UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly Report pursuant to Section 13 or 15(d) of
the
Securities Exchange Act of 1934 for the quarterly period
ended April 30, 1997.
or
[ ] Transition Report pursuant to Section 13 or 15(d) of
the Securities
Exchange Act of 1934
For the transition period from _________ to __________
Commission File No. 0-27498
CFM Technologies, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2786977
-------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1336 Enterprise Drive, West Chester, Pennsylvania 19380
--------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(610) 696-830
N/A
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all
reports to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90
days.
Yes X No
The number of outstanding shares of the Registrant's Common
Stock, no par value per share, on June 11, 1997 was 7,859,769.
CFM TECHNOLOGIES, INC.
INDEX
PART 1. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
Condensed Consolidated Balance Sheets (unaudited)
April 30, 1997 and October 31, 1996 ........................ 3
Condensed Consolidated Statements of Income(unaudited)
Three and Six months ended April 30, 1997 and 1996 ......... 5
Condensed Consolidated Statements of Cash Flows(unaudited)
Six months ended April 30, 1997 and 1996 ................ 6
Notes to Condensed Consolidated Financial Statements .... 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ...................................... 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ............................. 12
Signatures ................................................... 13
Exhibit Index ................................................ 14
<TABLE>
PART 1. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
CFM TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
<CAPTION>
April 30, October 31,
1997 1996
---------- -----------
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents .................................. $ 46,612 $ 9,308
Short-term investments ..................................... 10,064 2,946
Accounts receivable ........................................ 23,309 15,090
Inventories ................................................ 10,932 8,047
Prepaid expenses and other ................................. 350 362
Deferred income taxes ...................................... 1,053 641
---------- -----------
Total current assets .................................... 92,320 36,394
---------- -----------
PROPERTY, PLANT AND EQUIPMENT:
Land ....................................................... 540 540
Building and improvements .................................. 3,569 3,180
Machinery and equipment .................................... 5,867 4,075
Furniture and fixtures ..................................... 1,231 934
---------- -----------
11,207 8,729
Less - Accumulated depreciation and amortization ........... (2,168) (1,268)
---------- -----------
Net property, plant and equipment ....................... 9,039 7,461
---------- -----------
OTHER ASSETS:
Patents, net of accumulated amortization of $89 and $76 .... 278 266
Other ...................................................... 99 130
---------- -----------
Total other assets ...................................... 377 396
---------- -----------
$ 101,736 $ 44,251
========== ==========
</TABLE>
<TABLE>
CFM TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(unaudited)
<CAPTION>
April 30, October 31,
1997 1996
----------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABIlTIES:
<S> <C> <C>
Current portion of long-term debt ................................... $ 605 $ 489
Accounts payable .................................................... 5,392 4,211
Accrued expenses .................................................... 6,725 4,147
Customer deposits ................................................... 21 22
---------- -----------
Total current liabilities ........................................ 12,743 8,869
---------- -----------
LONG-TERM DEBT ......................................................... 2,887 2,525
---------- -----------
DEFERRED INCOME TAXES .................................................. 216 146
---------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, no par value; 1,000,000 authorized shares; no shares
issued or outstanding ........................................... - -
Common stock, no par value; 30,000,000 authorized shares; 7,848,769
and 6,052,924 shares issued and outstanding ...................... 79,693 29,592
Deferred Compensation ............................................... (276) -
Retained earnings ................................................... 6,473 3,119
---------- -----------
Total shareholders' equity ....................................... 85,890 32,711
---------- -----------
$101,736 $ 44,251
========== ===========
</TABLE>
<TABLE>
CFM TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(unaudited)
<CAPTION>
Three Months Ended Six Months Ended
April 30, April 30,
------------------- ------------------
1997 1996 1997 1996
<S> <C> <C> <C> <C>
NET SALES ....................................... $20,148 $10,086 $34,940 $19,697
COST OF SALES ................................... 10,774 5,082 18,742 10,637
------- ------- ------- -------
Gross profit ............................. 9,374 5,004 16,198 9,060
------- ------- ------- -------
OPERATING EXPENSES:
Research, development and engineering ........ 2,216 1,046 4,197 2,092
Seling, general and administrative ........... 4,850 2,854 7,706 4,675
------- ------- ------- -------
Total operating expenses ................. 7,066 3,900 11,903 6,767
------- ------- ------- -------
Operating income ......................... 2,308 1,104 4,295 2,293
INTEREST (INCOME) EXPENSE, NET .................. (616) 143 (711) 215
------- ------- ------- -------
Income before income taxes ............... 2,924 961 5,006 2,078
INCOME TAXES .................................... 944 336 1,652 727
------- ------- ------- -------
NET INCOME ...................................... $ 1,980 $ 625 $ 3,354 $ 1,351
======= ======= ======= =======
NET INCOME PER SHARE ............................ $ 0.25 $ 0.16 $ 0.47 $ 0.34
======= ======= ======= =======
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES ............................ 7,964 3,994 7,174 3,994
======= ======= ======= =======
</TABLE>
<TABLE>
CFM TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
<CAPTION>
Six Months Ended
April 30,
-----------------------
1997 1996
------- -------
OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 3,354 $ 1,351
Adjustments to reconcile net income to net cash
used in operating activities -
Depreciation and amortization .............................. 913 245
Deferred compensation ...................................... 41
Deferred income tax benefit ................................ (342) (61)
(Increase) decrease in -
Accounts receivable ..................................... (8,219) (4,226)
Inventories ............................................. (2,885) (1,690)
Prepaid expenses and other current assets ............... 12 (119)
Other assets ............................................ 6 (397)
Increase (decrease) in -
Accounts payable ........................................ 1,181 914
Accrued expenses ........................................ 2,578 1,115
Customer deposits ....................................... (1) (87)
------- -------
Net cash used in operating activities ............... (3,362) (2,955)
------- -------
INVESTING ACTIVITIES:
Purchases of short-term investments ........................... (74,173) -
Proceeds from short-term investments .......................... 67,055 -
Purchases of property, plant and equipment .................... (1,728) (1,786)
------- -------
Net cash used in investing activities ............... (8,846) (1,786)
------- -------
FINANCING ACTIVITIES:
Payments on long-term debt .................................... 272) (268)
Net borrowings on line of credit ............................. - 5,250
Proceeds from sale of common stock, net ..................... 49,288 -
Proceeds from exercise of stock options ....................... 157 -
Tax benefits from exercise of stock options ................... 339 -
------- -------
Net cash provided by financing activities ........... 49,512 4,982
------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ............. 37,304 241
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ................... 9,308 408
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD ......................... $46,612 $ 649
======== =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest expense ................................ $ 136 $ 176
Cash received for interest income ............................. 576 1
Cash paid for income taxes .................................... 1,072 1,117
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Machinery acquired under capital leases ....................... $ 750 $ 560
</TABLE>
CFM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation:
The condensed consolidated financial statements
included herein have been prepared by CFM
Technologies, Inc. without audit, pursuant to the rules
and regulations of the Securities and Exchange
Commission. Certain information and footnote
disclosures normally included in financial statements
prepared in accordance with generally accepted
accounting principles have been condensed or omitted
pursuant to such rules and regulations. These
statements include all adjustments that, in the opinion
of management, are necessary to provide a fair
statement of the results for the periods covered.
These financial statements should be read in
conjunction with the audited financial statements and
the notes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended October
31, 1996. The results of operations for the interim
periods presented are not necessarily indicative of the
results for the full year.
(2) Follow-on Public Offering of Common Stock:
The Company consummated a follow-on public offering
on February 19, 1997. The net proceeds from the
offering of 1,750,500 shares of common stock were
approximately $49,000,000.
(3) Accounts Receivable:
April 30, October 31,
1997 1996
----------- -----------
Billed ..................... $11,585,000 $10,558,000
Unbilled ................... 11,724,000 4,532,000
----------- -----------
$23,309,000 $15,090,000
=========== ===========
Unbilled receivables represent final retainage amounts to
be billed upon completion of the installation process.
(4) Inventories:
April 30, October 31,
1997 1996
----------- ----------
Raw materials .............. $ 6,091,000 $4,267,000
Work in Progress ........... 4,841,000 3,780,000
----------- ----------
$10,932,000 $8,047,000
=========== ==========
(5) Earnings Per Share (EPS):
In February 1997, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings per
Share", which the Company is required to adopt for both
interim and annual periods ending after December 15, 1997.
SFAS No. 128 simplifies the EPS calculation by replacing
primary EPS with basic EPS and replacing fully diluted EPS
with diluted EPS. Basic EPS is computed by dividing
reported earnings available to common shareholders by the
weighted average shares outstanding. Diluted EPS reflects
the potential dilution from the exercise or conversion of
securities into common stock, such as stock options.
Early application is prohibited, although footnote
disclosure of pro forma EPS amounts are required. Pro
forma basic EPS and diluted EPS would have been $0.27 and
$0.25, respectively, for the three months ended April 30,
1997 and $0.50 and $0.47, respectively, for the six months
ended April 30, 1997. Pro forma basic and diluted EPS
would have been $0.16 and $0.16 for the three months ended
April 30, 1996 and $0.36 and $0.34 for the six months
ended April 30, 1997, respectively.
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 ("FPD") 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-
Displace drying technologies were developed.
The Company has derived substantially all of its revenues from
the sale of a relatively small number of its systems, which range
in price from approximately $1.0 million to $2.7 million. The
Company sells its systems worldwide and records a significant
portion of its sales to customers outside the United States. The
Company's international sales have occurred in Europe, Korea,
Japan, Taiwan and Israel. 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.
Results of Operations
The following table sets forth certain financial data for the
periods indicated, expressed as a percentage of net sales.
Three Months Ended Six Months Ended
April 30, April 30,
----------------- -----------------
1997 1996 1997 1996
------ ------ ------ ------
Net sales 100.0% 100.0% 100.0% 100.0%
Gross margin 46.5% 49.6% 46.4% 46.0%
Research, development and
engineering 11.0% 10.4% 12.0% 10.6%
Selling, general and
administrative 24.1% 28.3% 22.1% 23.7%
Income from operations 11.5% 10.9% 12.3% 11.6%
Income before income taxes 14.5% 9.5% 14.3% 10.5%
Net income 9.8% 6.2% 9.6% 6.9%
Net Sales. Net sales for the three month period ended April
30, 1997 of $20.1 million increased 99.8% from $10.1 million in the
second quarter of fiscal 1996. This increase resulted primarily
from increased acceptance of the Company's Full-Flow(TM) systems by
the semiconductor industry as shipments were made to customers
equipping expanded, improved or new facilities. For the six months
ended April 30, 1997, net sales of $34.9 million increased 77.4%
from $19.7 million during the six months ended April 31, 1996.
International sales represented 62.9% and 52.1% of total net sales
in the three months ended April 30, 1997 and 1996, respectively.
International sales during the second quarter of fiscal 1997
represented approximately the same proportion of total sales as was
the case during the full 1996 fiscal year and the first quarter of
fiscal 1997. Because of continuing expansion of its international
marketing efforts the Company expects international sales to
continue to represent a significant portion of its net sales.
International orders accounted for approximately 82% of the
Company's backlog at April 30, 1997.
Gross Profit. Gross profit as a percentage of net sales
decreased from 49.6% in the three month period ended April 30, 1996
to 46.5% for the same period in fiscal 1997, but increased from the
46.1% reported in the first quarter of fiscal 1997. The gross
margin reported in the second quarter of fiscal 1997 declined over
the same period in fiscal 1996 due to aggressive pricing decisions
made by the Company as part of its market penetration strategy.
During the first half of fiscal 1997, gross margins increased to
46.4% from 46.0% reported for the first half of fiscal 1996 and
reflect improvements in manufacturing productivity and labor
efficiency coupled with continuing material cost reductions. These
improvements in manufacturing productivity more than offset the
impact of the Company's aggressive pricing strategy. Management
anticipates that continuing improvements in manufacturing
productivity and aggressive pricing will impact gross margins for
the remainder of the 1997 fiscal year. The Company's gross margins
have varied significantly from quarter to quarter and will continue
to be affected by a variety of factors, including the mix and
average selling prices of systems, sales of Original Equipment
Manufacturers ("OEM") automation equipment which yield relatively
lower gross margins and costs associated with new system
introductions and enhancements.
Research, Development and Engineering. Research, development
and engineering expenses for the quarter ended April 30, 1997
increased by 111.9 % to $2.2 million from $1.0 million recorded in
the same period during fiscal 1996. Expenses for the six months
ended April 30, 1997 increased by 100.6% to $4.2 million, or 12.0%
of net sales, from $2.1 million, or 10.6% of net sales, for the
corresponding period during fiscal 1996. Continued heavy
investment in FPD tool development, advanced automation
integration, work on expanding current system functionality and
adoption of a new software platform accounted for a major portion
of these costs during the second quarter. The Company anticipates
further increases in spending in support of research, development
and engineering as new, larger FPD platforms are introduced, 300mm
semiconductor platform development continues and new processes are
developed for existing and new equipment.
Selling, General and Administrative. Selling, general and
administrative expenses increased from $2.9 million or 28.3% of net
sales in the quarter ended April 30, 1996 to $4.9 million or 24.1%
of net sales in the quarter ended April 30, 1997. Sales for both
the second quarter of both fiscal 1996 and 1997 were predominantly
into East Asia where commission expenses are significantly higher
than on sales into Europe or the United States. For the six months
ended April 30, 1997, selling, general and administrative expenses
increased to $7.7 million, or 22.1% of net sales, from $4.7
million, or 23.7% of net sales, for the six months ended April 30,
1996. During the first half of fiscal 1997, the Company increased
the number of Company employees assigned to direct selling
activities by approximately 70%. The Company believes that
selling, general and administrative expenses, including legal
expenses related to certain patent litigation, personnel and sales
and support expenses in connection with the Company's efforts to
increase its net sales, and commission expenses due to increased
sales to East Asia will continue to increase in the remainder of
fiscal 1997 and beyond.
Interest Expense. Interest expense, net of interest income, of
$143,000 in the quarter ended April 30, 1996 was supplanted by
interest income, net of interest expense, of $616,000 in the
quarter ended April 30, 1997. Interest expense, net of interest
income, for the six months ended April 30, 1996 of $215,000 was
supplanted by interest income, net of interest expense, of $711,000
during the corresponding period of fiscal 1997. The net interest
income recorded during fiscal 1997 was the result of interest
income earned by the Company from investment of funds not
immediately needed to support the Company's operations which funds
were raised in the Company's initial public offering completed on
June 18, 1996 and in a follow-on public offering completed on
February 19, 1997. The Company anticipates that the investment of
these funds will continue to generate interest income, net of
interest expense, during the remainder of fiscal 1997.
Income Taxes. The Company provided for income taxes during the
quarter ended April 30, 1997 at a rate which caused the Company's
effective tax rate for the first half of fiscal 1997 to be 33.0%.
This rate is lower than the 34.0% effective rate for fiscal 1996
because of the favorable impact of tax credits generated by the
Company's increased spending on Research, Development and
Engineering expenses and tax benefits from the Company's tax
planning related to increased international sales.
Backlog
As of April 30, 1997, the Company's backlog of orders was $25.3
million, compared to $15.7 million as of April 30, 1996. The
majority of these orders were received during the preceding six
month period and are anticipated to ship within the coming six
month period. During fiscal 1996, the Company experienced two
order cancellation events and a general decrease in the lead times
following order placement by customers. During the second quarter
of fiscal 1997, orders from East Asia accounted for 46% of total
orders, with the balance coming from the U.S. (32%) and Europe
(22%). All of the orders received during the second quarter of
fiscal 1997 were for semiconductor production equipment. Ending
order backlog at April 30, 1997 represents approximately 64% FPD
systems and 36% semiconductor systems with 72% due to be shipped to
East Asia and the balance to Europe (18%) and the U.S. (10%). It
has been the experience of the Company that neither reported
backlog at a particular date nor the pattern of receipt of orders
is necessarily indicative of shipments during any particular future
period.
Liquidity and Capital Resources
At April 30, 1997, the Company had $46.6 million in cash and
cash equivalents, $10.1 million in short-term investments and $79.6
million in working capital. At October 31, 1996 the Company had
$9.3 million in cash and cash equivalents, $2.9 million in short-
term investments and $27.5 million in working capital. The
increase in cash, cash equivalents and short-term investments is a
result of the proceeds from a follow-on public offering completed
on February 19, 1997 which raised approximately $49.0 million, net
of expenses of approximately $0.6 million.
Approximately $3.4 million was used in operating activities
during the six months ended April 30, 1997, as compared with $3.0
million used in operating activities during the six months ended
April 30, 1996. Accounts receivable increased by $8.2 million
during the first six months of fiscal 1997 and inventories
increased by $2.9 million. Acquisitions of property, plant and
equipment were $1.7 million for the first six months of fiscal 1997
and $2.3 million for the first six months of fiscal 1996. Fiscal
1997 acquisitions included equipment for use in customer and
employee training and information systems in support of improved
engineering design infrastructure. Expenditures during the first
half of fiscal 1996 were primarily related to facility improvements
and the establishment of the Company's applications laboratory.
During the quarter ended April 30, 1997, the Company relocated
a portion of its manufacturing operations into approximately 14,000
sq. ft. of additional, leased manufacturing space in order to
provide increased production capacity. The Company believes that,
subject to product mix, present manufacturing capacity will support
annual net sales of approximately $120 million. Active planning is
currently underway to add additional manufacturing capacity during
1998.
The Company has a relationship with a commercial bank which
includes a mortgage on the Company's manufacturing facility in the
amount of $.9 million and a $7.5 million revolving demand line of
credit. The mortgage
bears interest at an annual rate of 8.9%. During the quarter ended
January 31, 1997, the line of credit became unsecured and interest
on any outstanding balance was reduced to an interest rate equal to
the bank's overnight borrowing rate plus 1/4 percent. As of April
30, 1997, no balance was outstanding under the Company's line of
credit.
The Company had outstanding accounts receivable of
approximately $15.1 million and $23.3 million as of October 31,
1996 and April 30, 1997, respectively. The Company sells its
systems under terms which delay billing for a portion of each sale
until the completion of certain events related to installation and
process validation. These unbilled amounts have increased from
$4.5 million at October 31, 1996 to $11.7 million at April 30,
1997. This increase is a result of an increase in the level of sales
activity and the granting of extended billing terms on certain sales.
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 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.
Litigation
The Company has filed complaints alleging infringement and
contributory infringement of one or more of its patents in Chancery
court in Delaware, naming two competitors and certain users of
equipment manufactured and sold by those parties. The complaints
seek compensatory damages in unspecified amounts and costs and
expenses relating to the complaints, including reasonable
attorneys' fees. The Company has been notified that an action was
filed against it by another competitor in the United States
District Court for the Northern District of California, San Jose
Division seeking declaratory judgment of patent noninfringement and
invalidity of one of the Company's patents. The Company has been
prosecuting these lawsuits vigorously and intends to continue to
vigorously prosecute and defend such actions with regard to these
litigants and any other parties whose actions may threaten to
expropriate the intellectual property of the Company.
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
Registrant filed a report on Form 8-A on
April 25, 1997 announcing the
adoption of a shareholders rights plan.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
4 Form of Common Stock Certificate
10.1 Amended and Restated CFM Technologies, Inc. 1995
Incentive Plan
10.2 Amended and Restated CFM Technologies, Inc. Non-Employee
Directors' Option Plan
11 Statement re: computation of earnings per common share
27 Financial Data Schedule
(b) Reports on Form 8-K
Registrant filed a current report on Form
8-K on April 25, 1997 with respect to the
filing of a stockholders' rights plan.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: June 12, 1997
CFM Technologies, Inc.
(Registrant)
By: \s\ Roger A. Carolin
Roger A. Carolin
Chief Executive Officer
By: \s\ Lorin J. Randall
Lorin J. Randall
Chief Financial Officer
EXHIBIT INDEX
Exhibit
4 Form of Common Stock Certificate.
10.1 Amended and Restated CFM Technologies,
Inc. 1995 Incentive Plan.
10.2 Amended and Restated CFM Technologies,
Inc. Non-Employee Directors' Option Plan.
11 Statement re: computation of per share
earnings.
27 Financial Data Schedule.
EXHIBIT 4
FORM OF COMMON STOCK CERTIFICATE
NUMBER SHARES
CFM
CFM TECHNOLOGIES, INC.
INCORPORATED UNDER THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA
COMMON STOCK CUSIP 12525K 10 6
WITHOUT PAR VALUE
THIS CERTIFIES THAT
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES, WITHOUT PAR VALUE, OF THE
COMMON STOCK OF CFM TECHNOLOGIES, INC.
transferable on the books of the Company by the holder hereof in
person or by duly authorized attorney, upon surrender of this
certificate properly endorsed. This certificate is not valid
unless countersigned by the Transfer Agent.
The Company will furnish to any shareholder upon request and
without charge, a full or summary statement of the designations,
voting rights, preferences, limitations and special rights of the
shares of each class authorized to be issued.
IN WITNESS WHEREOF, the Company has caused this certificate
to be signed by its duly authorized officers by use of their
facsimile signatures and its facsimile seal to be hereunto
affixed.
Dated
Lorin J. Randall Roger A. Carolin
Secretary of the Company President of the Company
Countersigned
AMERICAN STOCK TRANSFER & TRUST COMPANY
(New York, NY) Transfer Agent,
By
Authorized Signature
[corporate seal appears here]
- -----------------------------------------------------------------
The following abbreviations, when used in the inscription on
the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or
regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not
as tenants in common
UNIF GIFT MIN ACT - _________ Custodian __________ under Uniform
(Cust) (Minor)
Gifts to Minors Act __________________
(State)
Additional abbreviations may also be used though not in the above
list.
For value received, _______________ hereby sell, assign and
transfer unto ___________________________________________________
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE
_________________________________________________________________
Please print or typewrite name and address (including postal zip
code) of assignee
_________________________________________________________________
_________________________________________________________________
__________________________________________________________ Shares
of the Common Stock represented by the within Certificate, and do
hereby irrevocably constitute and appoint _______________________
_________________________________________________________________
Attorney to transfer the said stock on the books of the within-
named Company with full power of substitution in the premises.
Dated,____________________
___________________________________
NOTICE: The signature to this assignment must correspond with
the name as written upon the face of the Certificate, in every
particular, without alteration or enlargement, or any change
whatever.
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between CFM
Technologies, Inc. (the Company") and American Stock Transfer &
Trust Company, as Rights Agent, dated as of April 24, 1997 as the
same may be amended from time to time (the "Rights Agreement"),
the terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal executive offices
of the Company. Under certain circumstances, as set forth in the
Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate.
The Company will mail to the holder of this certificate a copy of
the Rights Agreement without charge after receipt of a written
request therefor. Under certain circumstances, as set forth in
the Rights Agreement, Rights owned by or transferred to any
Person who is or becomes an Acquiring Person (as defined in the
Rights Agreement) and certain transferees will become null and
void and will no longer be transferable.
EXHIBIT 11
CFM TECHNOLOGIES, INC.
EARNINGS PER COMMON SHARE
(Amounts in thousands,
except share and per share data)
(unaudited)
Three Months Ended Six Months Ended
April 30, April 30,
------------------ -----------------
1997 1996 1997 1996
--------- -------- -------- -------
Net income $ 1,980 $ 625 $ 3,354 $ 1,351
======== ======== ======== =======
Average number of common shares
outstanding 7,460 3,803 6,745 3,803
Adjustment for assumed conversion
of stock options 504 168 429 168
Adjustment for cheap stock
(treasury method) 23 23
-------- -------- -------- ------
Average number of common
shares outstand 7,964 3,994 7,174 3,994
======== ======== ======== ======
Earnings per common share $ 0.25 $ 0.16 $ 0.47 $ 0.34
======== ======== ======== ======
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<PERIOD-END> APR-30-1997
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</TABLE>
CFM TECHNOLOGIES, INC.
AMENDED AND RESTATED
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 1936, as
amended.
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.
2.15 "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;
(c) to determine the number of shares of Common
Stock to be covered by each Award granted hereunder; and
(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
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 1,000,000
(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.
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
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.
(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
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
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
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.
.32
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
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
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.
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.
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.
AMENDED AND RESTATED
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.
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.
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, and Stock Options for 200 shares of Common Stock with
respect to each committee of the Board of Directors on which an
Eligible Director serves, 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
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.
(c) Option Term. The term of each Stock Option
shall be ten years from 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.
(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
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
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
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.
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.
