grant, in shares
of Common Stock duly owned by the Participant (and for which the Participant has
good title free and clear of any liens and encumbrances) or (iii) by reduction
in the number of shares of Common Stock issuable upon such exercise, based, in
each case, on the Fair Market Value of the Common Stock on the last trading date
preceding the date of exercise. Upon payment in full of the option price and
satisfaction of the other conditions provided herein, a stock certificate
representing the number of shares of Common Stock to which the Participant is
entitled shall be issued and delivered to the Participant.

6
<PAGE>

(f) Death. Unless otherwise determined by the Committee on
-----
or after the date of grant, in the event of a Participant's Termination of
Employment by reason of death, any Stock Option held by such Participant which
was exercisable on the date of death may thereafter be exercised by the legal
representative of the Participant's estate until the earlier of one year after
the date of death or the expiration of the stated term of such Stock Option, and
any Stock Option not exercisable on the date of death shall be forfeited.

(g) Disability. Unless otherwise determined by the Committee
----------
on or after the date of grant, in the event of a Participant's Termination of
Employment by reason of Disability, any Stock Option held by such Participant
which was exercisable on the date of such Termination of Employment may
thereafter be exercised by the Participant until the earlier of one year after
such date or the expiration of the stated term of such Stock Option, and any
Stock Option not exercisable on the date of such Termination of Employment shall
become fully exercisable on such date. If the Participant dies during such one-
year period, any unexercised Stock Options held by the Participant at the time
of death may thereafter be exercised by the legal representative of the
Participant's estate until the earlier of one year after the date of the
Participant's death or the expiration of the option term of such Stock Option.
If an Incentive Stock Option is exercised after the expiration of the exercise
period that applies for purposes of Section 422 of the Code, such Stock Option
will thereafter be treated as a Non-Qualified Stock Option.

(h) Termination of Employment. Unless otherwise determined
-------------------------
by the Committee on or after the date of grant, in the event of a Participant's
Termination of Employment by reason of retirement, all Stock Options held by
such Participant which were exercisable on the date of such Termination of
Employment may thereafter be exercised by the Participant until the earlier of
one year after such date or the expiration of the option term of such Stock
Options. Unless otherwise determined by the Committee on or after the date of
grant, in the event of a Participant's Termination of Employment for any reason
other than retirement, death or Disability, all Stock Options held by such
Participant which were exercisable on the date of such Termination of Employment
may thereafter be exercised by the Participant until the earlier of 90 days
after such date or the expiration of the option term of such Stock Options.

(i) Change of Control. In the event of a Change of Control,
-----------------
all outstanding Stock Options shall immediately become fully exercisable, and
upon payment by the Participant of the option price (and, if requested, delivery
of the representation described in Section 10.2), a stock certificate

7
<PAGE>

representing the Common Stock covered thereby shall be issued and delivered to
the Participant.

(j) Non-Transferability of Options. No Stock Option shall be
------------------------------
transferrable by the Participant otherwise than by will or by the laws of
descent and distribution, to the extent consistent with the terms of the Plan
and the Option, and all Stock Options shall be exercisable, during the
Participant's lifetime, only by the Participant.

(k) Incentive Stock Option Limitations. To the extent that the
----------------------------------
aggregate Fair Market Value (determined as of the date of grant) of the Common
Stock with respect to which Incentive Stock Options are exercisable for the
first time by the Participant during any calendar year under the Plan and/or any
other stock option plan of the Company or any subsidiary or parent corporation
(within the meaning of Section 424 of the Code) exceeds $100,000, such Options
shall be treated as Options which are not Incentive Stock Options.

Should the foregoing provisions not be necessary in order for
the Stock Options to qualify as Incentive Stock Options, or should any
additional provisions be required, the Committee may amend the Plan accordingly,
without the necessity of obtaining the approval of the shareholders of the
Company.

(l) Ten-Percent Shareholder Rule. Notwithstanding any other
----------------------------
provision of the Plan to the contrary, no Incentive Stock Option shall be
granted to any person who, immediately prior to the grant, owns stock possessing
more than ten percent of the total combined voting power of all classes of stock
of the Company or any subsidiary or parent corporation (within the meaning of
Section 424 of the Code), unless the option price is at least 110% of the Fair
Market Value of the Common Stock on the date of grant and the Option, by its
terms, expires no later than five years after the date of grant.

6.5 Rights as Shareholder. A Participant shall not be deemed to be
---------------------
the holder of Common Stock, or to have any of the rights of a holder of Common
Stock, with respect to shares subject to the Option, unless and until the Option
is exercised and a stock certificate representing such shares of Common Stock is
issued to the Participant.

ARTICLE VII

RESTRICTED STOCK

7.1 Awards of Restricted Stock. The Committee shall determine the
--------------------------
eligible employees to whom, and the time or times

8
<PAGE>

at which, grants of Restricted Stock will be made, the number of shares to be
awarded, the time or times within which such Awards may be subject to
forfeiture, the vesting schedule and rights to acceleration thereof, and the
other terms and conditions of the Awards in addition to those set forth in
Section 7.2.

7.2 Terms and Conditions. Restricted Stock shall be subject to the
--------------------
following terms and conditions and such other terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:

(a) Restricted Stock Agreement. Each Restricted Stock Award
--------------------------
shall be evidenced by, and subject to the terms of, a Restricted Stock Agreement
executed by the Company and the Participant. The Restricted Stock Agreement
shall specify the number of shares of Common Stock subject to the Award, the
time or times within which such Restricted Stock is subject to forfeiture and
the other terms, conditions and restrictions applicable to such Award.

(b) Stock Certificate. When the restrictions applicable to a
-----------------
Restricted Stock Award, or any portion thereof, lapse, a stock certificate
representing the number of shares of Common Stock covered by such Restricted
Stock Award, or portion thereof, shall be issued and delivered to the
Participant. A Participant shall not be deemed to be the holder of Common Stock,
or to have any of the rights of a holder of Common Stock, with respect to shares
of Restricted Stock subject to the Award, unless and until the forfeiture
restrictions lapse and a stock certificate representing such shares of Common
Stock is issued to the Participant.

(c) Restriction Period. Subject to the provisions of the
------------------
Plan and the Restricted Stock Agreement, shares of Restricted Stock will be
forfeited to the Company if the Participant ceases to be an employee of the
Company and all Subsidiaries during a period (not to exceed five years) set by
the Committee commencing with the date of such Award (the "Restriction Period").
Subject to the provisions of the Plan, the Committee, in its sole discretion,
may provide for the lapse of such restrictions in installments and may waive
such restrictions, in whole or in part, at any time, based on such factors as
the Committee shall deem appropriate in its sole discretion.

(d) Death or Disability. Unless otherwise determined by the
-------------------
Committee on or after the date of the Award, upon the death or Disability of a
Participant during the Restriction Period, restrictions will lapse with respect
to a percentage of the Restricted Stock Award granted to the Participant that is
equal to the percentage of the Restriction

9
<PAGE>

Period that has elapsed as of the date of the Participant's Termination of
Employment, and a stock certificate representing such shares of Common Stock
shall be issued and delivered to the Participant or the Participant's estate, as
the case may be.

(e) Change of Control. In the event of a Change of Control,
-----------------
all Restricted Stock remaining subject to forfeiture shall immediately cease to
be subject to forfeiture and a stock certificate representing such shares of
Common Stock shall be issued and delivered to the Participant.

ARTICLE VIII

TERMINATION OR AMENDMENT

8.1 Termination or Amendment of Plan. The Committee may at any
--------------------------------
time amend, discontinue or terminate the Plan or any part thereof (including any
amendment deemed necessary to ensure that the Company may comply with any
regulatory requirement referred to in Article X); provided, however, that,
unless otherwise required by law, the rights of a Participant with respect to
Awards granted prior to such amendment, discontinuance or termination may not be
impaired without the consent of such Participant and, provided further that,
without the approval of the Company's shareholders, no amendment may be made
that would (i) materially increase the number of shares of Common Stock that may
be issued under the Plan (except by operation of Section 4.3); (ii) materially
modify the requirements as to eligibility to participate in the Plan; or (iii)
materially increase the benefits accruing to Participants.

8.2 Amendment of Options. The Committee may amend the terms of any
--------------------
Award previously granted, prospectively or retroactively, but, subject to
Article IV, no such amendment or other action by the Committee shall impair the
rights of any holder without the holder's consent. The Committee may also
substitute new Stock Options for previously granted Stock Options having higher
option prices.

ARTICLE IX

UNFUNDED PLAN

The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payment not yet made to a Participant by the
Company, nothing contained herein

10
<PAGE>

shall give any such Participant any rights that are greater than those of a
general creditor of the Company.

ARTICLE X

GENERAL PROVISIONS

10.1 Nonassignment. Except as otherwise provided in the Plan, any
-------------
Award granted hereunder and the rights and privileges conferred thereby shall
not be sold, transferred, assigned, pledged or hypothecated in any way (whether
by operation of law or otherwise), and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of an Award, right or privilege contrary to the
provisions hereof, or upon the levy of any attachment or similar process
thereon, such Award and the rights and privileges conferred hereby shall
immediately terminate and the Award shall immediately be forfeited to the
Company.

10.2 Legend. The Committee may require each person acquiring shares
------
pursuant to an Award to represent to the Company in writing that the Participant
is acquiring the shares without a view to distribution thereof. The stock
certificates representing such shares may include any legend which the Committee
deems appropriate to reflect any restrictions on transfer.

All certificates representing shares of Common Stock delivered under
the Plan shall be subject to such stock transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange or
stock market upon which the Common Stock is then listed or traded, any
applicable Federal or state securities law, and any applicable corporate law,
and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.

10.3 Other Plans. Nothing contained in the Plan shall prevent the
-----------
Board from adopting other or additional compensation arrangements, subject to
shareholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases.

10.4 No Right to Employment. Neither the Plan nor the grant of any
----------------------
Award hereunder shall give any Participant or other employee any right with
respect to continuance of employment by the Company or any Subsidiary, nor shall
the Plan impose any

11
<PAGE>

limitation on the right of the Company or any Subsidiary by which a Participant
is employed to terminate such Participant's employment at any time.

10.5 Withholding of Taxes. The Company shall have the right to
--------------------
reduce the number of shares of Common Stock otherwise deliverable pursuant to
the Plan by an amount that would have a Fair Market Value equal to the amount of
all Federal, state and local taxes required to be withheld, or to deduct the
amount of such taxes from any cash payment otherwise to be made to the
Participant. In connection with such withholding, the Committee may make such
arrangements as are consistent with the Plan as it may deem appropriate.

10.6 Listing and Other Conditions.
----------------------------

(a) If the Common Stock is listed on a national securities
exchange or the Nasdaq Stock Market, the issuance of any shares of Common Stock
pursuant to an Award shall be conditioned upon such shares being listed on such
exchange or Nasdaq. The Company shall have no obligation to issue any shares of
Common Stock unless and until such shares are so listed, and the right to
exercise any Option or vest in any Restricted Stock shall be suspended until
such listing has been effected.

(b) If at any time counsel to the Company shall be of the
opinion that any sale or delivery of shares of Common Stock pursuant to an Award
is or may in the circumstances be unlawful or result in the imposition of excise
taxes under the statutes, rules or regulations of any applicable jurisdiction,
the Company shall have no obligation to make such sale or delivery, or to make
any application or to effect or to maintain any qualification or registration
under the Securities Act of 1933, as amended, or otherwise with respect to
shares of Common Stock or Awards, and the right to exercise any Option or vest
in any Restricted Stock shall be suspended until, in the opinion of such
counsel, such sale or delivery shall be lawful or shall not result in the
imposition of excise taxes.

(c) Upon termination of any period of suspension under this
Section 10.6, any Award affected by such suspension which shall not then have
expired or terminated shall be reinstated as to all shares available before such
suspension and as to shares which would otherwise have become available during
the period of such suspension, but no such suspension shall extend the term of
any Option.

10.7 Governing Law. The Plan and actions taken in connection
-------------
herewith shall be governed and construed in accordance with the laws of the
Commonwealth of Pennsylvania.

12
<PAGE>

10.8 Construction. Wherever any words are used in the Plan in the
------------
masculine gender they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and wherever any words
are used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply.

10.9 Liability of the Board and the Committee. No member of the
----------------------------------------
Board or the Committee nor any employee of the Company or any of its
subsidiaries shall be liable for any act or action hereunder, whether of
omission or commission, by any other member or employee or by any agent to whom
duties in connection with the administration of the Plan have been delegated or,
except in circumstances involving bad faith, gross negligence or fraud, for
anything done or omitted to be done by himself.

10.10 Other Benefits. No payment pursuant to an Award shall be
--------------
deemed compensation for purposes of computing benefits under any retirement plan
of the Company or any Subsidiary nor affect any benefits under any other benefit
plan now or hereafter in effect under which the availability or amount of
benefits is related to the level of compensation.

10.11 Costs. The Company shall bear all expenses incurred in
-----
administering the Plan, including expenses related to the issuance of Common
Stock pursuant to Awards.

10.12 Severability. If any part of the Plan shall be determined to
------------
be invalid or void in any respect, such determination shall not affect, impair,
invalidate or nullify the remaining provisions of the Plan which shall continue
in full force and effect.

10.13 Successors. The Plan shall be binding upon and inure to the
----------
benefit of any successor or successors of the Company.

10.14 Headings. Article and section headings contained in the Plan
--------
are included for convenience only and are not to be used in construing or
interpreting the Plan.

ARTICLE XI

TERM OF PLAN

11.1 Effective Date. The Plan shall be effective as of the date of
--------------
its approval by the Company's shareholders.

13
<PAGE>

11.2 Termination Date. Unless sooner terminated, the Plan shall
----------------
terminate ten years after it is adopted by the Board and no Awards may be
granted thereafter. Termination of the Plan shall not affect Awards granted
before such date.

<PAGE>

Exhibit 10.7

CFM TECHNOLOGIES, INC.

NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

ARTICLE I

PURPOSE

The purpose of this Non-Employee Directors' Stock Option Plan (the
"Plan") is to enable CFM Technologies, Inc. (the "Company") to attract and
retain qualified independent directors and to further promote the mutuality of
interests between such directors and the Company's shareholders.

ARTICLE II

DEFINITIONS

For purposes of this Plan, the following terms shall have the
following meanings:

2.1 "Board" shall mean the Board of Directors of the Company.
-------

2.2 "Code" shall mean the Internal Revenue Code of 1986, as amended.
------

2.3 "Common Stock" means the Common Stock, no par value per share,
--------------
of the Company.

2.4 "Effective Date" shall mean the date on which the Plan is
----------------
approved by the Company's shareholders.

2.5 "Eligible Director" shall mean any member of the Board who, on
-------------------
the date of the granting of an Option, is not an officer or an employee of the
Company or any of the Company's subsidiaries.

2.6 "Fair Market Value" for purposes of the Plan, unless otherwise
-------------------
required by any applicable provision of the Code or any regulations issued
thereunder, shall mean, as of any date, the average of the high and low sales
prices of a share of Common Stock as reported on the principal national
securities exchange on which the Common Stock is listed or admitted to trading,
or if not listed or traded on any such exchange, on the Nasdaq Stock Market
("Nasdaq"), or, if such sales prices are not available, the average of the bid
and asked prices per share reported on Nasdaq, or, if such quotations are not
available, the fair market value as determined by the Board, which determination
shall be conclusive.
<PAGE>

2.7 "Participant" shall mean an Eligible Director to whom an Option
-------------
has been granted under the Plan.

2.8 "Stock Option" or "Option" shall mean any option to purchase
-------------- --------
shares of Common Stock granted pursuant to Article VI of the Plan.

ARTICLE III

ADMINISTRATION

3.1 Administration. The Plan shall be administered and interpreted
--------------
by the Board.

3.2 Guidelines. Subject to Article VII hereof, the Board shall have
----------
the authority to adopt, alter and repeal such administrative rules, guidelines
and practices governing the Plan as it shall, from time to time, deem
advisable; to interpret the terms and provisions of the Plan and any Option
granted under the Plan (and any agreements relating thereto); and to otherwise
supervise the administration of the Plan. The Board may correct any defect,
supply any omission or reconcile any inconsistency in the Plan or in any Option
in the manner and to the extent it shall deem necessary to carry the Plan into
effect. Notwithstanding the foregoing, no action of the Board under this
Section 3.2 shall impair the rights of any Participant without the Participant's
consent, unless otherwise required by law.

3.3 Decisions Final. Any decision, interpretation or other action
---------------
made or taken in good faith by the Board arising out of or in connection with
the Plan shall be final, binding and conclusive on the Company, all members of
the Board and their respective heirs, executors, administrators, successors and
assigns.

ARTICLE IV

SHARE LIMITATION

4.1 Shares. The maximum aggregate number of shares of Common Stock
------
that may be issued upon exercise of Options is 150,000 (subject to any increase
or decrease pursuant to Section 4.2), which may be either authorized and
unissued shares of Common Stock or issued Common Stock reacquired by the
Company. If any Option granted under the Plan shall expire, terminate or be
cancelled for any reason without having been exercised in full, the number of
unpurchased shares shall again be available for the purposes of the Plan.

2
<PAGE>

4.2 Changes. In the event of any merger, reorganization,
-------
consolidation, recapitalization, dividend (other than a regular cash dividend),
stock split, or other change in corporate structure affecting the Common Stock,
such substitution or adjustment shall be made in the maximum aggregate number of
shares which may be issued under the Plan, the number of shares subject to Stock
Options to be granted to Eligible Directors pursuant to Section 6.2 and the
number and option price of shares subject to outstanding Options, as may be
determined to be appropriate by the Board, in its sole discretion, provided that
the number of shares subject to any Option shall always be a whole number.

ARTICLE V

ELIGIBILITY

5.1 Eligible Directors. Only Eligible Directors are eligible to be
------------------
granted Options under the Plan.

ARTICLE VI

STOCK OPTIONS

6.1 Options. All Stock Options granted under the Plan shall be non-
-------
qualified stock options (i.e., options that do not qualify as incentive stock
----
options under section 422 of the Code).

6.2 Grants. After the Effective Date, for as long as the Plan
------
remains in effect, each Eligible Director shall automatically be granted Stock
Options for 3,000 shares of Common Stock on the date of the Company's annual
meeting of shareholders; provided, however, that an individual who ceases to be
a member of the Board on such date shall not be entitled to receive any Stock
Options. If a new member of the Board is elected to fill a vacancy on the
Board, such new Board member, if an Eligible Director, shall automatically be
granted Stock Options for 10,000 shares of Common Stock on the date of such
election.

6.3 Terms of Options. Options granted under the Plan shall be
----------------
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of the Plan, as the Board
shall deem desirable:

(a) Stock Option Contract. Each Stock Option shall be evidenced
by, and subject to the terms of, a Stock Option Contract executed by the Company
and the Participant. The

3
<PAGE>

Stock Option Contract shall specify the number of shares of Common Stock subject
to the Stock Option, the option price, the option term, and the other terms and
conditions applicable to the Stock Option.

(b) Option Price. The option price per share of Common Stock
------------
purchasable upon exercise of a Stock Option shall be equal to the Fair Market
Value of a share of Common Stock on the date of grant.

(d) Exercisability. All Stock Options shall be exercisable as
--------------
follows: Stock Options granted on the date of an annual meeting of shareholders
shall become exercisable in full on the date of the next succeeding annual
meeting of shareholders; and all Stock Options granted to Eligible Directors who
are elected to fill a vacancy on the Board shall vest one-third on each of the
first three anniversaries of the date of grant.

(e) Method of Exercise. Stock Options may be exercised in whole
------------------
or in part at any time during the option term by delivering to the Company
written notice of exercise specifying the number of shares of Common Stock to be
purchased and the option price therefor. The notice of exercise shall be
accompanied by payment in full of the option price and, if requested, by the
representation described in Section 9.2. Payment of the option price may be made
(i) in cash or by check payable to the Company or (ii) to the extent determined
by the Board on or after the date of grant, in shares of Common Stock duly owned
by the Participant (and for which the Participant has good title free and clear
of any liens and encumbrances) or (iii) by reduction in the number of shares of
Common Stock issuable upon such exercise, based, in each case, on the Fair
Market Value of the Common Stock on the last trading date preceding the date of
exercise. Upon payment in full of the option price and satisfaction of the other
conditions provided herein, a stock certificate representing the number of
shares of Common Stock to which the Participant is entitled shall be issued and
delivered to the Participant.

(f) Death. Unless otherwise determined by the Board on or after
-----
the date of grant, if a Participant ceases to be a member of the Board by reason
of death, any Stock Option held by such Participant at the date of death may
thereafter be exercised by the legal representative of the Participant's estate
until the earlier of one year after the Participant's date of death or the
expiration of the option term of such Stock Option.

4
<PAGE>

(g) Disability. Unless otherwise determined by the Board on or
----------
after the date of grant, if a Participant ceases to be a member of the Board by
reason of a disability that prevents him or her from performing the duties of a
director, any Stock Option held by such Participant may thereafter be exercised
by the Participant until the earlier of one year after such date or the
expiration of the option term of such Stock Option, and any Stock Option not
exercisable on the date on which such Participant ceases to be a member of the
Board shall become fully exercisable on such date. If the Participant dies
during such one-year period, any unexercised Stock Options held by the
Participant at the time of death may thereafter be exercised by the legal
representative of the Participant's estate until the earlier of one year after
the date of the Participant's death or the expiration of the option term of such
Stock Option.

(h) Other Termination. Unless otherwise determined by the Board
-----------------
on or after the date of grant, if a Participant ceases to be a member of the
Board for any reason other than death or disability, any Stock Option held by
such Participant may be exercised until the earlier of 90 days after such date
or the expiration of the option term of such Stock Option.

(i) Non-Transferability of Options. No Stock Option shall be
------------------------------
transferable by the Participant otherwise than by will or by the laws of descent
and distribution, to the extent consistent with the terms of the Plan and the
Option, and all Stock Options shall be exercisable, during the Participant's
lifetime, only by the Participant.

6.4 Rights as Shareholder. A Participant shall not be deemed to be
---------------------
the holder of Common Stock, or have any of the rights of a holder of Common
Stock, with respect to shares subject to an Option, until the Option is
exercised and a stock certificate representing such shares of Common Stock is
issued to the Participant.

ARTICLE VII

TERMINATION OR AMENDMENT

7.1 Termination or Amendment of Plan. The Board may at any time
--------------------------------
amend, discontinue or terminate the Plan or any part thereof (including any
amendment deemed necessary to ensure that the Company may comply with any
regulatory requirement referred to in Article IX); provided, however, that,
unless otherwise required by law, the rights of a Participant with respect to
Options granted prior to such amendment, discontinuance or termination may not
be impaired without the consent of such

5
<PAGE>

Participant and, provided further that, without the approval of the Company's
shareholders, no amendment may be made that would (i) materially increase the
number of shares of Common Stock that may be issued under the Plan (except by
operation of Section 4.2); (ii) materially modify the requirements as to
eligibility to participate in the Plan; or (iii) materially increase the
benefits accruing to Participants. Notwithstanding the foregoing, the
provisions of Article V and Article VI may not be amended more than once every
six months, other than to comport with changes in the Code, the Employee
Retirement Income Security Act, or the rules thereunder.

7.2 Amendment of Options. The Board may amend the terms of any
--------------------
Stock Option previously granted, prospectively or retroactively, but, subject to
Article IV, no such amendment or other action by the Board shall impair the
rights of any holder without the holder's consent.

ARTICLE VIII

UNFUNDED PLAN

8.1 Unfunded Status of Plan. The Plan is intended to constitute an
-----------------------
"unfunded" plan for incentive compensation. With respect to any payment not yet
made to a Participant by the Company, nothing contained herein shall give the
Participant any rights that are greater than those of a general creditor of the
Company.

ARTICLE IX

GENERAL PROVISIONS

9.1 Nonassignment. Except as otherwise provided in the Plan, any
-------------
Option granted hereunder and the rights and privileges conferred thereby shall
not be sold, transferred, assigned, pledged or hypothecated in any way (whether
by operation of law or otherwise), and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of any such Option, right or privilege contrary
to the provisions hereof, or upon the levy of any attachment or similar process
thereon, such Option and the rights and privileges conferred hereby shall
immediately terminate and the Option shall immediately be forfeited to the
Company.

9.2 Legend. The Board may require each person purchasing shares
------
upon exercise of a Stock Option to represent to the Company in writing that the
Participant is acquiring the

6
<PAGE>

shares without a view to distribution thereof. The stock certificates
representing such shares may include any legend which the Board deems
appropriate to reflect any restrictions on transfer.

All certificates representing shares of Common Stock delivered under
the Plan shall be subject to such stock transfer orders and other restrictions
as the Board may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange or
stock market upon which the Common Stock is then listed or traded, any
applicable Federal or state securities law, and any applicable corporate law,
and the Board may cause a legend or legends to be put on any such certificates
to make appropriate reference to such restrictions.

9.3 Other Plans. Nothing contained in the Plan shall prevent the
-----------
Board from adopting other or additional compensation arrangements, subject to
shareholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases.

9.4 No Right to Continue as Director. Neither the Plan nor the
--------------------------------
grant of any Option hereunder shall confer upon any person the right to continue
as a director of the Company or obligate the Company to nominate any director
for reelection by the Company's shareholders.

9.5 Listing and Other Conditions.
----------------------------

(a) If the Common Stock is listed on a national securities
exchange or the Nasdaq Stock Market, the issuance of any shares of Common Stock
upon exercise of an Option shall be conditioned upon such shares being listed on
such exchange or Nasdaq. The Company shall have no obligation to issue any
shares of Common Stock upon exercise of an Option unless and until such shares
are so listed, and the right to exercise any Option shall be suspended until
such listing has been effected.

(b) If at any time counsel to the Company shall be of the
opinion that any sale or delivery of shares of Common Stock upon exercise of an
Option is or may in the circumstances be unlawful or result in the imposition of
excise taxes under the statutes, rules or regulations of any applicable
jurisdiction, the Company shall have no obligation to make such sale or
delivery, or to make any application or to effect or to maintain any
qualification or registration under the Securities Act of 1933, as amended, or
otherwise with respect to shares of Common Stock, and the right to exercise any
Option shall be suspended until, in the opinion of said counsel, such sale or
delivery

7
<PAGE>

shall be lawful or shall not result in the imposition of excise taxes.

(c) Upon termination of any period of suspension under this
Section 9.5, any Option affected by such suspension which shall not then have
expired or terminated shall be reinstated as to all shares available before such
suspension and as to shares which would otherwise have become available during
the period of such suspension, but no such suspension shall extend the term of
any Option.

9.6 Governing Law. The Plan and actions taken in connection
-------------
herewith shall be governed and construed in accordance with the laws of the
Commonwealth of Pennsylvania.

9.7 Construction. Wherever any words are used in the Plan in the
------------
masculine gender they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and wherever any words
are used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply.

9.8 Liability of Board Members. No member of the Board nor any
--------------------------
employee of the Company or any of its subsidiaries shall be liable for any act
or action hereunder, whether of omission or commission, by any other member or
employee or by any agent to whom duties in connection with the administration of
the Plan have been delegated or, except in circumstances involving bad faith,
gross negligence or fraud, for anything done or omitted to be done by himself.

9.9 Costs. The Company shall bear all expenses incurred in
-----
administering the Plan, including expenses related to the issuance of Common
Stock upon exercise of Stock Options.

9.10 Severability. If any part of the Plan shall be determined to be
------------
invalid or void in any respect, such determination shall not affect, impair,
invalidate or nullify the remaining provisions of the Plan which shall continue
in full force and effect.

9.11 Successors. The Plan shall be binding upon and inure to the
----------
benefit of any successor or successors of the Company.

9.12 Headings. Article and section headings contained in this Plan
--------
are included for convenience only and are not to be used in construing or
interpreting the Plan.

8
<PAGE>

ARTICLE X

TERM OF PLAN

10.1 Effective Date. The Plan shall be effective as of the Effective
--------------
Date.

10.2 Termination. Unless sooner terminated, the Plan shall terminate
-----------
ten years after it is adopted by the Board and no Options may be granted
thereafter. Termination of the Plan shall not affect Options granted before
such date, which will continue to be exercisable after the Plan terminates.

<PAGE>

Exhibit 10.8

CFM TECHNOLOGIES, INC.

EMPLOYEE STOCK PURCHASE PLAN

1. PURPOSE. The purpose of this Employee Stock Purchase Plan of CFM
-------
Technologies, Inc., a Pennsylvania corporation (the "Corporation"), is to secure
for the Corporation and its shareholders the benefits of the incentive which an
interest in the ownership of shares of common stock of the Corporation will
provide to its employees, who will be responsible for the Corporation's future
growth and continued success.

2. DEFINITIONS. As used herein:
-----------

"ACCOUNT" means a bookkeeping account established by the
-------
Committee on behalf of a Participant to hold Payroll Deductions.

"APPROVED LEAVE OF ABSENCE" means a leave of absence that has
-------------------------
been approved by the applicable Participating Corporation in such a manner as
the Board may determine from time to time.

"BOARD" means the Board of Directors of the Corporation.
-----

"CODE" means the Internal Revenue Code of 1986, as amended.
----

"COMMITTEE" means the Committee appointed pursuant to section 14
---------
of the Plan.

"COMPENSATION" means an Employee's cash compensation payable for
------------
services to a Participating Corporation during a six-month period.

"ELECTION FORM" means the form acceptable to the Committee which
-------------
an Employee shall use to make an election to purchase Shares through Payroll
Deductions pursuant to the Plan.

"ELIGIBLE EMPLOYEE" means an Employee who meets the requirements
-----------------
for eligibility under section 3 of the Plan.

"EMPLOYEE" means a person who is an employee of a Participating
--------
Corporation.

"FAIR MARKET VALUE" means the average of the high and low sales
-----------------
prices of a Share for the last trading day as reported on the principal national
securities exchange on which
<PAGE>

the Shares are listed or admitted to trading or, if not listed or traded on any
such exchange, on the Nasdaq Stock Market, or, if such sales prices are not
available, the average of the bid and asked prices for a Share as reported on
Nasdaq, or, if such quotations are not available, the fair market value as
determined by the Board, which determination shall be conclusive.

"FIVE PERCENT OWNER" means an Employee who, with respect to a
------------------
Participating Corporation, is described in section 423(b)(3) of the Code.

"OFFERING" means an offering of Shares to Eligible Employees
--------
pursuant to the Plan.

"OFFERING COMMENCEMENT DATE" means April 1 and October 1 of each
--------------------------
fiscal year beginning on or after the closing for the Corporation's initial
public offering of its Shares, until the Plan Termination Date.

"OFFERING PERIOD" means the six-month period extending from an
---------------
Offering Commencement Date through the following Offering Termination Date.

"OFFERING TERMINATION DATE" means the September 30 or March 31
-------------------------
next following an Offering Commencement Date.

"OPTION PRICE" means 85 percent of the lower of (i) the Fair
------------
Market Value per Share on the Offering Commencement Date or (ii) the Fair Market
Value per Share on the Offering Termination Date.

"PARTICIPANT" means an Employee who meets the requirements for
-----------
eligibility under section 3 of the Plan and who has timely delivered an Election
Form to the Committee.

"PARTICIPATING CORPORATION" means the Corporation and the parent
-------------------------
and subsidiaries of the Corporation, within the meaning of sections 424(d) and
(e) of the Code, if any, that are approved by the Board and whose employees are
designated as Employees by the Board.

"PAYROLL DEDUCTIONS" means amounts withheld from a Participant's
------------------
Compensation pursuant to the Plan, as described in section 5 of the Plan.

"PLAN" means the CFM Technologies, Inc. Employee Stock Purchase
----
Plan, as set forth in this document, and as may be amended from time to time.

2
<PAGE>

"PLAN ANNUAL MAXIMUM" means the maximum number of Shares that may
-------------------
be purchased pursuant to the Plan in any calendar year, as determined pursuant
to section 10(a) of the Plan.

"PLAN OFFERING MAXIMUM PER PARTICIPANT" means the maximum number
-------------------------------------
of Shares that may be purchased by a Participant in any Offering, as determined
pursuant to section 10(a) of the Plan.

"PLAN TERMINATION DATE" means the earlier of
---------------------

(i) the Offering Termination Date for the Offering in which
the maximum number of Shares specified in section 10(a) of the Plan have been
issued pursuant to the Plan, or

(ii) the date as of which the Board chooses to terminate the
Plan as provided in section 15 of the Plan.

"SHARES" means shares of the Common Stock of the Corporation, no
------
par value per share.

"SUCCESSOR-IN-INTEREST" means the person or entity described in
---------------------
section 8(g) of the Plan.

"TERMINATION FORM" means the form acceptable to the Committee
----------------
which an Employee shall use to withdraw from an Offering pursuant to section
8(a) of the Plan.

3. ELIGIBILITY AND PARTICIPATION.
-----------------------------

(a) INITIAL ELIGIBILITY.
-------------------

(i) Except as provided in section 3(a)(ii) of the Plan,
each Employee shall be eligible to participate in the Plan.

(ii) An Employee shall not be eligible to participate in the
Plan if such Employee:

(A) is a Five Percent Owner;

(B) has been employed by a Participating Corporation
for less than six months;

(D) is ineligible to participate by virtue of section
8(c) of the Plan.

3
<PAGE>

(b) LEAVE OF ABSENCE. For purposes of participation in the
----------------
Plan, an Employee on an Approved Leave of Absence shall be deemed to be an
Employee until the first Offering Termination Date following commencement of
such Approved Leave of Absence. Termination by the Participating Corporation of
an Employee's Approved Leave of Absence, other than termination or return to
non-temporary employment, shall terminate an Employee's employment for all
purposes of the Plan and shall terminate such Employee's participation in the
Plan and the right to exercise any option.

(c) COMMENCEMENT OF PARTICIPATION. An Employee who meets the
-----------------------------
eligibility requirements of section 3(a) of the Plan and whose participation is
not restricted under section 10(a) of the Plan shall become a Participant by
completing an Election Form and filing it with the Committee on or before the
15th day of the month immediately preceding the Offering Commencement Date for
the first Offering to which such Election Form applies. Payroll Deductions for
a Participant shall commence on the first pay date following the applicable
Offering Commencement Date when his or her authorization for Payroll Deductions
becomes effective, and shall end on the Plan Termination Date, unless sooner
terminated by the Participant pursuant to section 8(a) of the Plan.

4. OFFERINGS.
---------

(a) SHARES PER OFFERING. The Plan shall be implemented by a
-------------------
series of Offerings that shall terminate on the Plan Termination Date. Offerings
shall be made with respect to Compensation payable for each six-month period
commencing on an Offering Commencement Date and ending on the applicable
Offering Termination Date. Shares available for any Offering shall be the
difference between the Plan Annual Maximum and the actual number of Shares
purchased by Participants pursuant to prior Offerings in that calendar year. If
the total number of Shares for which options are exercised on any Offering
Termination Date exceeds the maximum number of Shares available, the Committee
shall make a pro rata allocation of Shares available for delivery and
distribution in as nearly a uniform manner as practicable, and as it shall
determine to be fair and equitable, and the unapplied Account balances shall be
returned, without interest, to Participants as soon as practicable following the
Offering Termination Date.

5. PAYROLL DEDUCTIONS.
------------------

(a) AMOUNT OF PAYROLL DEDUCTIONS. An Eligible Employee who
----------------------------
wishes to participate in the Plan must file an Election Form with the Committee
on or before the 15th day of the month immediately preceding the Offering
Commencement Date for

4
<PAGE>

the first offering to which such Election Form applies, on which he or she may
elect to have Payroll Deductions of any amount from $10 to $500 (in whole dollar
amounts) made from his or her Compensation on each regular payday during the
time he or she is a Participant in the Plan.

(b) PARTICIPANTS' ACCOUNTS. All Payroll Deductions with respect
----------------------
to a Participant pursuant to section 5(a) of the Plan shall be credited to the
Participant's Account under the Plan.

(c) CHANGES IN PAYROLL DEDUCTIONS. A Participant may
-----------------------------
discontinue his or her participation in the Plan as provided in section 8(a) of
the Plan, but no other change can be made during an Offering, including, but not
limited to, changes in the amount of Payroll Deductions for such Offering. A
Participant may change the amount of Payroll Deductions for subsequent Offerings
by giving written notice of such change to the Committee on or before the 15th
day of the month immediately preceding the Offering Commencement Date for the
Offering for which such change is effective.

6. GRANTING OF OPTION. On each Offering Commencement Date, each
------------------
Participant shall be deemed to have been granted an option to purchase the
lesser of (A) the Plan Offering Maximum Per Participant and (B) that number of
whole Shares equal to the quotient obtained by dividing (i) the balance credited
to the Participant's Account as of the Offering Termination Date, by (ii) the
Option Price; provided, however, that if the balance credited to the
Participant's Account on such date is not sufficient to purchase at least 10
Shares, no Shares will be purchased for the Participant and the balance credited
to the Participant's Account shall be credited to the Participant's Account for
the next succeeding Offering, or, at the Participant's election, returned to the
Participant within a reasonable time following the Offering Termination Date,
without interest.

7. EXERCISE OF OPTION.
------------------

(a) AUTOMATIC EXERCISE. With respect to each Offering, a
------------------
Participant's option for the purchase of Shares granted pursuant to section 6 of
the Plan shall be deemed to have been exercised automatically on the Offering
Termination Date applicable to such Offering (or, if the Offering Termination
Date is not a business day, then on the first business day thereafter).

(b) FRACTIONAL SHARES AND MINIMUM NUMBER OF SHARES. Fractional
----------------------------------------------
Shares shall not be issued under the Plan. Amounts credited to an Account
remaining after the application of

5
<PAGE>

such Account to the exercise of options for a minimum of 10 whole Shares shall
be credited to the Participant's Account for the next succeeding Offering, or,
at the Participant's election, returned to the Participant within a reasonable
time following the Offering Termination Date, without interest.

(c) TRANSFERABILITY OF OPTION. No option granted to a
-------------------------
Participant pursuant to the Plan shall be transferable other than by will or by
the laws of descent and distribution, and no such option shall be exercisable
during the Participant's lifetime other than by the Participant.

(d) DELIVERY OF CERTIFICATES FOR SHARES. The Corporation shall
-----------------------------------
deliver certificates for Shares acquired on the exercise of options during an
Offering Period as soon as practicable following the Offering Termination Date.

8. WITHDRAWALS.
-----------

(a) WITHDRAWAL OF ACCOUNT. A Participant may elect to withdraw
---------------------
the balance credited to his or her Account by providing a Termination Form to
the Committee at any time more than two business days prior to the Offering
Termination Date applicable to the Offering.

(b) AMOUNT OF WITHDRAWAL. A Participant may withdraw all but
--------------------
not less than all the amounts credited to the Participant's Account by giving a
timely Termination Form to the Committee. All amounts credited to such
Participant's Account shall be paid as soon as practicable following the
Committee's receipt of the Participant's Termination Form, and no further
Payroll Deductions will be made with respect to the Participant.

(c) EFFECT OF WITHDRAWAL ON SUBSEQUENT PARTICIPATION. A
------------------------------------------------
Participant who elects to withdraw from an Offering pursuant to section 8(a) of
the Plan shall be deemed to have elected not to participate in each of the two
succeeding Offerings following the date on which the Participant gives a
Termination Form to the Committee, but the Participant may elect to participate
in subsequent Offerings by delivering a new Election Form to the Committee
pursuant to Section 3(c).

(d) TERMINATION OF EMPLOYMENT. Upon termination of a
-------------------------
Participant's employment for any reason other than death or continuation of an
Approved Leave of Absence, all amounts credited to such Participant's Account
and not yet applied to the purchase of Shares shall be returned to the
Participant, without interest. In the event of a Participant's death after
termination of employment but before the Participant's Account has been
returned, the Account shall be returned to the Participant's Successor-in-
Interest.

6
<PAGE>

(e) TERMINATION OF EMPLOYMENT DUE TO DEATH. Upon termination of
--------------------------------------
a Participant's employment because of death, the Participant's Successor-in-
Interest shall have the right to elect, by written notice to the Committee
before the earlier of two business days preceding the Offering Termination Date
or the 60th day following the Participant's date of death, either:

(i) to withdraw the amount credited to the Participant's
Account; or

(ii) to exercise the Participant's option for the purchase
of Shares on the Offering Termination Date next following the Participant's
death for the purchase of that number of Shares which the amount credited to
such Account will purchase at the applicable Option Price, and to have any
excess amount paid to the Participant's Successor-in-Interest as soon as
practicable after the Offering Termination Date, without interest.

If a timely written notice is not filed with the Committee pursuant to this
section 8(e), the Successor-in-Interest shall be paid the amount credited to the
Participant's Account in cash, without interest, within a reasonable time after
the Offering Termination Date.

(f) LEAVE OF ABSENCE. A Participant who goes on an Approved
----------------
Leave of Absence that commences before the Offering Termination Date after
having filed a timely Election Form with respect to such Offering shall have the
right to elect, by written notice to the Committee before the earlier of two
business days preceding the Offering Termination Date or the tenth day following
the commencement of the Participant's Approved Leave of Absence, either to:

(i) withdraw the balance credited to his or her Account
pursuant to section 8(a) of the Plan;

(ii) discontinue contributions to the Plan but remain a
Participant in the Plan through the Offering Termination Date; or

(iii) remain a Participant in the Plan through the Offering
Termination Date and continue the authorization for the Participating
Corporation to make Payroll Deductions for each payroll period out of continuing
payments to such Participant, if any.

If a timely written notice is not filed with the Committee pursuant to this
section 8(f), the Participant shall be deemed to have elected the option set
forth in this section 8(f)(ii).

7
<PAGE>

A Participant who is on an Approved Leave of Absence shall not be
eligible to participate in any Offering that begins on or after the commencement
of such Approved Leave of Absence.

(g) SUCCESSOR-IN-INTEREST. The Successor-in-Interest of a
---------------------
Participant who dies shall be the Participant's executor or administrator, or
such other person or entity to whom the Participant's rights under the Plan
shall have passed by will or the laws of descent and distribution.

9. INTEREST. No interest shall be paid or allowed with respect to
--------
amounts paid into the Plan or credited to any Participant's Account.

10. SHARES.
------

(a) MAXIMUM NUMBER OF SHARES. No more than 300,000 Shares may
------------------------
be purchased under the Plan. Such Shares shall be purchased by the Corporation
on the open market or shall be newly issued shares of the Corporation. In
addition, the Committee may, in its discretion, establish from time to time a
maximum number of Shares that may be purchased pursuant to the Plan in any
calendar year (the "Plan Annual Maximum") and shall establish for each Offering
a maximum number of Shares that may be purchased by a Participant (the "Plan
Offering Maximum Per Participant"). If the Committee fails to make such
determination, the Plan Annual Maximum shall be 100,000 Shares, and the Plan
Offering Maximum Per Participant shall be 25,000 Shares. Notwithstanding any
provisions of the Plan to the contrary:

(i) if any Participant would be, as of any Offering
Commencement Date, a Five Percent Owner (taking into account the Plan Offering
Maximum Per Participant for such Offering determined without regard to this
clause (i)), then the Plan Offering Maximum Per Participant with respect to such
Participant shall be reduced to that number of Shares (which may be zero) that,
when added to the number of Shares which such Participant is otherwise deemed to
own, is one less than the number of Shares that would cause such Participant to
be a Five Percent Owner; and

(ii) if any Participant would (without regard to this
sentence) be granted an option to participate in an Offering that would permit
such Participant's rights to purchase stock under all employee stock purchase
plans of the Participating Corporations which meet the requirements of section
423(b) of the Code to accrue at a rate which exceeds $25,000 in fair market
value (as determined pursuant to section 423(b)(8) of the Code) for each
calendar year in which such option would be outstanding, then the Plan Offering
Maximum

8
<PAGE>

Per Participant with respect to such Participant (determined without regard to
this clause (ii)) shall be reduced (but not below zero) by the number of Shares
that is one more than the number of Shares representing such excess fair market
value.

The number of Shares available for any Offering and the maximum number of Shares
that may be purchased under the Plan shall be adjusted if the number of
outstanding Shares of the Corporation is increased or reduced by split-up,
reclassification, stock dividend or the like.

(b) PARTICIPANT'S INTEREST IN SHARES. A Participant shall have
--------------------------------
no interest in Shares subject to an option until such option has been exercised.

(c) REGISTRATION OF SHARES. Shares to be delivered to a
----------------------
Participant under the Plan shall be registered in the name of the Participant.

(d) RESTRICTIONS ON EXERCISE. The Board may, in its discretion,
------------------------
require as conditions to the exercise of any option such conditions as it may
deem necessary to assure that the exercise of options is in compliance with
applicable securities laws.

11. EXPENSES. The Participating Corporations shall pay all fees and
--------
expenses incurred (excluding individual Federal, state, local or other taxes) in
connection with the Plan. No charge or deduction for any such expenses will be
made to a Participant upon the termination of his or her participation under the
Plan or upon the distribution of certificates representing Shares purchased with
his or her contributions.

12. TAXES. The Participating Corporations shall have the right to
-----
withhold from each Participant's Compensation an amount equal to all Federal,
state, city or other taxes as the Participating Corporations shall reasonably
determine are required to be withheld by them pursuant to any statute or other
governmental regulation or ruling. In connection with such withholding, the
Participating Corporations may make any such arrangements as are consistent with
the Plan as they may deem appropriate, including the right to withhold from
Compensation paid to a Participant other than in connection with the Plan.

13. PLAN AND CONTRIBUTIONS NOT TO AFFECT EMPLOYMENT. The Plan shall
-----------------------------------------------
not confer upon any Employee any right to continue in the employ of the
Participating Corporations.

14. ADMINISTRATION. The Plan shall be administered by the Board,
--------------
which may delegate responsibility for such administration to a committee of the
Board (the "Committee"). If

9
<PAGE>

the Board fails to appoint the Committee, any references in the Plan to the
Committee shall be treated as references to the Board. The Board, or the
Committee, shall have authority to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to it, and to make all other
determinations deemed necessary or advisable in administering the Plan, with or
without the advice of counsel. The determinations of the Board or the Committee
on the matters referred to in this section 14 shall be conclusive and binding
upon all persons in interest.

15. AMENDMENT AND TERMINATION. The Board may terminate the Plan at
-------------------------
any time and may amend the Plan from time to time in any respect; provided,
however, that upon any termination of the Plan, all Shares or Payroll Deductions
(to the extent not yet applied to the purchase of Shares) under the Plan shall
be distributed to the Participants; provided further, that no amendment to the
Plan shall affect the right of a Participant to receive his or her proportionate
interest in the Shares or his or her Payroll Deductions (to the extent not yet
applied to the purchase of Shares) under the Plan; and provided further, that
the Corporation may seek shareholder approval of an amendment to the Plan if
such approval is determined to be required by or advisable under the regulations
of the Securities and Exchange Commission or the Internal Revenue Service, the
rules of any stock exchange or stock market on which the shares are listed or
other applicable law or regulation.

16. EFFECTIVENESS. The Plan shall be effective upon the closing for
-------------
the Corporation's initial public offering of its Shares, subject to approval by
the Corporation's shareholders within one year before or after the adoption of
the Plan by the Board.

17. GOVERNMENT AND OTHER REGULATIONS. The purchase of Shares under
--------------------------------
the Plan shall be subject to all applicable laws, rules and regulations, and to
such approvals by any governmental agencies as may be required.

18. NON-ALIENATION. Participants shall not be permitted to assign,
--------------
alienate, sell, transfer, pledge or otherwise encumber their interest under the
Plan prior to the distribution to them of stock certificates. Any attempt to
assign, alienate, sell, transfer, pledge or otherwise encumber interests under
the Plan shall be void and of no effect.

19. NOTICES. Any notice required or permitted hereunder shall be
-------
sufficiently given only if delivered personally, or sent by registered or
certified mail, postage prepaid, addressed to the Corporation at:

10
<PAGE>

CFM Technologies, Inc.
1381 Enterprise Drive
West Chester, PA 19380
Attention: L. Jeffry Randall, Secretary

and to the Participant at the address on file with the Corporation from time to
time, or to such other address as either party may hereafter designate in
writing by notice similarly given by one party to the other.

20. SUCCESSORS. The Plan shall be binding upon and inure to the
----------
benefit of any successor, successors or assigns of the Corporation.

21. SEVERABILITY. If any part of the Plan shall be determined to be
------------
invalid or void in any respect, such determination shall not affect, impair,
invalidate or nullify the remaining provisions of the Plan which shall continue
in full force and effect.

22. ACCEPTANCE. The election by any Eligible Employee to participate
----------
in the Plan constitutes his or her acceptance of the terms of the Plan and his
or her agreement to be bound hereby.

23. APPLICABLE LAW. The Plan shall be construed in accordance with
--------------
the laws of the Commonwealth of Pennsylvania, to the extent not preempted by
applicable Federal law.

<PAGE>

EXHIBIT 11

COMPUTATION OF NET INCOME PER SHARE/(1)/
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
FISCAL YEAR SIX MONTHS SIX MONTHS
ENDED ENDED ENDED
OCTOBER 31, APRIL 30, APRIL 30,
1995 1995 1996
----------- ---------- ----------
<S> <C> <C> <C>
Net income.................................... $1,402 $ 253 $1,351
====== ===== ======
Weighted average common and common equivalent
shares:
Common stock................................ 3,802 3,802 3,802
Stock options (treasury stock method)....... 168 168 168
Cheap stock (treasury stock method)......... 46 46 46
------ ----- ------
Weighted average common or common equiva-
lent shares.............................. 4,016 4,016 4,016
====== ===== ======
Net income per share........................ $ .35 $ .06 $ .34
====== ===== ======
</TABLE>
- --------

(1) Computed on a basis as described in Note 2 of the Notes to Consolidated
Financial Statements.

<PAGE>

EXHIBIT 16

May 15, 1996

Securities and Exchange Commission

450 Fifth Street, Northwest

Washington, D.C. 20549

Gentlemen:

We have read the section entitled "Additional Information" included in the
CFM Technologies, Inc. Registration Statement on Form S-1 as filed with the
Securities and Exchange Commission on December 13, 1995, and are in agreement
with the statements contained therein regarding the Company's former auditors.

Stockton Bates & Company, P.C.

Certified Public Accountants

<PAGE>

EXHIBIT 21

SUBSIDIARIES OF CFM TECHNOLOGIES, INC.

<TABLE>
<CAPTION>
JURISDICTION OF
NAME INCORPORATION
---- ---------------
<S> <C>
CFM Technologies, Incorporated............................... Pennsylvania
CFMT, Inc.................................................... Delaware
CFM International Corp....................................... Guam
CFM Technologies Limited..................................... Scotland
CFM Technologies, S.A. ...................................... France
</TABLE>

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

To CFM Technologies, Inc.:

As independent public accountants, we hereby consent to the use of our report
and to all references to our Firm included in, or made a part of this
registration statement.

Arthur Andersen LLP

Philadelphia, Pa.

May 17, 1996