UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
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[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
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[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
CFC International, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[GRAPHIC OMITTED][GRAPHIC OMITTED]
March 29, 2000
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 Wednesday, April 26, 2000 at 1:00 p.m. Central Time.
We remain very optimistic about our business. I remain hopeful about
and dedicated to growth through acquisition, without dilution. These are,
indeed, exciting times at CFC International.
The election of directors, consideration of the CFC International, Inc.
2000 Stock Option Plan and 2000 Directors' Stock Option Plan, and related
matters are more fully described in the enclosed Proxy Statement. Please read
the Proxy Statement closely and 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,
[GRAPHIC OMITTED][GRAPHIC OMITTED]
Roger F. Hruby
Chairman of the Board,
Chief Executive Officer
YOUR VOTE IS IMPORTANT
Please Sign, Date, and Return Your Proxy Card
<PAGE>
[GRAPHIC OMITTED][GRAPHIC OMITTED]
500 State Street, Chicago Heights, Illinois 60411
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 26, 2000
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 April 26, 2000 at 1:00 p.m. Central Time, for the
following purposes:
1. To elect directors;
2. To approve the CFC International, Inc. 2000 Stock Option Plan;
3. To approve the CFC International, Inc. 2000 Directors' Stock Option
Plan; and
4. To transact such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on March 20, 2000
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. 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.
[GRAPHIC OMITTED][GRAPHIC OMITTED]
Dennis W. Lakomy
Executive Vice President,
Chief Financial Officer,
Treasurer, and Secretary
Chicago Heights, Illinois
March 29, 2000
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.
<PAGE>
CFC INTERNATIONAL, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
April 26, 2000
We are sending you this Proxy Statement in connection with the
solicitation by the Board of Directors of CFC International, Inc. 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
Wednesday, April 26, 2000, and at any postponement or adjournment of the annual
meeting. If your proxy is properly executed and returned in a timely manner, it
will be voted at the meeting in accordance with the directions you provide. If
you do not provide any direction, your proxy will be voted for the election of
the nominees named as directors, for the approval of the CFC International, Inc.
2000 Stock Option Plan (the "2000 Plan"), for the approval of the CFC
International, Inc. 2000 Directors' Stock Option Plan (the "2000 Directors'
Plan") and on other matters presented for a vote in accordance with the judgment
of the persons acting under the proxies. You may revoke your proxy 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.
Our principal executive offices are located at 500 State Street,
Chicago Heights, Illinois 60411 (telephone: 708/891-3456). This Proxy Statement
is dated March 29, 2000 and we expect to mail proxy materials to you beginning
on or about that date. In this Proxy Statement, the words "CFC International,"
"Company," "we," "our," "ours," and "us" refer to CFC International, Inc.
SHARES OUTSTANDING AND VOTING RIGHTS
Only stockholders of record at the close of business on March 20, 2000
are entitled to vote at the annual meeting of stockholders. The only outstanding
voting stock is our common stock, par value $.01 per share (the "Common Stock"),
of which 4,201,866 shares were outstanding as of the close of business on March
20, 2000. Each share of Common Stock is entitled to one vote.
The seven nominees who receive the highest number of affirmative votes
will be elected as directors. For this purpose, only the affirmative votes from
the holders of the shares of the Common Stock that are present in person or
represented by proxy and entitled to vote at the meeting will be counted.
Approval of the 2000 Plan and the 2000 Directors' Plan and, 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 and entitled to vote at
the meeting. Abstentions, directions to withhold authority, and broker non-votes
are counted as shares present in the determination of whether the shares of
stock represented at the meeting constitute a quorum. Abstentions, directions to
withhold authority, and broker non-votes are not counted in tabulations of the
votes cast on proposals presented to stockholders. An abstention, direction to
withhold authority, or broker non-vote will have no effect on the election of
directors. On approval of the 2000 Plan and the 2000 Directors' Plan,
abstentions will have the effect of a no vote, while broker non-votes will not
be counted as shares entitled to vote on either proprosal and will have no
effect on the outcome of the vote. An automated system administered by our
transfer agent will tabulate the votes.
PROPOSAL I
ELECTION OF DIRECTORS
Seven 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 2001. All
of the nominees are serving as directors as of the date of this Proxy Statement.
Unless you instruct us otherwise, your properly executed proxy, that is
returned in a timely manner, will be voted for election of the seven nominees.
If, however, any of the nominees should be unable or should fail to act as a
nominee because of an unexpected occurrence, the proxies will be voted for such
other person as the holders of your proxy, acting in their discretion, may
determine. In the alternative, the Board of Directors may reduce the number of
directors to be elected.
Biographical information as of March 29, 2000 concerning the seven
nominees is presented below:
Roger F. Hruby, age 65, has been a director of the Company since its
formation. Currently, Mr. Hruby also serves as the Company's Chairman of the
Board and Chief Executive Officer. Prior thereto, Mr. Hruby was the President
and Chief Operating Officer of the Company's 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 Chemical's Japanese joint venture in 1970 and supervised
its growth from a start-up venture to a significant manufacturing company with
annual sales in excess of $40 million. In 1986, Mr. Hruby formed the Company,
which purchased Bee Chemical's specialty transferable solid coatings division
from Morton Thiokol, and has been Chairman of the Board and Chief Executive
Officer since the date of its incorporation. He was also President of the
Company from its incorporation until June 1995, and from January 1998 to January
1999. Mr. Hruby has been involved in the specialty chemical industry since 1958.
Mr. Hruby earned a bachelor degree in chemistry from North Central College and a
Masters of Business Administration from the University of Chicago.
William G. Brown, age 56, has been a director of the Company since
August 1995. Mr. Brown currently is a member of Bell, Boyd & Lloyd LLC, Chicago,
Illinois, counsel to the Company. He is also a director of Lifemark Corporation,
MYR Group and Dovenmuehle Mortgage, Inc.
Robert B. Covalt, age 67, became a director of the Company in August
1997. Mr. Covalt has been Chief Executive Officer of Sovereign Specialty
Chemicals, Inc. since 1996. Prior thereto, he served in several capacities with
Morton International, Inc., a salt and specialty chemicals company, most
recently as Executive Vice President and President of the Specialty Chemicals
Group.
Richard L. Garthwaite, age 49, was named director of the Company on
March 26, 1999. Currently, Mr. Garthwaite also serves as the Company's
President and Chief Operating Officer. Prior thereto, Mr. Garthwaite was
President and Chief Executive Officer of A.L. Hyde Company, which is a
manufacturer of plastic products and a division of Danaher Corporation, from
1990.
Dennis W. Lakomy, age 55, has been a director of the Company since
August 1995. Mr. Lakomy also is Executive 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 the Company 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.
Richard Pierce, age 60, became a director of the Company in August
1995. Before becoming a director, Mr. Pierce served as an Advisory Director of
the Company since 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 56, 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 currently is the Executive Vice President and
Chief Financial Officer of Metris Companies Inc., a direct marketer of consumer
credit products and fee-based services, which he joined in 1998. He was
previously Chief Financial Officer of Advanta Corporation, a consumer credit
company, from 1993 until March 1998. 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.
The Board of Directors unanimously recommends that you 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 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 in 1999.
The Audit Committee's functions include making recommendations to the
Board of Directors on the selection of the Company's 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 Committee's conclusions to the
Board of Directors; and reviewing the Company's internal controls and accounting
policies with the independent auditors and certain officers of the Company. The
Audit Committee currently consists of Messrs. Covalt, 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"), the CFC International, Inc.
Directors' Stock Option Plan (the "Directors' Stock Option Plan") and the CFC
International, Inc. Stock Purchase Plan (the "Stock Purchase Plan" and,
collectively with the Stock Option Plan and Directors' Stock Option Plan,
referred to as the "Employee Plans"). If stockholders approve the 2000 Plan and
the 2000 Directors' Plan, the Stock Option Committee also will administer,
interpret and grant options under each of those Plans. Messrs. Covalt, Pierce
and Wesselink currently are the members of the Stock Option Committee.
The Compensation Committee is responsible for approving all employment
contracts, if any, and salaries of officers of the Company. The Compensation
Committee also is responsible for all bonuses, other payments, plans (other than
the Employee Plans), programs, and benefits for the Company's officers. Messrs.
Hruby and Pierce currently comprise the Compensation Committee.
Nominations for election of directors are made by the Board of
Directors and, pursuant to the Company's 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 2000 Annual Meeting"
for procedures with respect to nominations by stockholders.
During 1999, the Stock Option Committee held four meetings, the Audit
Committee held two meetings and the Compensation Committee met once. In 1999,
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 II
APPROVAL OF THE CFC INTERNATIONAL, INC.
2000 STOCK OPTION PLAN
We ask for your approval of the CFC International, Inc. 2000 Stock
Option Plan, which we shall refer to as the 2000 Plan in the remainder of this
discussion.
We expect that our pool of shares for stock option grants under the
Stock Option Plan will be exhausted before year-end. The Stock Option Plan
provides incentives to management to achieve both short-term and long-term
objectives, including increasing return to stockholders. We grant stock options
to buy the Company's Common Stock at the current market price on the grant date.
As a result, an optionee will benefit when the share price increases above the
option exercise price and the option is exercised, in which case stockholders
also will benefit from the increased value of their stock.
We believe that the potential reward offered by stock options enables
us to attract and retain employees. Although stock options are potentially
dilutive to current stockholders, they help the Company compete for talent in a
competitive industry. Our employees' willingness to accept stock options as part
of their compensation demonstrates their commitment to the Company's long-term
success. For these reasons, the Board of Directors believes that it is in the
best interests of the Company and our stockholders to adopt a new stock option
plan for executives and key employees. The Board of Directors adopted the 2000
Plan on November 12, 1999, subject to stockholder approval at the annual
meeting.
We summarize below certain key features of the 2000 Plan. Because it is
a summary, it may not contain all the information that is important to you.
Please read the full text of the 2000 Plan, which we have included as Appendix
A, before you decide how to vote.
Description of the 2000 Plan
Purpose We believe the 2000 Plan will help us
and Eligibility attract, retain and motivate executives and key
personnel by offering them a favorable opportunity to
become holders of stock in the Company, thereby giving
them a permanent stake in the growth and prosperity of
the Company and encouraging the continuity of their
services with the Company or its subsidiaries. If the
market value of the Company's Common Stock increases,
optionees will receive value, as will our
stockholders. As of March 20, 2000, the closing market
price of Common Stock of the Company as quoted on the
Nasdaq National Market System was $7.25.
The 2000 Plan permits the grant of stock options to
executives and key personnel. All employees, including
directors who are not members of the Stock Option
Committee, are eligible to participate in the 2000
Plan.
Shares The Board of Directors has authorized a
Available total of 150,000 shares of Common Stock for issuance
under the 2000 Plan. Shares subject to options may be
made available from unissued or reacquired shares of
the Common Stock.
If the Company's capitalization changes or if there is
a merger or a similar transaction, we will adjust the
number of shares and the kind of shares available for
issuance and the other limits under the 2000 Plan. If
an option expires or is terminated or canceled
unexercised as to any shares, those released shares
may again be optioned.
Administration The Stock Option Committee of the Board of Directors,
consisting of at least two non-employee directors,
will administer the 2000 Plan. In general, the
committee has full discretion to select participants,
determine the number of shares subject to each option,
the option price of the shares subject to each option
(which price shall not be less than fair market value
of the shares at the date of grant), the time or times
when each options becomes exercisable, and the
duration of the grant, and adopt rules, regulations
and guidelines for the proper administration of the
2000 Plan.
Awards The committee will determine vesting, exercisability,
payment and other restrictions applicable to an award.
Stock options are not intended to quality as
"incentive stock options" under the Internal Revenue
Code of 1986, as amended (the "Code"). The exercise
price of any stock option must be at least equal to
the fair market value of the Common Stock on the grant
date. Stock options will have terms of no more than
ten years. Each option becomes exercisable in such
installments, at such time or times, and may be
subject to such conditions, including conditions based
upon the performance of the Company, as the Stock
Option Committee may in its discretion determine at
the date of grant.
The Stock Option Committee, at its discretion, may
accelerate the exercisability of any option, or at any
time before the expiration or termination of an option
previously granted, extend the terms of the option for
additional periods, except that the aggregate option
period with respect to any option shall never exceed
ten years.
The Stock Option Committee may permit the exercise
price to be paid, all or in part, by delivery to the
Company of other shares of Common Stock of the
Company, valued at the fair market value at the close
of business on the date preceding the date of
exercise. All options under the 2000 Plan will expire
30 days after the participant's termination of
employment or directorship with the Company and its
subsidiaries, except in the case of death, disability,
retirement, or cause. If a participant's employment or
directorship is terminated because of death or
permanent disability, the optionee must exercise the
option within one year. In the event of termination
due to retirement, the option must be exercised within
three months after the date of termination, but only
to the extent that the option was exercisable at the
date of termination. If an optionee is removed for
cause, the option expires immediately and all rights
to purchase shall terminate. For this purpose, removal
for cause means removed on account of dishonesty,
disloyalty, or insubordination.
Amendment We may suspend, amend, or discontinue the 2000 Plan at
any time. However, we may not suspend, amend or
discontinue the 2000 Plan, nor can the Stock Option
Committee amend any outstanding award, without a
participant's consent if it would adversely affect the
participant's rights under such award. In addition,
we will not amend the 2000 Plan without stockholder
approval to increase the maximum shares which may be
purchased by all optionees under the 2000 Plan, change
the minimum purchase price of any option, change the
limitations on the option period or increase the time
limitations on the grant of options or permit the
granting of options to members of the Stock Option
Committee.
Effectiveness The 2000 Plan shall take effect only upon
and Term stockholder approval at the annual meeting. Subject to
such stockholder approval, the 2000 Plan will remain
in effect until the tenth anniversary of the date on
which it is originally approved.
Options Expected As of this date of this proxy statement, the Stock
to be Option Committee has not made any decision about
Awarded options that will be granted in 2000 under the 2000
under the Plan. However, it is expected that no executive
2000 Plan officer, director or nominee, nor any of their
associates, will receive options under the Plan. In
addition, we expect that no single employee will
receive more than 5% of the options granted under the
Plan.
Federal Income Tax Consequences
The following discussion is only a summary of general federal income
tax consequences to the Company and participants, and does not cover all
possible federal, state or local income tax consequences of participation in the
2000 Plan.
Grant The grant of a stock option has no immediate federal
of Awards income tax consequences. The participant will not
recognize any income and the company will not be
entitled to any tax deduction.
Exercise of Non-Qualified The optionee generally will recognize ordinary income
Stock Options in an amount equal to the excess of the fair market
value of the shares on the exercise date over the
option exercise price.
Tax Deductions Upon the exercise of a non-qualified stock option, the
by the Company Company generally will be allowed an income tax
deduction equal to the ordinary income recognized by
a participant.
The Company may be unable to deduct amounts that would
otherwise be deductible under the rules described
above (a) if it is determined that the amount
paid does not constitute reasonable compensation; (b)
if the amount paid constitutes part of the
acquisition price of another business or is
otherwise required to be capitalized; (c)
if the Company fails to comply with
requirements relating to the proper
reporting of compensation and tax
withholding; (d) if the services with
respect to which the compensation is paid
are rendered to an affiliate of the company
that does not file a consolidated federal
income tax return with the company; or (e)
if Section 162(m) of the Code applies.
Section 162(m) provides in general that a
publicly traded company may not deduct more
than $1 million in compensation paid in any
one calendar year to its chief executive
officer or to any other executive officer
whose compensation is required to be
disclosed in its proxy statement.
Adoption of the 2000 Plan. The affirmative vote of the holders of a
majority of the shares of Common Stock present in person or by proxy and
entitled to vote at the meeting is necessary to approve the adoption of the 2000
Plan.
The Board of Directors unanimously recommends that you vote "FOR" the
approval of the CFC International, Inc. 2000 Stock Option Plan.
PROPOSAL III
APPROVAL OF THE CFC INTERNATIONAL, INC.
2000 DIRECTORS' STOCK OPTION PLAN
We ask for your approval of the CFC International, Inc. 2000 Directors'
Stock Option Plan, which we shall refer to as the 2000 Directors' Plan in the
remainder of this discussion.
We expect that our pool of shares for stock option grants under the
Directors' Stock Option Plan soon will be exhausted. The Directors' Stock Option
Plan offers the Company's non-employee directors a favorable opportunity to
become stockholders, thereby giving them a permanent stake in the growth and
prosperity of the Company. The Board of Directors believes that it is in the
best interests of the Company and our stockholders to adopt a new stock option
plan for the Company's non-employee directors. The Board of Directors adopted
the 2000 Directors' Plan on November 12, 1999, subject to stockholder approval
at the annual meeting.
We summarize below certain key features of the 2000 Directors' Plan.
Because it is a summary, it may not contain all the information that is
important to you. Please read the full text of the 2000 Directors' Plan, which
we have included as Appendix B, before you decide how to vote.
Description of the 2000 Directors' Plan
Purpose We believe the 2000 Plan will help us
and Eligibility retain non-employee directors and align their
interests more closely with the interests of the
Company's stockholders by offering them a favorable
opportunity to become stockholders of the Company,
thereby giving them a permanent stake in the growth
and prosperity of the Company and encouraging the
continuity of their services with the Company. If the
market value of the Company's Common Stock increases,
optionees will receive value, as will our
stockholders.
The 2000 Directors' Plan permits the grant of stock
options to all non-employee directors of the Company.
Shares Available The Board of Directors has authorized a total of
50,000 shares of Common Stock for issuance under the
2000 Directors' Plan. Shares subject to options may
be made available from unissued or reacquired shares
of the Company's Common Stock.
If the Company's capitalization changes or if there is
a merger or a similar transaction, we will adjust the
number of shares and the kind of shares available for
issuance and the other limits under the 2000
Directors' Plan. If an option expires or is
terminated or canceled unexercised as to any shares,
those released shares may again be optioned.
Administration The Board of Directors will administer the 2000
Directors' Plan. In general, the Board of Directors
shall interpret the terms and provisions of the 2000
Directors' Plan.
Awards If stockholders approve the 2000 Directors' Plan, all
non-employee directors elected after the annual
meeting of stockholders shall be granted an option to
purchase 10,000 shares of the Company's Common Stock
upon the director's initial election to the Board of
Directors.
Non-employee directors re-elected to the Board of
Directors at this annual meeting of stockholders shall
be granted an option to purchase 2,500 shares of the
Company's Common Stock upon the director's
re-election.
Stock options are not intended to quality as
"incentive stock options" under the Code. The exercise
price of any stock option shall be the fair market
value of the Company's Common Stock on the grant date.
Stock options shall have terms of ten years and will
become exercisable with respect to 25% of the shares
subject to the option 12 months after the date of its
grant and with respect to an additional 25% at the end
of each 12-month period during each of the succeeding
three years.
The Stock Option Committee may permit the exercise
price to be paid, all or in part, by delivery to the
Company of other shares of Common Stock of the
Company, valued at the fair market value at the close
of business on the date preceding the date of
exercise. All options under the 2000 Directors' Plan
will expire 30 days after the participant's tenure as
director is terminated, except in the case of death,
disability, retirement, or cause. If a participant's
tenure as director is terminated because of death or
permanent disability, the optionee must exercise the
option within one year. In the event of termination
due to retirement, the option must be exercised within
three months after the date of termination, but only
to the extent that the option was exercisable at the
date of termination. If an optionee is removed for
cause, the option expires immediately and all rights
to purchase shall terminate. For this purpose, removal
for cause means removed on account of dishonesty,
disloyalty, or insubordination.
Amendment The Company may suspend, amend, or discontinue the
2000 Plan at any time. However, the Company may not
suspend, amend or discontinue the 2000 Plan, nor can
the Stock Option Committee amend any outstanding
award, without a participant's consent if it would
adversely affect the participant's rights under such
award. In addition, the Company will not amend the
2000 Plan without stockholder approval to increase the
maximum shares which may be purchased by all optionees
under the 2000 Plan, change the minimum purchase price
of any option, or change the limitations on the option
period or increase the time limitations on the grant
of options.
Effectiveness The 2000 Directors' Plan shall take effect
and Term only upon stockholder approval at the annual meeting.
Subject to stockholder approval, the 2000 Directors'
Plan will remain in effect until the tenth anniversary
of the date on which it is originally approved.
Options expected to be awarded in 2000 under Securities
the 2000 Directors' Plan Underlying Options
- ------------------------ ------------------
William G. Brown 2,500
Non-employee Director
Robert B. Covalt 2,500
Non-employee Director
Richard Pierce 2,500
Non-employee Director
David D. Wesselink 2,500
Non-employee Director
No other person, executive officer, or employee is eligible to receive options
under the 2000 Directors' Plan.
Federal Income Tax Consequences
The following discussion is only a summary of general federal income
tax consequences to the Company and participants, and does not cover all
possible federal, state or local income tax consequences of participation in the
2000 Directors' Plan.
Grant The grant of a stock option has no immediate federal
of Awards income tax consequences. The participant will not
recognize any income and the company will not be
entitled to any tax deduction.
Exercise of Non-Qualified The optionee generally will recognize ordinary
Stock income in an amount equal to the excess of the fair
Options market value of the shares on the exercise date over
the option exercise price.
Tax Deductions Upon the exercise of a non-qualified stock option,
by the the Company generally will be allowed an income tax
Company deduction equal to the ordinary income recognized by
a participant.
The Company may be unable to deduct amounts
that would otherwise be deductible under
the rules described above (a) if it is
determined that the amount paid does not
constitute reasonable compensation; (b) if
the amount paid constitutes part of the
acquisition price of another business or is
otherwise required to be capitalized; (c)
if the Company fails to comply with
requirements relating to the proper
reporting of compensation and tax
withholding; (d) if the services with
respect to which the compensation is paid
are rendered to an affiliate of the company
that does not file a consolidated federal
income tax return with the company; or (e)
if Section 162(m) of the Internal Revenue
Code applies.
Adoption of the 2000 Directors' Plan. The affirmative vote of the
holders of a majority of the shares of Common Stock present in person or by
proxy and entitled to vote at the meeting is necessary to approve the adoption
of the 2000 Directors' Plan.
The Board of Directors unanimously recommends that you vote "FOR" the
approval of the CFC International, Inc. 2000 Directors' Stock Option Plan.
Other Matters
We know 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, we expect that the persons named in the enclosed proxy will vote your
shares in accordance with their best judgment on that matter.
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of March 20, 2000, certain
information regarding the beneficial ownership of the 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 under "Management Compensation"), and by all
directors and executive officers as a group. As of such date, there were 147
record holders and approximately 700 beneficial holders of Common Stock and
4,201,866 shares of Common Stock outstanding.
Shares Beneficially
Owned
-----
Name(1) Number(2) Percent
- ------ --------- -------
Roger F. Hruby (3)................................ 2,432,321 57.9
Dennis W. Lakomy.................................. 322,264 7.7
William G. Brown (4).............................. 164,569 3.9
Richard L. Garthwaite............................. 50,000 1.1
Robert B. Covalt.................................. 5,000 *
Richard Pierce.................................... 11,000 *
David D. Wesselink................................ 13,000 *
RFH Investments, LP (5)........................... 930,044 22.1
Royce & Associates, Inc.(6)....................... 468,000 11.1
Artisan Partners Limited Partnership (7).......... 390,800 9.3
All directors and executive officers as a group
(7 persons) (3)(4)................................ 2,579,041 61.4
- -----------
* Represents less than 1% of the outstanding Common Stock.
(1) Unless otherwise indicated, 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) The numbers and percentages of shares shown above as owned by the
directors, Named Executive Officers, and by all directors and executive
officers as a group include in each case all outstanding stock options
covering shares of Common Stock that were exercisable within 60 days of
March 20, 2000 by that person or group as follows: (i) Dennis W. Lakomy -
1,414; (ii) William G. Brown - 10,000; (iii) Robert B. Covalt - 5,000; (iv)
Richard Pierce - 10,000; (v) David D. Wesselink - 10,000; and all directors
and executive officers as a group (including such individuals) - 27,018.
(3) Includes 930,044 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. Hruby's immediate family or
trusts for the benefit of such family members), but does not include
512,989 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 469,500 shares of Common Stock which Mr. Lakomy and members of Mr.
Brown's family beneficially owned immediately after the Company's initial
public offering of Common Stock in November 1995, which they still hold,
and for which Mr. Hruby holds an irrevocable voting proxy. Mr. Hruby also
holds an irrevocable voting proxy on Mr. Garthwaite's 50,000 shares. In
addition to the Common Stock set forth in the table above, Mr. Hruby owns
an option to purchase 534 shares of the Company's Voting Preferred Stock
with an exercise price of $500 per share. The Voting Preferred Stock is
entitled to 1,000 votes per share on all matters to be voted upon by the
Company's stockholders.
(4) 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. Brown's family
and of which Mr. Brown is not a beneficiary nor is he, or a member of his
immediate family, a trustee.
(5) RFH Investments, LP also owns 512,989 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 Company's stockholders and not included in
shares owned.
(6) The number of shares of Common Stock shown as beneficially owned is derived
from a Schedule 13G dated February 9, 2000 filed with the Securities and
Exchange Commission by the listed stockholder. Such stockholder's address
is 1414 Avenue of the Americas, New York, New York 10019.
(7) The number of shares of Common Stock shown as beneficially owned is derived
from a Schedule 13G dated February 14, 2000 filed with the Securities and
Exchange Commission by the listed stockholder. Such stockholder's address
is 1000 North Water Street, #1770, Milwaukee, WI 53202.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that our directors and
executive officers, and any person who own more than 10% of the Common Stock, to
report their transactions in the Common Stock to the Securities and Exchange
Commission and the Company within a specified period following a transaction.
Based solely on our review of copies of the forms that we have received, we
believe that during 1999, our executive officers, directors, and greater than
10% stockholders complied with their reporting obligations.
MANAGEMENT COMPENSATION
The following table provides certain summary information concerning the
compensation paid or accrued during the year ended December 31, 1999 to our
Chief Executive Officer and to each of the other executive officers who received
compensation in excess of $100,000 during the last fiscal year (the "Named
Executive Officers"). The Company does not have a restricted stock award program
or a long-term incentive plan.
SUMMARY COMPENSATION TABLE
--------------------------
Long-Term
Compen-
sation
Awards
------
ANNUAL COMPENSATION Other Securities All
------------------- Annual Underlying Other
Compen- Options/ Compen-
Name and Principal Salary Bonus sation SARs sation
Position Year ($) ($) ($) (#) ($)*
-------- ---- --- -- --- --- ----
Roger F. Hruby............ 1999 385,000 59,460 - - 5,000
Chairman of the Board 1998 350,000 - - - 5,000
Chief Executive Officer 1997 329,240 - - - 3,000
Richard L. Garthwaite..... 1999 188,194 30,000 135,697(1) 50,500 -
President, Chief Operating - - - - - -
Officer - - - - - -
Dennis W. Lakomy.......... 1999 181,912 18,027 - - 3,643
Executive Vice President, 1998 175,665 - - - 3,568
Chief Financial Officer, 1997 165,375 - - 19,458 3,000
Treasurer, and Secretary
- -----------
* Reflects matching contributions made by the Company pursuant to the
Company's 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
employee's income that the employee contributes.
(1) Mr. Garthwaite was awarded 50,000 restricted shares of the Company's stock
having a fair market value of the amount shown in the table on January 18,
1999, the date of the grant, with 25% immediately vesting, and the
remainder vesting equally over the first three anniversary dates.
<PAGE>
Option Grants in Last Fiscal Year
The following table sets forth individual grants of stock options made to
Named Executive Officers during 1999.
Percent
of Potential
Total Realizable
Options Value at
Granted Assumed
to Exer- Rates of
Employ- cise Stock Price
ees or Appreciation for
in Base Expir- Option Term (3)
Date of Options Fiscal Price ation ---------------
Name Grant(1) Granted Year (2) Date 5% 10%
- --------------------- --------- ------ ----- ----- -------- -------- --------
Roger F. Hruby
Richard L. Garthwaite 03/26/99 35,500 39.5% $9.50 03/26/07 $158,753 $380,243
03/26/99 15,000 16.7% 9.50 03/26/09 68,037 162,961
Dennis W. Lakomy
- -----------
(1) Except for specific situations, the options granted become exercisable as
to one-fourth of the grant on each of the first, second, third, and fourth
anniversary of the date of grant.
(2) Under our Stock Option Plan, the exercise price must be the fair
market value of our Common Stock on the date of grant.
(3) These amounts represent certain assumed annual rates of appreciation
calculated from the exercise price, as required by the rules of the
Securities and Exchange Commission. Actual gains, if any, on stock option
exercises and Common Stock holdings depend on the future performance of our
Common Stock. We cannot assure you that the amounts reflected in this table
will be achieved.
Option Exercises and Year-End Valuation
The following table provides certain information with respect to the
Named Executive Officers concerning the exercise of options and/or stock
appreciation rights ("SARs") during 1999 and unexercised options and SARs held
on December 31, 1999:
AGGREGATE 1999 OPTION/SAR EXERCISES AND VALUES
Value of
Number of Unexercised
Securities In-the
Underlying Money
Unexercised Options/
Options/SARs at SARs at
Shares 12/31/99 12/31/99*
Aquired ----------------- -----------------
on Value Unexer- Unexer-
Exer- Real- Exercis- cise- Exercis- cise
cise ized able able able able
Name (#) ($) (#) (#) ($) ($)
- ---- --- --- --- --- --- ---
Roger F. Hruby......... - - - - - -
Richard L. Garthwaite.. - - - 50,500 - -
Dennis W. Lakomy....... - - 1,414 18,044 - -
- -----------
* This column indicates the aggregate amount, if any, by which the market
value of the Common Stock on December 31, 1999 exceeded the options'
exercise price and is based on the closing per share sale price of the
Common Stock on such date of $6.125 as quoted on the Nasdaq National
Market.
Directors' Compensation
We pay our directors who are not employees $1,500 for each board
meeting attended and $750 for each board committee meeting attended that is not
held on the same day as a board meeting. We do not pay our directors an annual
retainer. We do not pay our directors who are also our employees any
compensation for serving as directors.
Upon the closing of the Company's initial public offering of Common
Stock (the "IPO"), each of the Company's 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.
We have an employment agreement with Mr. Garthwaite under which he is
entitled to receive an annual base salary and bonus. In addition, the agreement
provides for the payment of compensation and benefits if Mr. Garthwaite's
employment is terminated following a change in control of the Company. If Mr.
Garthwaite is terminated following a change in control, he will receive a
payment equal to 24 months of his base salary plus a prorated bonus.
Compensation Committee Interlocks and Insider Participation
Until August 1995, Mr. Hruby, the Company's Chief Executive Officer,
approved the terms of the compensation of the Company's executive officers. In
August 1995, the Company's Board of Directors formed a Compensation Committee,
which is currently comprised of Messrs. Hruby and Pierce, which determines the
compensation of the Company's executive officers in the future.
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 Committee of the Board of Directors generally
determines the compensation of our executive officers. The Compensation
Committee currently consists of two directors of the Company. The following
report with respect to certain compensation paid or awarded to the Company's
executive officers during 1999 is furnished by the directors who then comprised
the Compensation Committee.
General Policies
Our compensation program is intended to enable us 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 our policy to provide incentives to its senior management to
achieve both short-term and long-term objectives. To attain these objectives,
the executive compensation program is composed primarily of a base salary,
bonuses, and 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"). We do not expect the compensation currently paid to the Company's
executive officers, including pursuant to the Employee Plans, to exceed the $1
million cap.
Cash Compensation
We determine base salaries for executive officers by subjectively
assessing the executive officer's 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. We exceeded our minimum targeted performance
expectations during 1999. As a result, our executive officers will receive a
bonus for 1999 in 2000.
Stock Options
We may grant options to executive officers, as well as other employees
of the Company, upon joining the Company and each year thereafter under the
Employee Plans. The Stock Option Committee takes into account factors including
salary, position and responsibilities when granting options to executive
officers. In 1999, the Stock Option Committee granted options to purchase 90,800
shares of Common Stock pursuant to the Stock Option Plan and options to purchase
9,380 shares of Common Stock pursuant to the Stock Purchase Plan.
Chief Executive Officer Compensation
During 1999, our most highly compensated executive officer was Roger F.
Hruby, Chairman and Chief Executive Officer since the date of our incorporation.
Prior to the creation of the Compensation Committee, Mr. Hruby determined his
annual compensation by using the same criteria he used to determine the
compensation levels for other corporate officers and based his compensation on
his assessment of his overall performance and on information regarding awards
made by similar companies. Since the creation of the Compensation Committee, the
Compensation Committee has reviewed Mr. Hruby's compensation 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. Hruby's 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 Committee's view, Mr. Hruby's fiscal 1999 compensation package
reflects an appropriate balance of (i) the Company's performance in fiscal 1999,
(ii) Mr. Hruby's own performance level, and (iii) competitive standards. Mr.
Hruby's compensation typically consists of a base salary and bonus.
Compensation Committee Members
Richard Pierce
Roger F. Hruby
<PAGE>
PERFORMANCE GRAPH
The following graph compares the percentage change in the cumulative
total returns of the Company's 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, 1999, the last day of the Company's 1999 fiscal year.
Comparison of Cumulative Return
vs. Nasdaq Composite and S&P Chemical Composite Indices*
Company/Index Name 12/29/95 12/31/96 12/31/97 12/31/98 12/31/99
- ------------------ -------- -------- -------- -------- --------
CFC International, Inc. $ 90.79 $118.42 $123.68 $ 84.21 $ 64.47
Nasdaq Composite Index 100.73 123.61 150.35 209.93 389.60
S&P Chemical Composite
Index 104.49 127.89 152.50 141.21 161.06
--------
* Assumes $100 invested on November 16, 1995 in the Company's Common Stock,
the Nasdaq Composite Index, and the S&P Chemical Composite Index.
Historical results are not necessarily indicative of future performance.
<PAGE>
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors, pursuant to the recommendation of the Audit
Committee, has selected the accounting firm of PricewaterhouseCoopers LLP to
serve as our independent accountants for our current fiscal year ending December
31, 2000. PricewaterhouseCoopers LLP has served as our independent auditors
since 1986. We expect that representatives of PricewaterhouseCoopers LLP will 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 you.
SOLICITATION OF PROXIES
The Board of Directors will solicit proxies 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 we will not compensate these persons for these services. We
will request brokerage firms, banks, fiduciaries, voting trustees, or other
nominees to forward the soliciting material to the beneficial owners of stock
held of record by them, and we have hired Proxy Services Corporation to
coordinate the solicitation of proxies by and through such holders for a fee of
approximately $1,000 plus expenses. We will bear the entire cost of the Board of
Directors' solicitation.
SUBMISSION OF STOCKHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
In accordance with rules promulgated by the Securities and Exchange
Commission, if you wish to submit a proposal for inclusion in the proxy material
to be distributed by us in connection with the 2001 Annual Meeting, you must do
so no later than November 29, 2000. Any such proposal should be submitted in
writing to the Secretary of the Company at our principal executive offices. Upon
submitting a proposal, you shall provide us with a written notice that includes
your name and address, the number of shares of Common Stock that you hold of
record or beneficially, the dates upon which you acquired your shares, and
documentary support for your 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
Executive Vice President, Chief Financial Officer,
Treasurer, and Secretary
APPENDIX A
CFC INTERNATIONAL, INC.
2000 STOCK OPTION PLAN
The purpose of this 2000 Stock Option Plan (the "Plan") is to benefit
CFC International. Inc. (the "Company") and its subsidiaries through the
maintenance and development of management by offering certain present and future
executive and key personnel a favorable opportunity to become holders of stock
in the Company over a period of years, thereby giving them a permanent stake in
the growth and prosperity of the Company and encouraging the continuance of
their services with the Company or its subsidiaries. Options granted under this
Plan are intended not to qualify as "Incentive Stock Options" as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), and
the Plan shall be construed so as to carry out that intention.
1. Administration. The Plan shall be administered by a committee (the
"Committee") of the Board of Directors composed of no fewer than two
disinterested directors designated by the Board of Directors. A majority of the
Committee shall constitute a quorum, and the acts of a majority of the members
present at any meeting at which a quorum is present, or acts approved in writing
by all of the members, shall be the acts of the Committee.
Subject to the provisions of the Plan, the Committee shall have full
and final authority, in its absolute discretion, (a) to determine the persons to
be granted options under the Plan, (b) to determine the number of shares subject
to each option, (c) to determine the time or times at which options will be
granted, (d) to determine the option price of the shares subject to each option,
which price shall not be less than the minimum specified in Section 4 of the
Plan, (e) to determine the time or times when each option becomes exercisable
and the duration of the exercise period, (f) to prescribe the form or forms of
the agreements evidencing any options granted under the Plan (which forms shall
be consistent with the Plan), (g) to adopt, amend and rescind such rules and
regulations as, in the Committee's opinion, may be advisable in the
administration of the Plan, and (h) to construe and interpret the Plan, the
rules and regulations and the agreements evidencing options granted under the
Plan and to make all other determinations deemed necessary or advisable for the
administration of the Plan. Any decision made or action taken in good faith by
the Committee in connection with the administration, interpretation, and
implementation of the Plan and of its rules and regulations shall, to the extent
permitted by law, be conclusive and binding upon all optionees under the Plan
and upon any person claiming under or through such an optionee, and no director
of the Company shall be liable for any such decision made or action taken by the
Committee.
2. Eligibility. Options shall be granted only to key employees and
directors (other than members of the Committee) of the Company and its
subsidiaries.
3. Granting of Options.
(a) The Committee may grant options under which a total of not
more than 150,000 shares of the common stock, par value $.01 per share
(the "Common Stock"), of the Company may be purchased from the Company,
subject to adjustment as provided in paragraph 9.
(b) No options shall be granted under the Plan subsequent to
the tenth anniversary of the adoption of the Plan. If an option expires
or is terminated or canceled unexercised as to any shares, such
released shares may again be optioned (including a grant in
substitution for a canceled option). Shares subject to options may be
made available from unissued or reacquired shares of Common Stock.
(c) Nothing contained in the Plan or in any option granted
pursuant thereto shall confer upon any optionee any right to be
continued in the employment of the Company or any subsidiary of the
Company, or interfere in any way with the right of the Company or its
subsidiaries to terminate his employment at any time.
4. Option Price. The option price shall be determined by the Committee
and, subject to the provisions of paragraph 9, shall be not less than the fair
market value, at the time the option is granted, of the stock subject to the
option. For purposes of this Paragraph, "fair market value" shall be the closing
sales price of the Common Stock reported on the Nasdaq National Market System
(or on the principal national stock exchange or quotation service on which it is
listed) (as reported in The Wall Street Journal, Midwest Edition) on the date
the option is granted (or, if the date of grant is not a trading date, on the
first trading date immediately preceding the date of grant). In the event the
Common Stock is not listed or quoted on the Nasdaq National Market System or any
other national stock exchange, the fair market value of the shares of Common
Stock for all purposes of this Plan shall be reasonably determined by the
Committee.
5. Duration of Options, Increments and Extensions.
(a) Subject to the provisions of paragraph 7, each option
shall be for such term of not more than ten years as shall be
determined by the Committee at the date of the grant. Each option shall
become exercisable in such installments, at such time or times, and may
be subject to such conditions, including conditions based upon the
performance of the Company, as the Committee may in its discretion
determine at the date of grant.
(b) Notwithstanding any other provisions of the Plan to the
contrary, the Committee may in its discretion (i) specifically provide
as of the date of the grant for another time or times of exercise, (ii)
accelerate the exercisability of any option, subject to such terms and
conditions as the Committee deems necessary and appropriate to
effectuate the purposes of the Plan, or (iii) at any time before the
expiration or termination of an option previously granted, extend the
terms of such option (including options held by officers) for such
additional period as the Committee, in its discretion, shall determine,
except that the aggregate option period with respect to any option,
including the original term of the option and any extensions thereof,
shall never exceed ten years.
6. Exercise of Option.
(a) An option may be exercised by giving written notice to the
Company, attention of the Secretary, specifying the number of shares to
be purchased, accompanied by the full purchase price for the shares to
be purchased in cash or by check, except that the Committee may permit
the purchase price for the shares to be paid, all or in part, by the
delivery to the Company of other shares of Common Stock of the Company
in such circumstances and manner as it may specify. For this purpose,
the per share value of the Company's Common Stock shall be the fair
market value at the close of business on the date preceding the date of
exercise.
(b) At the time of the exercise of any option, the Company may
require, as a condition of the exercise of such option, the optionee to
pay the Company an amount equal to the amount of the tax the Company
may be required to withhold to comply with applicable law. An optionee
may, with the approval of the Committee, make an election to satisfy
the tax withholding obligation by either (1) tendering to the Company
shares of Common Stock owned by him and with the certificates therefor
registered in his name, having a fair market value equal to the tax
withholding obligation, (2) deduct from any cash payment pursuant to
any broker-assisted option exercise (net to optionee in cash or shares)
an amount sufficient to satisfy any withholding tax requirements, or
(3) instructing the Company to withhold from the shares of Common Stock
otherwise issuable upon the exercise of the option that number of
shares having a fair market value equal to the tax withholding
obligation. For this purpose, the per share value of the Company's
Common Stock to be delivered or withheld shall be the fair market value
at the close of business on the date preceding the date of exercise.
(c) At the time of exercise of any option, the Committee may,
if it shall determine it necessary or desirable for any reason, require
the optionee (or his heirs, legatees, or legal representative, as the
case may be) as a condition upon the exercise, to deliver to the
Company a written representation of present intention to purchase the
shares for his own account for investment and an agreement not to
distribute or sell such shares in violation of the registration
provisions of applicable securities laws. If such representation and
agreement are required to be delivered, an appropriate legend may be
placed upon each certificate delivered to the optionee upon his
exercise of part or all of the option and a stop transfer order may be
placed with the transfer agent.
(d) Each option shall also be subject to the requirement that,
if at any time the Committee determines, in its discretion, that the
listing, registration or qualification of the shares subject to the
option upon any securities exchange or under any state or federal law,
or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the
issue or purchase of shares thereunder, the option may not be exercised
in whole or in part unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any
conditions not acceptable to the Committee.
(e) If the Committee shall determine it necessary or desirable
for any reason, an option shall provide that it is contemplated that
the shares acquired through the exercise of the option will not be
registered under applicable federal and state securities laws and that
such shares cannot be resold unless they are registered under such laws
or unless an exemption from registration is available, and the
certificate for any such shares issued upon the exercise of the option
shall bear a legend making appropriate reference to such provisions.
7. Termination of Employment -- Exercise Thereafter.
(a) If the employment or tenure as a director of any optionee
with the Company or any of its subsidiaries is terminated for any
reason other than death, permanent disability, retirement or cause,
such optionee's option, to the extent the option is exercisable at the
date of termination, shall expire thirty days after the termination of
employment or directorship (or upon the scheduled termination of the
option, if earlier), and all rights to purchase shares pursuant thereto
shall terminate at such time. Temporary absence from employment because
of illness, vacation, approved leave of absence, or transfer of
employment among the Company and its parent or subsidiary corporations,
shall not be considered to terminate employment or to interrupt
continuous employment.
(b) In the event of termination of employment or directorship
because of death or permanent disability (within the meaning of Section
22(e)(3) of the Code), the option may be exercised in full, unless
otherwise provided at the time of grant, without regard to any
installments established under paragraph 5 hereof, by the optionee or,
if he is not living, by his heirs, legatees, or legal representative,
as the case may be, during its specified term prior to one year after
the date of death or permanent disability. In the event of termination
of employment or directorship because of retirement, the option may be
exercised by the optionee (or, if he dies within three months after
such termination, by his heirs, legatees, or legal representative, as
the case may be), at any time during its specified term prior to three
months after the date of such termination, but only to the extent the
option was exercisable at the date of such termination.
(c) If an optionee is discharged for cause, his option shall
expire forthwith and all rights to purchase shares under it shall
terminate immediately. For this purpose, "discharge for cause" means a
discharge on account of dishonesty, disloyalty or insubordination.
(d) Notwithstanding the foregoing provisions of this paragraph
7, the Committee may in the grant of any option make other and
different provisions with respect to its exercise after the optionee's
termination of employment or directorship.
8. Non-Transferability of Options. No option shall be transferable by
the optionee otherwise than by will or the laws of descent and distribution or
by qualified domestic relations order, and each option shall be exercisable
during any optionee's lifetime only by him or the optionee's legal
representative.
9. Adjustment.
(a) In the event that the Company's outstanding Common Stock
is changed by any stock dividend, stock split or combination of shares,
the number of shares subject to this Plan and to options under this
Plan shall be proportionately adjusted.
(b) In case of any capital reorganization, or of any
reclassification of the Common Stock or in case of the consolidation of
the Company with or the merger of the Company with or into any other
corporation (other than a consolidation or merger in which the Company
is the continuing corporation and which does not result in any
reclassification of outstanding shares of Common Stock) or of the sale
of the properties and assets of the Company as, or substantially as, an
entirety to any other corporation, the Company, or the corporation
resulting from such consolidation or surviving such merger or to which
such sale shall be made, as the case may be, shall determine that upon
exercise of options granted under the Plan after such capital
reorganization, reclassification, consolidation, merger or sale there
shall be issuable upon exercise of an option a kind and amount of
shares of stock or other securities or property (which may, as an
example, be a fixed amount of cash equal to the consideration paid to
stockholders of the Company for shares transferred or sold by them)
which the holders of the Common Stock (immediately prior to the time of
such capital reorganization, reclassification, consolidation, merger or
sale) are entitled to receive in such transaction as in the judgment of
the Committee is required to compensate equitably for the effect of
such event upon the exercise rights of the optionees. The above
provisions of this paragraph shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers and sales.
(c) In the event of any such adjustment the purchase price per
share shall be proportionately adjusted.
10. Amendment of Plan. The Board of Directors may suspend, amend or
discontinue the Plan at any time. However, no such suspension, amendment or
discontinuance shall (a) change or impair any option previously granted without
the consent of the optionee, or (b) without the approval of the holders of a
majority of the shares of the Common Stock which vote in person or by proxy at a
duly held stockholders' meeting, (i) increase the maximum shares which may be
purchased by all optionees under this Plan, (ii) change the minimum purchase
price of any option, (iii) change the limitations on the option period or
increase the time limitations on the grant of options, or (iv) permit the
granting of options to members of the Committee.
11. Effective Date. The Plan has been adopted and authorized by the
Board of Directors and the stockholders of the Company on _________, 2000 and
shall become effective on such date.
APPENDIX B
CFC INTERNATIONAL, INC.
2000 DIRECTORS' STOCK OPTION PLAN
The purpose of this 2000 Directors' Stock Option Plan (the "Plan") is
to benefit CFC International, Inc. (the "Company") and its subsidiaries by
offering its directors a favorable opportunity to become holders of stock in the
Company over a period of years, thereby giving them a permanent stake in the
growth and prosperity of the Company and encouraging the continuance of their
services with the Company. Options granted under this Plan are intended not to
qualify as "Incentive Stock Options" as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), and the Plan shall be construed
so as to carry out that intention.
1. Administration. The Plan shall be administered by the Board of
Directors of the Company (the "Board"), whose interpretation of the terms and
provisions of the Plan and whose determination of matters pertaining to options
granted under the Plan shall be within its absolute discretion and shall be
final and binding on all parties. A majority of the Board shall constitute a
quorum, and the acts of a majority of the members present at any meeting at
which a quorum is present, or acts approved in writing by all of the members,
shall be the acts of the Board.
2. Eligibility. Options shall be granted only to non-employee
directors of the Company.
3. Granting of Options.
(a) The Board may grant options under which a total of not
more than 50,000 shares of the common stock, par value $.01 per share
(the "Common Stock"), of the Company may be purchased from the Company,
subject to adjustment as provided in paragraph 9.
(b) Non-employee directors elected on or after the Effective
Date (as provided in paragraph 11) automatically shall be granted an
option to purchase 10,000 shares of Common Stock of the Company,
without further action required, upon the effective date of such
director's initial election to the Board, provided that such director
is eligible at that time under Paragraph 2 of this Plan.
(c) Non-employee directors re-elected to the Board on or after
the Effective Date (as provided in paragraph 11) automatically shall be
granted an option to purchase 2,500 shares of Common Stock of the
Company, without further action required, upon such director's
re-election to the Board at the April 26, 2000 Annual Meeting of
Stockholders, provided that such director is eligible at that time
under Paragraph 2 of this Plan.
(d) No options shall be granted under the Plan subsequent to
the tenth anniversary of the adoption of the Plan. If an option expires
or is terminated or canceled unexercised as to any shares, such
released shares may again be optioned (including a grant in
substitution for a canceled option). Shares subject to options may be
made available from unissued or reacquired shares of Common Stock.
(e) Nothing contained in the Plan or in any option granted
pursuant thereto shall confer upon any director any right to continue
serving as a director of the Company or interfere in any way with any
right of the Board or stockholders of the Company to remove such
director pursuant to the certificate of incorporation or bylaws of the
Company or applicable law.
4. Option Price. The exercise price per share for options granted under
this Plan shall be the fair market value of the shares of Common Stock on the
date of the grant of such option. For purposes of this Paragraph, "fair market
value" shall be the closing sales price of the Common Stock reported on the
Nasdaq National Market System (or on the principal national stock exchange or
quotation service on which it is listed) (as reported in The Wall Street
Journal, Midwest Edition) on the date the option is granted (or, if the date of
grant is not a trading date, on the first trading date immediately preceding the
date of grant). In the event the Common Stock is not listed or quoted on the
Nasdaq National Market System or any other national stock exchange, the fair
market value of the shares of Common Stock for all purposes of this Plan shall
be reasonably determined by the Board.
5. Duration of Options, Increments and Extensions. Subject to the
provisions of Paragraph 7, each option shall be for a term of ten years. Each
option shall become exercisable with respect to 25% of the shares subject to the
option 12 months after the date of its grant and with respect to an additional
25% at the end of each 12-month period thereafter during the succeeding three
years. All or any part of the shares with respect to which the right to purchase
has accrued may be purchased at the time of such accrual or at any time or times
thereafter during the option period.
6. Exercise of Option.
(a) An option may be exercised by giving written notice to the
Company, attention of the Secretary, specifying the number of shares to
be purchased, accompanied by the full purchase price for the shares to
be purchased in cash or by check, except that the Board may permit the
purchase price for the shares to be paid, all or in part, by the
delivery to the Company of other shares of Common Stock of the Company
in such circumstances and manner as it may specify. For this purpose,
the per share value of the Company's Common Stock shall be the fair
market value at the close of business on the date preceding the date of
exercise.
(b) At the time of the exercise of any option, the Company may
require, as a condition of the exercise of such option, the optionee to
pay the Company an amount equal to the amount of the tax the Company
may be required to withhold to comply with applicable law. An optionee
may, with the approval of the Board, make an election to satisfy the
tax withholding obligation by either (1) tendering to the Company
shares of Common Stock owned by him and with the certificates therefor
registered in his name, having a fair market value equal to the tax
withholding obligation, (2) deduct from any cash payment pursuant to
any broker-assisted option exercise (net to optionee in cash or shares)
an amount sufficient to satisfy any withholding tax requirements, or
(3) instructing the Company to withhold from the shares of Common Stock
otherwise issuable upon the exercise of the option that number of
shares having a fair market value equal to the tax withholding
obligation. For this purpose, the per share value of the Company's
Common Stock to be delivered or withheld shall be the fair market value
at the close of business on the date preceding the date of exercise.
(c) At the time of exercise of any option, the Board may, if
it shall determine it necessary or desirable for any reason, require
the optionee (or his heirs, legatees, or legal representative, as the
case may be) as a condition upon the exercise, to deliver to the
Company a written representation of present intention to purchase the
shares for his own account for investment and an agreement not to
distribute or sell such shares in violation of the registration
provisions of applicable securities laws. If such representation and
agreement are required to be delivered, an appropriate legend may be
placed upon each certificate delivered to the optionee upon his
exercise of part or all of the option and a stop transfer order may be
placed with the transfer agent.
(d) Each option shall also be subject to the requirement that,
if at any time the Board determines, in its discretion, that the
listing, registration or qualification of the shares subject to the
option upon any securities exchange or under any state or federal law,
or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the
issue or purchase of shares thereunder, the option may not be exercised
in whole or in part unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any
conditions not acceptable to the Board.
(e) If the Board shall determine it necessary or desirable for
any reason, an option shall provide that it is contemplated that the
shares acquired through the exercise of the option will not be
registered under applicable federal and state securities laws and that
such shares cannot be resold unless they are registered under such laws
or unless an exemption from registration is available, and the
certificate for any such shares issued upon the exercise of the option
shall bear a legend making appropriate reference to such provisions.
7. Termination of Directorship -- Exercise Thereafter.
(a) If the tenure as a director of any optionee with the
Company is terminated for any reason other than death, permanent
disability, retirement or cause, such optionee's option, to the extent
the option is exercisable at the date of termination, shall expire
thirty days after the termination of directorship (or upon the
scheduled termination of the option, if earlier), and all rights to
purchase shares pursuant thereto shall terminate at such time.
Temporary absence from acting as a director because of illness,
vacation, approved leave of absence shall not be considered to
terminate or interrupt continuous service as a director.
(b) In the event of termination of directorship because of
death or permanent disability (within the meaning of Section 22(e)(3)
of the Code), the option may be exercised in full, unless otherwise
provided at the time of grant, without regard to any installments
established under Paragraph 5 hereof, by the optionee or, if he is not
living, by his heirs, legatees, or legal representative, as the case
may be, during its specified term prior to one year after the date of
death or permanent disability. In the event of termination of
directorship because of retirement, the option may be exercised by the
optionee (or, if he dies within three months after such termination, by
his heirs, legatees, or legal representative, as the case may be), at
any time during its specified term prior to three months after the date
of such termination, but only to the extent the option was exercisable
at the date of such termination.
(c) If an optionee is removed for cause, his option shall
expire forthwith and all rights to purchase shares under it shall
terminate immediately. For this purpose, "removal for cause" means a
removal on account of dishonesty, disloyalty or insubordination.
8. Non-Transferability of Options. No option shall be transferable by
the optionee otherwise than by will or the laws of descent and distribution or
by qualified domestic relations order, and each option shall be exercisable
during any optionee's lifetime only by him or the optionee's legal
representative.
9. Adjustment.
(a) In the event that the Company's outstanding Common Stock
is changed by any stock dividend, stock split or combination of shares,
the number of shares subject to this Plan and to options under this
Plan shall be proportionately adjusted.
(b) In case of any capital reorganization, or of any
reclassification of the Common Stock or in case of the consolidation of
the Company with or the merger of the Company with or into any other
corporation (other than a consolidation or merger in which the Company
is the continuing corporation and which does not result in any
reclassification of outstanding shares of Common Stock) or of the sale
of the properties and assets of the Company as, or substantially as, an
entirety to any other corporation, the Company, or the corporation
resulting from such consolidation or surviving such merger or to which
such sale shall be made, as the case may be, shall determine that upon
exercise of options granted under the Plan after such capital
reorganization, reclassification, consolidation, merger or sale there
shall be issuable upon exercise of an option a kind and amount of
shares of stock or other securities or property (which may, as an
example, be a fixed amount of cash equal to the consideration paid to
stockholders of the Company for shares transferred or sold by them)
which the holders of the Common Stock (immediately prior to the time of
such capital reorganization, reclassification, consolidation, merger or
sale) are entitled to receive in such transaction as in the judgment of
the Board is required to compensate equitably for the effect of such
event upon the exercise rights of the optionees. The above provisions
of this Paragraph shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers and sales.
(c) In the event of any such adjustment the purchase price per
share shall be proportionately adjusted.
10. Amendment of the Plan. The Board may suspend, amend or discontinue
the Plan at any time; provided, however, that the Plan may not be amended more
than once every six months except to comport with changes in the Code, the
Employee Retirement Income Security Act, or the rules and regulations under
each, and provided further, that no such suspension, amendment or discontinuance
shall (a) without the consent of the optionee change or impair any option
previously granted, or (b) without the approval of the holders of a majority of
the shares of Common Stock which vote in person or by proxy at a duly held
stockholders' meeting, (i) increase the maximum number of shares which may be
purchased by all eligible directors pursuant to the Plan, (ii) change the
purchase price of any option, or (iii) change the option period or increase the
time limitations on the grant of options.
11. Effective Date. The Plan has been adopted and authorized by the
Board and the stockholders of the Company on _________, 2000 and shall become
effective on such date.