____________, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting
of Stockholders of CFC International, Inc. to be held at
the University of Chicago, Graduate School of
Business, The Conference Center, 450 North Cityfront Plaza
Drive, Chicago, Illinois on ______________, 1997 at 1:00
p.m. Central Time.
At the Annual Meeting, in addition to the election
of
directors, you will also be asked to consider an amendment
to our Companys certificate of incorporation increasing
the number of Voting Preferred Shares and a replacement
option granted to me by your Board of Directors to
purchase up to 10,000 of these shares. This amendment and
replacement option will assure my continuing voting control
of the Company in the event we issue a substantial number
of shares of Common Stock in an acquisition, merger, or
other transaction. Although no such transaction is
pending, your Board believes that the Company should be
in a position to issue a substantial number of additional
shares while maintaining my continuing voting control.
Your Board believes that my continuing control provides
CFC with protection against hostile takeover
attempts, which could cause disturbances in our growth
plans. As well, in a small, entrepreneurially-minded
company, quick decisions are essential. By having the
buck stop here, so to speak, with one individual who has
decades of industry experience in control, CFC will be
able to continue to act quickly in the best interests of
all of our shareholders.
We remain very optimistic about our business. In fact, I
have never been as excited about the near- and long-
term prospects of this Company. Growth is coming from all
of our international markets and in all of our product
lines. Our
new, state-of-the-art printing press will be fully
operational soon, increasing our capacity and quality in
the critical printed products area. I also remain
hopeful about and dedicated to growth through
acquisition, without dilution. These are, indeed, exciting
times at CFC International.
The election of directors, amendment to the certificate of
incorporation, replacement option and related matters are
more fully described in the enclosed Proxy Statement.
Please read the Proxy Statement closely and to mark, date
and sign the enclosed proxy and return it in the enclosed
envelope, which does not require postage if mailed in the
United States.
Sincerely,
Roger F. Hruby
Chairman of the Board &
Chief Executive Officer
YOUR VOTE IS IMPORTANT
Please Sign, Date, and Return Your Proxy Card
500 State Street, Chicago Heights, Illinois 60411
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
_______________, 1997
You are cordially invited to attend the annual meeting
of stockholders of CFC International, Inc., which will be
held at the University of Chicago, Graduate School of
Business, The Conference Center, 450 North Cityfront Plaza
Drive, Chicago,
Illinois on Monday, May 28, 1997 at 1:00 p.m. Central
Time, for the following purposes:
1. To elect directors;
2. To consider and vote upon a proposal to approve an
amendment to the Companys Certificate of Incorporation
relating to the Companys Voting Preferred Stock and an
option to purchase 10,000 shares of such stock granted to
Roger F. Hruby. A copy of the Amendment and the Hruby
Option are included as Appendix A to the proxy statement;
and
3. To transact such other business as may properly come
before the meeting.
Only stockholders of record at the close of business on
April 10, 1997 are entitled to vote at the meeting. A list of
such stockholders will be available for examination by any
stockholder for any purpose germane to the meeting, during
normal business hours, at Harris Trust & Savings Bank, 311
West Monroe, 14th Floor, Chicago, Illinois for a period of ten
days prior to the meeting.
A proxy statement and a proxy card solicited by the Board of
Directors are enclosed herewith. It is important that your
shares be represented at the meeting regardless of the size of
your holdings. Whether or not you intend to be present at the
meeting in person, we urge you to mark, date and sign the
enclosed proxy card and return it in the envelope provided for
that purpose, which does not require postage if mailed in the
United States. If you attend the meeting, you may, if you
wish, withdraw your proxy and vote in person.
Dennis W. Lakomy
Vice President, Chief
Financial Officer,
Treasurer, and Secretary
YOU ARE URGED TO MARK, DATE, AND SIGN THE ENCLOSED
PROXY AND RETURN IT PROMPTLY. THE PROXY
IS REVOCABLE AT ANY TIME PRIOR TO ITS
USE.
Chicago Heights, Illinois
__________, 1997
CFC INTERNATIONAL, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
_____________, 1997
This Proxy Statement is furnished in connection with
the solicitation by the Board of Directors of CFC
International, Inc. (the Company or CFC) of proxies for use
at the annual meeting of stockholders of the Company to
be held at the University of Chicago, Graduate School
of Business, The Conference Center, 450 North Cityfront
Plaza Drive, Chicago, Illinois at 1:00 p.m. Central Time,
on ____________, 1997, and at any postponement or
adjournment thereof. Proxies properly executed and returned
in a timely manner will be voted at the meeting in
accordance with the directions noted thereon. If no
direction is indicated, they will be voted for the election
of the nominees named herein as directors, for the proposal
to approve an amendment to the Companys Certificate
of
Incorporation relating to the Companys Voting Preferred
Stock and the Replacement Option (as defined below), and
on other matters presented for a vote in accordance with
the judgment of the persons acting under the proxies.
Any stockholder giving a proxy may revoke it at any time
before it is voted, either in person at the meeting, by
written notice to the Secretary of the Company, or by
delivery of a later-dated
proxy.
The Companys principal executive offices are located at
500 State Street, Chicago Heights, Illinois 60411
(telephone: 708/891-3456). It is expected that proxy
materials will be mailed to stockholders beginning on
or about ___________, 1997.
SHARES OUTSTANDING AND VOTING RIGHTS
Only stockholders of record at the close of business on
___________, 1997 are entitled to vote at the annual
meeting of stockholders. The Companys only outstanding
voting stock is its common stock, par value $.01 per share
(the Common Stock), of which
shares were outstanding as of the
close of business on ___________, 1997. Each share of
Common Stock is entitled to one vote. With respect to the
proposal to approve the Amendment to the Companys
Certificate of Incorporation, shares which are not
voted (whether by
abstention, broker non-vote, or otherwise) will have
the effect of a vote against the Amendment. (See
Proposal to Amend the Companys Certificate of
Incorporation Relating to the Number of Authorized Shares
of Voting Preferred Stock.)
Election of each director requires the affirmative vote
of
the holders of a plurality of the shares of the
Companys Common Stock present in person or represented by
proxy and entitled to vote at the meeting. Approval of
the proposed amendment to the Companys certificate of
incorporation requires the affirmative vote of the holders
of a majority of the Companys outstanding Common Stock.
In general, approval of any other matter submitted to the
stockholders for their consideration requires the
affirmative vote of the holders of a
majority of the shares of the Common Stock present in person
or represented by proxy. An automated system administered
by the Companys transfer agent will tabulate the votes.
ELECTION OF DIRECTORS
Six directors are to be elected at the meeting. The Board
of Directors has designated the persons named below
as nominees for election as directors for a term expiring at
the annual meeting of stockholders in 1998. All of the
nominees are serving as directors as of the date of
this Proxy Statement.
The six nominees for director receiving the vote of
the holders of a plurality of the shares of Common Stock
present in person or represented by proxy and entitled to
vote at the meeting will be elected. Unless otherwise
instructed, properly executed proxies that are returned in a
timely manner will be voted for election of the six
nominees. If, however, any of the nominees should be unable
or should fail to act as a
nominee by virtue of an unexpected occurrence, the proxies
will be voted for such other person as will be determined
by the holders of the proxies in their discretion, or the
Board of Directors may make an appropriate reduction in the
number of directors to be elected.
Biographical information concerning the six nominees is
presented below:
Roger F. Hruby, age 62, has been a director of the
Company since its formation. Currently, Mr. Hruby also
serves as the Companys Chairman of the Board and Chief
Executive Officer. Prior thereto, Mr. Hruby was the
President and Chief Operating Officer of the Companys
predecessor, Bee Chemical, from 1977 until the sale of
that company to Morton Thiokol, Inc., in 1985, at which
time Mr. Hruby also became its Chief Executive Officer.
Mr. Hruby also organized the formation of Bee
Chemicals Japanese joint venture in 1970 and supervised
its growth from a start-up venture to a significant
manufacturing company with sales in excess of $40 million.
In 1986, Mr. Hruby formed the Company, which purchased
Bee Chemicals specialty transferable solid coatings
division from Morton
Thiokol and has been Chairman of the Board, Chief
Executive Officer, and until June 1995, President of the
Company since the date of its incorporation. Mr. Hruby has
been involved in the specialty chemical industry since
1958. Mr. Hruby earned a
bachelors degree in chemistry from North Central College and
a Masters of Business Administration from the University
of
Chicago.
Robert J. DuPriest, age 56, has been a director of
the Company since August 1995. Mr. DuPriest also is the
President and Chief Operating Officer of the Company. He
joined the Company in 1990 as Vice President and Chief
Operating Officer, and became President in June 1995.
Prior to joining the Company, Mr. DuPriest served
from 1985 in successive management positions with Rank
Video Services of America, where he was responsible for
worldwide operations and joint ventures.
Mr. DuPriest earned a bachelors degree from
American University.
Dennis W. Lakomy, age 52, has been a director of the
Company since August 1995. Mr. Lakomy also is Vice
President, Chief Financial Officer, Secretary, and
Treasurer of the Company. He joined Bee Chemical in 1975
and served as Vice President and Controller of that company
from 1982 until co-founding CFC with Mr. Hruby in 1986.
Mr. Lakomy earned a bachelors degree in accounting from
Loyola University of Chicago and a Masters of Business
Administration from the University of Chicago.
William G. Brown, age 54, has been a director of the
Company
since August 1995. Mr. Brown currently is a partner of
Bell, Boyd & Lloyd, Chicago, Illinois, counsel to the
Company.
He
is also a Director of the MYR Group Inc., Medicus
Systems Corporation, Managed Care Solutions, Inc., and
Dovenmuehle Mortgage, Inc.
Richard Pierce, age 58, became a director of the Company
in August 1995. Before becoming a director, Mr. Pierce
served as an Advisory Director of the Company in 1991. He
currently is the Managing Director of the Chicago
office of Russell Reynolds Associates, Inc., an executive
recruiting firm, which he joined in 1976.
David D. Wesselink, age 54, became a director of the
Company in August 1995. Before becoming a director, Mr.
Wesselink served as an Advisory Director of the Company
since 1992.
He
has been Chief Financial Officer of Advanta Corporation,
a consumer credit company, since 1993. Prior thereto, he
served in several capacities with Household International, a
consumer and commercial financial services company,
including Chief Financial Officer, Treasurer and Vice
President, Research and Development.
The Board of Directors recommends that stockholders vote FOR
the election of each of the nominees for director.
Meetings and Committees of the Board
The three standing committees of the Board of Directors
of the Company are the Audit Committee, the Stock
Option Committee, and the Compensation Committee, the
functions and membership of which are described below.
The Board of Directors does not have a standing nominating
committee. The
Board of Directors held four meetings and acted four times
by unanimous written consent in 1996.
The Audit Committees functions include
making recommendations to the Board of Directors on the
selection of the Companys independent auditors,
reviewing the overall scope of the independent auditors
examination, reviewing the proposed annual financial
statements of the Company with the independent auditors
and reporting a summary of the Audit Committees
conclusions to the Board of Directors;
and
reviewing the Companys internal controls and
accounting policies with the independent auditors and
certain officers of the Company. The Audit Committee
currently consists of
Messrs. Brown, Pierce and Wesselink.
The Stock Option Committee is responsible for
the
administration and interpretation of, and the granting
of options under the CFC International, Inc. Stock Option
Plan (the Stock Option Plan) and the CFC International,
Inc. Stock Purchase
Plan (the Stock Purchase Plan
and,
collectively with the Stock Option Plan, referred to as
the Employee Plans). Messrs. Pierce and Wesselink currently
are members of the Stock Option Committee.
The Compensation Committee is responsible for approving
all employment contracts with, and salaries of, officers
of the Company. The Compensation Committee also is
responsible for all bonuses, other payments, plans (other
than the Employee Plans), or programs, and benefits for
the Companys officers. Messrs. Hruby, Brown, and Pierce
currently comprise the Compensation Committee.
Nominations for election of directors are made by the
Board of Directors and, pursuant to the Companys bylaws,
may be made by a committee appointed by the Board
or by any stockholder entitled to vote in the election
of directors. See Submission of Stockholder Proposals for
the 1998 Annual Meeting for procedures with respect to
nominations by
stockholders.
During 1996, the Stock Option Committee held two
meetings. The Audit Committee met twice and the
Compensation Committee met once during 1996. In 1996,
during the time each director served in such capacity, no
director attended less than 75% of the aggregate of all
meetings of the Board and all meetings held by committees
of the Board on which such director served.
PROPOSAL TO AMEND THE COMPANYS CERTIFICATE OF
INCORPORATION RELATING TO THE NUMBER OF AUTHORIZED
SHARES OF VOTING PREFERRED STOCK AND THE REPLACEMENT
OPTION The Companys
Certificate of Incorporation currently
authorizes 750 shares of Voting Preferred Stock, par
value $.01 per share (Voting Preferred Stock), none of
which is outstanding. The
holders of Voting Preferred Stock are
entitled to: (i) 1,000 votes per share on all matters to
be voted upon by stockholders; (ii) quarterly dividends
at an annual rate equal to the prime rate of LaSalle
Northwest National Bank, Chicago in effect as of the prior
December 31, applied to the per share issuance price
of the Voting Preferred Stock; and (iii) a liquidation
preference equal to the per share issuance price plus any
accumulated and unpaid dividends. The Voting Preferred
Stock has no preemptive, conversion, redemption, or
exchange rights.
Mr. Roger F. Hruby, the Companys Chairman of the
Board, Chief Executive Officer, and founder, currently has
an option to purchase for $500 per share part or all of
534 of the authorized but unissued shares of Voting
Preferred Stock (the Existing Option). Mr. Hrubys
Existing Option is currently exercisable, terminates
upon his death, and is not
transferable. The Existing Option contains
customary
antidilutive provisions. Were Mr. Hruby to exercise
the Existing Option in its entirety, he would be able to
acquire 534,000 additional votes for an aggregate purchase
price of $267,000, or $.50 per vote. Upon exercise of
the Existing Option, there are no restrictions placed
on Mr. Hrubys ability to transfer or sell the Voting
Preferred Stock and the Company does not have the right to
redeem the Voting Preferred Stock.
The Voting Preferred Stock and the Existing Option
were established prior to and in connection with the
Companys initial public offering of its Common Stock in
November 1995 (the IPO). Mr. Hrubys Existing Option was
granted to give Mr. Hruby additional assurances that he
would be able to maintain voting control of the Company.
The number of shares
of Voting Preferred Stock subject to the Existing Option
was selected with the intention of permitting Mr. Hruby to
replace the voting power associated with the
approximately 534,000 shares of nonvoting Class B Common
Stock, par value $.01 per share (the Class B Stock), of
the Company that Mr. Hruby beneficially owned at the time
of the IPO. Pursuant to the Companys Certificate of
Incorporation, the Class B Stock is convertible on a 1-for-
1 basis into shares of Common Stock by anyone other than
Mr. Hruby or any Hruby Family Member, as defined in the
Companys Certificate of Incorporation. The
exercise price, dividend rate, and liquidation value of
the Voting Preferred Stock and the Existing Option were
selected with the intention of making the aggregate
exercise price a substantial amount and to give Mr. Hruby
a return on such amount.
The Board of Directors of the Company has approved
an amendment (the Amendment) to the Companys Certificate
of Incorporation and the granting of a replacement option
(the Replacement Option) to Mr. Hruby. Adoption of the
Amendment and the Replacement Option is subject to their
approval by the stockholders of the Company. The texts of
Article FOURTH of the Certificate of Incorporation, with
the changes proposed in the Amendment, and the Replacement
Option are attached to this Proxy Statement as Appendix A.
The following discussion is qualified by reference to
Appendix A, which is incorporated herein by reference.
The Certificate of Incorporation currently provides
that each share of the Companys Voting Preferred Stock is
entitled to 1,000 votes. The Amendment, if approved,
would increase the number of authorized shares of Voting
Preferred Stock from 750 shares to 10,000 shares and
clarify the definition of Purchase Price of the Voting
Preferred Stock on which the dividend and liquidation
rights of such shares are based. The Amendment would not
change any other terms of the Voting Preferred Stock, and
would not effect any other changes to the Certificate of
Incorporation.
The Replacement Option would entitle Mr. Hruby to
purchase from the Company all or any part of the 10,000
shares of Voting Preferred Stock at an exercise and
issuance price of $50 per share at any time during the ten-
year period following its date of grant. If Mr. Hruby
were to exercise the Replacement Option in its
entirety, he would be able to acquire 10,000,000
additional votes for an aggregate purchase price of
$500,000, or $.05 per vote. The Replacement Option also
contains customary antidilution provisions so that in the
event that the Companys outstanding Common Stock is
changed by any combination or subdivision of shares or
any similar transaction or by any stock dividend, stock
split, reverse stock split, or any similar transaction,
the purchase price and the number of shares granted under
the Replacement Option will be proportionately adjusted.
The Existing Option will be terminated upon effectiveness of
the Replacement Option.
The Replacement Option is exercisable only by Mr. Hruby
and is not transferable by Mr. Hruby to anyone. The
Replacement Option will also expire if Mr. Hruby ceases to
be Chairman of the Board of the Company for any reason.
The terms of the Replacement Option do not contain any
restrictions on Mr. Hrubys ability to transfer or
sell any of the Voting Preferred Stock issued upon its
exercise, however such terms do require that Mr. Hruby and
any subsequent holders of the Voting Preferred Stock
enter into an agreement granting the Company the right
and option to repurchase any shares of Voting Preferred
Stock purchased by Mr. Hruby upon exercise of the
Replacement Option for a price equal to the price paid to
the Company by Mr. Hruby, plus any accrued but
unpaid dividends. This repurchase option would be
exercisable by the
Company at any time Mr. Hruby ceases to be Chairman of
the Board of Directors of the Company.
Mr. Hruby currently beneficially owns 2,528,640 shares
of Common Stock, which includes 538,670 shares of Common
Stock owned by certain of the Companys executive
officers and directors, or for the benefit of their
families, as to which Mr. Hruby holds
an irrevocable proxy. See Principal
Stockholders. These shares represent approximately 63.2%
of
the outstanding Common Stock and voting power of the
Company and enable Mr. Hruby to control the Company and
elect all of its directors. If Mr. Hruby were to exercise
the Replacement Option in its entirety, he would control
approximately 89.6%
of the voting power of the Company and the Company would
have to issue approximately 11,070,000 additional shares of
Common Stock (approximately 2.78 times the number of
currently outstanding shares of Common Stock) before Mr.
Hruby would not be able to absolutely control the Company
and elect all of its directors.
The Amendment and the Replacement Option were
initially proposed to the Companys Board of Directors by Mr.
William G. Brown, who is one of the Companys Directors and
is a partner of the law firm of Bell, Boyd & Lloyd, which
provides legal services to the Company. Mr. Brown proposed
the Amendment and the Replacement Option to the Board
in response to an indication by Mr. Hruby that the loss
of his voting control of the Company would be an extremely
important factor in his approval or disapproval of any
transaction involving the issuance of Common Stock.
Recognizing that fact, the other members of the Board
wanted to create a mechanism that would allow the Company
to issue substantial amounts of Common Stock in the future
without material dilution or cessation of Mr. Hrubys
voting control of the Company. The purpose of the
Amendment and the Replacement Option is to eliminate
the conflict to Mr. Hruby in the event that the
Company is presented with an opportunity to make an
acquisition or engage in a financing transaction that would
require the issuance of substantial amounts of Common Stock.
Were such an opportunity to arise, the Board believes that
the Replacement Option would permit Mr. Hruby to focus
solely on the best interests of the Company without
conflicting concerns regarding his personal objectives of
maintaining control of the Company and his management
positions with the Company. Because Mr. Hruby has informed
the Board that he desires to control the Company for only
so long as he is actively involved in managing its daily
affairs, the Replacement Option will expire upon Mr.
Hruby ceasing to be Chairman of the Board of Directors
of the Company and the Company will be entitled to
repurchase and retire any outstanding Voting Preferred
Stock at that time.
The number of shares subject to the Replacement Option
was
determined by the Board by simply selecting an
arbitrary amount of additional votes that the Board
thought would be adequate to ensure Mr. Hrubys voting
control of the Company for the foreseeable future.
Should the Company issue more than 11 million additional
shares of Common Stock prior to Mr. Hrubys resignation or
termination as Chairman of the Board, the Board may need
to reassess the terms of the Replacement Option and may
propose another amendment further increasing the number of
votes Mr. Hruby may acquire. The exercise price per share
of $50 for the Replacement Option was determined by the
Board by selecting an aggregate exercise price that would be
a significant amount to Mr. Hruby but that he would be able
to pay.
The Board retained the services of Comstock
Valuation Advisors, Inc. (Comstock), an independent
valuation firm, to determine whether the fair market
value of the Voting Preferred Stock was more than the
$500,000 aggregate exercise
price of the Replacement Option. In an opinion letter
dated March 31, 1997, Comstock determined that the fair
market value of the Voting Preferred Stock was not more
than the aggregate $500,000
purchase price. In reaching that conclusion,
Comstock reviewed the terms of the Voting Preferred Stock
from both a dividend yield method and a discounted
cash flow method, adjusting each upward by 10% for the
value of the voting control of the Company and downward
by approximately 30% for the lack of marketability and in
each case using an annual discount rate for funds of
10.6%. Based on the dividend yield method, Comstock
estimated the fair market value of the Voting
Preferred Stock to be approximately $428,000. Based on
the discounted cash flow method over a ten year period,
Comstock estimated the fair market value of the Voting
Preferred Stock to be approximately $497,000.
In recommending approval of the proposed Amendment and
the Replacement Option, the Board considered the
advisability of maintaining Mr. Hrubys voting control of
the Company even if a
substantial number of additional shares of Common Stock are
issued in an acquisition, merger, public offering, or
other transaction. The Board discussed the fact that the
existence of the Replacement Option may make the
Company a less attractive transaction partner or
investment opportunity, but the Board concluded that was
preferable to not being able to participate in any such
transactions. The Board also considered creating and
issuing an additional class
of
nonvoting common stock, but determined that nonvoting
common stock would not be as advantageous to the Company
as the Replacement Option because the Company would be
precluded from using that stock as consideration for
acquisitions to be accounted for under the pooling of
interests method. The
Board concluded that (i) reducing the term of the
Existing Option from Mr. Hrubys lifetime to the earlier of
Mr. Hrubys tenure as Chairman of the Board or ten years from
the date of grant and (ii) obtaining the right to
repurchase any
outstanding shares of Voting Preferred Stock in the
event Mr. Hruby ceases to be Chairman of the Board were
both in the Companys and its stockholders best interest.
Because each of the values reached by Comstock was less
than the $500,000 aggregate purchase price for the Voting
Preferred Stock, the Board of the Company has determined
that the terms of the Voting Preferred stock are fair to,
and in the best interests of, the Company and all of its
stockholders.
In
deciding whether to vote in favor of the Amendment and
the Replacement Option, stockholders of the Company
should be aware that the existence of the Voting
Preferred Stock, and Mr. Hrubys option to purchase
such stock, may impede takeovers of the Company and other
transactions that in some circumstances might be
beneficial to the Companys other stockholders. The
Replacement Option and Voting Preferred Stock have the
overall effect of preventing, without the approval of Mr.
Hruby, the acquisition or exercise of control over the
Company and the removal of incumbent officers and
directors, thus providing such officers and
directors (including Mr. Hruby) with the right, subject to
Mr. Hrubys exercise of his right, to retain their
positions. The
Replacement Option and Voting Preferred Stock might also
limit opportunities for stockholder participation in
certain types of transactions even though such transactions
might be favored by holders of a majority of the Companys
Common Stock, and may negatively impact the Companys
ability to enter into certain business combinations
or to engage in
certain
financing and acquisition transactions.
Approval of the Amendment requires the affirmative vote
of the holders of a majority of the Companys outstanding
Common Stock. Mr. Hruby currently beneficially owns and
has the
right to vote 2,528,640 shares of Common Stock, giving
Mr. Hruby the right to vote approximately 63.2% of the
outstanding
Common Stock. Accordingly, Mr. Hruby has sufficient
voting power to approve the Amendment and the Replacement
Option even if all of the other stockholders of the
Company vote against their approval.
However, Mr. Hruby has indicated his
intention to vote in favor of the proposal to approve
the Amendment and the Replacement Option only if such
proposal receives the affirmative vote of a majority of the
shares of the Companys outstanding Common Stock that are
voted with respect to the Amendment, other than shares
owned by Mr. Hruby. The effect of Mr. Hrubys intended
vote would be to have the approval of the Amendment and
the Replacement Option determined by the independent
stockholders of the Company. Shares of Common Stock
that are not voted (whether by abstention, broker non-
vote, or otherwise) will have the effect of a vote
against the Amendment for the purposes of satisfying the
statutory requirement of approval by holders of a
majority of the outstanding Common Stock, but will not
affect the determination of Mr. Hruby as to whether to
vote his shares in favor of the Amendment and therefore
would have no practical effect on the outcome of the
proposal. The Board of Directors has not obtained the
services of any proxy solicitors with respect to any of
the proposals in this Proxy Statement.
For the reasons set forth above, the Board of
Directors believes that the Amendment and the Replacement
Option are in the best interests of the Company and all of
its stockholders and recommends that stockholders vote FOR
approval of the Amendment and the Replacement Option.
Other Matters
Management knows of no other matters to be brought
before the annual meeting other than those described above.
If any other business should come before the meeting, it
is intended that the persons named in the enclosed proxy
will vote the shares in accordance with their best
judgment on any such matter.
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of March 24,
1997, certain information regarding the beneficial ownership
of the Companys Common Stock by each person known by the
Company to be the beneficial owner of 5% or more of
the outstanding Common Stock, by each director, nominee
for director, and Named Executive Officer (as defined
below), and by all directors and executive officers as a
group. As of such date, there were 112
record holders and approximately 1,200
beneficial holders of Common Stock.
Shares Beneficially
Owned Name (1)
Number
Percent
Roger F. Hruby (2) 2,520,607 63.2
Robert J. DuPriest 89,509 2.2
Dennis W. Lakomy 317,537 8.0
William G. Brown (3) 158,769 4.0
Richard Pierce 1,000 *
David D. Wesselink 1,000 *
RFH Investments, LP (4) 999,160 25.1
All directors and executive officers as a group
(7 persons) (2) (3) 2,549,752 63.9
___________
* Represents less than 1% of the outstanding Common Stock.
(1) The address of all of the persons named or
identified above is c/o CFC International, Inc., 500
State Street, Chicago Heights, Illinois 60411.
(2) Includes 999,160 shares of Common Stock owned by RFH
Investments, LP, a limited partnership of which Mr. Hruby is
the managing general partner (and of which all of the
partners are members of Mr. Hrubys immediate family or
trusts for the benefit of such family members), but does not
include 523,404 shares of Class B Common Stock owned by RFH
Investments, LP. The shares of Common Stock shown above as
beneficially owned by Mr. Hruby also include 538,670 shares
of Common Stock which Messrs. DuPriest and Lakomy and
members of Mr. Browns family beneficially owned immediately
after the IPO, which they still hold, and for which Mr.
Hruby holds an irrevocable voting proxy. In addition to
the Common Stock set forth in the table above, Mr. Hruby
owns an option to purchase 534 shares of the Companys Voting
Preferred Stock. (For a discussion of the options terms,
see Certain Transactions and Proposal to Amend the Companys
Certificate of Incorporation Relating to the Number of
Authorized Shares of Voting Preferred Stock and the
Replacement Option.)
(3) Includes 157,067 shares of Common Stock which are owned
by the William Gardner Brown 1993 GST Trust, a trust for the
benefit of Mr. Browns family and of which Mr. Brown is not a
beneficiary nor is he, or a member of his immediate family,
a trustee.
(4) RFH Investments, LP also owns 523,404 shares of Class B
Common Stock, which is substantially equivalent to the
Common Stock in all respects except that the Class B Common
Stock generally is not entitled to vote on any matters
submitted to a vote of the Companys stockholders.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The directors and certain officers of the Company are
required to report their transactions in the Common Stock to
the Securities and Exchange Commission within a specified
period following a transaction. During 1996, the directors
and officers filed all such reports within the specified time
period.
MANAGEMENT COMPENSATION
The following table provides certain summary information
concerning the compensation paid or accrued during the year
ended December 31, 1996 to the Companys Chief Executive
Officer and to each of the other executive officers of the
Company who received compensation in excess of $100,000 during
the last fiscal year (the Named Executive Officers). The
Company does not have a restricted stock award program or a
long-term incentive plan.
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Awards
Other Securities
Annual UnderlyingAll Ot
her
Name and Principal SalaryBonusCompensationOptions/SARs
Compensation
Position Year ($) ($) ($) (#)
($)*
Roger F. Hruby 1996285,00028,50024,000(1) - 3,000
Chairman of the Board and 1995 285,000 28,500 -
3,000
Chief Executive Officer 1994282,08828,500 - -
3,000
Robert J. DuPriest 1996181,50018,1506,727(2)10,000 3,000
President and Chief 1995165,00051,150523(2) - 3,000
Operating Officer 1994165,00016,500 - - 3,300
Dennis W. Lakomy 1996165,37516,537 - - 3,000
Vice President, Chief Financial 1995 157,500 15,750
- - -3,000
Officer, Treasurer and Secretary 1994 157,500 15,750
- - -3,150
___________
* Reflects matching contributions made by the Company
pursuant to the Companys contributory retirement savings
plan, which covers eligible employees who qualify as to age and
length of service. Under the plan, the Company makes matching
contributions equal to 50% of the first 4% of the employees
income that the employee contributes.
(1) A $1 million life insurance policy on Mr. Hruby is paid for
by the Company, with Mr. Hrubys estate as the
beneficiary. The amount shown above is the premium paid for
such policy.
(2) In connection with Mr. DuPriests exercise of options
covering 31,414 shares of Common Stock on November 24, 1995, the
Company loaned him $81,838 for the payment of taxes on the
gain realized upon the exercise of those options. The
Company loaned Mr. DuPriest another $28,715 to pay the final
estimated taxes due on January 15, 1996. The loan accrues no
interest and is due on January 31, 2001. The amount shown
above represents taxable income from imputed interest in
accordance with Internal Revenue Service requirements. The
following table sets forth individual grants of stock
options made to the Named Executive Officers during 1996.
Potential
Realizable Value
at Assumed
Percent of Total Annual Rates of Stock
Options GrantedExercisePrice Appreciation
Date ofOptionsto Employeesor Base Expiration
for Option Term (2)
Grant Granted in Fiscal Year Price (1)
Date 5% 10%
Roger F. Hruby - - - - - - -
Robert J. DuPriest 3/1/9610,000 13.8%$10.873/1/06$68,39
2 $173,320
Dennis W. Lakomy - - - - - - -
__________
(1) Under the Stock Option Plan, the exercise price must be
the fair market value of the Common Stock on the date of
grant and the options granted generally become exercisable as
to onefourth of the grant on each of the first, second,
third, and fourth anniversary of the date of grant.
(2) These amounts represent certain assumed annual rates of
appreciation calculated from the exercise price, as required
by the rules of the Securities and Exchange Commission.
Actual gains, if any, on stock option exercises and Common
Stock holdings are dependent on the future performance of the
Common Stock. There can be no assurance that the amounts
reflected in this table will be achieved.
Option Exercises and Year-End Valuation
The following table provides certain information with
respect to the Named Executive Officers concerning the
exercise of options and/or stock appreciation rights (SARs)
during 1996 and unexercised options and SARs held on December
31, 1996:
AGGREGATE 1996 OPTION/SAR EXERCISES AND VALUES
Number of SecuritiesValue of Une
xercised
Underlying Unexercised In-the-Mon
ey Options/
Shares AcquiredValue Options/SARs at
12/31/96
SARs at 12/31/96*
on ExerciseRealizedExercisableUnexercisableEx
ercisable Unexercisable
Name (#) ($) (#) (#) ($) ($)
Roger F. Hruby - - - - -
Robert J. DuPriest - - - 10,000 -
3,750 Dennis W. Lakomy - - - - -
____________
* This column indicates the aggregate amount, if any, by
which the market value of the Common Stock on December 31,
1996 exceeded the options exercise price and is based on the
closing per share sale price of the Common Stock on such date
of $11.25 as quoted on the Nasdaq National Market.
Directors Compensation
Directors of the Company who are not employees of the
Company are paid $1,500 for each board meeting attended and
$750 each board committee meeting attended which is not held
on the same day as a board meeting, but are not paid an annual
retainer. Directors of the Company who are also employees of
the Company are not paid any compensation for serving as
directors.
Upon the closing of the Companys initial public offering of
Common Stock (the IPO), each of the Companys non-employee
directors, Messrs. Brown, Pierce and Wesselink, were
automatically granted, pursuant to the CFC International, Inc.
Directors Stock Option Plan, a one-time option covering
10,000 shares of Common Stock. Each of the options has a term
of ten years and a per share exercise price of $9.50. The
options become exercisable as to one-fourth of the grant on
each of the first, second, third, and fourth anniversary of
the date of grant.
Compensation Committee Interlocks and Insider Participation
Until August 1995, Mr. Hruby, the Companys Chief Executive
Officer, approved the terms of the compensation of the
Companys executive officers. In August 1995, the Companys
Board of Directors formed a Compensation Committee, which is
currently comprised of Messrs. Hruby and Brown and chaired by
Mr. Pierce, which determines the compensation of the Companys
executive officers in the future.
William G. Brown, a director of the Company, is a partner of
the law firm of Bell, Boyd & Lloyd. The Company has utilized,
and anticipates that it will continue to utilize, the services
of such firm.
In accordance with rules promulgated by the Securities and
Exchange Commission, the information included under the
captions Report of the Compensation Committee and
Performance Graph will not be deemed to be filed or to be
proxy soliciting material or incorporated by reference in any
prior or future filings by the Company under the Securities
Act of 1933 as amended, or the Securities Exchange Act of
1934, as amended (the Exchange Act).
REPORT OF THE COMPENSATION COMMITTEE
The compensation of the Companys executive officers is
generally determined by the Compensation Committee of
the Board of Directors. The Compensation Committee
currently consists of three directors of whom a
majority are not officers or employees of the Company.
The following report with respect to certain compensation
paid or awarded to the Companys executive officers during
1996 is furnished by the directors who then comprised the
Compensation Committee.
General Policies
The Companys compensation program is intended to enable
to the Company to attract, motivate, reward, and retain
the
management talent required to achieve corporate objectives
in a highly competitive industry, and
thereby increase
stockholder value. It is the Companys policy to
provide
incentives to its senior management to achieve both short-
term and long-term objectives. To attain these
objectives, the Companys executive compensation program is
composed of a base salary and a stock option grants.
Section 162(m) of the Internal Revenue Code of 1986,
as amended, limits the deduction for federal income tax
purposes of certain compensation paid by any publicly held
corporation to its chief executive officer and its four
other highest
compensated officers to $1 million per each such
executive (the $1 million cap). The compensation currently
paid to the Companys executive officers, including
pursuant to the
Employee Plans, is not expected to exceed the $1 million
cap. See Base Salary.
Base Salary
Base salaries for executive officers are determined by
a subjective assessment of the executive
officers
responsibilities and position within the Company, and
the performance of the executive officer. Base
salaries are reviewed annually and from time to time by
the Compensation Committee and adjusted appropriately.
Prior to the creation of the Compensation Committee,
Mr. Hruby reviewed base salaries annually and adjusted
them as appropriate.
Stock Options
Options may be granted to executive officers, as well
as other employees of the Company, upon joining the Company
and each year thereafter under the Employee Plans.
Options are granted to executive officers taking into
account factors
including salary, position, and responsibilities. In
1996,
the Stock Option Committee granted options to purchase
77,673 shares of Common Stock pursuant to the Stock Option
Plan and options to purchase 14,114 shares of Common Stock
pursuant to the Stock Purchase Plan.
Chief Executive Officer Compensation
During 1996, the Companys most highly compensated
executive officer was Roger F. Hruby, Chairman and
Chief Executive Officer of the Company since the date of
its incorporation. Prior to the creation of the Compensation
Committee, Mr. Hruby determined his annual compensation
using the same criteria used to determine compensation
levels for other corporate officers and was based on
his assessment of his overall
performance and on information regarding awards made
by similar companies. Following the creation of the
Compensation Committee, the Compensation Committee
reviewed Mr. Hrubys
compensation arrangements using the same criteria that it
uses to determine compensation levels for other corporate
officers. No specific weighting was assigned to these
factors. Based on its review, the Compensation Committee
believes that Mr. Hrubys experience, dedication and
knowledge have been of vital importance to the
successful and ongoing growth of the administration and
operations of the Company. In the
Compensation Committees view, Mr. Hrubys fiscal 1996
compensation package reflects an appropriate balance of
(i)
the Companys performance in fiscal 1996, (ii) Mr. Hrubys own
performance level, and (iii) competitive standards.
Mr.
Hrubys compensation consists of base salary and bonus.
Compensation
Committee
Members
Richard Pierce
William G. Brown
Roger F. Hruby
PERFORMANCE GRAPH
The following graph compares the percentage change in
the cumulative total returns on the Companys Common Stock,
the Nasdaq Composite Index, and the S&P Chemical Composite
Index (assuming reinvestment of any dividends) for the
period beginning on November 16, 1995, the effective date
of the registration of the Common Stock under Section
12 of the Exchange Act, and ending on December 31, 1996,
the last day of the Companys 1996 fiscal year.
CORPORATE PERFORMANCE GRAPH
(See Exhibit 1)
Company/Index Name*
11/16/9512/29/9512/3
1/96
CFC International, Inc. $100.00
$90.79$118 .42
Nasdaq Composite Index 100.00
100.73
123.60
S&P Chemical Composite Index 100.00
105.55
127.68
___________
* Assumes $100 invested on November 16, 1995 in the
Companys
Common Stock, the Nasdaq Composite Index, and the
S&P Chemical Composite Index. Historical results are
not
necessarily indicative of future performance.
CERTAIN TRANSACTIONS
In August 1995, the Company granted to Mr. Hruby an
option to purchase, at an exercise price of $500 per
share, 534 shares of its Voting Preferred Stock, par
value $.01 per share, subject to antidilutive
adjustments. The holders of Voting Preferred Stock will
be entitled to (i) 1,000 votes per share on all matters to
be voted upon by stockholders; (ii) quarterly dividends at
an annual rate equal to the prime rate of LaSalle
Northwest National Bank, Chicago in effect as of the prior
December 31, applied to the per share purchase price
(initially $500) of the Voting Preferred Stock; and (iii)
a liquidation preference equal to the per share purchase
price (initially $500) plus any accumulated and unpaid
dividends. The Voting Preferred Stock has no pre-emptive,
conversion, redemption, or exchange rights. Mr. Hrubys
option is currently exercisable, terminates upon his
death, and is not transferable.
In connection with Mr. DuPriests exercise of
options covering 31,414 shares of Common Stock on November
24, 1995, the Company loaned him $81,838 for the payment of
a portion of the taxes on the gain realized upon the
exercise of those options. Additionally, on January
15, 1996, the Company loaned Mr. DuPriest an additional
$28,715 for the payment of the remainder of the taxes on
the gain realized upon the exercise of those options.
In the event Mr. DuPriest sells any shares of Common Stock
received pursuant to the exercise of those options prior to
the maturity of these loans, he will be obligated to
repay the loans from the proceeds, net of applicable
taxes, received from such sale. No interest accrues
under either loan and both mature on January 31, 2001.
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors, pursuant to the recommendation of
the Audit Committee, has selected the accounting firm of
Price Waterhouse LLP to serve as the independent accountants
of the Company for its current fiscal year ending December
31, 1997. Price Waterhouse LLP has served as the Companys
independent auditors since 1986. Representatives of Price
Waterhouse LLP are expected to be present at the annual
meeting, and they
will have an opportunity to make a statement if they so
desire and will be available to respond to appropriate
questions from stockholders.
SOLICITATION OF PROXIES
Proxies will be solicited by the Board of Directors through
the use of the mail. Proxies may also be solicited
by directors, officers, and a small number of other
employees of the Company personally, or by mail,
telephone, facsimile, or otherwise, but such persons will
not be compensated for such services. Brokerage
firms, banks, fiduciaries, voting trustees, or other
nominees will be requested to forward the soliciting
material to the beneficial owners of stock held of record
by them, and the Company has hired Proxy Services
Corporation to coordinate the solicitation of proxies by
and through such holders for a fee of approximately $1,000
plus expenses. The entire cost
of the Board of Directors
solicitation will be borne by the Company.
SUBMISSION OF STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL
MEETING
In accordance with rules promulgated by the Securities
and Exchange Commission, any stockholder who wishes to
submit a proposal for inclusion in the proxy material to be
distributed by the Company in connection with the 1998
Annual Meeting must do so no later than December 1,
1997. Any such proposal should be submitted in writing to
the Secretary of the Company at is principal executive
offices. Upon submitting a proposal, the stockholder
shall provide the Company with a written notice which
includes the stockholders name and address, the number
of shares of Common Stock that such stockholder holds
of record or beneficially, the dates upon which such
shares were acquired, and documentary support for a claim of
beneficial ownership.
GENERAL
It is important that proxies be returned promptly. If
you are unable to attend the meeting, you are urged,
regardless of the number of shares owned, to date, sign and
return without delay your proxy card in the enclosed
addressed envelope.
By Order of the Board
of Directors
Dennis W. Lakomy
Vice President, Chief
Financial Officer
Treasurer and Secretary
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF
INCORPORATION
OF
CFC INTERNATIONAL, INC.
CFC International, Inc., a Delaware corporation
(the Corporation), certifies that the following amendment of
the Certificate of Incorporation of the Corporation has been
duly adopted in accordance with the provisions of Sections
222 and 242 of the General Corporate Law of the State of
Delaware:
Article FOURTH of the Certificate of Incorporation
is
amended as follows:
1.The number 10,750,750 in the second line of Article
FOURTH is deleted and the number 10,760,000 is inserted in
lieu thereof.
2.The number 750 in the fifth line of Article FOURTH is
deleted and the number 10,000 is inserted in lieu thereof.
3.The words as determined pursuant to the Stock
Option
Agreement dated as of October 24, 1995 between the
Corporation and Roger F. Hruby in Section 4.2.1 of Article
FOURTH are deleted and the words paid to the Corporation
upon issuance are inserted in lieu thereof.
IN WITNESS WHEREOF, the Corporation has caused
this certificate to be signed by its Chairman and
Secretary this _____ day of _____________, 1997.
CFC INTERNATIONAL, INC.
By
Roger F. Hruby,
Chairman
ATTEST:
Dennis Lakomy, Secretary
ARTICLE FOURTH FROM
RESTATED CERTIFICATE OF
INCORPORATION OF CFC
INTERNATIONAL, INC.
WITH PROPOSED CHANGES MARKED
FOURTH: The total number of shares of all
classes of stock which the Corporation shall have authority
to issue is 10,760,000 10,750,750 of which (i) 10,000,000
shares, par value $.01 per share, are to be of a class
designated Common Stock (Common Stock); (ii) 750,000
shares, par value $.01 per share, are to be of a class
designated Class B Common Stock (Class B Stock); and
(iii) 10,000 750 shares, par value $.01 per share, are to
be of a class designated Voting Preferred Stock (Voting
Preferred Stock).
The Common Stock and Class B Stock shall rank on
a parity, share for share, in the payment of dividends and
in the distribution of assets in the event of any
liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, and shall
be identical in all other respects except for voting rights
which shall be in accordance with the provisions of Section
4.1.2 below and for conversion rights which shall be in
accordance with the provisions of Section 4.1.4 below.
4.1. Common Stock and Class B Stock Provisions.
4.1.1. Dividend Rights. Subject to the
provisions of applicable law and the preferences
of the Voting Preferred Stock, the holders of
the Common Stock and the holders of Class B
Stock shall be entitled to receive dividends at
such times and in such amounts as may be
determined by the Board of
Directors provided that no dividend shall be declared
or paid on the outstanding shares of Common Stock
unless an identical dividend, in an equal amount per
share, is concurrently declared and paid on the
outstanding shares of Class B Stock, and provided,
further, that similarly no dividend shall be declared
or paid on the outstanding shares of Class B Stock
unless an identical dividend, in an equal amount per
share, is concurrently declared and paid on the
outstanding shares of Common Stock.
4.1.2. Voting Rights. The holders of Common
Stock shall have one vote for each share on each
matter submitted to a vote or consent of the
stockholders of the Corporation and, except as and
to the extent otherwise provided by law, the holders
of Class B Stock shall not be entitled to vote on
any matter at any meeting or by consent of
Stockholders.
4.1.3. Liquidation Rights. In the event of any
liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, after
payment or provision for payment of the debts and
other liabilities of the Corporation and the
preferential amounts to which the holders of the
Voting Preferred Stock shall be entitled, the
holders of the Common Stock and Class B Stock shall
be entitled to share ratably in the remaining assets
of the Corporation.
4.1.4. Conversion of Class B Stock. The Class B
Common Stock shall be convertible into Common Stock,
share for share, in accordance with the provisions
hereafter set forth:
(a) Shares of Class B Stock shall be
convertible, at the option of the holder thereof, at
any time if the beneficial owner of such shares is
not a Hruby Family Member. For this purpose,
beneficial ownership shall include any ownership the
direct or indirect benefit of which accrues to any
Hruby Family Member. The term Hruby Family Member
shall mean and include the following persons:
(i) Roger F. Hruby and Nadeane L. Hruby; (ii) a
lineal descendant of a grandparent of Roger F. Hruby
or Nadeane L. Hruby or a spouse of any such lineal
descendant; (iii) any estate of or trust for the
benefit of any of the persons referred to in clauses
(i) through (ii); (iv) any partnership, corporation,
trust or other form of business or investment entity
or association controlled, managed or owned
beneficially to any material extent by any one or
more of any of the persons referred to in clauses
(i) through (iii).
(b) Before any holder of shares of Class B
Stock shall be entitled to convert his shares or to
receive a certificate representing the shares of
Common Stock into which his shares have been
converted, he shall surrender the certificate or
certificates therefor, duly endorsed to the
Corporation or in blank, at the office of the
Corporation, and shall give written notice to the
Corporation at its office that the beneficial owner
of such shares is not a Hruby Family Member, that he
elects to convert his shares and the name or names
(with addresses) in which he wishes the certificate
or certificates of Common Stock to be issued. The
Corporation will, as soon as practicable thereafter,
issue and deliver at its office to such holder of
shares, or to his nominee or nominees, certificates
for the number of shares of Common Stock to which he
shall be entitled.
(c) The Corporation shall at all times reserve
and keep available, free from preemptive rights, out
of its authorized but unissued Common Stock, solely
for the purpose of effecting the conversion of the
shares of the Class B Stock, the number of shares of
Common Stock deliverable upon the conversion of all
shares of Class B Stock then outstanding.
(d) In the case of any consolidation or merger
of the Corporation with or into any other
Corporation (other than a consolidation or merger in
which the Corporation is the continuing corporation)
or in the case of any sale or transfer of all or
substantially all of the assets of the Corporation,
the holder of each share of Class B Stock shall
after such consolidation, merger, sale or transfer
have the right to convert such share into the kind
and amount of shares of stock and other securities
and property which such holder would have been
entitled to receive upon such consolidation, merger,
sale or transfer if he had held the Common Stock
issuable upon the conversion of such share of Class
B Common Stock immediately prior to such
consolidation, merger, sale or transfer.
4.2. Voting Preferred Stock Provisions.
4.2.1. Liquidation Rights. In the event of any
liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the
holders of the Voting Preferred Stock shall be
entitled to receive an amount equal to the purchase
price per share paid to the Corporation upon
issuance , as determined pursuant to the Stock
Option Agreement dated as of October 24, 1995
between the Corporation and Roger F. Hruby (the
Purchase Price) of such shares plus any accrued
and unpaid dividends thereon before any distribution
shall be made to the holders of the Common Stock.
4.2.2. Dividend Rights. The holders of Voting
Preferred Stock shall be entitled to receive from
net income during each twelve month period ending
December 31 a mandatory dividend per share at the
rate per annum equal to the prime rate of interest
announced by LaSalle Northwest National Bank, in
effect as of the prior December 31, applied to the
Purchase Price of each share for the period issued
and outstanding, payable quarterly on the 31st day
of March, the 30th day of June, the 30th day of
September, and the 31st day of December in each
year. The Voting Preferred Stock shall be non
cumulative. The holders of the Voting Preferred
Stock shall not be entitled to receive any dividends
thereon other than those specifically herein above
provided for.
4.2.3. Voting Rights. On each matter submitted to
a vote of the stockholders of the Corporation, the
holders of Voting Preferred Stock shall have 1,000
votes for each share.
CFC INTERNATIONAL, INC.
VOTING PREFERRED STOCK OPTION AGREEMENT
CFC International, Inc., a Delaware corporation (the
Company), hereby grants to Roger F. Hruby (the Optionee) an
option to purchase 10,000 shares of its Voting Preferred
Stock, par value $.01 per share (Voting Preferred Stock),
upon the terms and conditions set forth herein (the Option). 1.
The purchase price payable upon exercise of the Option
shall be $50 per share, provided, however, that in the event
that the Companys outstanding Common Stock is changed by any
combination or subdivision of shares or any similar
transaction or by any stock dividend, stock split, reverse
stock split or any similar transaction, the purchase price and
the number of shares granted under this Option shall be
proportionately adjusted.
2. The exercise of the Option shall be subject to the
following conditions:
(a) The Option may be exercised in whole or in part and at
one time or from time to time by giving written notice to the
Company, attention of the Secretary, specifying the number of
shares to be purchased and accompanied by the full purchase
price for the shares to be purchased either in cash or by
check.
(b) At the time of any exercise of the Option, the Company
may require the Optionee to deliver to the Company a written
representation of present intention to purchase the shares for
his own account for investment and not for distribution. An
appropriate legend may be placed upon each certificate
delivered to the Optionee upon his exercise of part or all of
the Option.
(c) It is contemplated that the shares acquired upon the
exercise of the Option will not be registered under applicable
federal and state securities laws. Such shares cannot be
resold unless they are registered under such laws or unless an
exemption from registration is available. The certificate for
any such shares issued upon the exercise of the Option shall
bear a legend making appropriate reference to the provisions
of this paragraph.
3. The term of the Option shall continue until the earlier
of March 14, 2007, or the date on which the Optionee ceases to
serve as Chairman of the Board of the Company, at which time
the Option shall terminate.
4. The Option is not transferable and is exercisable only
by the Optionee himself. Without limiting the generality of
the foregoing, this Option is not exercisable by any legal
representative, attorney, hear, legatee, successor or assign
to the Optionee.
5. The Optionee shall not have any rights of a shareholder
with respect to the shares subject to the Option until such
shares are actually issued upon exercise of the Option.
6. By acceptance of this option certificate, the Optionee
agrees and accepts the termination and cancellation of the
option certificate delivered to the Optionee by the Company
dated October 24, 1995 to purchase 534 shares of its common
stock, par value $.01 per share, at a price of $500 per share.
7. By acceptance of this option certificate, the Optionee
agrees that at the time or times of his exercise of this
option he will enter into a an agreement with the Company
binding on all holders of shares of Voting Preferred Stock
issued by the Company pursuant to this option (the Holders)
pursuant to which the Holders shall grant to the Company the
right and option to purchase, exercisable at any time or times
after the date on which the Optionee ceases to be the Chairman
of the Board of the Company, part or all of the Holders
Voting Preferred, such option being exercisable pursuant to
the terms and conditions of this Section 7. Exercise of the
option by the Company to purchase shares of Voting Preferred
Stock shall be effected by written notice to the Holder or
Holders of the shares of Voting Preferred Stock which the
Company shall have elected, in its sole discretion, to
purchase stating the closing date and place of closing.
Payment of the purchase price to the Holder as hereinafter
provided shall be tendered to the Holder against delivery of
duly endorsed certificates representing the Voting Preferred
Shares purchased at the time and place set forth in such
written notice. If the Holder does not deliver duly endorsed
stock certificates at the closing representing all of the
Voting Preferred Shares being purchased, free of all adverse
claims, the transfer and sale of the Voting Preferred Shares
being purchased shall nonetheless be deemed to be effective as
of such date without any further action and the Company shall
record such transfer on the books and records of the Company,
provided that the Company shall hold the purchase price,
without interest, for payment at a subsequent date against
delivery of duly endorsed stock certificates. The option
granted by this Section 7 shall be exercisable on and after
the date on which the Optionee shall have ceased to be
Chairman of the Board of the Company whatever the reason,
whether voluntary or involuntary including death or
disability. The purchase price, payable in cash against
delivery of duly endorsed certificates representing the Voting
Preferred Shares being purchased, shall be the exercise price
paid by the Optionee to the Company for the Voting Preferred
Shares being purchased plus any accrued but unpaid dividends
thereon.
8. THIS OPTION AND THE TERMINATION AND CANCELLATION OF THE
OUTSTANDING OPTION CERTIFICATE ARE CONDITIONED ON THE APPROVAL
OF AN AMENDMENT TO THE CERTIFICATE OF INCORPORATION OF THE
COMPANY INCREASING THE NUMBER OF AUTHORIZED SHARES OF VOTING
PREFERRED STOCK FROM 750 TO 10,000, AND IN THE EVENT THAT A
MAJORITY OF STOCKHOLDERS OF THE COMPANY HAVE NOT APPROVED THAT
AMENDMENT ON OR BEFORE JUNE 15, 1997, THIS OPTION CERTIFICATE
SHALL BE NULL AND VOID AND OF NO FURTHER FORCE AND EFFECT.
This Option agreement is executed and effective as of this
___ day of _______, 1997.
CFC International, Inc.
By
President
I hereby assent to the terms and conditions stated above.
Roger F. Hruby, Optionee
EXHIBIT 1
CORPORATE PERFORMANCE GRAPH
This graph displays cumulative shareholder return with the
dollar amount on the Y axis and the time period on the X axis.
May 16, 1997
VIA EDGAR TRANSMISSION
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Preliminary Proxy Materials of CFC International, Inc.
Ladies and Gentlemen:
On behalf of CFC International, Inc., a Delaware corporation
(the Company), and pursuant to Item 101(a)(1)(iii) of
Regulation S-T, we hereby submit in electronic format for filing
pursuant to Rule 14a-6(a) under the Securities Exchange Act of
1934, as amended, the preliminary proxy statement and related
form of proxy, letter to stockholders and notice to be used at
the 1997 Annual Meeting of Stockholders of the Company (the
Meeting).
This revised form of preliminary proxy statement is filed in
response to comments delivered verbally by Mr. Alan Morris of the
Commissions staff (the Staff) to Mr. Mark McMillan of Bell,
Boyd & Lloyd, the Companys counsel. As the Company cannot
schedule and hold its annual meeting of stockholders until the
Staff has approved the form of proxy statement, the Company
respectfully requests that the Staff deliver any additional
comments it may have as soon as possible.
Please contact the undersigned at (708) 757-2803 or D. Mark
McMillan of Bell, Boyd & Lloyd, the Companys counsel, at (312)
807-4383 with any questions or comments concerning these
materials.
Sincerely,
Dennis W. Lakomy
Vice President & Chief Financial
Officer
cc: Alan M. Morris, Esq.
Nasdaq National Market
