As filed with the Securities and Exchange Commission On August 28, 1997
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
_____________
CFM TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 3559 23-2786977
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(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification
incorporation Classification No.)
or organization) Code Number)
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 to:
Justin P. Klein, Esq.
Steven J. Feder, Esq.
Ballard Spahr Andrews & Ingersoll
1735 Market Street, 51st Floor
Philadelphia, Pennsylvania 19103
(215) 665-8500
____________________
Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box:
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, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box: X
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 Rule462(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
434, please check the following box.
____________________________
CALCULATION OF REGISTRATION FEE
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Title of each class Amount to be registered Proposed maximum
of securities to be offering per share(1)
registered
Common Stock 205,583 Shares $30.0625
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Proposed maximum Amount of registration
aggregate fee(1)
offering price(1)
$6,180,338.94 $1,872.83
(1) Calculated in accordance with Rule 457(c) on the basis of the average
of the high and low sale prices of the Registrant's Common Stock on August
26, 1997 as reported on the Nasdaq Stock Market.
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, as amended, or until this
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
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Information contained herin 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, DATED AUGUST 28, 1997
PROSPECTUS
205,583 Shares
CFM TECHNOLOGIES, INC.
Common Stock
(no par value per share)
This Prospectus relates to 205,583 shares of common stock,
no par value per share ("Common Stock"), of CFM Technologies,
Inc., a Pennsylvania corporation ("CFM" or the "Company"), which
are being offered for sale from time to time by certain
shareholders of the Company (the "Selling Shareholders"). See
"Plan of Distribution."
The Company will not receive any of the proceeds from the
sale of the shares of Common Stock being offered hereby (the
"Shares"). The Shares have been, or will be, acquired from the
Company by the Selling Shareholders pursuant to the exercise of
certain stock option agreements (the "Options") for which the
Company will receive payment of the exercise price for the
Options. The Selling Shareholders directly, through agents
designated from time to time, or through brokers, dealers or
underwriters to be designated, may sell the Shares from time to
time on terms to be determined at the time of sale. To the
extent required, the specific number of Shares to be sold, the
purchase price and public offering price, the names of any such
agent, broker, dealer or underwriter, and any applicable
commission or discount with respect to the particular offer will
be set forth in a supplement to this Prospectus.
The expenses of registration of the Shares under the
Securities Act of 1933, as amended (the "Securities Act"), will
be paid by the Company. The Selling Shareholders will, however,
bear the expense of any transfer taxes and underwriting discounts
and commissions applicable to the Shares sold by them. The Company
and the Selling Shareholders have agreed to indemnify each other
against certain liabilities under the Securities Act.
The Selling Shareholders and any brokers, dealers, agents or
underwriters that participate with the Selling Shareholders in
the distribution of Shares may be deemed to be "underwriters"
within the meaning of the Securities Act, and any commissions
received by them and any profits on the resale of the Shares
purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
The Common Stock is traded on the Nasdaq Stock Market under
the symbol "CFMT." On August __, 1997, the last reported sale
price of the Common Stock was $__ per share.
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE
DISCUSSION UNDER "RISK FACTORS" BEGINNING ON PAGE 6 OF THIS
PROSPECTUS.
_____________________________________________
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.
The date of this Prospectus is August __, 1997.
No dealer, salesman or other person has been authorized to
give any information or to make any representation not contained
in or incorporated by reference in this Prospectus and, if given
or made, such information or representation must not be relied
upon as having been authorized by the Company or any other
person. This Prospectus does not constitute an offer to sell or
a solicitation of an offer to buy any of the securities offered
hereby in any jurisdiction to any person to whom it is unlawful
to make such an offer in such jurisdiction. Neither the delivery
of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that the information herein
is correct as of any time subsequent to the date hereof or that
there has been no change in the affairs of the Company since such
date.
__________________
TABLE OF CONTENTS
__________________
Page
AVAILABLE INFORMATION 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 3
PROSPECTUS SUMMARY 4
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 6
RISK FACTORS 6
USE OF PROCEEDS 14
DIVIDEND POLICY 14
DESCRIPTION OF CAPITAL STOCK 15
SHARES ELIGIBLE FOR FUTURE SALE 16
RECENT DEVELOPMENTS 17
SELLING SHAREHOLDERS 17
PLAN OF DISTRIBUTION 20
LEGAL MATTERS 22
EXPERTS 22
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange
Commission (the "Commission") in Washington, D.C. a Registration
Statement on Form S-3 under the Securities Act with respect to
the Shares. This Prospectus, which constitutes part of the
Registration Statement, omits certain of the information
contained in the Registration Statement and the exhibits and
schedules thereto on file with the Commission pursuant to the
Securities Act and the rules and regulations of the Commission
thereunder. Statements contained in this Prospectus as to the
contents of any contract or other document referred to are not
necessarily complete and in each instance reference is made to
the copy of such contract or other document filed as an exhibit
to the Registration Statement, and each such statement is
qualified in all respects by such reference. The Company is
subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements,
information statements and other information with the Commission.
Such reports, proxy statement, information statements and other
information may be inspected and copied at the public reference
facilities maintained by the Commission at its office at
Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, as well as at the Regional Offices of the Commission
at Citicorp Center, 500 West Madison Avenue, Suite 1400, Chicago,
Illinois 60661 and Seven World Trade Center, Suite 1300, New
York, New York 10048. Copies of such material can also be
obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates, or from the Commission's internet web site at
http://www.sec.gov. Shares of the Common Stock are traded on the
Nasdaq Stock Market. Such reports, proxy statement, information
statements and other information can also be inspected and copied
at the offices of the Nasdaq Stock Market, 1735 K Street, N.W.,
Washington, D.C. 20006.
As used in this Prospectus all references to fiscal years
refer to the Company's fiscal years ended on October 31.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the
Commission pursuant to the Exchange Act (File No. 0-27498) are
incorporated herein by reference:
(i) the Company's Annual Report on Form 10-K
for the fiscal year ended October 31, 1996;
(ii) the Company's Proxy Statement, dated
February 13, 1997, for the annual meeting of
shareholders held on March 11, 1997;
(iii) the Company's Quarterly Report on Form
10-Q for the quarter ended January 31, 1997, as
amended by Form 10-Q/A, filed June 2, 1997
(iv) the Company's Quarterly Report on Form
10-Q for the quarter ended April 30, 1997; and
(v) the Company's Current Report on Form 8-K
dated April 25, 1997.
All other documents and reports filed by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange
Act, prior to the termination of the offering made hereby, shall
be deemed to be incorporated by reference and to be a part of
this Prospectus from the date of filing of such documents. Any
statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any subsequently filed
document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus
is delivered, upon oral or written request of any such person, a
copy of any or all of the information incorporated herein by
reference, other than the exhibits to such documents (unless such
exhibits are specifically incorporated by reference into the
information that this Prospectus incorporates). Requests should
be directed to Lorin J. Randall, Vice President, Chief Financial
Officer, Treasurer and Secretary of CFM Technologies, Inc., 1336
Enterprise Drive, West Chester, Pennsylvania 19380, telephone
(610) 696-8300.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the
more detailed information appearing elsewhere in this Prospectus
and the documents incorporated herein by reference. All
references in this Prospectus to fiscal years refer to the
Company's fiscal years ended on October 31.
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.
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. Similar trends characterize the market
for the FPD industry. Manufacturers of FPDs are focused on
equipment that can help to achieve higher resolutions, lower
power consumption, improved brightness and clearer images.
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 90 Full-Flow systems to more than 25 semiconductor and
FPD manufacturers. The Company's customers include: GEC Plessey,
LG International (America) and related entities ("LG"), Motorola,
National Semiconductor, Samsung, SGS-Thomson Microelectronics,
Siemens, Texas Instruments and Tower Semiconductor. Full-Flow
systems can currently be configured with either one or two
vessels that are capable of processing either 50 or 100 5-inch, 6-
inch or 8-inch wafers each. 100-wafer systems, which the Company
began to ship in April 1996, address the cost-sensitive
photoresist strip market as well as other wet processing
applications. In addition, the Company believes its Full-Flow
technology is 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 ten FPD processing systems
based on its Full-Flow platform. In addition, the Company
received a $16.1 million order for six FPD Systems from LG in the
first quarter of fiscal 1997 and has commenced delivery of these
systems.
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.
The Offering
Common Stock outstanding as of July 21, 1997(1) 7,881,589 shares
Shares offered by the Selling Shareholders(2) 205,583 shares
Common Stock to be outstanding assuming the sale
of all of the Shares(3) 8,087,172 shares
Nasdaq Stock Market symbol CFMT
(1) Excludes 1,042,377 shares of Common Stock issuable upon the
exercise of outstanding stock options as of July 21, 1997 of
which options to purchase 492,667 shares of Common Stock
were then exercisable. See "Shares Eligible for Future
Sale."
(2) The Shares offered hereby may be acquired from the Company
by the Selling Shareholders upon the exercise of the
Options. See "Selling Shareholders."
(3) Assumes the exercise of the Options. Excludes 836,794
shares of Common Stock issuable upon the exercise of the
remaining outstanding stock options as of July 21, 1997 of
which options to purchase 287,084 shares of Common Stock
were then exercisable. See "Selling Shareholders" and
"Shares Eligible for Future Sale."
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements in this Prospectus including those concerning the
Company's expectations of future sales, gross profits, research,
development and engineering expenses, selling, general and
administrative expenses, product introductions and cash
requirements include certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. As such, actual results may vary materially from such
expectations. Factors which could cause actual results to differ
from expectations include variations in the level of orders,
which can be affected by general economic conditions and growth
rates in the semiconductor and FPD manufacturing industries, and
in the markets served by the Company's customers, international
economic and political climates, difficulties or delays in
product functionality or performance, the delivery performance of
sole source vendors, the timing of future product releases,
failure to respond adequately to either changes in technology or
customer preferences, changes in pricing by the Company or its
competitors, ability to manage growth, risk of nonpayment of
accounts receivable, changes in budgeted costs and failure to
realize a successful outcome to pending patent litigation, all of
which constitute significant risks. For a description of
additional risks, see "Risk Factors" beginning on this page.
There can be no assurance that the Company's results of
operations will not be adversely affected by one or more of these
factors.
RISK FACTORS
In addition to other information in this Prospectus, the
following factors should be considered carefully in evaluating an
investment in the Common Stock.
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 approximately $0.9
million to $3.2 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 of even one system in 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 and FPDs; variations in the types 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 and adversely
affected.
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 from
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 and FPD
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 and FPD manufacturers to install and integrate
capital equipment into production lines, these manufacturers will
tend to choose 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 and FPD
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 and substrate size. Thus, there can
be no assurance that the Company's products will achieve broad
market acceptance.
Customer Concentration
Historically, relatively few customers have accounted for a
substantial portion of the Company's net sales. Sales to LG,
IBM, SGS-Thompson Microelectronics and Motorola accounted for
approximately 29.1%, 25.3%, 19.0% and 10.8%, respectively,
totalling 84.2% of net sales in fiscal 1996. In the first six
months of fiscal 1997, sales to ProMos Technologies, IBM, Siemens
and Macronix accounted for approximately 16.5%, 16.3%, 14.0% and
12.9%, respectively, totalling 59.7% of net sales for such
period. 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 canceled 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.
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 and 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 or at all. Any
inability to obtain adequate deliveries of components and
subassemblies that conform to the Company's reliability and
quality requirements or any other circumstance that would require
the Company to seek alternate 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.
Dependence on Limited Product Offerings
To date, the Company's net sales have consisted primarily of
sales to the semiconductor industry. The Company has developed a
version of its Full-Flow system for use in FPD manufacturing.
While sales of Full-Flow systems for FPD applications have became
increasingly significant, there can be no assurance that the
Company will be successful in maintaining or expanding these
product sales. 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.
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. In order to 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 introduction 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 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 and 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.
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 significantly
increased its operations to support increased revenues, including
the hiring of additional personnel, and has made and expects to
continue to make substantial investments in research, development
and engineering and in sales and marketing to support product
development. 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 Company has
recently leased an additional facility and anticipates that
additional manufacturing capacity may be required. The need to
acquire additional remote facilities could be disruptive and
could have a material adverse effect on the Company.
Dependence upon Personnel
The success of the Company depends to a large extent upon
the efforts of key managerial and technical employees. The loss
of 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.
In addition, 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 recruiting, training, integrating and retaining
the necessary personnel to support its anticipated growth. The
failure to do so could have a material adverse effect on the
Company's results of operations.
Lengthy Sales Cycle
Sales of the Company's systems depend upon the decision of a
prospective customer either to increase manufacturing capacity or
change its established manufacturing process. These decisions
typically involve significant capital commitments or a change in
process approach, which may require the approval of senior
management. 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.
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 late 1995 and in 1996, a number of
semiconductor manufacturers 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 addition, certain
market analysts project an overall reduction in expenditures for
semiconductor capital equipment in 1997. 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 and adversely affected if
downturns or slowdowns in the semiconductor or FPD markets occur
in the future.
International Sales
Sales to customers located outside the United States
accounted for approximately 63.1% of the Company's net sales in
fiscal 1996 and approximately 61.1% of the Company's net sales
for the first six months of fiscal 1997. The Company anticipates
that such 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 rate fluctuations, 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 has entered into a sales agency
agreement with ANAM Technology America,Inc. ("ANAM") in Korea
(since 1996 with ANAM and 1991 with an affiliate of ANAM), a
distribution agreement with Innotech Corporation ("Innotech") in
Japan in 1992 and a sales representation agreement with Ampoc Far
East Company Limited ("AMPOC") in Taiwan in 1996. Although
management believes that it maintains good relationships with
ANAM, Innotech and AMPOC, 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 international sales
could be adversely affected. Although the Company's sales are
predominantly denominated in United States dollars, to the extent
that the Company expands its international operations or changes
its pricing to denominate prices in international currencies, the
Company will be exposed to increased risk 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.
Highly Competitive Industry
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, as well as customer 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 service
and support resources than the Company. In the semiconductor wet
processing market, the Company competes primarily with Dainippon
Screen, FSI International, SCP Global Technologies, 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 and adversely
affect the Company's business and results of operations.
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 has 36 issued patents, patent applications
awaiting notice of final issuance, pending and/or under
evaluation in the United States 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 encompass use of
the defendants' products or that the subject patent will not be
found to be unenforceable or invalid during prosecution of the
actions. The Company is also a defendant in a lawsuit which
seeks a declaratory judgment of patent noninfringement and
invalidity of one of the Company's patents. There can be no
assurances that the Company will prevail in either of these
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 or future 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 cases, 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 clams will
not be asserted in the future, nor can there be any assurance, if
such clams are made, that the Company will be able to defend such
claims successfully or, if necessary, obtain licenses on
reasonable terms or at all. 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.
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. Failure to so
comply with applicable environmental requirements could result in
substantial liability to the Company, 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, any of which
could have a material adverse effect on the Company.
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.
In April 1997, the Company adopted a shareholder rights plan, as
a result of which rights were issued which will become
exercisable only in the event, with certain exceptions, an
acquiring party accumulates, or announces an offer to acquire,
20% or more of the Company's Common Stock. While not intended to
prevent a takeover of the Company, the shareholder rights plan is
designed to compel a potential acquiror to negotiate with the
Company's Board of Directors. 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."
Continued Existence of a Control Group
Assuming exercise of all of the Options and sale of the
shares of Common Stock received thereupon by the Selling
Stockholders, 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 15.5%
and 18.1%, respectively, of the Common Stock. Existing
management will hold sufficient voting power to enable it to
continue to exert significant influence over 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.
Volatility of Stock 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 companies, 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.
There can be no assurance that the market price of the Common
Stock of the Company will not decline.
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. Following completion of this offering, assuming exercise
of all of the Options, 8,087,172 shares of Common Stock will be
outstanding. Of these shares, 4,283,909 have been sold pursuant
to registration statements filed under the Securities Act.
Substantially all of the balance of such outstanding shares may
be sold or may have been sold in the open market pursuant to the
provisions of Rule 144 under the Securities Act. Under Rule 144
as currently in effect, these shares may be sold subject to
volume limitations and certain other conditions imposed under
such rule. 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.
USE OF PROCEEDS
The net proceeds from the sale of the Common Stock will be
received by the Selling Shareholders. The Company will not
receive any of the proceeds from the sale of the Shares. The
Company will receive, upon exercise of the Options, payment of
the exercise price of the Options aggregating $648,962. See
"Selling Shareholders."
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. The
declaration of any future dividends by the Company is within the
discretion of the Board of Directors and will be dependent upon
the earnings, financial condition and capital requirements of the
Company, as well as any other factors deemed relevant by the
Board of Directors.
DESCRIPTION OF CAPITAL STOCK
Following the amendment of its Articles of Incorporation in
April 1997, the Company's authorized capital stock consists of
30,000,000 shares of Common Stock, no par value per share, and
1,000,000 shares of Preferred Stock, no par value per share. As
of July 21, 1997, 7,881,589 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
hereto. See "Recent Developments."
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.
Shareholder Rights Plan
On April 24, 1997, the Company adopted a shareholder rights
plan, providing for a dividend distribution of one right for each
share of the Company's Common Stock to holders as of the close of
business on May 9, 1997. The rights will become exercisable only
in the event, with certain exceptions, an acquiring party
accumulates, or announces an offer to acquire, 20% or more of the
Company's Common Stock. The rights will expire on April 24,
2007. Each right will entitle the holder to buy one-hundredth of
a share of a new series of preferred stock at a price of $180.
In addition, upon the occurrence of certain events, holders of
the rights will be entitled to purchase either the Company's
Common Stock or shares in an acquiring entity at half of market
value. The Company will generally be entitled to redeem the
rights at $.001 per right at any time until the tenth day
following the acquisition of 20% of its Common Stock. While not
intended to prevent a takeover of the Company, the shareholder
rights plan is designed to compel a potential acquiror to
negotiate with the Company's Board of Directors.
Transfer Agent and Registrar
The transfer agent and registrar for the Common Stock is
American Stock Transfer & Trust Company.
SHARES ELIGIBLE FOR FUTURE SALE
Following completion of this offering, assuming exercise of
all of the Options, 8,087,172 shares of Common Stock will be
outstanding. Of these shares, 4,283,909 have been sold pursuant
to registration statements filed under the Securities Act.
Substantially all of the balance of such outstanding shares may
be sold in the open market pursuant to the provisions of Rule 144
under the Securities Act. Under Rule 144 as currently in effect,
these restricted securities are eligible for public sale 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 one
year, 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 two year holding period requirement.
An aggregate of 1,563,123 shares of Common Stock are
reserved for issuance under the Company's stock option plans and
pursuant to certain other stock options not granted under plans
(including the Options). In addition, 293,789 shares of Common
Stock are reserved for issuance under the Company's Employee
Stock Purchase Plan and 150,000 shares of Common Stock are
reserved for issuance under the Company's Non-Employee Directors'
Stock Option Plan.
RECENT DEVELOPMENTS
Increase in Authorized Capital
At the annual meeting of the Company's shareholders held on
March 11, 1997, the shareholders of the Company approved an
amendment to the Company's Articles of Incorporation to increase
the authorized number of shares of Common Stock from 10,000,000
to 30,000,000. The amendment to the Articles of Incorporation
became effective on April 16, 1997.
Adoption of Shareholder Rights Plan
On April 24, 1997, the Company adopted a shareholder rights
plan, providing for a dividend distribution of one right for each
share of the Company's Common Stock to holders as of the close of
business on May 9, 1997. The rights will become exercisable only
in the event, with certain exceptions, an acquiring party
accumulates, or announces an offer to acquire, 20% or more of the
Company's Common Stock. The rights will expire on April 24,
2007. Each right will entitle the holder to buy one one-
hundredth of a share of a new series of preferred stock at a
price of $180. In addition, upon the occurrence of certain
events, holders of the rights will be entitled to purchase either
the Company's Common Stock or shares in an acquiring entity at
half of market value. The Company will generally be entitled to
redeem the rights at $.001 per right at any time until the tenth
day following the acquisition of 20% of its Common Stock. While
not intended to prevent a takeover of the Company, the
shareholder rights plan is designed to compel a potential
acquiror to negotiate with the Company's Board of Directors.
SELLING SHAREHOLDERS
The Shares being offered by the Selling Shareholders have
been, or may be, acquired by certain employees, directors and
former directors of the Company upon the exercise of the Options.
The Options
The table below indicates with respect to each of the
Options, the date of grant, number of shares of Common Stock
subject to the grant the exercise price and the expiration date.
All of the Options are presently exercisable.
Shares of
Common
Stock
Date of Underlying Exercise Expiration
Name Grant Options Options Date
------- ------- ------- -------
Roger A. Carolin(1) 3/28/91 159,664 $2.40 3/31/01
Milton S.Stearns,Jr.(2) 12/9/94 3,326 7.52 12/8/04
11/3/95 8,317 7.52 11/2/05
Burton E. 3/18/91 8,317 2.40 3/17/01
McGillivray(3) 6/11/93 2,488 2.40 6/10/03
9/25/94 14,144 7.52 9/24/04
Kevin Durr(4) 12/31/90 3,327 .24 12/31/97
John N. McConnell, Sr.(5) 3/3/96 3,000 7.52 3/31/06
Vincent L. Verdiani(6) 3/3/96 3,000 7.52 3/31/06
(1) The options indicated were granted pursuant to an agreement
between the Company and Mr. Carolin entered into in
connection with his compensation as President and Chief
Executive Officer of the Company. The agreement provided
for options to purchase 159,664 shares (post-split) at an
exercise price of $2.40 per share (post-split). The split
refers to the 3.326-for-1 common stock split effected on
June 16, 1996.
(2) The options indicated were granted pursuant to an agreement
between the Company and Mr. Stearns as part of his
compensation for serving as a member of the Company's Board
of Directors.
(3) The options indicated were granted pursuant to an agreement
between the Company and Mr. McGillivray as part of his
compensation for serving as a member of the Company's Board
of Directors.
(4) The options indicated were granted pursuant to an agreement
between the Company and Mr. Durr as part of his compensation
as an employee of the Company. The agreement provided for
options to purchase an aggregate of approximately 16,632
shares (post-split) at an exercise price of $.24 per share
(post-split) becoming exercisable in installments over a
period of five years. Mr. Durr has heretofore exercised a
portion of such options, with the balance remaining
indicated above.
(5) The options indicated were granted pursuant to an agreement
between the Company and Mr. McConnell in connection with his
retirement from the Company's Board of Directors and
appointment as an Honorary Lifetime Director of the Company.
The agreement provides for options to purchase 3,000 shares
(post-split) at an exercise price of $7.52 per share (post-
split).
(6) The options indicated were granted pursuant to an agreement
between the Company and Mr. Verdiani in connection with his
retirement from the Company's Board of Directors and
appointment as an Honorary Lifetime Director of the Company.
The agreement provides for options to purchase 3,000 shares
(post-split) at an exercise price of $7.52 per share (post-
split).
Security Ownership and Shares Offered
The table below sets forth the name of each of the Selling
Shareholders, the number of shares of Common Stock owned by each
Selling Shareholder and the number of shares that may be sold
pursuant to this Prospectus. The following table is based upon
information furnished to the Company by the Selling Shareholders.
Shares Shares
Beneficially Beneficially
Owned Prior to Owned After the
Offering(1)(2) Offering(1)(2)(3)
--------------- -----------------
Shares
Name* Number Percent Offered Number Percent
- ------------------------- ------- ------- -------- ------ -------
Roger A. Carolin(4) 179,928 2.23% 159,664 20,264 **
Milton S Stearns,Jr.(5) 40,843 ** 11,643 29,200 **
Burton E. cGillivray(6) 53,897 ** 24,949 28,948 **
Kevin Durr(7) 4,827 ** 3,327 1,500 **
John N. McConnell, Sr.(8) 237,135 3.01% 3,000 234,135 2.97%
Vincent L. Verdiani(9) 28,623 ** 3,000 25,623 **
-------
TOTAL SHARES OFFERED 205,583
________________
* 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 below, the persons named in the
table have sole voting and investment power with respect to
all shares beneficially owned.
(2) Based on 7,881,589 shares outstanding as of July 21, 1997
and 8,087,172 shares to be outstanding after this offering,
except that shares underlying options (including the
Options) exercisable within 60 days are deemed to be
outstanding for purposes of calculating the percentage owned
by the holder of such options (including the Options).
(3) Assumes that all of the Shares are sold.
(4) Consists of exercisable options to purchase 179,928 shares
(including Options to purchase 159,664 shares). Mr. Carolin
disclaims beneficial ownership of 56,159 shares owned by his
wife, Helena Carolin.
(5) Includes 4,000 shares held in a trust of which Mr. Stearns
is trustee and exercisable Options to purchase 11,643
shares.
(6) Includes 16,632 shares owned jointly with Mr. McGillivray's
spouse and exercisable Options to purchase 24,949 shares.
(7) Includes exercisable Options to purchase 3,327 shares.
(8) Includes 14,211 shares owned jointly with Mr. McConnell's
spouse, 219,924 shares held in trust for Mr. McConnell's
children and exercisable Options to purchase 3,000 shares.
(9) Includes 23,711 shares owned jointly with Mr. Verdiani's
spouse and exercisable Options to purchase 3,000 shares.
Relationships Between the Company and the Selling Shareholders
Roger A. Carolin has served the Company as a director since
its inception in 1984 and as President and Chief Executive
Officer since April 1991.
Milton S. Stearns, Jr. has been a director of the Company
since December 1994.
Burton E. McGillivray has been a director of the Company
since 1990.
Kevin Durr has been employed by the Company since November
1988 and currently serves as an Account Executive.
John N. McConnell, Sr. served the Company as a Director from
its inception in 1984 until March, 1996 and has been an Honorary
Lifetime Director of the Company since March 1996. John N.
McConnell, Sr. is the father of Christopher F. McConnell, a
founder of the Company and currently the chairman of the Board of
Directors of the Company. Honorary Lifetime Directors are not
elected by the Company's shareholders, do not receive any
compensation for their services as such and are not voting
members of the Board of Directors.
Vincent L. Verdiani served the Company as a Director from
1985 until March 1996 and has been an Honorary Lifetime Director
of the Company since March 1996.
PLAN OF DISTRIBUTION
The Company will not receive any of the proceeds of the sale
of the Shares by the Selling Shareholders. The Company will
receive, upon exercise of the Options, the exercise price for the
Options, aggregating $648,962. The Shares may be sold from time
to time to purchasers directly by the Selling Shareholder.
Alternatively, the Selling Shareholders may from time to time
offer the Shares through underwriters, brokers, dealers or agents
who may receive compensation in the form of underwriting
discounts, concessions or commissions from the Selling
Shareholders and/or the purchasers of the Shares for whom they
may act as agent. The Selling Shareholders and any such
underwriters, brokers, dealers or agents who participate in the
distribution of the Shares may be deemed to be "underwriters,"
and any profits on the sale of the Shares by them and any
discounts, commissions or concessions received by any such
underwriters, brokers, dealers or agents might be deemed to be
underwriting discounts and commissions under the Securities Act.
To the extent the Selling Shareholders may be deemed to be
underwriters, the Selling Shareholders may be subject to certain
statutory liabilities of the Securities Act, including, but not
limited to, Sections 11, 12 and 17 of the Securities Act and Rule
10b-5 under the Exchange Act.
Any distribution of the Shares by the Selling Shareholders
may be effected from time to time in one or more transactions at
fixed prices, at prevailing market prices at the time of sale, at
varying prices determined at the time of sale or at negotiated
prices. The Shares may be sold by one or more of the following
methods without limitation: (i) to underwriters who will acquire
Shares for their own account and resell them in one or more
transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the time
of sale (any public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be
changed from time to time); (ii) a block trade in which the
broker or dealer so engaged will attempt to sell the Shares as
agent but may position and resell a portion of the block as
principal to facilitate the transaction; (iii) purchases by a
broker or dealer as principal and resale by such broker or dealer
for its own account pursuant to this Prospectus; (iv) ordinary
brokerage transactions and transactions in which the broker
solicits purchasers; (v) an exchange distribution in accordance
with the rules of such exchange; (vi) face-to-face transactions
between sellers and purchasers without a broker or dealer; (vii)
through the writing of options; and (viii) other legally
available means. In addition, the Shares may be sold in private
transactions or under Rule 144 rather than pursuant to this
Prospectus.
There is no assurance that the Selling Shareholders will
sell any or all of the Shares or that any of the Selling
Shareholders will not transfer, devise or gift such Shares by
other means not described herein.
Underwriters participating in any offering made pursuant to
this Prospectus (as amended or supplemented from time to time)
may receive underwriting discounts and commissions, and discounts
or concessions may be allowed or reallowed or paid to dealers,
and brokers or agents participating in such transaction may
receive brokerage or agent's commissions or fees.
At the time a particular offering of Shares is made, to the
extent required, a revised Prospectus or Prospectus Supplement
will be distributed which will set forth the amount of Shares
being offered and the terms of the offering, including the
purchase price or public offering price, the name or names of any
underwriters, brokers, dealers or agents, the purchase price paid
by any underwriter for Shares purchased from the Selling
Shareholders, any discounts, commissions and other items
constituting compensation from the Selling Shareholders and any
discounts, commissions or concessions allowed or reallowed or
paid to dealers. Such revised Prospectus or Prospectus
Supplement and, if necessary, a post-effective amendment to the
registration statement of which this Prospectus is a part, will
be filed with the Commission to reflect the disclosure of
additional information with respect to the distribution of the
Shares.
The Selling Shareholders and any other person participating
in such distribution will be subject to applicable provisions of
the Exchange Act and the rules and regulations thereunder,
including, without limitation, Regulation M (promulgated under
the Exchange Act), which may limit the timing of purchases and
sales of any of the Shares by the Selling Shareholders and any
other such person. Furthermore, under Regulation M, any person
engaged in the distribution of the Shares may not simultaneously
engage in market-making activities with respect to the Common
Stock for a specified period of time prior to the commencement of
such distribution. All of the foregoing may affect the
marketability of the Shares and the ability of any person or
entity to engage in market-making activities with respect to the
Common Stock.
In order to comply with the securities laws of certain
states, if applicable, the Shares will be sold in such
jurisdictions, if required, only through registered or licensed
brokers or dealers.
The Company has agreed that all costs, expenses and fees in
connection with the registration of the Shares will be borne by
the Company. The Selling Shareholders will, however, bear the
expense of any transfer taxes and underwriting discounts and
commissions applicable to the Shares sold by it. The Selling
Shareholders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales
of the Shares against certain liabilities, including liabilities
arising under the Securities Act. The Company and the Selling
Shareholders have agreed to indemnify each other against certain
liabilities under the Securities Act.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed
upon for the Company by Ballard Spahr Andrews & Ingersoll,
Philadelphia, Pennsylvania.
EXPERTS
The consolidated balance sheets as of October 31, 1995 and
1996 and the consolidated statements of income, shareholders'
equity and cash flows for each of the three fiscal years in the
period ended October 31, 1996, incorporated by reference in this
Prospectus have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect
thereto, included in the Annual Report on Form 10-K for the
fiscal year ended October 31, 1996.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following is a list of the estimated expenses to be
incurred by the Registrant in connection with the issuance and
distribution of the Shares being registered hereby which shall be
borne by the Company. All of the expenses listed below, except
the Securities and Exchange Commission Registration Fee,
represent estimates only.
SEC Registration Fee $ 1,872.83
Accountants' Fees and Expenses $ 3,500.00*
Legal Fees and Expenses $11,000.00*
Miscellaneous Fees and Expenses $ 500.00*
----------
TOTAL $16,872.83*
*Estimated
Item 15. 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 Company to indemnify its directors and officers to
the fullest extent permitted by Pennsylvania law. In addition,
the Company maintains directors and officers liability insurance.
Item 16. Exhibits.
Exhibit
Number Description
- ------- -----------
3.1 Articles of Incorporation, as amended
(incorporated by reference to Exhibit 3.1 to
Registration Statement on Form S-1, Reg. No. 333-
20325)
3.2 Articles of Amendment to Articles of
Incorporation, effective April 18, 1997
3.3 Statement with Respect to Shares, filed
May 1, 1997 (Incorporation by reference to
Exhibits 1 and 2 to the registration statement
on Form 8-A dated April 24, 1997.)
3.4 Amended and Restated Bylaws
(incorporated by reference to Exhibit 3.2 to
Registration Statement on Form S-1, Reg. No. 333-
20325)
4 Specimen copy of Common Stock
Certificate (incorporated by reference to Exhibit
4 to Registration Statement on Form S-1, Reg.
No. 333-20325)
5 Opinion of Ballard Spahr Andrews &
Ingersoll
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Ballard Spahr Andrews &
Ingersoll (contained in Exhibit 5)
24 Power of Attorney (included on signature
page of Registration Statement)
99.1 Option Agreement, dated March 28, 1991, between
CFM and Roger A. Carolin
Item 17. Undertakings.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment
to this Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933, as amended
(the "Act");
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the Registration Statement or any material change to such
information in the Registration Statement;
Provided, however, That paragraphs (A)(1)(i) and (A)(1)(ii)
do not apply if the Registration Statement is on Form S-3, Form
S-8 or Form F-3, and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), that are incorporated by reference
in the Registration Statement.
(2) That, for the purpose of determining any liability
under the Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Act, each filing
of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising
under the Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, 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.
D. The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under
the Act, 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
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 Act, 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
as amended, the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3
and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the Town of
West Chester, Commonwealth of Pennsylvania, on August28, 1997.
CFM TECHNOLOGIES, INC.
By: /s/ Roger A. Carolin
------------------------
Roger A. Carolin,
President and
Chief Executive Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Christopher F.
McConnell, Roger A. Carolin and Lorin J. Randall, and each or any one
of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this registration
statement, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or his or their
substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed by the following persons
in the capacities and on the date indicated.
Signature Title Date
- --------------- ----------------- ---------------
/s/Christopher F. McConnell Chairman of the August 28, 1997
- --------------------------- Board of Director
Christopher F. McConnell
/s/ Roger A. Carolin President, Chief August 28, 1997
- --------------------------- Executive Officer
Roger A. Carolin and Director
(Principal
Executive Officer)
/s/ Lorin J. Randall Vice President, August 28, 1997
- --------------------------- Chief Financial
Lorin J. Randall Officer, Treasurer
and Secretary
(Principal
Financial Officer)
/s/ James Kim Director August 28, 1997
- ---------------------------
James Kim
/s/ Brad Mattson Director August 28, 1997
- ---------------------------
Brad Mattson
/s/ Burton E. McGillivray Director August 28, 1997
- ---------------------------
Burton E. McGillivray
/s/ Milton S. Stearns, Jr. Director August 28, 1997
- ---------------------------
Milton S. Stearns, Jr.
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
3.1 Articles of Incorporation, as amended
(incorporated by reference to Exhibit 3.1 to
Registration Statement on Form S-1, Reg. No. 333-20325)
3.2 Articles of Amendment to Articles of
Incorporation, effective April 18, 1997
3.3 Statement with Respect to Shares, filed
May 1, 1997 (Incorporation by reference to
Exhibits 1 and 2 to the registration statement
on Form 8-A dated April 24, 1997.)
3.4 Amended and Restated Bylaws (incorporated by
reference to Exhibit 3.2 to Registration Statement on
Form S-1, Reg. No. 333-20325)
4 Specimen copy of Common Stock Certificate
(incorporated by reference to Exhibit 4 to Registration
Statement on Form S-1, Reg. No. 333-20325)
5 Opinion of Ballard Spahr Andrews & Ingersoll
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Ballard Spahr Andrews & Ingersoll
(contained in Exhibit 5)
24 Power of Attorney (included on signature page
of Registration Statement)
99.1 Option Agreement, dated March 28, 1991, between CFM and
Roger A. Carolin
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Form S-3 registration
statement of our report dated December 19, 1996 included in CFM
Technologies, Inc.'s Annual Report on Form 10-K for the year
ended October 31, 1996 and to all references to our firm included
in this registration statement.
Philadelphia, Pa.,
Arthur Andersen LLP
August 26, 1997
CFM Technologies, Inc.
March 28, 1991
Mr. Roger Carolin
CFM Technologies
1380 Enterprise Drive
West Chester, PA 19380
RE: CFM Technologies, Inc. (the "Company") Grant of Non-
qualified Stock Option
Dear Roger:
The Company is pleased to advise you that its Board has
granted to you a stock option (an "Option"), as provided below,
under the CFM Technologies, Inc. 1992 Employee Stock Option Plan
(the "Plan"), a copy of which is attached hereto. This option is
in lieu of the option granted in your March 28, 1991 letter and
agreed to by the Company.
1. Definitions. For the purposes of this Agreement, the
following terms shall have the meanings set forth below:
(a) "Board" shall mean the Board of Directors of the
Company.
(b) "Cause" shall mean (i) your theft or embezzlement,
or attempted theft or embezzlement, of money or property of the
Company, your perpetration or attempted perpetration of fraud, or
your participation in a fraud or attempted fraud, on the Company
or your unauthorized appropriation of, or your attempt to
misappropriate, any tangible or intangible assets or property of
the Company, (ii) any act or acts of disloyalty, misconduct or
moral turpitude by you injurious to the interest, property,
operations, business or reputation of the Company or your
conviction of a crime the commission of which results in injury
to the Company, or (iii) your failure or inability to carry out
effectively your duties and obligations to the Company or to
participate effectively and actively in the management of the
Company, as determined in the reasonable judgment of the Board.
(c) "Common Stock" shall mean the Company's Common
Stock, no par value per share, or, in the event that the
outstanding Common Stock is hereafter changed into or exchanged
for different stock or securities of the Company, such other
stock or securities.
(d) "Code" shall mean the Internal Revenue Code of
1986, as amended, and any successor statute.
(e) "Committee" shall mean the Executive Compensation
and Stock option Committee, or such other committee of the Board
which may be designated by the Board to administer the Plan. The
Committee shall be composed of two or more directors as appointed
from time to time to serve by the Board.
(f) "Company" shall mean CFM Technologies, Inc., a
Pennsylvania business corporation, and any subsidiary corporation
of CFM Technologies, Inc. as such term is defined in Section
425(f) of The Code.
(g) "Disability" shall mean your inability,due to
illness, accident, injury, physical or mental incapacity
or other disability, to carry out effectively your duties and
obligations to the Company or to participate effectively and
actively in the management of the Company for a period of at
least 90 consecutive days or for shorter periods aggregating at
least 120 days (whether or not consecutive) during any twelve-
month period, as determined in the reasonable judgment of the
Board.
(h) "Employment Period" shall mean the period of time
which you are employed by the Company.
(i) "Fair Market Value" of the Common Stock shall be
determined by the Committee or, in the absence of the Committee,
by the Board.
(j) "Option Shares" shall mean (i) all shares of
Common Stock issued or issuable upon the exercise of the option
and (ii) all shares of Common Stock issued with respect to the
Common Stock referred to in clause (i) above by way of stock
dividend or stock split or in connection with any conversion,
merger, consolidation or recapitalization or other reorganization
affecting the Common Stock. Option Shares will continue to be
Option Shares in the hands of any holder other than you (except
for the Company or the Founders Stockholders and, to the extent
that you are permitted to transfer Option Shares pursuant to
paragraph (14) or (16) hereof, purchasers pursuant to a public
offering under the Securities Act), and each such transferee
thereof will succeed to the rights and obligations of a holder of
option Shares hereunder.
(k) "Founders Stock" shall mean the Common Stock
subject to the Buy/Sell Agreement between the Company and certain
Shareholders dated 11/1/91, a copy of which is attached hereto.
(1) "Public Offering" means a public offering and sale
of Common Stock to the public pursuant to an effective
registration statement under the Securities Act.
(m) "Sale of the Company" shall mean a merger or
consolidation effecting a change in control of the Company, a
sale of all or substantially all of the Company's assets or a
sale of all of the Company's outstanding voting securities.
(n) "Securities Act" shall mean the Securities Act of
1933, as amended, and any successor statute.
(o) "Subsidiary" means with respect to any Person, any
corporation of which the shares of stock having a majority of the
general voting power in electing the board of directors are, at
the time as of which any determination is being made, owned by
such Person either directly or indirectly through Subsidiaries.
2. Option.
(a) Terms. Your Option is to purchase up to 48,000
shares of Common Stock (the "Option Shares") at an option price
per share of $8.00 (the "Exercise Price"), payable upon exercise
as set forth in paragraph 2(b) below. Your option will expire at
the close of business on the last day of the month which ends the
ten year period beginning with the date of this letter (the
"Expiration Date"), subject to earlier expiration in connection
with the termination of your employment or your death as provided
in paragraph 4(b) below. Your Option is intended to be an
"incentive stock option" within the meaning of section 422A of
the Code.
(b) Payment of Option Price.- Subject to paragraph 3
below, your Option may be exercised in whole or in part upon
payment of an amount (the "Option Price") equal to the product of
(i) the Exercise Price multiplied by (ii) the number of option
Shares to be acquired. Payment shall be made in cash (including
check, bank draft or money order) or, in the discretion of the
Committee, by delivery of a promissory note (if in accordance
with policies approved by the Board).
3. Exercisability Following Employment Termination. If
your employment with the Company terminates prior to the
Expiration Date for reasons other than Cause, your Option will be
fully exercisable as otherwise set forth in this Agreement except
that the Company shall have the absolute right in its discretion
to purchase your option within thirty days of the date your
employment terminates at a price per share which is equal to the
difference between the Exercise Price and the Fair Market Value
at the date that the Company exercises its right. If the Company
does not choose to exercise its right, the Employee may continue
to hold the option until the Expiration Date and, if the Employee
exercises the Option, the shares received shall be subject to the
same restrictions and rights of redemption to which the
shareholders who purchase shares pursuant to the private offering
dated March 28, 1989 are subject and entitled.
4. Expiration of Option. In no event shall any part of
your option be exercisable after the Expiration Date set forth in
paragraph 2(a) above.
5 Procedure for Exercise. You may exercise all or any
portion of your Option, at any time and from time to time prior
to its expiration, by delivering written notice to the Company
(to the attention of the Company' a Secretary) together with
payment of the Option Price in accordance with the provisions of
paragraph 2(b) above.
6. Securities Laws Restrictions and Other Restrictions on
Transfer of Option Shares. You represent that when you exercise
your option you will be purchasing Option Shares for your own
account and not on behalf of others. You understand and acknowl
edge that federal and state securities laws govern and restrict
your right to offer, sell or otherwise dispose of any Option
Shares unless your offer, sale or other disposition thereof is
registered under the Securities Act and state securities laws, or
in the opinion of the Company's counsel, such offer, sale or
other disposition is exempt from registration or qualification
thereunder. You agree that you will not offer, sell or otherwise
dispose of any Option Shares in any manner which would: (i)
require the Company to file any registration statement with the
Securities and Exchange Commission (or any similar filing under
state law) or to amend or supplement any such filing or (ii)
violate or cause the Company to violate the Securities Act, the
rules and regulations promulgated thereunder or any other state
or federal law. You further understand that the certificates for
any Option Shares you purchase will bear such legends as the
Company deems necessary or desirable in connection with the
Securities Act or other rules, regulations or laws.
7. Non-Transferability of Option. Your option is
personal to you and is not transferable by you other than by Will
or the laws of descent and distribution. During your lifetime
only you (or your guardian or legal representative) may exercise
your option. In the event of your death, your Option My be
exercised only (i) by the executor or administrator of your
estate or the person or persons to whom your rights under the
option shall pass by Will or the laws of descent and distribution
and (ii) to the extent that you were entitled thereunder at the
date of your death.
8. Conformity with Plan. Your Option is intended to
conform in all respects with, and is subject to all applicable
provisions of, the Plan, which is incorporated herein by
reference Inconsistencies between this Agreement and the Plan
shall be resolved in accordance with the terms of the Plan. By
executing and returning the enclosed copy of this Agreement, you
acknowledge your receipt of this Agreement and the Plan and agree
to be bound by all the terms of this Agreement and the Plan.
9. Withholding of Taxes. The Company shall be
entitled, if necessary or desirable, to withhold from you from
any amounts due and payable by the Company to you (or secure-
payment from you in lieu of withholding) the amount of any
withholding or other tax due from the Company with respect to any
Option Shares issuable under this Plan, and the Company may defer
such issuance unless indemnified by you to its satisfaction.
10. Adjustments.
(a) In the event of a reorganization, recapitalization,
stock dividend or stock split, or combination or other change in
the shares of Common Stock, the Board or the Committee may, in
order to prevent the dilution or enlargement of rights under your
Option, make such adjustments in the number and type of shares
authorized by the Plan, the number and type of shares covered by
your option and the Exercise Price specified herein as may be
determined to be appropriate and equitable.
(b) The issuance by the Company of shares of stock of
any class, or options or securities exercisable or convertible
into shares of stock of any class, for cash or property, or for
labor or services either upon direct sale, or upon the exercise
or conversion of other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock then subject to any
Options.
11. Right to Purchase Option Shares Upon Your Termination
of Employment.
(a) Repurchase of Option Shares. If your employment
with the Company shall terminate for any reason whatsoever,
including your death, Disability, resignation or termination (the
date on which such termination occurs being referred to as the
"Termination Date"), then the Company shall have the option to
repurchase all or any part of the Option Shares issued or
issuable upon exercise of your Option, whether held by you or by
one or more of your transferees, at the price determined in
accordance with the provisions of paragraph 12 hereof (the
"Repurchase Option").
(b) Repurchase by Company. The Company may elect to
purchase all or any portion of the option Shares by delivery of
written notice (the "Repurchase Notice") to you or any other
holders of the option Shares within 90 days after the Termination
Date. The Repurchase Notice shall set forth the number of Option
Shares to be acquired from you and such other holder(s), the
aggregate consideration to be paid for such shares and the time
and place for the closing of the transaction. The number of
Option Shares to be repurchased by the company shall first be
satisfied to the extent possible from the Option Shares held by
you at the time of delivery of the Repurchase Notice. If the
number of option Shares then held by you is less than the total
number of Option Shares the Company has elected to purchase, then
the Company shall purchase the remaining shares elected to be
purchased from the other holders thereof, prorate according to
the number of shares held by each such holder at the time of
delivery of such Repurchase Notice.
(c) Repurchase by Founders Stockholders. If for any
reason the Company does not elect to purchase all of the Option
Shares pursuant to the Repurchase Option, then the Founders
Stockholders (other than you) shall be entitled to exercise the
Company's Repurchase Option in the manner set forth in paragraph
11(a) for all or any portion of the number of Option Shares the
Company has not elected to purchase (the "Available Shares"). As
soon as practicable after the Company has determined that there
will be Available Shares, but in any event within 90 days after
the Termination Date, the Company shall deliver written notice
(the "Option Notice") to the Founders Stockholders setting forth
the number of Available Shares and the price for each Available
Share. Each Founders stockholder may elect to purchase any
number of Available Shares by delivering written notice to the
Company within 20 days after receipt of the Option Notice from
the Company. If more than one Founders Stockholder elects to
purchase the Available Shares and such elections exceed the
number of Available Shares, the number of Available Shares to be
purchased by the electing Founders Stockholders will be allocated
among them pro rate based upon their relative percentage
ownership of Original Stock as set forth in paragraph 1 hereof.
As soon as practicable, and in any event within five days after
the expiration of such 20-day period, the Company shall notify
you and any other holder(s) of Option Shares as to the number of
Option Shares being purchased from you by the Founders
stockholders (the "Supplemental Repurchase Notice"). At the time
the Company delivers the supplemental Repurchase Notice to you
and such other holder(s) of Option Shares, the Founders
Stockholders shall also receive written notice from the Company
setting forth the number of shares it is entitled to purchase,
the aggregate purchase price and the time and place of the
closing of the transaction.
(d) Closing of Repurchase of Option Shares. The
purchase of Option Shares pursuant to this paragraph 11 will be
closed at the Company's executive offices within 20 days after
the expiration of the 120-day period referred to in paragraph
11(b). At the closing, The purchaser or purchasers shall pay the
purchase price in the manner specified in paragraph 12(b) and you
and any other holders of Option Shares being purchased shall
deliver the certificate or certificates representing such shares
to the purchaser or purchasers or their nominees, accompanied by
duly executed stock powers. Any purchaser of Option Shares under
this paragraph 11 shall be entitled to receive customary
representations and warranties from you and any other selling
holders of Option Shares regarding the sale of such shares
(including representations and warranties regarding good title to
such shares, free and clear of any liens or encumbrances).
12. Purchase Price Option Shares.
(a) Purchase Price. In the event you cease to be
employed by the Company for any reason other than termination for
Cause and you have not violated any of the provisions of
paragraphs 17, 18 and 19 hereof, the purchase price per share to
be paid for the Option Shares purchased by the Company and the
Founders Stockholders pursuant to paragraph 12 shall be equal to
the Fair Market Value of such Option Shares as of the Termination
Date. In the event you are discharged for Cause or if you have
violated any of the provisions of paragraphs 17, 18 and 19
hereof, the purchase price to be paid for the Option Shares shall
be equal to The lesser of the Exercise Price and the Fair Market
Value of such Option Shares as of the Termination Date.
(b) Manner of Payment. If the Company elects to
purchase all or any part of the Option Shares, including Option
Shares held by one or more transferees, the Company shall pay for
such shares: (i) first, by certified check or wire transfer of
funds to the extent such payment would not cause the Company to
violate the Business corporation law of the Commonwealth of
Pennsylvania and would not cause the Company to breach any
agreement to which it is a party relating to the indebtedness for
borrowed money or other material agreement; and (ii) thereafter,
with a subordinated promissory note of the Company. Such
subordinated promissory note shall bear interest at the
applicable federal rate as defined under the Code (which shall be
payable annually in cash unless otherwise prohibited), shall have
all principal payment due on the fifth anniversary of the date of
issuance and shall be subordinated on terms and conditions
satisfactory to the holders of the Company's indebtedness for
borrowed money. If any Founders Stockholders elect to purchase
all or any portion of the Available Shares, such Founders
Stockholders shall pay for that portion of such Option Shares by
certified check or wire transfer of funds.
13. Restrictions on Transfer.
(a) Transfer of Option Shares. You will not sell,
pledge or otherwise transfer any interest in any Option Shares
except pursuant to the provisions of paragraph 12 or 15 hereof
("Exempt Transfers") and except pursuant to the provisions of
this paragraph 13. At least 30 days prior to making any transfer
other than an Exempt Transfer, you will deliver a written notice
(the "Sale Notice") to the Company and the Founders Stockholders.
The Sale Notice will disclose in reasonable detail the identity
of the prospective transferee(s) and the terms and conditions of
the proposed transfer. You agree not to consummate any such
transfer until 30 days after the Sale Notice has been delivered
to the Company and the Founders Stockholders, unless the parties
to the transfer have -been finally determined pursuant to this
paragraph 13 prior to the expiration of such 30-day period. (The
date of the first to occur of such events is referred to herein
as the "Authorization Date").
(b) First Refusal Rights. The Company may elect to
purchase all (but not less than all) of the Option Shares to be
transferred by you upon the same terms and conditions as those
set forth in the Sale Notice by delivering a written notice of
such election to you within 20 days after the receipt of the Sale
Notice by the Company. If the Company has not elected to
purchase all of the Option Shares to be transferred, than the
Founders Stockholders may elect to purchase all (but not less
than all) of the option Shares to be transferred upon the same
terms and conditions as those set forth in the Sale Notice by
delivering a written notice of such election to you within 30
days after the receipt of the Sale Notice by the Founders
Stockholder. My person who has the right to acquire Option
Shares pursuant to this paragraph 13(b) will be given up to 30
days (after it has been determined that such person has such
right) to consummate the purchase and sale of Option Shares. If
more than one Founders Stockholder elects to purchase the Option
Shares specified in the Sale Notice end such elections exceed the
number of remaining shares, then the number of Option Shares to
be purchased by the electing Founders Stockholders will be
allocated among them pro rata based upon their relative
percentage ownership of original Stock as set forth in paragraph
1 hereof. If neither the Company nor any Founders Stockholder
has elected to purchase all of the Option Shares specified in the
Sale Notice, you may transfer the Option Shares specified in the
Sale Notice at a price and on the terms no more favorable to the
transferee(s) thereof than specified in the Sale Notice during
the 60--day period immediately following the Authorization Date.
Any Option Shares not transferred within such 60-day period will
be subject to the provisions of this paragraph 13(b) upon
subsequent transfer.
(c) Certain Permitted Transfers. The restrictions
contained in this paragraph 13 will not apply with respect to
transfers of Option Shares (i) pursuant to applicable laws of
descent and distribution or (ii) among your family group;
provided that the restrictions contained in this paragraph will
continue to be applicable to the Option Shares after any such
transfer and the transferees of such Option Shares have agreed in
writing to be bound by the provisions of this Agreement. Your
"family - group" means your spouse and descendants.
(d) Termination of Restrictions. The restrictions on
the transfer of Option Shares set forth in this paragraph 13 will
continue with respect to each option Share until the date on
which such Option Share has been transferred in a transaction
permitted by this paragraph (except in a transaction contemplated
by paragraph 13(c); provided in any event the restrictions on
transfers set forth in this paragraph 13 will terminate when the
company has sold shares of its Common stock pursuant to a Public
Offering.
14. Additional Restrictions on Transfer.
(a) Restrictive Legend. The certificates representing
the Option Shares will bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY
ISSUED ON ____________ HAVE NOT BEEN REGISTERED UNDER TILE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY
STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM
REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS
SET FORTH IN AN OPTION AGREEMENT BETWEEN THE COMPANY AND ROGER
CAROLIN DATED AS OF ___________, A COPY OF WHICH MAY BE OBTAINED
BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS
WITHOUT CHARGE."
(b) Option of Counsel. You may not sell, transfer or
dispose of any option Shares (except pursuant to an effective
registration statement under the Securities Act) without first
delivering to the Company an opinion of counsel reasonably
acceptable in form and substance to the Company that registration
under the Securities Act or any applicable state securities law
is not required in connection with such transfer.
(c) Holdback. You agree not to effect any public sale
or distribution of any equity securities of the Company, or any
securities convertible into or exchangeable or exercisable for
such securities, during the seven days prior to and the 180 days
after the effectiveness of any underwritten registration, except
as part of such underwritten registration if otherwise permitted.
15. Sale of the company.
(a) Consent to Sale of Company. If the Board and the
holders of a majority of the Company's Common Stock then
outstanding approve the sale of the Company to an independent
third party (whether by merger, consolidation, sale of all or
substantially all of its assets or sale of all of the outstanding
Common Stock) (the "Approved Sale"), you will consent to and
raise no objections against the Approved Sale of the Company, and
if the Approved Sale of the Company is structured as a sale of
stock, you will agree to sell all of your Option Shares and
rights to acquire Option Shares on the terms and conditions
approved by the Board and the holders of a majority of the Common
Stock then outstanding. You will take all necessary and
desirable actions in connection with the consummation of the
Approved Sale of the Company. For purposes of this paragraph 15,
an "independent third party" is any person who does not own in
excess of 5% of the Company's Common Stock on a fully-diluted
basis, who is not controlling, controlled by or under common
control with any such 5% owner of the Company' s Common Stock and
who is not the spouse, ancestor or descendant (by birth or
adoption) of such 5% owner of the Company's Common Stock.
(b) Purchaser Representative. If the Company or the
holders of the Company's securities enter into any negotiation
or transaction for which Rule 506 (or any similar rule then in
effect) promulgated by the Securities Exchange Commission may be
available with respect to such negotiation or transaction
(including a merger, consolidation or other reorganization), you
will, at the request of the Company, appoint a purchase
representative (as such term is defined in Rule 501) reasonably
acceptable to the Company. If you appoint the purchase
representative designated by the Company, the Company will pay
the fees of such purchaser representative, but if you decline to
appoint the purchaser representative designated by the Company,
you will appoint another purchaser representative (reasonably
acceptable to the Company), and you will he responsible for the
fees of the purchaser representative so appointed.
(c) Termination of Restrictions. The provisions of
this paragraph 15 will terminate when the Company has sold shares
of its Common Stock pursuant to a Public Offering.
16. Voting Agreement. Until such time as the Company has
effectuated a Public Offering, you agree to appoint members of
the Committee as your proxy to vote your Option Shares and to
authorize such proxies to vote such shares in the same manner as
a majority of the Common Stock (excluding the Option Shares) is
voted on any matter.
17. Confidential Information. You acknowledge that the
information, observations and data obtained by you while employed
by the Company concerning the business or affairs of the Company,
any of its affiliates or any Subsidiary ("Confidential Informa
tion") are the property of the Company or such affiliate or
Subsidiary, as the case may be. Therefore, you agree that you
shall not disclose to any unauthorized person or use for your own
account any Confidential information without prior written
consent of the Board, unless and to the extent that the afore
mentioned matters become generally known to and available for use
by the public other than as a result of your acts or omissions to
act. You shall deliver to the Company at the termination of your
Employment Period, or at any other time the Company may request,
all memoranda, notes, plans, records, reports, computer tapes and
software and other documents and data (and copies thereof)
relating to the Confidential information, Work Product (as
defined in paragraph 18 below) or the business of the Company,
any of its affiliates or any Subsidiary which you may then
possess or have under your control.
l8. Inventions and Patents. You agree that all
inventions, innovations, improvements, developments, methods,
designs, analyses, drawings, reports and all similar or related
information which relates to the Company's, its affiliates' or
any of its Subsidiaries' actual or anticipated semiconductor wet
processing business, research and development or existing or
future products or services and which are conceived, developed or
made by you while employed by the company and/or its Subsidiaries
("Work Product") belong to the Company or such affiliate or
Subsidiary, as the case may be. You will promptly disclose such
Work Product to the Board and perform all actions reasonably
requested by the Board (whether during or after the
Employment Period) to establish and confirm such owner-ship
(including, without limitation, assignments, consents, powers or
attorney and other instruments).
19. Non-Compete, Non-Solicitation.
(a) You acknowledge that in the course of employment
with the Company you have become and will become familiar with
the Company's trade secrets and with other confidential
information concerning the Company, its affiliates, its
subsidiaries and its predecessors and that your services have
been and will be of special, unique and extraordinary value to
the Company. Therefore, you agree that, during the Employment
Period and for the two (2) years immediately thereafter (the "Non-
Compete Period"), you shall not directly or indirectly own,
manage, control, participate in, consult with, render services
for, or in any manner engage in any business competing with the
businesses of the Company or its Subsidiaries as such businesses
exist or are in process on the date of the termination of
Executive's employment, within any geographical area in which the
Company, its affiliates or its Subsidiaries engage or plan to
engage in such businesses. You further agree that during the Non-
Compete Period you will not own or hold, directly or indirectly,
any interest in any business in the semiconductor wet processing
equipment industry except for interests in the Company or any of
its Subsidiaries. Nothing herein shall prohibit you from being a
passive owner of not more than 2% of the outstanding stock of any
class of a corporation which is publicly traded, so long as you
have no active participation in the business of such corporation.
(b) During the Non-compete Period, you shall not
directly or indirectly through another entity (i) induce or
attempt to induce any employee of the Company, any of its
affiliates or any subsidiary to leave the employ of the Company
or such affiliate or Subsidiary, or in any way interfere with the
relationship between the company, any of its affiliates or any
Subsidiary and any employee thereof, (ii) hire any person who was
an employee of the Company, any of its affiliates or any
subsidiary at any time during the Employment Period, or (iii)
induce or attempt to induce any customer, supplier, licensee or
other business relation of the Company, any of its affiliates or
any Subsidiary to cease doing business with the Company or
such affiliate or Subsidiary, or in any way interfere with the
relationship between any such customer, supplier, licensee or
business relation and the Company, any of its affiliates or any
Subsidiary.
(c) You covenant and agree that, if you shall violate
any of the covenants or agreements under this paragraph 19, (i)
the Company shall be entitled to an accounting and repayment of
all profits, compensation, commissions, remuneration or benefits
that you directly or indirectly have realized and/or may realize
as a result of, growing out of or in connection with any such
violation and (ii) all severance payment, insurance or other
benefits (if any) you are otherwise entitled shall cease; such
remedies shall be in addition to and not in limitation of any
injunctive relief or other rights or remedies that the Company is
or may be entitled at law in equity or under this Agreement.
(d)You hereby acknowledge that you have carefully read
and considered the provisions of this paragraph 19 and, having
done so, agree that the restrictions set forth in such paragraph
19 (including, but not limited to, the time period of restriction
and the geographical areas of restriction set forth in this
paragraph 19) are fair and reasonable and are reasonably required
for the protection of the interests of the Company, its officers,
directors and other employees.
20. Scope of Provisions. If at the time of enforcement of
paragraph 17, 18 or 19 of this Agreement, a court holds that the
restrictions stated here in are unreasonable under circumstances
then existing, the parties hereto agree that the maximum period,
scope or geographical area reasonable under such circumstances
shall be substituted for the stated period, scope or area.
21. Remedies. The parties hereto (and the Founders
stockholders as third-party beneficiaries) will be entitled to
enforce their rights under this Agreement specifically to recover
damages by reason of any breach of any provision of this
Agreement and to exercise all other rights existing in their
favor. The parties hereto acknowledge and agree that money
damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that any party hereto (and any
Founders stockholder as a third-party beneficiary) may, in its
sole discretion, apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief
(without posting bond or other security) in order to enforce or
prevent any violation of the provisions of this Agreement.
22. Amendment. Except as otherwise provided herein, any
provision of this Agreement may be amended or waived only with
the prior written consent of you and the Company; provided that
no provision of paragraphs 11, 12, 13, 14, 15 or 21 or of this
paragraph 22 may be amended or waived without the prior written
consent of the Founders Stockholders owning a majority of the
Original Stock held by all Founders Stockholders.
23. Successors and Assigns. Except as otherwise expressly
provided herein, all covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto will bind
and inure to the benefit of the respective successors and
permitted assigns of the parties hereto whether so expressed or
not.
24. Severability. Whenever possible, each provision of
this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of
this Agreement is held to be prohibited by or invalid under
applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating
the remainder of this Agreement.
25. Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
constitute an original, but all of which taken together shall
constitute one and the same Agreement.
26. Descriptive Headings. The descriptive headings of
this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
27. Governing law. The corporate law of Pennsylvania will
govern all questions concerning the relative rights of the
Company and its stockholders. All other questions concerning the
construction, validity and interpretation of this Agreement will
be governed by the internal law, and not the law of conflicts, of
Pennsylvania.
28. Notice. All notices, demands or other communications
to he given or delivered under or by reason of the provisions of
this Agreement shall be in writing and shall be deemed to have
been given when delivered personally or mailed by certified or
registered mail, return receipt requested and postage prepaid, to
the recipient. Such notices, demands and other communications
shall he sent to you and to the Company and the Founders
Stockholders at the addresses indicated below:
(a) If to the Optionee:
Roger Carolin
__________________
__________________
(b) If to the Company:
CFM Technologies, Inc.
1380 Enterprise Drive
West Chester, PA 19380
Attention: President
(c) If to the Founders Stockholders:
CFM Technologies, Inc.
1380 Enterprise Drive
West Chester, PA 19380
Attention: Christopher F. McConnell
or to such other address or to the attention of such other person
as the recipient party has specified by prior written notice to
the sending party
29. Third-Party Beneficiary. The Company and you
acknowledge that the Founders Stockholders are third-party
beneficiaries under this Agreement.
30. Entire Agreement. This Agreement constitutes the entire
understanding between you and the Company, and supersedes all
other agreements, whether written or oral, with respect to the
acquisition by you of Common Stock of the Company.
Please execute the extra copy of this Agreement in the space
below and return it to the Company's Secretary at its executive
offices to confirm your understanding and acceptance of the
agreements contained in this Agreement.
Very truly yours,
CFM TECHNOLOGIES, INC.
By:/s/Chris McConnell
Enclosures: 1. Extra copy of this Agreement
2. Copy of the Plan
The undersigned hereby acknowledges having read this
Agreement and the Plan and hereby agrees to be bound by all
provisions set forth herein and in the Plan.
Dated as of OPTIONEE:
3/28/93 By:/s/ Roger Carolin
Roger Carolin
Microfilm Number
----------------
Filed with the Department of State on April 16, 1997
--------------
Entity Number
-----------------
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Secretary of the Commonwealth
ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
DSCB:15-1915 (Rev 91)
In compliance with the requirements of 15 Pa. C.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.
----------------------
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, PA 19380 Chester
-------------------------------------------------------------
Number and Street City State Zip County
(b) c/o
----------------------------------------------------------
Name of Commercial Registered Office Provider County
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:
Pa. Business Corporation Law of 1988, as amended.
-------------------------------------------------
4. The date of its incorporation is: 11/1/94
-------
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 ---------
Date Hour
6. (Check one of the following):
X The amendment was adopted by the shareholders (or members)
pursuant to 15 Pa.C.S. 1914 (a) and (b).
The amendment was adopted by the board of directors pursuant
to 15 Pa. C.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.
(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 27 day of March , 1997 .
CFM TECHNOLOGIES, INC
---------------------
(Name of Corporation)
BY:Lorin J. Randall
-------------------
TITLE:Secretary
-------------------
EXHIBIT A
TO
ARTICLES OF AMENDMENT
OF
CFM TECHNOLOGIES, INC.
The Address of the Corporation's Registered Address is this Commonwealth is
hereby changed to:
1336 Enterprise Drive
West Chester, Pennsylvania 19380
Chester County
Article 6(a) of the Corporation's Articles of Incorporation 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 Thirty-One Million (31,000,000) shares, to be
divided into Thirty Million (30,000,000) shares of Common Stock, no par
value per share, and One Million (1,000,000) shares of Preferred Stock,
no par value per share."
BALLARD SPAHR ANDREWS & INGERSOLL
1735 Market Street, 51st Floor
Philadelphia, PA 19103-7599
August 26, 1997
CFM Technologies, Inc.
1336 Enterprise Drive
West Chester, Pennsylvania 19380
Re: CFM Technologies, Inc.
Registration Statement on Form S-3
Gentlemen:
We have acted as counsel to CFM Technologies, Inc., a
Pennsylvania corporation (the "Company"), in connection with the
preparation of the Company's Registration Statement filed on Form
S-3 (the "Registration Statement") on the date hereof with the
Securities and Exchange Commission (the "Commission") pursuant to
which the Company is registering under the Securities Act of
1933, as amended, 205,583 shares of its common stock, no par
value per share (the "Common Stock"), for sale by certain Selling
Shareholders as described in the Registration Statement.
In this connection, we have examined and relied upon
such corporate records and other documents, instruments and
certificates and have made such other investigation as we deemed
appropriate as the basis for the opinion set forth below. In our
examination, we have assumed legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of
all documents submitted to us as originals, the conformity to
original documents of documents submitted to us as certified,
conformed or photostatic copies and the authenticity of such
original documents.
Based upon the foregoing, we are of the opinion that
the shares of Common Stock to be sold by the Selling Shareholders
have been duly authorized and, when issued as described in the
Company's Registration Statement, will be legally issued, fully
paid and nonassessable.
We hereby consent to the filing of this opinion as
Exhibit 5 to the Registration Statement and to the reference to
this firm under the caption "Legal Matters" in the Prospectus
forming a part thereof.
Very truly yours,
Ballard Spahr Andrews & Ingersoll
