CFI INDUSTRIES INC, DEF 14A, 1995-10-26

CFI INDUSTRIES INC
DEF 14A, 1995-10-26
CONVERTED PAPER & PAPERBOARD PRODS (NO CONTANERS/BOXES)

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<PAGE> 1

SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the registrant /X/

Filed by a party other than the registrant / /

Check the appropriate box:

/ / Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))

/X/ Definitive proxy statement

/ / Definitive additional materials

/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CFI INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of filing fee (Check the appropriate box):

/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.

/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).

/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.

(1) Title of each class of securities to which transaction applies:

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

(2) Aggregate number of securities to which transaction applies:

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

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):

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

(4) Proposed maximum aggregate value of transaction:

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

(5) Total fee paid:

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

/ / Fee paid previously with preliminary materials.

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

/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.

(1) Amount previously paid:

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

(2) Form, schedule or registration statement no.:

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

(3) Filing party:

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

(4) Date filed:

- --------------------------------------------------------------------------------
<PAGE> 2

CFI INDUSTRIES, INC.
935 W. UNION AVENUE
WHEATON, IL 60187
(708) 668-2838

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

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

DECEMBER 5, 1995
------------------------

TO: The Stockholders of CFI INDUSTRIES, INC.

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Meeting")
of CFI Industries, Inc., a Delaware corporation (the "Company"), will be held at
Two North Riverside Plaza, Suite 200, Chicago, Illinois, on Tuesday, December 5,
1995, at 10:00 A.M., Chicago time for the following purposes:

1. To elect a Board of seven (7) directors;

2. To approve the Company's employee stock purchase plan, the Form Your
Future Plan; and

3. To transact such other business as may properly come before the
Meeting or any adjournment thereof.

Stockholders of record at the close of business on October 18, 1995, are
entitled to notice of and to vote at the Meeting or any adjournment thereof. A
complete list of the stockholders entitled to vote at the Meeting will be
available for examination by any stockholder at the Company's executive offices,
for any purpose germane to the Meeting during ordinary business hours, for a
period of at least ten days prior to the Meeting.

By Order of the Board of Directors

SUSAN OBUCHOWSKI
Secretary

October 27, 1995
Chicago, Illinois

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

IMPORTANT:

THE BOARD OF DIRECTORS EXTENDS A CORDIAL INVITATION TO ALL STOCKHOLDERS TO
ATTEND THE MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
COMPLETE, DATE, SIGN AND RETURN AS PROMPTLY AS POSSIBLE THE ENCLOSED PROXY IN
THE ACCOMPANYING REPLY ENVELOPE. STOCKHOLDERS WHO ATTEND THE MEETING MAY REVOKE
THEIR PROXIES AND VOTE IN PERSON.
<PAGE> 3

CFI INDUSTRIES, INC.
935 W. UNION AVENUE
WHEATON, IL 60187
(708) 668-2838
------------------------

PROXY STATEMENT
------------------------

INTRODUCTION

This Proxy Statement is furnished in connection with the solicitation by
the management of CFI Industries, Inc. ("CFI" or the "Company") of proxies to be
voted at the Annual Meeting of Stockholders (the "Meeting") to be held on
Tuesday, December 5, 1995, and any adjournment thereof, the cost of which will
be borne by the Company. In addition to solicitation by mail, employees of the
Company may solicit proxies by telegraph, telephone and personal interviews.
Brokers and other nominees who held stock of the Company on October 18, 1995,
will be asked to contact the beneficial owners of the shares which they hold.
The costs of solicitation, which are borne by the Company, will be nominal.

This Proxy Statement and accompanying Proxy are being mailed to
stockholders commencing on or about October 27, 1995. The Proxy, if properly
executed and returned, will be voted according to your instructions, but it may
be revoked at any time before it is exercised by giving notice in writing to the
Secretary of the Company or by voting in person at the Meeting.

Only stockholders of record on October 18, 1995 (the "Record Date"), or
their proxy, will be entitled to vote at the Meeting. On such date 1,997,332
shares of common stock, par value $1.00 ("Common Stock"), were outstanding. Each
share outstanding on the Record Date for the Meeting entitled the holder thereof
to one vote upon each matter to be voted upon at the Meeting. The stockholders
of a majority of the Common Stock, present in person or represented by Proxy,
shall constitute a quorum at the Meeting. Abstentions and broker non-votes are
counted for purposes of determining the presence or absence of a quorum for the
transaction of business. If, however, a quorum is not present or represented at
the Meeting, the stockholders entitled to vote at the Meeting, whether present
in person or represented by Proxy, shall only have the power to adjourn the
Meeting until such time as a quorum is present or represented. At such time as a
quorum is present or represented by Proxy, the Meeting will reconvene without
notice to stockholders, other than an announcement at the prior adjournment of
the Meeting, unless the adjournment is for more than thirty days or a new record
date has been set.

If a Proxy in the form enclosed is duly executed and returned, the shares
of the Company's Common Stock represented thereby will be voted in accordance
with the specifications made thereon by the stockholder. If no such
specifications are made, such Proxy will be voted (i) for election of the seven
nominees for directors; (ii) for approval of the Company's employee stock
purchase plan, the Form Your Future Plan; and (iii) at the discretion of Philip
C. Calian and Robert W. George, the Board of Directors' designated proxies for
the Meeting, with respect to such other business as may properly come before the
Meeting or any adjournment thereof. Abstentions are counted in tabulations of
the votes cast on proposals presented to stockholders, whereas broker non-votes
are not counted for purposes of determining whether a proposal has been
approved. Under applicable Delaware law, a broker non-vote will have no effect
on the outcome of the election of directors. A Proxy is revocable by either a
subsequently dated, properly executed Proxy appointment which is received by the
Company prior to the time votes are counted at the Meeting, or by a stockholder
giving notice of revocation to the Company in writing or during the Meeting
prior to the time votes are counted. The mere presence at the Meeting of a
stockholder who appointed a proxy does not itself revoke the appointment.

One stockholder of the Company, Equity Holdings, can direct the voting of
66.8% of the outstanding shares of Common Stock. See "Security Ownership of
Certain Beneficial Owners."

1
<PAGE> 4

ELECTION OF DIRECTORS
(PROPOSAL 1)

The Company recommends the election to the Board of Directors (the "Board")
of the seven nominees whose names appear below. The enclosed Proxy will be voted
for the election of the seven nominees unless authority is withheld. The
affirmative vote of shares held of record by owners of a majority of the shares
of Common Stock present in person or represented by proxy at the Meeting is
required for election of the nominees. Each director will serve until the next
Meeting and thereafter until a successor has been duly elected and qualified or
until his or her earlier resignation or removal. In the event that any nominee
is unable to serve (which is not anticipated), the persons designated as proxies
will cast votes for the remaining nominees and for such other person or persons
as the Board may recommend. All of the nominees are presently directors.

The following table sets forth the name of each nominee and, for each, the
period during which the nominee has served as a director, information relating
to the nominee's age, principal occupation and business experience during the
past five years, any other directorships held by the nominee in publicly held
companies, and certain other information. For information concerning membership
on committees of the Board, see "Committees of the Board of Directors;
Meetings."

2
<PAGE> 5

<TABLE>
<CAPTION>
PRINCIPAL POSITIONS WITH THE COMPANY;
YEAR BECAME PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME A DIRECTOR AGE AND FIVE-YEAR EMPLOYMENT HISTORY(1)(2)
- ---------------------- ----------- --- -------------------------------------------------------
<S> <C> <C> <C>
ROBERT W. GEORGE...... 1995 48 President, Chief Executive Officer and Chief Operating
Officer of the Company and Plastofilm since March 1995;
President and Chief Operating Officer of the Company
and Plastofilm from September 1994 until March 1995;
Consultant to the Company and Plastofilm from June 1994
until September 1994; From May 1993 through June 1994,
Mr. George was President and Chief Operating Officer of
Nitro-Bar Ltd., a manufacturer of specialty steel heat
treatment products; From October 1989 to May 1993, Mr.
George was a private business performance consultant,
providing strategic business assessments and interim
management services.
RICHARD M. HARRIS..... 1991 60 Private consultant since July 1992; Senior Vice
President, Axel Johnson Inc. from July 1987 to July
1992.
DONALD J.
LIEBENTRITT......... 1990 45 Vice President of the Company since September 1989;
Vice President of Plastofilm since June 1989; member of
the law firm Rosenberg & Liebentritt, P.C.
SHELI Z. ROSENBERG.... 1989 53 Co-Chairman of the Board of the Company and Plastofilm
from September 1994 until March 1995; Acting Chairman
of the Company and Plastofilm from January 1994 until
September 1994; President of the Company from October
1990 to September 1991; member of the law firm
Rosenberg & Liebentritt, P.C.; Director, President and
Chief Executive Officer of Equity Group Investments,
Inc. ("Equity Group") and Equity Financial Management
Company, ("Equity Financial") both are investment
firms, since November 1994; Executive Vice President
and a director of Equity Group and Equity Financial for
more than five years prior to November 1994; prior to
October 4, 1991, Mrs. Rosenberg was Vice President of
Madison Management Group, Inc. ("Madison"). Madison
filed a petition under the federal bankruptcy laws on
November 8, 1991. Vice President of First Capital
Benefits Administrators, Inc. ("Benefit
Administrators") since July 1987. Benefits
Administrators filed a petition under the federal
bankruptcy laws January 3, 1995. A director of American
Classic, Anixter International Inc., Capsure Holdings
Corp., Falcon Building Products, Inc., Great American
Management and Investment, Inc., Jacor Communications,
Inc., Revco D.S., Inc. and The Vigoro Corporation; and
a trustee of Equity Residential Properties Trust.
</TABLE>

- ---------------
(1) Each nominee's principal occupation has been held for more than the past
five years except as otherwise indicated.

(2) Only directorships of issuers with a class of securities registered pursuant
to Section 12 of the Securities Exchange Act of 1934, as amended (the
"Act") or subject to the requirements of Section 15(d) of the Act or
directorships of issuers registered as investment companies under the
Investment Company Act of 1940 are listed in the above table.

3
<PAGE> 6

COMMITTEES OF THE BOARD OF DIRECTORS; MEETINGS

The Board, which met six times during fiscal 1995, has delegated some of
its authority to its Audit Committee and its Option and Compensation Committee.
The Audit Committee, which met three times during fiscal 1995, currently
consists of Messrs. Burman and Harris. The Committee recommends to the Board a
firm of independent certified public accountants to audit the Company's annual
financial statements, discusses with the auditors and approves in advance the
scope of the audit, reviews with the auditors the financial statements and
auditors' report and consults with the Company's management about the Company's
system of internal accounting controls. The Committee reports to the Board on
its activities and findings.

The Option and Compensation Committee, which did not meet in fiscal 1995,
is comprised of Messrs. Brake and Harris and Mrs. Rosenberg. During fiscal 1995,
all actions concerning compensation and option grants were addressed by the full
Board. The Option and Compensation Committee reviews and makes recommendations
concerning proposals by management with respect to compensation, bonuses,
employment agreements, stock option grants and other benefits and policies
respecting such matters for all employees of the Company.

Each director attended at least 75% of the aggregate number of meetings of
the Board and the Committees on which he or she served for the period such
director held such position.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ALL OTHER
SALARY BONUS OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) SARS (#) ($)
- --------------------------------------------- ---- ------- ------ -------- ------------
<S> <C> <C> <C> <C> <C>
Philip C. Calian............................. 1995 0(2) 0 0 14,625(3)
Chairman of Board(1) 1994 0 0 100,000 14,250(3)
1993 0 0 1,500 15,000(3)
Robert W. George............................. 1995 151,838(4) 19,534 100,000 0
President, Chief Executive Officer and 1994 0 0 0 0
Chief Operating Officer 1993 0 0 0 0
Richard L. Partlow........................... 1995 110,198 19,534 0 3,150(5)
Vice President--Sales 1994 95,425 0 60,000 2,850(5)
Plastofilm 1993 100,393 0 5,000 3,000(5)
Robert W. Zimmer............................. 1995 91,669 19,534 5,000 1,422(5)
Treasurer and Controller 1994 42,404 0 30,000 312(5)
1993 0 0 0 0
</TABLE>

- ---------------
(1) Mr. Calian was Co-Chairman of the Board and Chief Executive Officer of the
Company and Plastofilm from September 1994 until March 1995 and Acting
President and Chief Executive Officer of the Company and Plastofilm from
January 1994 until September 1994.

(2) In lieu of cash compensation for his role as Acting President and Chief
Executive Officer, Mr. Calian received options to purchase 100,000 shares of
Common Stock and an affiliate of EGI received $20,000 as reimbursement for
his services.

(3) Includes directors fees.

(4) Includes $27,800 paid to Mr. George as a consultant to the Company and
Plastofilm during July and August 1994.

(5) Includes contributions to Plastofilm's defined contribution plan.

4
<PAGE> 7

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES OF
------------------------ STOCK PRICE
% OF TOTAL APPRECIATION
OPTIONS GRANTED TO EXERCISE OR FOR OPTION TERM
GRANTED EMPLOYEES BASE PRICE EXPIRATION --------------------
NAME (#) IN FISCAL YEAR ($/SH) DATE 5%($)(1) 10%($)(2)
- ------------------------------------- ------- -------------- ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Philip C. Calian..................... 0 0 0 0 0
Robert W. George..................... 100,000 73.0 2.75 9/14/04 172,946 438,279
Richard L. Partlow................... 0 0 0 0 0
Robert W. Zimmer..................... 5,000 3.6 4.00 6/21/05 12,578 31,875
</TABLE>

- ---------------
(1) Assumes a price of $4.48 at the end of ten years for options granted to Mr.
George and a price of $6.52 at the end of ten years for options granted to
Mr. Zimmer.

(2) Assumes a price of $7.13 at the end of ten years for options granted to Mr.
George and a price of $10.37 at the end of ten years for options granted to
Mr. Zimmer.

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

<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED ON VALUE FY-END (#) FY-END ($)
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- ----------------------------------------- ----------- -------- -------------- --------------
<S> <C> <C> <C> <C>
Philip C. Calian......................... 0 0 103,000/0 151,875/0
Robert W. George......................... 0 0 33,333/66,667 45,833/91,667
Richard L. Partlow....................... 0 0 43,334/21,666 63,751/31,875
Robert W. Zimmer......................... 0 0 20,000/15,000 30,000/15,625
</TABLE>

COMPENSATION OF DIRECTORS

Directors who are not employees of the Company receive an annual fee of
$15,000 for serving as directors and an annual fee of $2,400 for serving on a
Board committee. Additionally, on the date of each Meeting all directors receive
options to purchase 1,500 shares at the fair market value of the Common Stock on
the date of such Meeting. The options are immediately exercisable and expire at
the end of ten years. On December 6, 1994, each director, except Mr. Calian who
declined his options to purchase 1,500 shares, was granted options to purchase
1,500 shares at $4.375 per share.

PENSION PLAN TABLE

<TABLE>
<CAPTION>
FINAL AVERAGE
REMUNERATION 10 15 20 25 30 35
- ------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
$50,000.................... $ 3,667 $ 5,500 $ 5,500 $ 5,500 $ 5,500 $ 5,500
100,000.................... 7,333 11,000 11,000 11,000 11,000 11,000
150,000.................... 11,000 16,500 16,500 16,500 16,500 16,500
200,000.................... 14,667 22,000 22,000 22,000 22,000 22,000
250,000.................... 16,296 24,444 24,444 24,444 24,444 24,444
</TABLE>

5
<PAGE> 8

Until December 31, 1991, Plastofilm had provided a noncontributory Internal
Revenue Service ("IRS") qualified pension plan for all full-time employees after
the completion of one full year of service. The formula for the determination of
benefits was computed by multiplying the highest five years' salary average by
11% and adjusting for the participant's years of service at the expected normal
retirement date. The above amounts are calculated on a straight-life annuity
basis which are not offset for Social Security or other benefits. On November
12, 1991, the Board of Plastofilm adopted a resolution to freeze future benefit
accruals in the pension plan as of December 31, 1991.

In fiscal 1995, Mr. Partlow, who is listed in the Summary Compensation
Table, had accrued 3.5 years of pension plan participation and has $93,225 as
his final average pay for purposes of calculating annual retirement benefits.

EMPLOYEE CONTRACTS AND TERMINATION
OF EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENTS

Plastofilm and each of Messrs. Partlow and Zimmer have an agreement that if
his employment with Plastofilm is terminated without cause by Plastofilm prior
to April 30, 1997, he will be paid compensation at his then base salary until
the first to occur of (a) 270 days after his last day of employment, and (b) the
date of which he starts full-time employment with another employer. Terminated
without cause includes a termination subsequent to a sale or change in control
with respect to Plastofilm, and following such sale or change in control there
is subsequent diminution of his duties.

Messrs. Partlow and Zimmer will also be offered coverage in Plastofilm's
health insurance plan at the same cost as active employees until the first to
occur of (a) or (b) above.

COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION

The Company has a Compensation and Option Committee. Its members are
Messrs. Brake and Harris and Mrs. Rosenberg.

No compensation committee interlock relationships existed during fiscal
1995.

During fiscal 1995, the Company paid Rosenberg & Liebentritt, P.C., a law
firm whose two stockholders are Mrs. Rosenberg and Mr. Liebentritt, $32,000 in
legal fees. During fiscal 1995, the Company paid Seyfarth Shaw Fairweather &
Geraldson ("Seyfarth") approximately $68,800. Mrs. Rosenberg's spouse is a
partner at Seyfarth. Such amounts are also disclosed in "Certain Relationships
and Related Transactions."

Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, (the "Exchange Act"), that might incorporate future
filings, including this Proxy Statement, in whole or in part, the Compensation
Committee Report on Executive Compensation presented below and the Performance
Graph following shall not be incorporated by reference into any such filings.

COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION

Though the Company does have an Option and Compensation Committee, during
the last fiscal year, the full Board determined the compensation of the
Company's executive officers, including those named in the Summary Compensation
Table. The Board believes that the compensation of the Company's Chief Executive
Officer and all of the Company's executive officers should be both competitive
and based on Company performance.

The Company's compensation policy takes into account a review of local and
national peer group salary surveys. Comparisons are made within the industry in
such disciplines as operations, accounting and sales. The salary structure is
designed to attract and retain highly qualified executives. This is accomplished
by providing competitive base salaries and meaningful incentives intended to
reward performance. Such performance is

6
<PAGE> 9

measured against pre-established quantitative goals that are specific to the
officer's performance. The officer's responsibilities, performance evaluations
and expected future contributions are factored into annual increases.

Mr. Calian, who received options to purchase 100,000 shares of Common Stock
in fiscal 1994 for acting as President and Chief Executive Officer did not
receive additional renumeration in that capacity in fiscal 1995. Mr. Calian did
receive director's fees which are paid to all non-employee directors.

The philosophy behind Mr. George's compensation, who became a director and
Chief Executive Officer in March 1995 and President and Chief Operating Officer
in September 1994, was to provide Mr. George with a salary which was at the low
end of the range for a chief executive officer of a comparable company. The
grant of options to purchase 100,000 shares of Common Stock at $2.75 per share
was made to incentize Mr. George by directly linking a meaningful portion of his
total compensation package to increases in stockholder value. The options vest
over a two-year period but become immediately exercisable if, among other
reasons, the Common Stock trades at $6 per share or more for more than 30
consecutive days. The Common Stock has traded at $6 per share or more for more
than 30 consecutive days, therefore the options are now fully exercisable. Mr.
George was not present at the time the other Board members approved his
compensation package.

In fiscal 1995, Mr. George, and the other named executives in the Summary
Compensation Table, qualified for a $19,534 cash bonus for achieving specific
financial performance objectives based on the Company's earnings before interest
and taxes.

The salaries of all executive officers are comparable to and competitive
with other top executives in other companies within the industry. Incentive
compensation is tied to Company performance based on earnings before interest
and taxes and is intended to encourage continued profitability and teamwork, and
enhanced stockholder value.

The Board recognizes that while bonus programs provide rewards for positive
short-term individual and corporate performance, the interests of stockholders
are best served by giving key employees the opportunity to participate in the
appreciation of the Company's Common Stock through the granting of stock options
thereby aligning such employees' interests with those of the Company's
stockholders. The Board believes that over an extended period of time, stock
performance will, to a meaningful extent, reflect executive performance, and
that such arrangements further reinforce management goals and incentives to
achieve stockholder objectives. During fiscal 1995, Mr. Zimmer was granted
options to purchase 5,000 shares of Common Stock to align his option holdings
more closely with the holdings of the other individuals named in the Summary
Compensation Table and others who are not named.

The Board believes that the compensation program properly rewards its
executive officers for achieving improvements in the Company's performance and
serving the interests of its stockholders.

C. Clifford Brake
Marshall L. Burman
Philip C. Calian
Robert W. George
Richard M. Harris
Donald J. Liebentritt
Sheli Z. Rosenberg

7
<PAGE> 10

PERFORMANCE GRAPH

Below is a graph comparing total stockholders' return on the Company's
Common Stock over the last five years with the S&P 500 and a Peer Group
comprised of Portage Industries Inc., Shorewood Packaging Inc. and Sun Coast
Plastics Inc.

<TABLE>
<CAPTION>
Measurement Period CFI Indus-
(Fiscal Year Covered) tries, Inc. S&P 500 Peer Group
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 96.77 107.40 62.31
1992 93.55 121.80 71.38
1993 83.87 138.40 78.44
1994 77.42 140.35 160.86
1995 106.45 176.94 123.88
</TABLE>

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth the names and addresses of all persons who
owned, to the knowledge of management of the Company, beneficially more than 5%
of the outstanding shares of Common Stock as of October 18, 1995:

<TABLE>
<CAPTION>
AMOUNT AND
NATURE
OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
- --------------------------------------------------------------------- ------------ --------
<S> <C> <C>
Equity Holdings(2)................................................... 1,334,592 66.8%
Two North Riverside Plaza
Chicago, Illinois 60606
</TABLE>

- ---------------
(1) The amounts of the Company's Common Stock beneficially owned are reported on
the basis of regulations of the Securities and Exchange Commission ("SEC")
governing the determination of beneficial ownership of securities.

(2) Equity Holdings, an Illinois general partnership, is comprised of Samuel
Zell, Trustee of the Samuel Zell Revocable Trust under a trust agreement
dated January 17, 1990, Ann Lurie and Sheli Z. Rosenberg, Co-Trustees of the
Robert H. and Ann Lurie Trust and B/S Investments, an Illinois general
partnership. Certain direct and indirect beneficial owners of B/S
Investments are trusts created for the benefit of Mr. Zell and his family
and Mrs. Lurie and her family. Mmes. Rosenberg and Lurie are trustees of
certain of these trusts. Mr. Zell and Mmes. Rosenberg and Lurie may be
deemed to be beneficial owners of the shares of Common Stock owned by Equity
Holdings but they each disclaim beneficial ownership of such shares.

8
<PAGE> 11

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth, as of October 18, 1995, certain information
with respect to the Common Stock that may be deemed to be beneficially owned by
each director of CFI, the executive officers named in the Summary Compensation
Table and by all directors and executive officers as a group.

<TABLE>
<CAPTION>
SHARES UPON
NAME OF BENEFICIAL SHARES OF EXERCISE OF PERCENT
HOLDER(1) COMMON STOCK OPTIONS(2) TOTAL OF CLASS
- ----------------------------------------- ------------ ----------- --------- --------
<S> <C> <C> <C> <C>
C. Clifford Brake........................ -- 4,500 4,500 *
Marshall L. Burman....................... 500 4,500 5,000 *
Philip C. Calian......................... -- 103,000 103,000 4.9%
Robert W. George......................... 25 100,000 100,025 4.8%
Richard M. Harris........................ 5,000 4,500 9,500 *
Donald J. Liebentritt.................... 300 4,500 4,800 *
Richard L. Partlow....................... 25 45,000 45,025 2.2%
Sheli Z. Rosenberg....................... 1,346,050(3)(4) 4,500 1,350,550(3)(4) 67.5%
Robert W. Zimmer......................... 2,025(5) 20,000 22,025(5) 1.1%
All directors and executive officers as a
group including the above-named
persons................................ 1,353,925 290,500 1,644,425 71.9%
</TABLE>

- ---------------
* Less than 1%

(1) Unless otherwise indicated, each person included in the group has sole
investment power and sole voting power with respect to the securities
beneficially owned by such person.

(2) The amounts shown in this column reflect shares of Common Stock subject to
options granted under the Company's 1991 Stock Option Plan which are
currently exercisable or exercisable within 60 days of this table.

(3) Includes 1,334,592 shares beneficially owned by Equity Holdings. Under the
regulations of the SEC, Mrs. Rosenberg may be deemed to be the beneficial
owner of all the shares which are beneficially owned by Equity Holdings, see
"Security Ownership of Certain Beneficial Owners." Mrs. Rosenberg disclaims
beneficial ownership of the shares beneficially owned by Equity Holdings.

(4) Includes 11,458 shares beneficially owned by Mrs. Rosenberg's spouse. Mrs.
Rosenberg disclaims beneficial ownership of the shares beneficially owned by
her spouse.

(5) Includes 2,000 shares held in as joint tenants with Mr. Zimmer's mother.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During fiscal 1995, the Company paid approximately $46,000 to Equity Group
Investments, Inc. ("EGI") and certain of its affiliates. EGI is an affiliate of
Equity Holdings. The amount paid was for services relating to corporate
planning, corporate secretarial services, tax advice and other matters. The
Company believes that such payments were reasonable and were paid on terms
substantially similar to those which would have been obtained from an unrelated
third party.

During fiscal 1995, the Company paid Rosenberg & Liebentritt, P.C., a law
firm whose two stockholders are Mrs. Rosenberg and Mr. Liebentritt, $32,000 in
legal fees. During fiscal 1995, the Company paid Seyfarth approximately $68,800.
Mrs. Rosenberg's spouse is a partner at Seyfarth. Such amounts are also
disclosed in "Compensation Committee Interlocks and Insider Participation."

9
<PAGE> 12

APPROVAL OF THE COMPANY'S EMPLOYEE STOCK PURCHASE PLAN,
THE FORM YOUR FUTURE PLAN (THE "PURCHASE PLAN")
(PROPOSAL 2)

The Company seeks stockholder approval of the Purchase Plan because the
Internal Revenue Code of 1986, as amended, (the Code), requires such approval
for any plan that is intended to constitute an "employee stock purchase plan"
under section 423 of the Code. The Board adopted the Purchase Plan on March 24,
1995, and recommended that it be submitted to the stockholders of the Company
for approval.

The purpose of the Purchase Plan is to provide a method for eligible
employees of the Company and its subsidiaries to acquire a proprietary interest
in the Company through the purchase of shares of Common Stock from the Company
at a discount from fair market value, by means of voluntary payroll deductions
between 1% and 20% of an employee's base pay on each pay date and by awards of
Common Stock to employees or groups of employees at the Company's discretion. A
total of 200,000 shares of Common Stock of the Company (subject to adjustments
for stock splits, stock dividends, recapitalizations or other corporate
restructurings) has been authorized for issuance under the Purchase Plan. The
full text of the Purchase Plan, as approved and adopted by the Board, is set
forth in Exhibit A to this Proxy Statement, and the following description of the
Purchase Plan is qualified in its entirety by reference to the text of the
Purchase Plan.

DESCRIPTION OF THE PURCHASE PLAN

General. A committee of the Board that administers the Purchase Plan (the
"Plan Committee") will on a semi-annual basis make available to eligible
employees who elect to participate in the Purchase Plan (the "Participant")
shares of Common Stock for the six-month period in an "Offering". Eligible
employees will be able to purchase Common Stock during an Offering at a price
less than the fair market value of the Common Stock on the date of the purchase
from funds accumulated through payroll deductions during such Offering (the
"Effective Date"). The discount from the fair market value has been set at 15%.
The right of an eligible employee to purchase Common Stock in any Offering is
referred to as an "Option".

Common Stock purchased under the Purchase Plan will be held for each
Participant's account ("Account') by electronic record.

Eligibility. The Purchase Plan is open to employees of the Company and its
subsidiaries who (i) have been employed for at least 90 days and (ii)
customarily work more than 20 hours each week and more than five months in a
calendar year. An employee who meets the above criteria but who, after the grant
of an Option, would own stock possessing 5% or more of the total combined voting
power or value of all classes of stock of the Company would not be an eligible
employee.

Administration. The Purchase Plan is administered by the Plan Committee who
has responsibility for general operation of the Purchase Plan and has the power
to interpret provisions of the Purchase Plan. An agent appointed by the Company
(the "Plan Agent") will handle the day to day operations of the Purchase Plan
administering the recordkeeping of each Participant. Account statements will be
sent to each Participant after each Offering period and will set forth: (i)
payroll deductions; (ii) dividends, if any, received on Common Stock purchased
under the Purchase Plan; (iii) the total amounts applied to the purchase of
Common Stock during the Offering, (iv) numbers of shares purchased; (v) number
of shares distributed, if any; (vi) market value at the end of each Offering
period, (vii) fair market value of the shares; (viii) semi-annual discount, (ix)
cash balance; and (x) Account balance for the Purchase Plan, year-to-date.

Participation. After a Participant's enrollment in the Purchase Plan is
effective, the amount to be deducted from the Participant's payroll check for a
given period will be deducted and allocated to such Participant's Account. On
the last business day of the Offering, a Participant shall be deemed to have
exercised his or her Option on such date and shall be deemed to have purchased
from the Company such number of full shares of Common Stock as his or her
accumulated base pay deductions on such date will allow at the purchase price.
No fractional shares will be purchased. Unless a Participant elects otherwise,
the Company shall carryover the remaining balance in such Participant's Account
to the next Offering. No interest will be paid or allowed on any money in the
Account of the Participant.

10
<PAGE> 13

Exercise Price. The purchase price per share for each Offering shall be 85%
of the lesser of: (i) the fair market value of the Common Stock on the last
business day of the Offering; or (ii) the greater of (A) the fair market value
of the Common Stock for the Offering, and (B) the fair market value of the
Common Stock on the first business day of the Offering,

Withdrawal. A Participant may withdraw from the Purchase Plan by delivering
a withdrawal notice to the Company at least 10 business days prior to the end of
such Offering. In such event, the Company will refund the entire balance of his
or her account as soon as practicable thereafter. To re-enter the Purchase Plan,
an eligible employee who has previously withdrawn must re-enroll in the Purchase
Plan. Such re-entry cannot, however, become effective before the beginning of
the next Offering following his or her withdrawal.

Awards. The Plan Committee may make awards of Common Stock to employees or
groups of employees in its discretion. The Plan Committee shall determine, in
its sole discretion, who shall receive an award, the size of any award and the
conditions and restrictions, if any, applicable to such award.

Expenses. Fees and expenses incurred in connection with the administration
of the Purchase Plan will be paid by the Company. The expenses of any sale,
however, will be borne by the Participant.

Terminations and Amendments. The Purchase Plan may be terminated at any
time by the Board. It will terminate in any case on the earlier of (a) the date
on which all or substantially all of the unissued shares of the Common Stock
reserved for its purpose have been purchased, or (b) 10 years from the date the
Purchase Plan was adopted by the Board.

The Board also reserves the right to amend the Purchase Plan from time to
time in any respect provided, however, that no amendment shall become effective
without prior approval of the Company's stockholders (i) which would increase
the aggregated number of shares of Common Stock to be issued under the Purchase
Plan (other than pursuant to the provisions of the Purchase Plan relating to
adjustments in the event of stock splits, stock dividends, mergers and other
changes in the capitalization of the Company); (ii) which would change the class
of employees eligible to reserve Options under the Purchase Plan; and (iii) if
such amendment requires stockholder approval for any other reason in order for
the Purchase Plan to be eligible or to continue to qualify for the benefits
conferred by SEC Rule 16b-3.

FEDERAL INCOME TAX CONSEQUENCES

Amounts deducted from a Participant's payroll check under the Purchase Plan
continue to be taxable income to the Participant in the year such amounts are
earned. Such income would be subject to taxation to the same extent (Federal,
state and local) as other compensation income received by the Participant.
Participants will not recognize additional taxable income either (i) at the time
an Option is granted pursuant to the Purchase Plan, or (ii) at the time an
option is exercised under the Purchase Plan.

A Participant will not realize any taxable income when Common Stock is
purchased in his or her Account under the Purchase Plan.

A Participant who purchases Common Stock pursuant to an Option under the
Purchase Plan and disposes (by sale or exchange) of such Common Stock more than
two years after the Option is granted and more than one year after the option is
exercised, or who dies at any time while holding the Common Stock, will
recognize ordinary income at the time of disposition or death in an amount equal
to the lesser of (i) the excess, if any, of the fair market value of the Common
Stock at the time of the disposition or death over the purchase price paid for
the Common Stock, or (ii) 15% of the fair market value of the Common Stock
determined on the Effective Date of the Offering. The Participant's basis in the
Common Stock disposed of will be increased by the amount of ordinary income
recognized. Any further gain recognized on the disposition will be taxed as a
long-term capital gain.

A Participant who purchases Common Stock pursuant to an Option under the
Purchase Plan and disposes of such Common Stock less than two years after the
Option is granted or less than one year after the Option is exercised will
recognize ordinary income at the time of disposition in an amount equal to the
excess of the fair market value of the Common Stock on the date of the exercise
of the Option over the purchase price paid for such Common Stock. Any additional
gain or loss recognized by the Participant on the

11
<PAGE> 14

disposition will be a short-term or long-term capital gain or loss, depending on
whether the Participant held the Common Stock for at least one year.

Recipients of awards shall recognize ordinary income based upon the fair
market value of the award at the award date.

PARTICIPANTS ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS TO DETERMINE
THE PARTICULAR TAX CONSEQUENCES THAT MAY RESULT FROM PARTICIPATION IN THE
PURCHASE PLAN AND THE SUBSEQUENT DISPOSAL OF COMMON STOCK PURCHASED PURSUANT TO
THE PURCHASE PLAN. NOTHING CONTAINED HEREIN SHALL BE TREATED AS TAX ADVISE.

The Purchase Plan is not subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended, and is not qualified under
Section 401(a) of the Code.

RECOMMENDATION OF THE BOARD OF DIRECTORS
WITH RESPECT TO THE PURCHASE PLAN

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PURCHASE PLAN. IF A
CHOICE IS SPECIFIED ON THE PROXY BY A STOCKHOLDER, THE SHARES WILL BE VOTED AS
SPECIFIED. IF NO SPECIFICATION IS MADE, THE SHARES WILL BE VOTED "FOR" THE
PURCHASE PLAN.

EXECUTIVE OFFICERS

Philip C. Calian serves as Chairman of the Board of the Company and
Plastofilm. For further information about his experience and positions with the
Company, see page 2 of the Proxy Statement.

Robert W. George serves as a Director, President, Chief Executive Officer
and Chief Operating Officer of the Company and Plastofilm. For further
information see page 3 of the Proxy Statement.

Donald J. Liebentritt serves as a Director and Vice President of the
Company and Plastofilm. For further information about his experience and
positions with the Company, see page 3 of the Proxy Statement.

Richard L. Partlow, Jr. has been Vice President--Sales and Marketing of
Plastofilm since December 1991. He had previously been Sales Manager of
Plastofilm. Mr. Partlow is 49 years old.

Robert W. Zimmer became Treasurer and Controller of the Company in
September 1994. Mr. Zimmer has been the Controller of Plastofilm since November
1993. From November 1990 through November 1993, Mr. Zimmer was a Vice President
and Controller of Kalmus & Associates, Inc. Prior to 1990, Mr. Zimmer was Vice
President and Chief Financial Officer of Regensteiner Printing Company. Mr.
Zimmer is 44 years old.

AUDITORS

In accordance with the recommendation of the Audit Committee, Deloitte &
Touche LLP was appointed by the Board as independent certified public
accountants to examine the financial statements of the Company for fiscal 1995.
A representative of Deloitte & Touche LLP is expected to be present at the
Meeting where he will have the opportunity to make a statement if he so desires
and will be available to respond to appropriate questions.

12
<PAGE> 15

STOCKHOLDER PROPOSALS

Any proposals of stockholders to be presented at the 1996 Meeting must be
received by the Secretary of the Company for inclusion in the Company's Proxy
Statement and form of Proxy no later than June 29, 1996.

OTHER MATTERS

The Board is not aware of any business which will be presented at the
Meeting other than those matters set forth in the accompanying Notice of Annual
Meeting. If any other matters are properly presented at the Meeting for action,
it is intended that the persons named in the accompanying Proxy and acting
thereunder will vote in accordance with their best judgment on such matters.

By Order of the Board of Directors

SUSAN OBUCHOWSKI
Secretary

October 27, 1995
Chicago, Illinois

13
<PAGE> 16

EXHIBIT A

THE CFI INDUSTRIES, INC. FORM
YOUR FUTURE PLAN
(EFFECTIVE JULY 1, 1995)
<PAGE> 17

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
1. Purpose of the Plan.............................................................. A-2
2. Definitions...................................................................... A-2
2.1 "Account".................................................................. A-2
2.2 "Award".................................................................... A-2
2.3 "Base Pay"................................................................. A-2
2.4 "Board".................................................................... A-2
2.5 "Common Stock"............................................................. A-2
2.6 "Designated Affiliate"..................................................... A-2
2.7 "Eligible Employee"........................................................ A-2
2.8 "Employee"................................................................. A-2
2.9 "Fair Market Value"........................................................ A-2
2.10 "Offering"................................................................. A-2
2.11 "Offering Date"............................................................ A-2
2.12 "Parent"................................................................... A-2
2.13 "Participant".............................................................. A-3
2.14 "Pay Day".................................................................. A-3
2.15 "Plan Administrator"....................................................... A-3
2.16 "Subsidiary" or "Subsidiaries"............................................. A-3
3. Plan Benefits.................................................................... A-3
4. Offerings........................................................................ A-3
5. Awards........................................................................... A-5
6. Stock Subject to the Plan........................................................ A-5
7. Changes in Capital Structure..................................................... A-5
8. Employee's Rights as a Stockholder............................................... A-6
9. Interest......................................................................... A-6
10. Rights Not Transferable.......................................................... A-6
11. Administration of the Plan....................................................... A-7
12. Termination of and Amendments to Plan............................................ A-7
</TABLE>

A-1
<PAGE> 18

THE CFI INDUSTRIES, INC. FORM
YOUR FUTURE PLAN

1. PURPOSE OF THE PLAN. The CFI Industries, Inc. Form Your Future Plan (the
"Plan") is adopted effective July 1, 1995, by CFI Industries, Inc., a Delaware
corporation (the "Company"), to give all Eligible Employees (defined below) an
opportunity to acquire Common Stock (defined below) through the exercise of
options that are intended to meet the requirements of Section 423 of the
Internal Revenue Code of 1986, as amended (the "Code"), and to furnish a
facility through which the Company can award or sell shares of Common Stock to
selected Employees.

2. DEFINITIONS.

2.1 "Account" means the record of the funds accumulated with respect
to an Eligible Employee as a result of deductions from his or her paycheck
for the purpose of purchasing stock under Paragraph 4.6 of the Plan.

2.2 "Award" means a grant or sale of shares of Common Stock to an
Employee under Section 5 of the Plan.

2.3 "Base Pay" means regular salary, straight time earnings, or draws
against commissions, as the case may be, but excludes compensation for
bonuses, overtime, actual commissions, amounts paid as reimbursement of
expenses and other additional compensation.

2.4 "Board" means the Board of Directors of the Company.

2.5 "Common Stock" means the Company's common stock, $1.00 par value,
which may consist of newly issued shares or shares repurchased by the
Company on the open market.

2.6 "Designated Affiliate" means any corporation which is either a
Parent or Subsidiary with respect to the Company and whose employees are
designated as eligible to participate in the Plan. Any corporation which is
either a Parent or a Subsidiary may be designated by the Plan Administrator
as a Designated Affiliate and such designation shall remain in effect
unless and until revoked by the Plan Administrator.

2.7 "Eligible Employee" means any person who is an Employee of the
Company or a Designated Affiliate on an Offering Date and who has then been
an Employee of the Company or a Designated Affiliate for at least 90 days.
Notwithstanding the foregoing, a person shall not be an Eligible Employee
if (i) his or her customary employment is 20 hours or less per week; (ii)
his or her customary employment is for not more than five months in the
calendar year; or (iii) immediately after the grant of options hereunder in
the specific Offering, he or she would own shares (including all shares
which may be purchased under outstanding options) possessing 5% or more of
the total combined voting power or value of all classes of shares of the
Company, or, if applicable, any Parent or Subsidiary. The rules of Section
424(d) of the Code shall apply in determining share ownership for purposes
of item (iii) in the preceding sentence.

2.8 "Employee" means an individual employed by the Company or a Parent
or Subsidiary.

2.9 "Fair Market Value" means (i) as of a day, the value determined by
the Board in its discretion based on recent trading activity; or (ii) for
an Offering, the average of such values so determined for all of the
business days during such Offering.

2.10 "Offering" means the period described in Paragraph 4.1 during
which Base Pay deductions are made as described in Paragraph 4.3.

2.11 "Offering Date" means July 3, 1995, and each January 1 and July 1
thereafter if such date is a business day, or the first business day
following such date if that date is not a business day.

2.12 "Parent" means any corporation, other than the Company, in the
unbroken chain of corporations ending with the Company if each of the
corporations other than the Company owns stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain.

A-2
<PAGE> 19

2.13 "Participant" means, with respect to an Offering, an Eligible
Employee who has satisfied the requirements set forth in Paragraph 4.2,
and, with respect to an Award, an Employee who is designated by the Board
as a recipient of an Award.

2.14 "Pay Day" means July 14, 1995, and each subsequent day as of
which Base Pay is paid to an Employee.

2.15 "Plan Administrator" means the Board or the Committee described
in Section 11.

2.16 "Subsidiary" or "Subsidiaries" means any corporation or
corporations other than the Company in an unbroken chain of corporations
beginning with the Company if each of the corporations other than the last
corporation in the broken chain owns stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain.

3. PLAN BENEFITS.

3.1 Offerings. In connection with an Offering, the Company shall give
Eligible Employees the opportunity to elect Base Pay deductions sufficient
to purchase Common Stock as provided in Section 4.

3.2 Awards. In connection with each Award, the Company shall grant or
sell shares of Common Stock to Employees pursuant to Section 5.

4. OFFERINGS.

4.1 Duration of Offering. Offerings shall commence on each Offering
Date and terminate on the last business day preceding the next following
Offering Date.

4.2 Enrollment. An Eligible Employee may become a Participant in
connection with an Offering by completing, signing and filing an enrollment
agreement ("Enrollment Agreement") and any other necessary papers with the
Company at least 10 business days prior to the commencement of the
particular Offering. Base Pay deductions for a Participant shall commence
on the first Pay Day in the Offering and shall end on the last Pay Day in
the Offering unless earlier terminated by the Participant as provided in
Paragraph 4.5. Subject to the following sentence, participation in one
Offering under the Plan shall neither limit, nor require, participation in
any other Offering. Unless otherwise specified, an Enrollment Agreement
will continue to apply to succeeding Offerings until modified or revoked.

4.3 Base Pay Deductions.

(a) At the time a Participant files his or her Enrollment Agreement,
he or she shall elect to have deductions made from his or her Base Pay of a
whole percentage between 1% and 20% of his or her Base Pay on each Pay Day
during the time he or she is a Participant in the Offering.

(b) All Base Pay deductions made for a Participant shall be credited
to his or her Account under the Plan. A Participant may not make any
separate cash payment into such Account nor may payment for shares be made
other than by Base Pay deduction.

(c) A Participant may discontinue his or her Base Pay deductions or
participation in the Plan as provided in Paragraph 4.5, but no other change
can be made during an Offering and, specifically, except as provided in the
next sentence, no change shall be made to the amount of the Base Pay
deductions for a Participant for that Offering.

4.4 Amount of Shares. On each Offering Date, the Plan shall be deemed
to have granted to the Participant an option to purchase Common Stock for
as many full shares as he or she will be able to purchase with the Base Pay
deductions credited to his or her Account during his or her participation
in that Offering. Notwithstanding the foregoing, no Eligible Employee shall
be granted an option which permits his or her rights to purchase Common
Stock under the Plan and any similar employee stock purchase plans of the
Company and, if applicable, a Parent or Subsidiary, to accrue at a rate
which exceeds $25,000 of Fair Market Value of such stock (determined at the
time such option is granted) for each calendar year in which such option is
outstanding at any time. The purpose of the limitation in the preceding
sentence is to comply with Section 423(b)(8) of the Code.

A-3
<PAGE> 20

4.5 Withdrawal/Discontinuance.

(a) A Participant may withdraw with respect to an Offering, in whole
but not in part, at any time prior to the last business day of such
Offering by delivering a withdrawal notice ("Withdrawal Notice") to the
Company at least 10 business days prior to the end of the Offering, in
which event the Company will refund the entire balance of his or her
Account as soon as practicable thereafter, but not later than the second
Pay Day following the delivery of such Notice.

(b) A Participant may elect to discontinue his or her Base Pay
deductions during the course of a particular Offering, at any time at least
10 business days prior to the final Pay Day of such Offering by delivering
an election to discontinue deductions to the Company. Such election shall
be effective as soon as practicable thereafter, but not later than the
second Pay Day following the delivery of such election. Such election shall
not constitute a withdrawal for the purpose of this Paragraph 4.5. In the
event that a Participant elects to discontinue his or her Base Pay
deductions, he or she shall remain a Participant in such Offering and shall
be entitled to purchase from the Company such number of full shares of
Common Stock as set forth in and in accordance with Paragraph 4.6 of the
Plan.

(c) To re-enter the Plan for purposes of a subsequent Offering, an
Eligible Employee who has previously withdrawn or discontinued Base Pay
deductions must file a new Enrollment Agreement in accordance with
Paragraph 4.2. Such re-entry into the Plan cannot, however, become
effective before the beginning of the next Offering following his or her
withdrawal or discontinuance.

4.6 Exercise of Option/Balance Carryover/Reversions. Each Eligible
Employee who continues to be a Participant in an Offering through the last
business day of that Offering shall be deemed to have exercised his or her
option on such date and shall purchase from the Company a number of full
shares of Common Stock determined by dividing his or her accumulated Base
Pay deductions on such date by the purchase price for such Offering. Any
balance remaining in a Participant's Account after such purchase will be
carried over to the next Offering, provided that only amounts less than the
price of a single share in an Offering may be carried over from one
Offering to the next. Upon termination of the Plan, the balance of each
Eligible Employee's Account shall be returned to him or her.

4.7 Exercise Price. The purchase price per share for each Offering
shall be 85% of the lesser of: (i) the Fair Market Value of the Common
Stock on the last business day of the Offering; or (ii) the greater of (A)
the Fair Market Value of the Common Stock for the Offering, or (B) the Fair
Market Value of the Common Stock on the Offering Date of the Offering.

4.8 Exhaustion of Shares. If the total number of shares for which
options are to be granted on any Offering Date in accordance with Paragraph
4.4 exceeds the number of shares then available under the Plan (after
deduction of all shares for which options have been exercised or are then
outstanding), the Company shall make a pro rata allocation of the shares
remaining available in as nearly a uniform manner as shall be practical and
as it shall determine to be equitable.

4.9 Employee Rights.

(a) Except as specifically provided herein, all Eligible Employees
shall have the same rights and privileges with respect to Offerings under
the Plan. All rules and determinations of the Plan Administrator in the
administration of the Plan shall be uniformly and consistently applied to
all persons in similar circumstances.

(b) An Eligible Employee's rights under the Plan with respect to an
Offering will terminate when he or she ceases to be an Eligible Employee
because of resignation, layoff, or discharge. Subject to subparagraph
4.9(c), a Withdrawal Notice will be considered as having been received from
the Employee on the day his or her employment ceases, and all Base Pay
deductions not used will be refunded.

(c) If a Participant's employment shall be terminated by reason of
retirement, death, or disability prior to the end of an Offering, he or she
(or his or her designated beneficiary, in the event of his or her death, or
if none, his or her legal representative) shall have the right, to elect to
have the balance of his or her Account either paid to him or her in cash or
applied as of the end of such Offering toward the

A-4
<PAGE> 21

purchase of Common Stock. Such right shall be exercised by written notice
given to the Plan Administrator (i) except as provided in clause (ii), no
more than 10 business days after such termination of employment; or (ii) if
the Participant's employment is terminated by reason of death, no more than
90 days after the Participant's designated beneficiary or legal
representative, as the case may be, has received notice from the Plan
Administrator regarding such right.

5. AWARDS.

5.1 Amount. The Plan Administrator may make Awards of Common Stock to
Employees or groups of Employees in its discretion.

5.2 Participation. The Plan Administrator shall determine, in its sole
discretion, who shall receive an Award, the size of any Award and the
conditions and restrictions, if any, applicable to such Award. The Plan
Administrator's decision shall be based on factors that it deems to be
appropriate. An Award may be granted under this Plan to an Employee who has
previously received an Award or other benefits under this or other plans of
the Company, including to an individual who was the recipient of an Award
canceled or suspended in connection with the Award then being granted.

5.3 Conditions and Restrictions. At the time an Award is granted, the
Plan Administrator shall determine the conditions and restrictions, if any,
applicable to such Award. Such conditions and restrictions may include (i)
provisions for the forfeiture of the shares subject to the Award upon the
occurrence or nonoccurrence of specified events, (ii) restrictions on the
sale, resale or other disposition of such shares, (iii) restrictions
related to the payment of dividends with respect to such shares, (iv)
restrictions with respect to the right to vote such shares, (v) put or call
rights with respect to such shares, (vi) provisions to comply with federal
and/or state securities laws, or (vii) other conditions or restrictions
deemed appropriate by the Plan Administrator. The Plan Administrator, in
its discretion, shall have the power to eliminate, or accelerate the lapse
of, any condition or restriction that it has imposed on an Award.

5.4 Consideration and Issuance. Common Stock granted under this
Section 5 shall be transferred in consideration of the services of the
Participant, with or without other payment therefor as determined by the
Plan Administrator and shall be issued in the Participant's name, or as
otherwise directed pursuant to Paragraph 8.3. The Participant will have all
of the rights of ownership of such shares, subject to the conditions and
restrictions established pursuant to Paragraph 5.3.

6. STOCK SUBJECT TO THE PLAN. The aggregate number of shares of Common
Stock available for grant under options under Section 4, and/or for issuance
under Awards under Section 5, shall not exceed 200,000, subject to adjustment
pursuant to Paragraph 7.1 hereof. In the event that any option granted under the
Plan expires unexercised or is terminated, surrendered or canceled without being
exercised, in whole or in part, for any reason, or any share of Common Stock
subject to an Award is forfeited pursuant to a condition imposed under Paragraph
5.3, the number of shares of Common Stock theretofore subject to such option or
Award shall again be available for grant under an option, or for issuance under
an Award, and shall not reduce the aggregate number of shares of Common Stock
available under the Plan, as set forth in this Section 6.

7. CHANGES IN CAPITAL STRUCTURE.

7.1 Share Adjustment Generally. In the event that the outstanding
shares of Common Stock of the Company are hereafter increased or decreased
or changed into or exchanged for a different number or kind of shares or
other securities of the Company or of another corporation, by reason of any
reorganization, merger, consolidation, recapitalization, reclassification,
stock split-up, combination of shares, or dividend payable in shares, (i)
appropriate adjustment shall be made by the Board in the number or kind of
shares as to which an option granted under this Plan shall be exercisable,
so that the option holder's proportionate interest shall be maintained as
before the occurrence of such event and (ii) the number or kind of shares
reserved for grant under options and issuance under Awards under the Plan
shall be appropriately adjusted. Shares of Common Stock subject to an Award
shall be treated in the same manner as other outstanding shares of Common
Stock, provided that any conditions and restrictions applicable to the
Award shall continue to apply to any Common Stock, other security or other
consideration received in connection with the foregoing. Any adjustment
made by the Board pursuant to

A-5
<PAGE> 22

this Paragraph 7.1 with respect to options under Section 4 shall be
consistent with Section 424(a) of the Code and shall be conclusive.

7.2 Merger. In the event of a merger, consolidation or share exchange
involving the Company, or the sale of more than 50% of the Company's
outstanding Common Stock to another entity or group, the Plan Administrator
may revise, alter, amend or modify the terms related to any Offering, or an
Award, in any manner that it deems appropriate, including, but not limited
to, either of the following respects:

(i) the date on which shares are purchased under the Offering, or
the dates upon which conditions and restrictions lapse under the Award,
may be advanced; and

(ii) the surrender of shares of Common Stock subject to an Award in
a merger, consolidation or share exchange involving the Company, or the
sale of such shares, may be authorized, free and clear of, or subject
to, any conditions and restrictions applicable to such shares, as
determined by the Plan Administrator.

The Plan Administrator may provide for any of the foregoing in an
agreement evidencing an Award. If the Plan Administrator believes that any
such event is reasonably likely to occur, the Plan Administrator may take
the foregoing action at any time before and contingent upon the
consummation of such an event.

8. EMPLOYEE'S RIGHTS AS A STOCKHOLDER.

8.1 Rights Contingent until Purchase or Issue. No Employee shall have
any right as a stockholder with respect to any shares under the Plan until
the shares have been purchased in an Offering, or issued in connection with
an Award, as applicable, and the purchase or issuance has been evidenced on
the ownership records of the Company.

8.2 Book Entry Ownership. Shares purchased in an Offering, or issued
in connection with an Award, as applicable, shall be reflected by means of
a book entry record maintained by the Company except to the extent that (i)
the Company elects to deliver certificates with respect to shares subject
to an Award; or (ii) the Participant requests that certificates be
delivered with respect to shares reflected by means of a book entry record
pursuant to procedures established by the Company.

8.3 Registration. Shares purchased by or issued to a Participant under
the Plan will be registered in the name of the Participant, or, if the
Participant so directs pursuant to procedures established by the Company,
in the names of the Participant and one such other person as may be
designated by the Participant, as joint tenants with right of survivorship,
to the extent and in the manner permitted by applicable law. With respect
to an Offering, such direction shall be by written notice to the Company no
less than 10 business days prior to the end of the Offering.

8.4 Subject to Applicable Laws. The obligations of the Company to sell
and deliver Common Stock under the Plan shall be subject to all applicable
laws, regulations, rules and approvals, including, but not by way of
limitation, the effectiveness of a registration statement under the
Securities Act of 1933 if deemed necessary or appropriate by the Company.

8.5 Legends. Certificates for shares of Common Stock purchased or
issued hereunder may be legended as the Plan Administrator shall deem
appropriate.

9. INTEREST. No interest will be paid or allowed on any money in the
Account of a Participant.

10. RIGHTS NOT TRANSFERABLE. No Participant shall be permitted to sell,
assign, transfer, pledge, or otherwise dispose of or encumber the Base Pay
deductions credited to his or her Account, or any rights with regard to the
exercise of an option or to receive shares in an Offering under the Plan, other
than by will or the laws of descent and distribution, and such right and
interest shall not be liable for, or subject to, the debts, contracts, or
liabilities of the Participant. If any such action is taken by the Participant,
or any claim is perfected by any other party in respect of such right and
interest whether by garnishment, levy, attachment or otherwise, such action or
claim will be treated as an election to withdraw funds in accordance with
Paragraph 4.5. An Award, or shares of Common Stock subject to an Award, shall
likewise not be subject to

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<PAGE> 23

sale, assignment, pledge or other disposition if such action would be
inconsistent with the conditions and restrictions applicable thereto.

11. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Board, if each director is a "disinterested person" (as defined below). If all
directors are not "disinterested persons," the Plan shall be administered by a
committee consisting of two or more members of the Board, each of whom shall be
a "disinterested person," which committee (the "Committee") may be an executive,
compensation or other committee, including a separate committee especially
created for this purpose. The Committee shall have such of the powers and
authority vested in the Board hereunder as the Board may delegate to it
(including the power and authority to interpret any provision of this Plan or of
any option or Award). The members of such Committee shall serve at the
discretion of the Board. A majority of the members of the Committee shall
constitute a quorum, and all actions of the Committee shall be taken by a
majority of the members present. Any action may be taken by a written instrument
signed by all of the members of the Committee and any action so taken shall be
fully effective as if it had been taken at a meeting. The Board and/or the
Committee, if one has been established by the Board, shall be referred to in
this Plan as the "Plan Administrator." "Disinterested person" shall be defined
by reference to the rules and regulations promulgated under Section 16(b) of the
Securities Exchange Age of 1934, as amended (the "Act").

Subject to the provisions of the Plan, and with a view to effecting its
purpose, the Plan Administrator shall have sole authority, in its absolute
discretion, to (a) construe and interpret the Plan, (b) define the terms used in
the Plan, (c) prescribe, amend and rescind rules and regulations relating to the
Plan, (d) correct any defect, supply any omission or reconcile any inconsistency
in the Plan, (e) determine the time or times at which options shall be granted
under the Plan, (f) determine all other terms and conditions of options, and (g)
make all other determinations necessary or advisable for the administration of
the Plan. All decisions, determinations and interpretations made by the Plan
Administrator shall be binding and conclusive on all Participants in the Plan
and on their legal representatives, heirs and beneficiaries.

12. TERMINATION OF AND AMENDMENTS TO PLAN. The Plan may be terminated at
any time by the Board. It will terminate in any case on the earlier of (a) the
date on which all or substantially all of the unissued shares of Common Stock
reserved for the purpose of the Plan have been issued and, in the case of
outstanding Awards, upon the lapse of all forfeiture conditions applicable
thereto, or (b) 10 years from the date the Plan is adopted by the Board. Upon
such termination or any other termination of the Plan, all Base Pay deductions
not used to purchase shares will be refunded.

The Board also reserves the right to amend the Plan from time to time in
any respect, provided, however, that no amendment shall be effective without
prior approval of the stockholders of the Company (a) which would, except as
provided in Sections 6 and 7, increase the aggregate number of shares of Common
Stock to be issued under the Plan, (b) which would change the class of Employees
eligible to receive options or Awards under the Plan, or (c) if such amendment
requires stockholder approval for any other reason in order for the Plan to be
eligible or continue to qualify for the benefits conferred by Securities and
Exchange Commission Rule 16b-3, as amended from time to time, or any successor
rule or regulatory requirements. No amendment may adversely affect an
outstanding option without the consent of the holder thereof unless such
amendment is required by law.

A-7
<PAGE> 24
CFI INDUSTRIES, INC.

THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON DECEMBER 5, 1995

The undersigned hereby appoints PHILP C. CALIAN and ROBERT W. GEORGE as
proxies, each with the power to appoint a substitute, and thereby authorizes
them to represent and to vote, as designated below, all the shares of common
stock of CFI Industries, Inc. held of record by the undersigned on October 18,
1995 at the Annual Meeting of Stockholders to be held on December 5, 1995, or
any adjournment thereof.
1. Authority to vote for the election as directors of the group of seven
nominees proposed by the board of directors listed below.
C. Clifford Brake, Marshall L. Burman, Philip C. Calian, Robert W.
George, Richard M. Harris, Donald J. Liebentritt and Sheli Z.
Rosenberg
2. To approve the Company's employee stock purchase plan, the Form Your
Future Plan.
3. To transact such other business as may properly come before the meeting or
any adjournment thereof.

YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES ON
THE REVERSE SIDE. IF YOU DO NOT MARK ANY BOXES, YOUR PROXY WILL BE VOTED IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT
VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.

<PAGE> 25
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this
Proxy will be voted FOR authority to vote for the election as directors of
the group of seven nominees proposed by the board of directors and FOR
authority to vote for the Form Your Future Plan.
FOR WITHHELD
1. Election of Directors.
For, except vote withheld from the following nominees:

_____________________________________________________________
FOR WITHHELD ABSTAIN
2. Form Your Future
Plan approval

3. To transact such other business as may properly come before the
meeting or any adjournment thereof.

IMPORTANT: Please sign and date
this Proxy exactly as your name or
names appear(s) hereon. If the
stock is held jointly, signatures
should include both names.
Executors, administrators, trustees,
guardians and others signing in a
representative capacity should give
full title. In order to ensure that
your shares will be represented at
the annual meeting of stockholders,
please sign, date and return this
Proxy promptly in the enclosed
business reply envelope. If you
do attend the meeting, you may, if
you wish, withdraw your Proxy and
vote in person.

_________________________________________

_________________________________________
Dated: ____________________, 1995