<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
Core Materials Corporation
-------------------------------------------------
(Name of Registrant as Specified in its Charter)
----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (check the appropriate box):
<TABLE>
<S> <C> <C>
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rule 14a-6(i)(4) and
0-11
1) Title of each class of securities to which transaction
applies:
------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing:
1) Amount Previously Paid:
------------------------------------------------------------
2) Form, Schedule or Registration No.:
------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------
</TABLE>
<PAGE> 2
CORE MATERIALS CORPORATION
800 Manor Park Drive
Columbus, Ohio 43228
(614) 870-5000
April 27, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Core Materials Corporation to be held at the Holiday Inn Columbus--West, 2350
Westbelt Drive, Columbus, Ohio 43228, on May 28, 1998, at 9:00 a.m., Eastern
Standard time. Further information about the meeting and the matters to be
considered is contained in the formal Notice of Annual Meeting of Stockholders
and Proxy Statement on the following pages.
It is important that your shares be represented at this meeting. Whether or
not you plan to attend, we hope that you will sign, date and return your proxy
promptly in the enclosed envelope.
Sincerely,
Malcolm M. Prine
Chairman of the Board
<PAGE> 3
CORE MATERIALS CORPORATION
800 MANOR PARK DRIVE
COLUMBUS, OHIO 43228
(614) 870-5000
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 28, 1998
------------------
TO OUR STOCKHOLDERS:
Notice is hereby given that the 1998 Annual Meeting of Stockholders of Core
Materials Corporation (the "Company") will be held on May 28, 1998 at 9:00 a.m.,
Eastern Standard time, at the Holiday Inn Columbus--West, 2350 Westbelt Drive,
Columbus, Ohio 43228, for the following purposes:
(1) to elect five (5) directors to comprise the Company's Board of
Directors, each to serve a one-year term expiring at the 1999 annual
meeting of stockholders of the Company;
(2) to ratify the appointment of Deloitte & Touche LLP as auditors for the
Company for the year ending December 31, 1998;
(3) to approve the Core Materials Corporation Employee Stock Purchase Plan;
and
(4) to consider and act upon such other business as may properly come
before the meeting and any adjournments or postponements thereof.
The foregoing matters are described in more detail in the proxy statement
which is attached hereto and made a part hereof. Only stockholders of record at
the close of business on April 14, 1998, the record date, will be entitled to
receive notice of and to vote at the meeting.
Management desires to have maximum representation at the meeting and
respectfully requests that you date, execute and promptly mail the enclosed
proxy in the postage-paid envelope provided. A proxy may be revoked by a
stockholder by notice in writing to the Secretary of the Company at any time
prior to its use.
BY ORDER OF THE BOARD OF DIRECTORS
Kevin L. Barnett
Vice President, Secretary, Treasurer &
Chief Financial Officer
Dated: April 27, 1998
<PAGE> 4
CORE MATERIALS CORPORATION
800 MANOR PARK DRIVE
COLUMBUS, OHIO 43228
(614) 870-5000
------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 28, 1998
------------------
To Our Stockholders:
This proxy statement (the "Proxy Statement") is furnished in connection
with the solicitation on behalf of the Board of Directors (the "Board of
Directors") of Core Materials Corporation (the "Company") of proxies to be used
and voted at the annual meeting of stockholders of the Company (the "Annual
Meeting") to be held at the Holiday Inn Columbus--West, 2350 Westbelt Drive,
Columbus, Ohio 43228, on May 28, 1998 at 9:00 a.m., Eastern Standard time, and
at any adjournment thereof. The Annual Meeting is being held for the purposes
set forth in the accompanying Notice of Annual Meeting of Stockholders. The
Proxy Statement, the accompanying proxy card and the Notice of Annual Meeting of
Stockholders are first being sent to stockholders on or about April 27, 1998.
GENERAL INFORMATION
SOLICITATION
The enclosed proxy is solicited by the Board of Directors. In addition to
the use of the mail, proxies may be solicited, personally or by telephone or
telegraph, by directors and officers of the Company, who will not receive
additional compensation therefor. Additionally, the Company's stock transfer
agent, American Stock Transfer & Trust Co., New York, New York will conduct
proxy solicitations on the Company's behalf and receive reimbursement for
reasonable out-of-pocket expenses. Arrangements also will be made with brokerage
firms and other custodians, nominees and fiduciaries for the forwarding of proxy
solicitation material to certain beneficial owners of the Company's common
stock, par value $.01 per share (the "Common Stock"), and the Company will
reimburse such brokerage firms, custodians, nominees and fiduciaries for
reasonable out-of-pocket expenses incurred by them in connection therewith. The
expenses of the proxy solicitation will be paid by the Company. No solicitation
will be made by specially engaged employees or other paid solicitors.
VOTING RIGHTS AND VOTES REQUIRED
Holders of shares of the Common Stock at the close of business on April 14,
1998 (the "Record Date") are entitled to notice of, and to vote at, the Annual
Meeting. On the Record Date, 9,612,580 shares of Common Stock were outstanding.
Each share of Common Stock outstanding on the Record Date is entitled to one
vote on all matters presented at the Annual Meeting. The presence, in person or
by proxy, of stockholders entitled to cast a majority of all the votes entitled
to be cast constitutes a quorum for the transaction of business at the Annual
Meeting, and no business (other than adjournment of the Annual Meeting) can be
conducted unless a quorum is present in person or by proxy.
Abstentions will be counted as shares present in determining the presence
of a quorum for a particular matter but will not be counted as votes cast in
determining the approval of any matter by the stockholders. If a broker or other
record holder or nominee indicates on a proxy that it does not have authority to
vote certain shares on a particular matter or does not return proxies for
certain shares, those shares will not be counted as either present for purposes
of determining a quorum or as votes cast in determining the approval of any
matter by the stockholders.
In the election of directors (Proposal 1), each of the five directors shall
be elected by a plurality of votes cast by stockholders of record on the Record
Date and present at the Annual Meeting, in person or by proxy. Cumulative voting
in the election of directors is not permitted. Passage of the proposal to
approve the Core
<PAGE> 5
Materials Corporation Employee Stock Purchase Plan (Proposal 3) requires the
approval of a majority of the votes cast by stockholders of record on the Record
Date and present at the Annual Meeting, in person or by proxy. The Company is
seeking stockholder ratification of the appointment of independent auditors of
the Company (Proposal 2), but such ratification is not required by law.
VOTING OF PROXIES
Shares of Common Stock represented by all properly executed proxies
received prior to the Annual Meeting will be voted in accordance with the
choices specified in the proxy. Unless contrary instructions are indicated on
the proxy, the shares will be voted (i) FOR the election as directors of the
nominees named herein, (ii) FOR the ratification of the appointment of the
auditors named herein, and (iii) FOR the approval of the Core Materials
Corporation Employee Stock Purchase Plan.
The management of the Company and the Board of Directors know of no matters
to be brought before the Annual Meeting other than as set forth herein. If,
however, any other matter is properly presented to the stockholders for action,
it is the intention of the holders of the proxies to vote at their discretion on
all matters on which the shares of Common Stock represented by such proxies are
entitled to vote.
REVOCABILITY OF PROXY
A stockholder who signs and returns a proxy in the accompanying form may
revoke it at any time before the authority granted thereby is exercised. A proxy
may be revoked by delivering a written statement to the Secretary of the Company
that the proxy is revoked.
ANNUAL REPORT
The Company's 1998 Annual Report to Stockholders, which includes financial
statements and information concerning the Company's operations during the year
ended December 31, 1997, accompanies this Proxy Statement.
The Company will provide, without charge, a copy of its Annual Report on
Form 10-K for the fiscal year ended December 31, 1997, upon written request of
any person solicited. Such request should be addressed to Core Materials
Corporation, Attn: Kevin L. Barnett, Vice President, Secretary, Treasurer and
Chief Financial Officer, 800 Manor Park Drive, P.O. Box 28183, Columbus, Ohio
43228.
STOCKHOLDER PROPOSALS
Any stockholder who desires to present a proposal for consideration at the
1999 annual meeting of stockholders must submit the proposal in writing to the
Company. If the proposal is received by the Company on or before December 28,
1998, and otherwise meets the requirements of applicable state and federal law,
it will be included in the proxy statement and form of proxy relating to the
1999 annual meeting of stockholders.
2
<PAGE> 6
OWNERSHIP OF COMMON STOCK
CERTAIN BENEFICIAL OWNERS
The following table sets forth, to the knowledge of the Company, the only
beneficial owner, as of April 14, 1998, of more than 5% of the outstanding
shares of the Company's Common Stock.
NUMBER OF SHARES OF COMMON STOCK BENEFICIALLY OWNED
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ---------------------------------------------------- -------------------- ----------------
<S> <C> <C>
Navistar International Transportation Corp. 4,264,000(1) 44.4%
455 North Cityfront Plaza Drive
Chicago, Illinois 60611
</TABLE>
- ---------------
(1) Navistar International Transportation Corp. received these shares of Common
Stock on December 31, 1996, pursuant to the terms of an asset purchase
agreement which provided for the acquisition by the Company of the Columbus
Plastics operating unit of Navistar International Transportation Corp. The
terms and conditions of the asset purchase agreement are discussed in
greater detail below under the heading "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS".
MANAGEMENT
The table below sets forth, as of April 14, 1998 the number of shares of
Common Stock beneficially owned by each director of the Company, by each nominee
for election as director of the Company, by each executive officer named in the
Summary Compensation Table contained herein, and by all such directors, nominees
and executive officers as a group. The information concerning the persons set
forth below was furnished in part by each such person.
NUMBER OF SHARES OF COMMON STOCK BENEFICIALLY OWNED
<TABLE>
<CAPTION>
NAME OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ---------------------------------------------------- -------------------- ----------------
<S> <C> <C>
Kevin L. Barnett.................................... 9,500(1) *
Richard R. Conte.................................... 173,200(2) 1.8%
James F. Crowley.................................... 6,500(3) *
Ralph O. Hellmold................................... 68,000(4) *
Thomas M. Hough..................................... 7,000(1) *
Malcolm M. Prine.................................... 74,011(5) *
Thomas E. Rigsby.................................... 7,000(1) *
Kenneth M. Schmell.................................. 11,500(1) *
James L. Simonton................................... 0(6) *
Gerald L. Voirol.................................... 3,750(1) *
All directors, nominees and executive officers
as a group (10 persons)........................... 360,461 3.7%
</TABLE>
- ---------------
* Less than 1% of the outstanding shares of Common Stock
(1) Exclusively includes shares of Common Stock which may be acquired within 60
days through the exercise of stock options.
(2) Includes: (1) 167,000 shares of Common Stock which Mr. Conte has the right
to acquire within 60 days through the exercise of stock options; (2) 4,000
shares of Common Stock which are held in trust for Mr. Conte's son; (3)
2,000 shares of Common Stock as to which Mr. Conte shares voting and
investment power
3
<PAGE> 7
with his wife; and (4) 200 shares of Common Stock as to which Mr. Conte has
sole voting and investment power.
(3) Includes: (1) 5,500 shares of Common Stock as to which Mr. Crowley has sole
voting and investment power and (2) 1,000 shares of Common Stock as to which
Mr. Crowley shares voting and investment power with his wife. If elected as
a director at the Annual Meeting, Mr. Crowley will receive a one-time grant
of a director option to acquire 35,000 shares of Common Stock under the
Company's Long-Term Equity Incentive Plan, which option will vest in
increments of 20% over a five year period.
(4) Includes (1) 7,000 shares of Common Stock which Mr. Hellmold has the right
to acquire within 60 days through the exercise of stock options and (2)
61,000 shares of Common Stock as to which Mr. Hellmold has sole voting and
investment power.
(5) Includes: (1) 7,000 shares of Common Stock which Mr. Prine has the right to
acquire within 60 days through the exercise of stock options; (2) 1,011
shares of Common Stock held by Mr. Prine's wife; (3) 5,000 shares of Common
Stock held by Mr. Prine's daughter; and (4) 61,000 shares of Common Stock as
to which Mr. Prine has sole voting and investment power.
(6) If elected as a director at the Annual Meeting, Mr. Simonton will receive a
one-time grant of a director option to acquire 35,000 shares of Common Stock
under the Company's Long-Term Equity Incentive Plan, which option will vest
in increments of 20% over a five year period.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors, and persons who beneficially own
more than 10% of the Company's issued and outstanding shares of Common Stock, to
file initial statements of beneficial ownership and changes of beneficial
ownership with the Securities and Exchange Commission and to provide the Company
with a copy of all such statements. Except as otherwise set forth in the
following paragraph and based solely on a review of the Section 16(a) statements
furnished to the Company and certain written representations from the Company's
executive officers and directors, the Company believes that all Section 16(a)
filing requirements applicable to its executive officers, directors and greater
than 10% beneficial owners were complied with for the fiscal year ended December
31, 1997.
Ralph O. Hellmold, a current director and director nominee, purchased 300
shares of Common Stock on May 27, 1997, 2,700 shares of Common Stock on May 28,
1997, and 4,000 shares of Common Stock on May 29, 1997. These purchases should
have been reported on a Form 4, Statement of Changes in Beneficial Ownership, by
June 10, 1997. Mr. Hellmold reported these transactions on a Form 4 on June 16,
1997. Similarly, Mr. Hellmold purchased 2,000 shares of Common Stock on October
30, 1997 and 2,000 shares of Common Stock on October 31, 1997. These purchases
should have been reported on a Form 4 by November 10, 1997. Mr. Hellmold
reported these transactions on a Form 4 on December 8, 1997.
4
<PAGE> 8
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following biographies set forth certain information with respect to the
background and experience of the persons nominated to become directors at the
Annual Meeting, the Company's current executive officers and those persons the
Company anticipates will become executive officers following the Annual Meeting.
The Company is not aware of any family relationships among any of the following
persons or any arrangements or understandings pursuant to which such persons
have been, or are to be, selected as a director or executive officer of the
Company (other than arrangements or understandings with directors or executive
officers acting solely in their capacity as such). Executive officers of the
Company are elected to serve for a term of one year or until their successors
have been duly elected and qualified.
<TABLE>
<CAPTION>
NAME AGE POSITION(S) CURRENTLY HELD
- --------------------------------- --- ---------------------------------
<S> <C> <C>
Kevin L. Barnett................. 35 Vice President, Secretary,
Treasurer and Chief Financial
Officer
James F. Crowley................. 51 --
Ralph O. Hellmold................ 57 Director
Thomas M. Hough.................. 52 Director
Stephen J. Klestinec............. 48 --
Malcolm M. Prine................. 69 Chairman of the Board of
Directors
Kenneth M. Schmell............... 49 Acting Chief Executive Officer
and General Manager
James L. Simonton................ 57 --
Gerald L. Voirol................. 46 Controller and Assistant
Secretary
</TABLE>
Kevin L. Barnett. Kevin L. Barnett joined the Company as an employee on
April 1, 1997 and was elected Vice President, Secretary, Treasurer and Chief
Financial Officer on April 24, 1997. Mr. Barnett joined the Company after
approximately five years of working with Medex Inc., a manufacturer and marketer
of products used for medical and surgical applications. Mr. Barnett served as
Vice President, Treasurer, and Corporate Controller of Medex Inc. from October,
1995 to January, 1997. He served as Vice President and Corporate Controller of
Medex Inc. from May, 1994 to October, 1995 and as Assistant Treasurer from
April, 1992 to May, 1994. Prior to joining Medex Inc., Mr. Barnett served as a
certified public accountant with Deloitte & Touche LLP from August, 1984 to
April, 1992.
James F. Crowley. James F. Crowley has been nominated to become a director
of the Company at the Annual Meeting. Mr. Crowley is currently the President of
Brookside Capital Incorporated, a private investment and advisory firm
head-quartered in New York, which he founded in 1993. From 1984 to 1992, Mr.
Crowley served in various capacities with Prudential Securities, Inc. including
President of Global Investment & Merchant Banking. Prior to joining Prudential
Securities, Inc., Mr. Crowley provided financial advisory, merger, acquisition
and underwriting services as a First Vice President and Partner at Smith Barney,
Harris Upham & Co. in its Investment Bank and Capital Markets Division. Mr.
Crowley graduated from the Wharton School at the University of Pennsylvania in
1976.
Ralph O. Hellmold. Ralph O. Hellmold has been a director of the Company
since December 31, 1996. He is the founder and President of Hellmold Associates,
Inc., an investment banking boutique which specializes in mergers, acquisitions
and working with troubled companies or their creditors and acts as general
partner of hedge funds which invest primarily in securities of financially
distressed companies. Mr. Hellmold is also a director of International Aircraft
Investors located in Torrance, California and an independent trustee of
Ridgewood Electric Power Trusts II and III, Delaware business trusts. Prior to
forming Hellmold Associates in 1990, Mr. Hellmold was a Managing Director at
Prudential-Bache Capital Funding, where he served as co-head of the Corporate
Finance Group, co-head of the Investment Banking Committee and head of the
Financial Restructuring Group. From 1974 until 1987, Mr. Hellmold was a partner
at Lehman Brothers and its successors, where he worked in Corporate Finance and
co-founded the Financial Restructuring Group.
Thomas M. Hough. Thomas M. Hough has been a director of the Company since
December 31, 1996. He has served as the Vice President and Treasurer of Navistar
International Corp. and its principal operating
5
<PAGE> 9
subsidiary, Navistar International Transportation Corp.(1) since October 1992.
Previously, Mr. Hough served as Assistant Treasurer and Assistant Controller of
Navistar International Transportation Corp.(1) and as Controller of Navistar
Financial Corporation (a principal financial subsidiary of Navistar
International Transportation Corp.(1)) Mr. Hough joined Navistar International
Transportation Corp.(1) in 1980, after twelve years with Deloitte & Touche LLP.
Mr. Hough also serves as a member of the Professional Advisory Board of the
Department of Accounting at the University of Illinois at Chicago.
Stephen J. Klestinec. Stephen J. Klestinec joined the Company as an
employee on April 1, 1998. The Company anticipates that Mr. Klestinec will be
elected to the position of Vice President of Sales and Marketing at the first
meeting of the Board of Directors following the Annual Meeting. Mr. Klestinec
was employed by Atlanta based Georgia-Pacific Resin, Inc. ("Georgia-Pacific"), a
manufacturer of thermoset resins, from 1981 until joining the Company on April
1. At Georgia-Pacific, Mr. Klestinec served as market manager of fiber
reinforced products. In such capacity, Mr. Klestinec commercialized products for
both the North American and International markets in the aerospace, mass
transit, electrical and electronic industries. Mr. Klestinec also managed the
abrasives, adhesives and specialty market segment. Mr. Klestinec also held
positions at Georgia-Pacific in market development, quality assurance and
manufacturing. Prior to joining Georgia-Pacific, Mr. Klestinec served as plant
manager for Pacific Resins and Chemicals. Mr. Klestinec holds a bachelor's
degree in Chemistry from Belmont Abby College in Belmont, North Carolina.
Malcolm M. Prine. Malcolm M. Prine has been a director of the Company and
Chairman of the Company since December 31, 1996. Mr. Prine also served as a
director of RYMAC Mortgage Investment Corporation(2) from May 1992 to December
31, 1996. Mr. Prine has been self-employed while acting as a consultant for the
last nine years. He is currently a director of Equitable Resources, a natural
gas utility company, and PA Capital Bank, a Pennsylvania commercial bank serving
small businesses and individuals. He also serves on the board of various private
organizations and universities.
Kenneth M. Schmell. Kenneth M. Schmell is the General Manager and Acting
Chief Executive Officer of the Company and has served in those capacities since
the close of business on December 31, 1996. Prior to joining the Company, Mr.
Schmell served Navistar International Transportation Corp.(1) in various
capacities for approximately eight years, including service as Plant Manager of
the Columbus Plastics operation of Navistar International Transportation
Corp.(1)
James L. Simonton. James L. Simonton has been nominated to become a
director of the Company at the Annual Meeting. Mr. Simonton is currently the
Vice President of Purchasing and Supplier Development for Navistar International
Transportation Corp.(1) and has served in that capacity since 1992.
Gerald L. Voirol. Gerald L. Voirol is the Company's Controller and
Assistant Secretary and has served in those capacities since December 31, 1996.
Mr. Voirol was employed by Navistar International Transportation Corp.(1) from
1973 until joining the Company in 1996. Mr. Voirol served as Controller of the
Columbus Plastics operating unit of Navistar International Transportation
Corp.(1) from 1991 until 1996.
- ---------------
(1) Navistar International Transportation Corp. currently holds 4,264,000 shares
of Common Stock of the Company, or approximately 44% of all outstanding
shares of Common Stock as of April 14, 1998. The Company acquired the
Columbus Plastics operating unit of Navistar International Transportation
Corp. on December 31, 1996, pursuant to the terms of an asset purchase
agreement with RYMAC Mortgage Investment Corporation. Further information on
the relationship between Navistar International Transportation Corp. and the
Company is set forth below under the heading "CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS".
(2) RYMAC Mortgage Investment Corporation, a Maryland corporation, merged with
the Company on December 31, 1996. Further information on the merger of RYMAC
Mortgage Investment Corporation is set forth below under the heading
"CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS".
6
<PAGE> 10
COMPENSATION, MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
For the fiscal year ended December 31, 1997, the directors of the Company
received a director's fee of $3,000 per quarter. The Company anticipates that
the compensation arrangement for the fiscal year ending December 31, 1998 will
remain the same. In addition, the Company's Long-Term Equity Incentive Plan
provides for a one-time grant of a director option to each of the Company's
non-employee directors to purchase 35,000 shares of Common Stock, which option
vests in increments of 20% over a five year period. Mr. Conte, Mr. Hellmold, Mr.
Hough, Mr. Prine and Mr. Rigsby received this one-time grant of a director
option during the fiscal year ended December 31, 1997. If elected at the Annual
Meeting, Mr. Simonton and Mr. Crowley will receive this one-time grant of a
director option. The Company also has entered into certain compensation
arrangements with members of its Board of Directors. These compensation
arrangements are discussed below under the heading "COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION".
The Board of Directors met six times during the fiscal year ended December
31, 1997. During such period, each of the directors attended at least 75% of the
aggregate of the total number of meetings of the Board of Directors and the
total number of meetings of all committees of the Board of Directors on which
such director served.
The Company has a Compensation Committee which currently consists of
Messrs. Hellmold, Prine and Rigsby, each of whom is a non-employee member of the
Board of Directors. The Compensation Committee did not meet during the fiscal
year ended December 31, 1997 for the reasons described in the "Report of the
Compensation Committee" set forth below. The purpose of the Compensation
Committee is to recommend the form and amount of compensation to be paid to the
executive officers and directors of the Company.
The Company has an Audit Committee which currently consists of Messrs.
Hellmold, Hough and Prine. The principal function of the Audit Committee is to
review and approve the scope of the annual audit undertaken by the Company's
independent certified public accountants and meet with them to review and
inquire as to audit functions and other financial matters and to review the
year-end audited financial statements. The Audit Committee met once during the
fiscal year ended December 31, 1997.
The Company has a Nominating Committee which currently consists of Messrs.
Hellmold, Hough and Prine. The principal function of the Nominating Committee is
to recommend candidates for membership on the Board of Directors. The Nominating
Committee was appointed on February 4, 1998 and has met one time since its
formation.
STOCKHOLDER NOMINATIONS
The Company's Bylaws set forth certain procedural requirements pursuant to
which stockholders may make nominations to the Board of Directors. The
Nominating Committee may not accept recommendations for nominations to the Board
of Directors in contravention of these procedural requirements.
In order for a stockholder to nominate a person for election to the Board
of Directors, the stockholder must give written notice of such stockholder's
intent to make such nomination either by personal delivery or by United States
mail, postage prepaid, to the Secretary of the Company not less than fifty nor
more than seventy-five days prior to the meeting at which directors will be
elected. In the event that less than sixty days prior notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder to be timely must be received by the Company not later than
the close of business on the tenth day following the day on which such notice of
the date of the meeting was mailed or such public disclosure was made, whichever
first occurs.
The notice must set forth (i) the name and address of record of the
stockholder who intends to make such nomination; (ii) a representation that the
stockholder is a holder of record of shares of the Company's capital stock
entitled to vote at the meeting and intends to appear in person or by proxy at
the meeting to nominate the person or persons specified in the notice; (iii) the
name, age, business and residence addresses and principal occupation or
employment of each proposed nominee; (iv) a description of all arrangements or
understandings between the stockholder and each proposed nominee and any other
person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder; (v) such other
7
<PAGE> 11
information regarding each proposed nominee as would be required to be included
in a proxy statement filed pursuant to the proxy rules of the Securities and
Exchange Commission and (vi) the written consent of each proposed nominee to
serve as a director of the Company if so elected. The Company may require any
proposed nominee to furnish such other information as may reasonably be required
by the Company to determine the eligibility of such proposed nominee to serve as
a director of the Company. The presiding officer of the meeting of stockholders
may, if the facts warrant, determine that a nomination was not made in
accordance with the foregoing procedure. If the presiding officer makes such
determination, the officer shall declare such determination at the meeting and
the defective nomination will be disregarded.
Written notice should be addressed to Core Materials Corporation, Attn:
Kevin L. Barnett, Vice President, Secretary, Treasurer and Chief Financial
Officer, 800 Manor Park Drive, P.O. Box 28183, Columbus, Ohio 43228.
8
<PAGE> 12
EXECUTIVE COMPENSATION
The following table sets forth certain compensation information for Kenneth
M. Schmell, Kevin L. Barnett and Gerald L. Voirol. No other individual served as
Chief Executive Officer of the Company or was compensated as an employee of the
Company in an amount greater than $100,000 for the fiscal year ended December
31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION LONG TERM COMPENSATION
---------------- -------------------------------------------
NAME AND SALARY BONUS AWARDS-SECURITIES ALL OTHER
PRINCIPAL POSITION YEAR ($) ($) UNDERLYING OPTIONS(#) COMPENSATION($)(3)
- --------------------------------- ---- ------- ------ ---------------------- ------------------
<S> <C> <C> <C> <C> <C>
Kenneth M. Schmell(1) 1997 115,000 76,969 125,000 8,413
Acting Chief Executive Officer
and General Manager
Kevin L. Barnett(2) 1997 86,250 51,312 100,000 4,169
Vice President, Secretary,
Treasurer, and Chief
Financial Officer
Gerald L. Voirol(1) 1997 78,650 26,239 40,000 5,702
Controller and Assistant
Secretary
</TABLE>
- ---------------
(1) Messrs. Schmell and Voirol assumed their positions with the Company as of
the close of business on December 31, 1996. Accordingly, compensation
information is not provided for periods prior to the fiscal year ended
December 31, 1997.
(2) The Company employed Mr. Barnett on April 1, 1997. Accordingly, compensation
information is not provided for Mr. Barnett for periods prior to the fiscal
year ended December 31, 1997. Mr. Barnett's annual salary is $115,000.
(3) Includes contributions by the Company to its 401(k) plan for salaried
employees. The Company makes contributions to its 401(k) plan in two ways.
The Company makes a matching contribution which is based on the employee's
salary reduction contribution (the "matching contribution"). The Company
also makes a contribution (the "retirement contribution") which is based on
the age and regular earnings of the employee for the year. Matching
contributions for the fiscal year ended December 31, 1997, for each of
Messrs. Schmell, Barnett and Voirol were $938, $288 and $590 respectively.
Retirement contributions during the fiscal year ended December 31, 1997, for
each of Messrs. Schmell, Barnett and Voirol were $7,475, $3,881 and $5,112,
respectively.
9
<PAGE> 13
The following table sets forth certain information with respect to stock
options granted during the fiscal year ended December 31, 1997 to the executive
officers named in the Summary Compensation Table contained herein. In accordance
with Securities and Exchange Commission ("Commission") rules, the hypothetical
realizable values for each option grant are shown based on the compound annual
rates of stock price appreciation of 5% and 10% from the grant date to the
expiration date. The assumed rates of appreciation are prescribed by the
Commission and are for illustration purposes only. The assumed rates of
appreciation are not intended to predict future stock prices, which will depend
upon market conditions and the Company's future performance and prospects.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------- POTENTIAL REALIZABLE
% OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SHARE)(2) DATE 5%($) 10%($)
- ---------------------------- -------------- ------------- ------------ ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Kenneth M. Schmell.......... 125,000 15.7 2.75 4/16/07 216,183 547,849
Kevin L. Barnett............ 100,000 12.6 2.75 4/16/07 172,946 438,279
Gerald L. Voirol............ 40,000 5.0 2.75 4/16/07 69,178 175,312
</TABLE>
- ---------------
(1) All options were granted under the Company's Long-Term Equity Incentive
Plan. Mr. Schmell's option vests in ten installments (i.e. 11,500 shares of
Common Stock vest on December 31 of each year from 1997 to 2005 and 21,500
shares of Common Stock vest on June 30, 2006). Mr. Barnett's option vests in
ten installments (i.e. 9,500 shares of Common Stock vest on April 1 of each
year from 1998 to 2006 and 14,500 shares of Common Stock vest on October 1,
2006). Mr. Voirol's option vests in ten installments (i.e. 3,750 shares of
Common Stock vest on December 31 of each year from 1997 to 2005 and 6,250
shares of Common Stock vest on June 30, 2006). The options expire ten years
from the date of grant.
(2) Represents fair market value on the date of grant.
The following table sets forth certain information with respect to all
vested (exercisable) and unvested (unexercisable) options held by each of the
executive officers named in the Summary Compensation Table contained herein at
the end of the fiscal year ended December 31, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SECURITIES OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED AT FISCAL YEAR END(#) AT FISCAL YEAR END($)(1)
ON VALUE ------------------------------- -------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ ----------- ----------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth M. Schmell...... 0 0 11,500 113,500 10,810 106,690
Kevin L. Barnett........ 0 0 0 100,000 0 94,000
Gerald L. Voirol........ 0 0 3,750 36,250 3,525 34,075
</TABLE>
- ---------------
(1) "Value of Unexercised In-the-Money Options at Fiscal Year End" is based upon
the fair market value of the Company's shares of Common Stock on December
31, 1997 ($3.69) less the exercise price of in-the-money options at the end
of the fiscal year ended December 31, 1997.
10
<PAGE> 14
REPORT OF THE COMPENSATION COMMITTEE
The Company assumed its current business operations on January 1, 1997. The
Company subsequently established a Compensation Committee consisting of Messrs.
Hellmold, Prine and Rigsby. The Board of Directors, including the members of the
Compensation Committee, decided that the compensation philosophy and
compensation levels of the Company during its initial year of operation should
be made by the Board of Directors meeting as a whole. Accordingly, the
Compensation Committee did not meet separately from the Board of Directors
during the fiscal year ended December 31, 1997 and all compensation decisions
are the responsibility of the entire Board of Directors.
The purpose of the Company's compensation program is to attract and retain
qualified executive officers by providing a total compensation package which is
competitive with comparable corporations and to also provide incentives to
create short-term and long-term improvements in the Company's performance.
The Company's compensation philosophy is based on the belief that (i) the
Company must attract and retain qualified individuals and motivate and reward
such individuals for performance, (ii) a substantial portion of an executive's
compensation should be at risk based upon the Company's performance and (iii)
incentives should exist which align the interests of the executives with those
of the Company's stockholders and focus on the creation of long-term stockholder
value.
Following this philosophy the Company has developed a compensation program
for its executives which includes the following components:
BASE SALARY
Base salaries have been established for the executive officers based upon
the experience and capabilities of the executives (as determined in the
subjective judgment of the Board of Directors) and the salaries of comparable
companies.
BONUS/PROFIT SHARING
The Board of Directors has established a bonus/profit sharing program for
the executives and other salaried employees. This program is designed to align
the interests of such individuals with those of the Company's stockholders by
directly tying profit sharing payments to the Company's performance for the
year. This program creates a profit sharing pool for the executives and other
salaried employees based upon a percentage of the Company's earnings before
taxes for the year above a pre-established threshold. This threshold is
established annually by the Board of Directors and is intended to begin creating
a profit sharing pool only after the Company's earnings before taxes exceeds a
reasonable return to stockholders.
STOCK OPTIONS
The Board of Directors granted stock options under the Company's Long-Term
Equity Incentive Plan to executives and salaried employees which are intended to
align the long-term interests of these individuals with the interests of the
Company's stockholders. The Board of Directors determined the options awarded to
the executive officers based upon the subjective judgment and experience of the
directors in compensating executive officers. All options for the executive
officers of the Company were granted at fair market value and are subject to a
ten year vesting schedule. An executive officer, upon exercise of an option,
will receive two stock certificates, as follows: (i) one stock certificate
evidencing shares of Common Stock having a total fair market value on the date
of exercise equal to the option exercise price paid by the executive officer
(which shares of Common Stock will be unrestricted as to resale by the executive
officer); and (ii) a second stock certificate evidencing the balance, if any, of
the shares of Common Stock issuable upon exercise of the option, which shares of
Common Stock will be restricted as to resale by the executive officer until the
fixed expiration date of the option (as if it had not been exercised).
11
<PAGE> 15
BASIS FOR ACTING CHIEF EXECUTIVE OFFICER'S COMPENSATION
The compensation for Mr. Schmell, for 1997, was established in accordance
with the information discussed above.
Submitted by the Compensation Committee and the Board of Directors
Ralph O. Hellmold
Malcolm M. Prine
Thomas E. Rigsby
Richard R. Conte
Thomas M. Hough
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consisted during the fiscal year ended December
31, 1997 of Mr. Hellmold, Mr. Prine and Mr. Rigsby. The Compensation Committee
did not meet during the fiscal year ended December 31,1997 for the reasons
described in the "Report of the Compensation Committee" set forth above.
Accordingly, all compensation decisions were made by the Board of Directors. The
Company has entered into certain compensation arrangements with members of its
Board of Directors, as follows:
RELATIONSHIP WITH MR. CONTE
Mr. Conte served as Chairman, Chief Executive Officer and Principal
Financial Officer of RYMAC Mortgage Investment Corporation (which merged with
the Company on December 31, 1996) ("RYMAC"). RYMAC negotiated a severance
agreement with Mr. Conte, dated as of November 1, 1994, in anticipation of a
potential business acquisition involving RYMAC. The severance agreement provided
Mr. Conte with a right to receive a salary for a period of one year following
the cessation of Mr. Conte's employment (up to a maximum payment of $115,000) as
a result of any business combination involving RYMAC. During the fiscal year
ended December 31, 1997, Mr. Conte received $67,083 under the terms of the
severance agreement. The Company also compensated Mr. Conte in the total amount
of $47,917 for the fiscal year ended December 31, 1997 for his services as an
employee from January until May (including services during a portion of that
time as Chief Financial Officer). Mr. Conte is currently a director of the
Company, but will not stand for re-election at the Annual Meeting.
RELATIONSHIP WITH MR. HELLMOLD
RYMAC entered into a letter agreement dated as of November 1, 1995, as
amended on April 10, 1996 and July 18, 1996, with Hellmold Associates, Inc.
("Hellmold Associates"), an investment banking boutique. Mr. Hellmold is the
founder and President of Hellmold Associates, and is also a current director of
the Company and nominee for director of the Company. The letter agreement
provided that Hellmold Associates would assist RYMAC in identifying and
contacting potential acquisition candidates and in structuring and negotiating a
strategic acquisition. Hellmold Associates also was engaged by Navistar
International Transportation Corp. ("Navistar") to assist it in selling its
Columbus Plastics operation.
In 1996, Hellmold Associates identified Columbus Plastics as a potential
acquisition candidate for RYMAC. Upon the closing of the acquisition of Columbus
Plastics, Hellmold Associates was paid $688,305 in advisory fees by the Company.
In 1997, Hellmold Associates also received $30,075 in additional compensation,
as a result of the increase in the purchase price paid to Navistar which
reflected an increase in the net tangible assets of Columbus Plastics as of the
December 31, 1996 acquisition date. Hellmold Associates may receive additional
compensation in the future as a result of further post-closing adjustments to
the purchase price of Columbus Plastics.
12
<PAGE> 16
RELATIONSHIP WITH MR. PRINE
The Company compensates Mr. Prine as a consultant for special services and
advice that he provides to the Acting Chief Executive Officer at a rate of
$7,500 per month. Mr. Prine received a total of $90,000 in cash compensation for
such services during the fiscal year ended December 31, 1997. Mr. Prine also
received $15,000 in 1997 for consulting services rendered in 1996.
In addition, Mr. Prine was paid $125,000 in the fiscal year ended December
31, 1997, for consulting services that he rendered in connection with the merger
of RYMAC and the Company and the acquisition of Columbus Plastics.
RELATIONSHIPS WITH MR. HOUGH, MR. RIGSBY AND MR. SIMONTON
In the past, certain officers of Navistar, including Mr. Hough and Mr.
Rigsby, have been elected to the Board of Directors. Sales to Navistar
represented approximately 77% of the Company's total revenues for the fiscal
year ended December 31, 1997. The Company anticipates that Mr. Hough and Mr.
Simonton (currently officers of Navistar) will be elected as directors of the
Company at the Annual Meeting.
PERFORMANCE GRAPH
The following graph sets forth a comparison of cumulative total return on
(i) the shares of Common Stock; (ii) the Standard & Poor's Small Cap 600 Index
and (iii) the Standard & Poor's Trucks & Parts Index. The Company did not
acquire the Columbus Plastics operation of Navistar until December 31, 1996, nor
did it assume its current business operations until January 1, 1997.
Accordingly, information is not provided for fiscal years ended prior to the
fiscal year ended December 31, 1997.
COMPARISON OF 12 MONTH CUMULATIVE TOTAL RETURN*
AMONG CORE MATERIALS CORPORATION, THE S&P SMALLCAP 600 INDEX
AND THE S&P TRUCKS & PARTS INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD CORE MATERIALS S&P SMALLCAP S&P TRUCKS &
(FISCAL YEAR COVERED) CORPORATION 600 PARTS
<S> <C> <C> <C>
12/96 100 100 100
12/97 164 126 165
</TABLE>
* INFORMATION REFLECTED ON PERFORMANCE GRAPH ASSUMES $100 INVESTED ON 12/31/96
IN STOCK OR INDEX-INCLUDING REINVESTMENT OF DIVIDENDS. FISCAL YEAR ENDING
DECEMBER 31.
13
<PAGE> 17
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATIONSHIP WITH NAVISTAR
On October 8, 1996, RYMAC, a Maryland corporation, formed the Company as a
wholly-owned subsidiary under the laws of the State of Delaware. RYMAC
incorporated the Company in order to acquire substantially all of the assets of
the Columbus Plastics operating unit of Navistar.
RYMAC had entered into an asset purchase agreement (as amended, the "Asset
Purchase Agreement") with Navistar on September 12, 1996. The Asset Purchase
Agreement provided for the acquisition of Columbus Plastics (the "Acquisition").
The obligation of Navistar to consummate the acquisition, however, was
conditioned upon the reincorporation of RYMAC in the State of Delaware.
Accordingly, RYMAC formed the Company on October 8, 1996, as a wholly-owned
subsidiary under the laws of the State of Delaware and subsequently merged with
and into the Company on December 31, 1996 (the "Merger"). The Company was the
surviving corporation in the Merger with each outstanding share of RYMAC common
stock being converted into the right to receive one share of the Company's
Common Stock.
Pursuant to the terms of the Asset Purchase Agreement, the Company acquired
substantially all of the assets and liabilities of Columbus Plastics on December
31, 1996. As consideration, Navistar received a secured note (the "Secured
Note") in the principal amount of $25,504,000. Navistar also received 4,264,000
shares of newly issued common stock of the Company, representing approximately
45% of the total number of shares of Common Stock issued and outstanding at the
time of the Acquisition. (1) The acquisition of such Common Stock made Navistar
the Company's largest stockholder, a position which is generally protected by
certain provisions in the Company's certificate of incorporation (as amended,
the "Certificate of Incorporation") that limit the possibility of a change in
ownership or control of the Company. For instance, the Certificate of
Incorporation requires a super-majority vote to remove directors or approve
certain extraordinary corporate transactions such as mergers and acquisitions.
The Certificate of Incorporation also restricts transfers of securities which
could result in a change of ownership of a specified percentage in the
Company.(2) Navistar's status as the largest stockholder of the Company has
allowed Navistar in the past (and will allow Navistar at the Annual Meeting) to
influence the composition of the Board of Directors. The Company anticipates
that Mr. Hough and Mr. Simonton, currently officers of Navistar, will be elected
as directors of the Company at the Annual Meeting.
In addition to being the Company's largest stockholder, Navistar is also a
significant customer of the Company with sales to Navistar representing
approximately 77% of the Company's total revenues during the fiscal year ended
December 31, 1997. The Company has a Comprehensive Supply Agreement with
Navistar, pursuant to which the Company sells fiberglass reinforced parts to
Navistar. Additionally, the Company and Navistar have a Transitional Services
Agreement, under which Navistar has provided certain accounting, payroll, human
resources and office support services to the Company and has procured insurance
on the Company's behalf. The accounting, payroll, human resources and office
support services were discontinued in early 1998. The total cost to the Company
for such services and support during the fiscal year ended December 31, 1997 was
approximately $183,000. Finally, the Company and Navistar entered into a
Registration Rights Agreement at the time of the Merger and Acquisition under
which the Company granted to Navistar certain demand and "piggy-
- ---------------
1 The principal amount of the Secured Note and the number of shares of Common
Stock received by Navistar are subject to adjustment pursuant to the terms of
the Asset Purchase Agreement. Effective December 31, 1996, the amount of the
Secured Note was increased to $29,514,000 in order to reflect an increase in
the "net tangible assets" of Columbus Plastics as of the December 31, 1996
acquisition date. In 1997, as a result of a review of the closing balance
sheet and all purchase price adjustments, the Secured Note was reduced by
$1,629,000 to reflect an amendment to the closing balance as of the
Acquisition. In addition, Navistar will receive future consideration in the
form of an increase in the principal amount of the Secured Note if the Company
achieves earnings results above specified levels during the period 1997
through 1999. Based on the Company's earnings for the fiscal year ended
December 31, 1997, the Secured Note was increased by $2,937,000.
2 This restrictive transfer provision is discussed below under the heading
"LIMITATION ON OWNERSHIP".
14
<PAGE> 18
back" rights with respect to the registration for sale under the Securities Act
of the shares of Common Stock received pursuant to the Asset Purchase Agreement.
OTHER MATERIAL RELATIONSHIPS
The Company has entered into certain material arrangements with members of
its Board of Directors which arrangements are discussed above under the heading
"COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION."
LIMITATION ON OWNERSHIP
The Certificate of Incorporation contains a provision (the "Prohibited
Transfer Provision") which was designed at the time of the Merger and
Acquisition to help assure the continued availability of the Company's
substantial net operating losses by seeking to prevent an ownership change in
the Company. Under the Prohibited Transfer Provision, transfers of stock of the
Company (including, all classes of the Company's stock, options to purchase
stock or any other interest in the Company that could be treated as stock
(collectively, the "Stock")), are prohibited if they will cause the transferee
to hold a "Prohibited Ownership Percentage" or if the transferee's ownership
percentage already exceeds the Prohibited Ownership Percentage. As defined in
the Certificate of Incorporation, a "Prohibited Ownership Percentage" generally
means direct and indirect ownership of 4.5% or more of the Stock or any other
percentage that would cause a transferee to be considered a five percent
stockholder under the federal income tax rules referenced in the Certificate of
Incorporation. The Prohibited Transfer Provision did not apply to the issuance
of Stock to Navistar pursuant to the Asset Purchase Agreement and will not
restrict certain transfers that are made in compliance with exceptions set forth
in the Prohibited Transfer Provision.
15
<PAGE> 19
PROPOSAL 1
ELECTION OF DIRECTORS
COMPOSITION OF THE BOARD OF DIRECTORS
The Board of Directors currently consists of five members. At the Annual
Meeting, the stockholders will elect five directors to hold office until the
election and qualification of their successors at the next annual meeting of
stockholders or until their earlier resignation, death, disqualification or
removal from office.
The intention of the proxies is to vote the shares of Common Stock they
represent for the election of James F. Crowley, Ralph O. Hellmold, Thomas M.
Hough, Malcolm M. Prine and James L. Simonton, unless the proxy is marked to
indicate that such authorization is expressly withheld. Each of the nominees,
except Mr. Crowley and Mr. Simonton, is currently a member of the Board of
Directors. Richard R. Conte and Thomas E. Rigsby, current members of the Board
of Directors, will not stand for re-election at the Annual Meeting. All of the
nominees have stated their willingness to serve and the Company is not aware of
any reason that would cause any of the nominees to be unavailable to serve as a
director should they be elected at the Annual Meeting. If any of the nominees
should become unavailable for election, discretionary authority may be exercised
by the proxies to vote for a substitute nominee proposed by the Board of
Directors. Certain information with respect to the background and experience of
each of the five nominees is set forth above under the heading "DIRECTORS AND
EXECUTIVE OFFICERS OF THE COMPANY".
Under Delaware law and the Company's Bylaws, the five nominees receiving
the greatest number of votes will be elected as directors. Shares of Common
Stock as to which the voting authority is withheld will be counted for quorum
purposes but will not be counted toward the election of directors, or toward the
election of individual nominees specified in the form of proxy.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF MESSRS.
CROWLEY, HELLMOLD, HOUGH, PRINE AND SIMONTON
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of Deloitte & Touche LLP to
audit the financial statements of the Company for the fiscal year ending
December 31, 1998. A representative of Deloitte & Touche LLP is expected to be
present at the Annual Meeting and, if so, will have the opportunity to make a
statement if he or she desires to do so, and will be available to respond to
appropriate questions.
The appointment of auditors is being presented to the stockholders for
ratification at the Annual Meeting. While ratification by stockholders of this
appointment is not required by law or the Company's Certificate of Incorporation
or Bylaws, management believes that such ratification is desirable. In the event
this appointment is not ratified by a majority vote of stockholders, the Board
of Directors will consider that fact when it appoints independent certified
public accountants for the next fiscal year.
CHANGE OF ACCOUNTANTS
Prior to the Merger and Acquisition, Ernst & Young LLP was the independent
auditor of RYMAC. By contrast, Deloitte & Touche LLP was the independent auditor
of the Columbus Plastics operation of Navistar and of the Company.
On December 31, 1996, the Board of Directors elected to dismiss Ernst &
Young LLP as the independent auditor of RYMAC and retained Deloitte & Touche LLP
as the Company's independent auditor, as Deloitte & Touche LLP was the auditor
of the Columbus Plastics operation, the accounting acquiror.
For the years ended December 31, 1994 and 1995, the audit reports of Ernst
& Young LLP on the consolidated financial statements of RYMAC as of and for the
years ended December 31, 1995 and 1994 did not contain any adverse opinion or
disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit
16
<PAGE> 20
scope, or accounting principles. For these same two fiscal years and through the
date of their dismissal (December 31, 1996), there were no disagreements with
Ernst & Young LLP on any matter of accounting principles or practices, financial
statement disclosures, auditing scope, or procedure, which, if not resolved to
the satisfaction of Ernst & Young LLP, would have caused them to make reference
to the subject matter of any disagreements in connection with their reports on
the financial statements of RYMAC.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
APPOINTMENT OF DELOITTE & TOUCHE LLP.
PROPOSAL 3
RATIFICATION OF EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors is proposing the Core Materials Corporation Employee
Stock Purchase Plan (the "Plan") for approval by the Company's stockholders. The
Plan provides eligible employees with an opportunity to purchase shares of
Common Stock at a discount through regular payroll deductions. The following
description of the Plan is qualified in its entirety by reference to the full
text of the Plan, which is set forth in Appendix I to this Proxy Statement and
made a part hereof.
PURPOSE OF THE STOCK PURCHASE PLAN
The purpose of the Plan is to provide eligible employees of the Company
with an opportunity to acquire an equity interest in the Company through the
purchase of shares of Common Stock, and thereby develop an incentive for such
employees to remain with the Company, provide a means for such employees to
share in the future success of the Company, and link and align the personal
interests of such employees to those of the Company's stockholders.
PLAN ADMINISTRATION
The Plan will be administered by the Compensation Committee of the Board of
Directors or such other committee of at least three directors as may be
appointed by the Board of Directors (the "Committee"). The Committee members
will serve at the pleasure of the Board of Directors. None of the members of the
Committee may be an employee of the Company or be eligible to participate in the
Plan. The Committee will have the authority to prescribe, amend and rescind
rules and regulations relating to the Plan. The Committee also will have
authority to interpret the Plan and correct any defect or supply any omission or
reconcile any inconsistency in the Plan to the extent necessary for the
effective operation of the Plan. Any such determination, decision or action
taken by the Committee with respect to the construction, interpretation,
administration or application of the Plan will be conclusive.
ELIGIBLE EMPLOYEES
Any employee of the Company will be eligible to participate in the Plan,
provided that each such employee has been employed by the Company for at least
one year and does not own 5% or more of the total combined voting power or value
of all classes of shares of the Company. An eligible employee may begin to
participate in the Plan as of the August 1st or February 1st following the date
on which the employee satisfies the foregoing eligibility requirements.
SECURITIES SUBJECT TO THE PLAN
A maximum of 100,000 shares of Common Stock are available for issuance
under the Plan (subject to adjustment as described below under the heading
"Adjustments upon Stock Dividend, Stock Split or Other Recapitalization"). The
shares of Common Stock subject to the Plan generally shall be previously issued
Common Shares acquired by the Company. The Board of Directors, however, may
determine, in its sole discretion, that the shares of Common Stock to be
purchased under the Plan will be authorized and unissued shares of Common Stock.
To the extent that the Company issues shares of Common Stock under the Plan, the
17
<PAGE> 21
amounts received by the Company will provide additional capital for the Company
and may be used for any corporate purpose of the Company.
RIGHTS TO PURCHASE
Upon effectiveness of the Plan, the Committee will authorize one or more
offerings ("Offering" or "Offerings"), pursuant to which eligible employees may
purchase, through authorized payroll deductions, shares of Common Stock subject
to the Plan. Each Offering shall be made over the course of an offering period
(the "Offering Period") which will consist of one fiscal quarter of the plan
year (running the twelve month period beginning each August 1st and ending the
following July 31st) (the "Plan Year").
Each eligible employee who desires to become a participant in the Plan may
do so by completing and submitting an Enrollment/Change Form. The employee will
specify on such Enrollment/Change Form a contribution percentage or amount that
the employee wishes to authorize the Company to deduct at regular payroll
intervals, which amount shall not be less than $5.00 per pay period. The amounts
withheld through such payroll deductions will be credited to a cash account
("Cash Account") for each participating employee. Interest will not accrue on
amounts deposited in an employee's Cash Account.
Each participating employee who has enrolled in the Plan will be granted a
right to purchase shares of Common Stock subject to the Plan (a "Right to
Purchase"), on the last business day of each Offering (the "Right to Purchase
Date"). A custodian ("Custodian") appointed by the Company for the Plan will
purchase the maximum number of whole shares of Common Stock that the Custodian
can purchase with the amounts in the employee's Cash Account. The Custodian will
make such purchases beginning on the Right to Purchase Date. Amounts remaining
in the Cash Account after such purchase will remain in the Cash Account for use
during the next Offering Period.
The purchase price for the shares of Common Stock (the "Right to Purchase
Price") will be 85% of the fair market value of the shares of Common Stock as of
the Right to Purchase Date. Fair market value will equal the average of the high
and low price per share of Common Stock (or, if applicable, the price per share
of Common Stock paid by the Custodian) on the American Stock Exchange, or on any
national stock exchange, on the Right to Purchase Date or, if no sales of shares
of Common Stock were made on such date, on the next preceding date on which
sales of Common Stock were made on the American Stock Exchange or other national
stock exchange.
The Custodian will establish and maintain a share account for each
participating employee and will credit to such account the number of shares of
Common Stock purchased for such employee. A participating employee may withdraw
all or a portion of the shares of Common Stock credited to the employee's share
account by written notice to the Custodian given at least twenty days in advance
of each August 1 or February 1. The employee can withdraw such shares of Common
Stock on a first-in first-out basis. The Custodian will charge the employee a
fee (agreed to by the Company and the Custodian) for such withdrawal and deliver
to the participating employee a share certificate issued in the employee's name
for the number of whole shares of Common Stock that the employee wishes to
withdraw from the employee's share account. Shares of Common Stock withdrawn by
a participating employee will be registered and issued only in the name of such
participating employee.
Any cash dividends paid with respect to the shares of Common Stock credited
to a participating employee's share account will be added to the employee's Cash
Account and applied to the exercise of Rights to Purchase on the immediately
succeeding Right to Purchase Date. Accordingly, an election by an employee to
leave shares of Common Stock with the Custodian will constitute an election to
apply any cash dividends with respect to such shares of Common Stock to the
exercise of Rights to Purchase.
A participating employee may, by written notice to the Company at least
twenty days prior to each August 1st or February 1st, increase or decrease the
amount of the participating employee's payroll deduction. In addition, the
participating employee may discontinue payroll deductions, as of any future date
specified by the Company for making the payroll deductions (the "Payroll
Deduction Date(s)"), by written notice delivered to the Company at least twenty
days in advance of such Payroll Deduction Date. The employee thereafter may not
resume deductions until the next following August 1st or February 1st. Amounts
remaining in a participating
18
<PAGE> 22
employee's Cash Account who ceases payroll deductions will be used on the next
Right to Purchase Date to purchase shares of Common Stock. The Committee may
impose such other restrictions on the right to cease payroll deductions as it
deems appropriate.
The Company at its option, at any time after the end of an Offering Period,
may close the Cash Account of an eligible employee not participating in another
Offering under the Plan. In that event, any balance remaining in the employee's
Cash Account will be refunded to the employee. In addition, the Company at its
option, at any time after the end of an Offering Period, may close the share
accounts related to such Offering. In that event, the Custodian will deliver to
each participating employee in that Offering a share certificate issued in the
employee's name for the number of whole Common Shares credited to the employee's
share account without charging a withdrawal fee.
LIMITATIONS ON GRANT OF RIGHT TO PURCHASE AND GOVERNMENT REGULATION
The number and market value of the shares of Common Stock purchased by any
participating employee under the Plan may not exceed certain limitations. These
limitations prohibit the grant of a Right to Purchase (i) if, immediately after
such Right to Purchase is granted, such employee would own, and/or hold
outstanding options or rights to purchase, shares of the Company possessing 5%
or more of the total combined voting power or value of all classes of shares of
the Company; or (ii) which permits an employee's rights to purchase shares of
Common Stock under all employee stock purchase plans of the Company to accrue at
a rate which exceeds $25,000 of fair market value of such shares of Common Stock
(determined as of the date such Right to Purchase is granted) for each calendar
year in which such Right to Purchase is outstanding.
The Company's obligation to issue, sell or deliver any shares of Common
Stock under the Plan also is subject to all applicable laws and regulations and
to the approval of any governmental or regulatory authority required in
connection with such issuance, sale or delivery. The Company will not be
required to issue, sell or deliver any shares of Common Stock under the Plan
prior to (i) approval of such shares of Common Stock for any required listing on
any national stock exchange; and (ii) the completion of any registration or
other qualification of such shares of Common Stock under any state or federal
law or any ruling or regulation of any governmental or regulatory authority
which the Company in its sole discretion determines to be necessary or
advisable.
RIGHTS AS STOCKHOLDERS
A participating employee will not have any of the rights or privileges of a
stockholder with respect to shares of Common Stock subject to an unexercised
Right to Purchase. A participating employee who has exercised a Right to
Purchase will have all the rights and privileges of a stockholder immediately
following such exercise.
TERMINATION OF EMPLOYMENT
If the employment of a participating employee terminates for any reason,
including death, disability, retirement or other cause, the employee's
participation in the Plan will terminate automatically as of the date of the
employee's termination. As soon as practicable following the former employee's
termination, the Company will refund to such former employee (or beneficiary in
the case of the former employee's death) any and all amounts in the former
employee's Cash Account. In addition, the Custodian will deliver to the former
employee (or beneficiary) a share certificate issued in the former employee's
name for the number of whole shares of Common Stock credited to the former
employee's share account through prior Offerings.
RESTRICTION UPON ASSIGNMENT
Rights to Purchase are not assignable or transferable (including by pledge
or hypothecation) and are exercisable during a participating employee's lifetime
only by such employee. The Company will not recognize and has no duty to
recognize any assignment or purported assignment by a participating employee of
such employee's Rights to Purchase or of any rights under the Rights to
Purchase.
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<PAGE> 23
ADJUSTMENTS UPON STOCK DIVIDEND, STOCK SPLIT OR OTHER RECAPITALIZATION
In the event of any change in the outstanding shares of Common Stock, by
reason of a stock dividend, recapitalization, merger, consolidation, split-up,
combination or exchange of shares, or the like, appropriate adjustments shall be
made to the aggregate number and class of shares subject to the Plan, the number
and class of shares subject to outstanding Rights to Purchase, the purchase
price per share (in the case of shares subject to outstanding Rights to
Purchase), and the number and class of shares which may be subscribed to by any
one employee. The Committee may make such other adjustments as it deems
equitable.
DURATION AND AMENDMENT OF THE PLAN
The Plan will become effective upon (i) stockholder approval of the Plan at
the Annual Meeting, and (ii) ratification of the Plan by the Board of Directors
at their next scheduled meeting. The Plan will continue in effect until the
earlier to occur of (i) the purchase by eligible employees of all shares of
Common Stock subject to the Plan; or (ii) the termination of the Plan by the
Board of Directors. No termination of the Plan may affect any Rights to Purchase
previously granted under the Plan.
The Company reserves the right to amend, suspend, modify or terminate the
Plan at any time. The Committee, however, generally may not make any changes or
additions that would adversely affect Rights to Purchase previously granted
under the Plan. In addition, the Committee generally may not make any amendment
without prior stockholder approval if such amendment would (i) increase the
aggregate number of shares of Common Stock subject to the Plan or which may be
subscribed to by an eligible employee; (ii) decrease the minimum purchase price
for a share of Common Stock, or (iii) change any of the provisions of the Plan
relating to eligibility for participation in Offerings.
INTEREST OF ELIGIBLE EMPLOYEES IN THE PLAN
All employees of the Company will be able to participate in the Plan if
they satisfy the eligibility requirements of the Plan detailed above. As of
December 31, 1997, the Company employed a total of 433 employees.
The Company's employees currently include the executive officers named in
the Summary Compensation Table set forth above under the heading "EXECUTIVE
COMPENSATION". No current director or person nominated to become a director at
the Annual Meeting is currently an employee of the Company.
All eligible employees will have discretion to determine whether or not
they wish to participate in the Plan. Accordingly, the Company has not and
cannot determine the benefits or amounts that will be received by or allocated
to any employee of the Company (or the benefits or amounts which would have been
received by or allocated to any employee of the Company for the fiscal year
ended December 31, 1997, assuming the Plan had been in effect during such fiscal
year).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE CORE
MATERIALS CORPORATION EMPLOYEE STOCK PURCHASE PLAN.
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<PAGE> 24
OTHER MATTERS
The management of the Company and the Board of Directors know of no matters
to be brought before the Annual Meeting other than as set forth above. If,
however, any other matters are properly presented to the stockholders for
action, it is the intention of the persons named in the proxy to vote at their
discretion on all matters on which the shares of Common Stock represented by
such proxies are entitled to vote.
BY ORDER OF THE BOARD OF DIRECTORS
Malcolm M. Prine
Chairman of the Board
Dated: April 27, 1998
21
<PAGE> 25
Appendix I
CORE MATERIALS CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
1. Purpose of the Plan. The purpose of the Core Materials Corporation
Employee Stock Purchase Plan (the "Plan") is to provide eligible employees of
Core Materials Corporation (the "Company") with an opportunity to acquire an
equity interest in the Company through the purchase of Common Shares, and thus
develop an incentive to remain with the Company, provide a means for employees
to share in the future success of the Company, and to link and align the
personal interests of such employees to those of the Company's stockholders. If
the Company issues Common Shares under the Plan, the proceeds therefrom will
provide additional capital for the Company, which will be used for general
corporate purposes. It is the intention of the Company to have the Plan qualify
as an "employee stock purchase plan" under Section 423 of the Code and the Plan
is to be construed accordingly.
2. Definitions. For purposes of this Plan, the following terms when
capitalized shall have the meanings designated herein unless a different meaning
is plainly required by the context. Where applicable, the masculine pronouns
shall include the feminine and the singular shall include the plural.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Cash Account" shall mean the account established for each
Participant to which amounts withheld through payroll deductions
shall be credited.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended,
and the regulations and rulings thereunder.
(d) "Committee" shall mean the Compensation Committee of the Board or
such other committee of at least three directors as may be
appointed by the Board from time to time to serve at the pleasure
of the Board.
(e) "Common Shares" shall mean the common shares of the Company.
(f) "Company" shall mean Core Materials Corporation.
(g) "Custodian" shall mean the person selected by the Company to hold
the amounts withheld through Participants' payroll deductions
pending the purchase of Common Shares pursuant to the Plan and to
hold the Common Shares so purchased for the benefit of Participants
until such Common Shares are withdrawn pursuant to the terms of the
Plan. The Custodian shall qualify as an "agent independent of the
issuer" as that term is used in Regulation M promulgated under the
Securities Exchange Act of 1934, as amended.
(h) "Effective Date" shall mean the last business day of each Offering
Period under the Plan.
(i) "Offering" shall mean an opportunity provided by the Committee to
purchase Common Shares under the Plan.
(j) "Offering Period" shall mean the period during which an Offering
shall be made under the Plan and shall consist of a fiscal quarter
of the Plan.
(k) "Participant" shall include any employee who has satisfied the
requirements of the Plan to acquire Common Shares under the Plan
and has elected to have payroll deductions made pursuant to the
Plan.
(l) "Payroll Deduction Date(s)" shall mean the date or dates specified
by the Company on which withholdings for each fiscal quarter of the
Plan shall be made.
(m) "Plan Year" shall mean the fiscal year of the Plan which shall be
the twelve (12) month period beginning each August 1st and ending
on the following July 31st.
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<PAGE> 26
(n) "Right to Purchase" shall mean an option to purchase Common Shares
granted to a Participant who elects to participate in an Offering
under the provisions of the Plan.
(o) "Right to Purchase Date" shall mean the Effective Date of an
Offering Period.
(p) "Share Account" shall mean the account established for each
Participant to which Common Shares purchased on each Right to
Purchase Date for the Participant shall be credited.
3. Administration. The Plan shall be administered by the Committee. Each
member of the Committee must be an outside director of the Company and shall not
be eligible to participate in the Plan. Subject to express provisions of the
Plan and to such instructions and limitations as the Board may establish from
time to time, the Committee shall have the authority to prescribe, amend and
rescind rules and regulations relating to the Plan. The Committee may interpret
the Plan and may correct any defect or supply any omission or reconcile any
inconsistency in the Plan to the extent necessary for the effective operation of
the Plan. Any determination, decision or action taken by the Committee on the
matters referred to in this paragraph shall be conclusive.
4. Effectiveness of the Plan. The Plan shall become effective upon (i)
shareholder approval of the Plan at the 1998 annual meeting of shareholders of
the Company (scheduled to be held on May 28, 1998) or any adjournment thereof,
and (ii) Board ratification of the Plan at the Board meeting immediately
following the 1998 annual meeting of the shareholders of the Company or any
adjournment thereof.
5. Common Shares Subject to the Plan. Subject to adjustment as provided in
Paragraph 17 herein, not more than 100,000 Common Shares shall be offered under
the Plan. The Common Shares subject to the Plan generally shall be previously
issued Common Shares acquired by the Company. The Board, however, also may
determine, in its sole discretion, that the Common Shares to be purchased under
the Plan shall be authorized and unissued Common Shares.
6. Offerings under the Plan. After the Plan has become effective, one or
more Offerings, as determined by the Committee, may be made to eligible
employees to purchase Common Shares subject to the Plan. The Offerings may be
consecutive or concurrent as determined by the Committee. Each Offering shall be
made during an Offering Period. Common Shares not sold under one Offering may be
offered again in any subsequent Offering.
7. Eligibility. Subject to the terms of this Plan, any employee of the
Company who has been employed by the Company, for at least one (1) year may
participate in the Plan. Notwithstanding the previous sentence, any employee of
the Company who owns greater than 5% of the total combined voting power or value
of all classes of shares of the Company shall not be eligible to participate in
any Offerings under the Plan.
An eligible employee may begin to participate in the Plan as of the August
1st or February 1st following the date on which he or she satisfies the
requirements of the previous paragraph.
Nothing contained herein and no rules and regulations prescribed by the
Committee shall permit or deny participation in any Offering contrary to the
requirements of the Code (including, without limitation, Sections 423(b)(3),
423(b)(4) and 423(b)(8) thereof).
Nothing contained herein and no rules and regulations prescribed by the
Committee shall permit any employee to be granted a Right to Purchase under the
Plan:
(a) if, immediately after such Right to Purchase is granted, such employee
would own, and/or hold outstanding options or rights to purchase, shares of the
Company possessing five percent (5%) or more of the total combined voting power
or value of all classes of shares of the Company; or
(b) which permits an employee's rights to purchase Common Shares under all
employee stock purchase plans of the Company to accrue at a rate which exceeds
Twenty-Five Thousand Dollars ($25,000.00) of fair market value of Common Shares
(determined as of the date such Right to Purchase is granted) for each calendar
year in which such Right to Purchase is outstanding at any time.
For purposes of this paragraph, the provisions of Section 424(d) of the
Code shall apply in determining the stock ownership of each employee. For
purposes of clause 7(b) above, the provisions of Section 423(b)(8) of the
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<PAGE> 27
Code shall apply in determining whether an employee's Rights to Purchase and
other rights are permitted to accrue at a rate in excess of the permitted rate.
8. Payroll Deductions. In order to participate in the Plan, an eligible
employee must indicate on an Enrollment/Change Form (to be provided by the
Committee) the contribution percentage or amount that he wishes to authorize the
Company to deduct at regular payroll intervals. The minimum deduction for each
eligible employee, during each Offering Period, shall be an amount equal to five
dollars ($5.00) per pay period. Each Enrollment/Change Form will include
authorization for the Company to make payroll deductions from the eligible
employee's compensation.
The amounts withheld through such payroll deductions shall be credited to
each Participant's Cash Account. The withholdings for each fiscal quarter of the
Plan from the compensation of a Participant shall be made on the Payroll
Deduction Dates specified by the Company. Such amounts will be delivered to the
Custodian and held pending the purchase of Common Shares as described in
Paragraph 10 hereof.
Any employee of the Company who has satisfied the eligibility requirements
of Paragraph 7 as of August 1, 1998, may complete an Enrollment/Change Form and
authorize payroll deductions pursuant to this Paragraph 8 to be effective as of
such date. Each other employee of the Company shall be eligible to complete an
Enrollment/ Change Form and to begin payroll deductions hereunder as of the
August 1 or February 1 following the date on which such employee satisfies the
eligibility requirements of Paragraph 7. Subject to the other limitations of
this Paragraph 8, a Participant may, by written notice to the Company at least
twenty (20) days prior to each August 1st or February 1st, increase or decrease
the amount of his payroll deduction as of each Payroll Deduction Date.
Notwithstanding the foregoing, a Participant may by written notice to the
Company at least twenty (20) days prior to any Payroll Deduction Date
discontinue payroll deductions as of such Payroll Deduction Date. Payroll
deductions may not thereafter be resumed until the next following August 1st or
February 1st. In the event that a Participant ceases his payroll deductions as
provided herein, such Participant's Cash Account balance will be used, as of the
next Right to Purchase Date, to purchase Common Shares. The Committee may impose
such other restrictions on the right to cease payroll deductions as it may deem
appropriate.
9. No Interest on Cash Accounts. The payroll deductions and other monies
held in Participants' Cash Accounts shall bear no interest.
10. Purchase Price and Exercise of Right to Purchase. The purchase price
for a Common Share under each Offering shall be determined by the Committee as
of the Right to Purchase Date of each Offering and shall be stated as a
percentage of the fair market value of a Common Share on the Right to Purchase
Date of the Offering. Such purchase price shall be equal to eighty-five percent
(85%) of the per share fair market value of the Common Shares as of the Right to
Purchase Date.
The fair market value of a Common Share on any date shall be the average of
the high and low price per share of the Common Shares (or, if applicable, the
price paid by the Custodian) on the American Stock Exchange or on any national
stock exchange on such date or, if no such sales of Common Shares are made on
such date, on the next preceding date on which sales of Common Shares were made
on the American Stock Exchange or on any national stock exchange.
Each Participant shall be deemed to have been granted a Right to Purchase
on the Effective Date of each Offering for the number of whole Common Shares
which the Participant would be able to purchase with the balance in his Cash
Account. Each outstanding Right to Purchase will be exercised automatically on
the Right to Purchase Date to purchase the number of whole Common Shares which
the amount in the Participant's Cash Account at that time is sufficient to
purchase at the applicable purchase price. Any amounts remaining in a
Participant's Cash Account after such application will remain in the Cash
Account for use during the next Offering Period.
The Custodian shall purchase the number of Common Shares with respect to
which Rights to Purchase have been exercised beginning on the Right to Purchase
Date. The Custodian shall establish and maintain a separate Share Account for
each Participant, which shall be credited with the number of whole Common Shares
purchased
24
<PAGE> 28
on the Right to Purchase Date on behalf of each Participant. A Participant may
withdraw the Common Shares credited to his Share Account on a first-in-first-out
basis by written notice to the Custodian at least twenty (20) days prior to any
August 1st or February 1st. A Participant may withdraw all or a portion of the
Common Shares which were credited to his Share Account on or prior to the Right
to Purchase Date immediately preceding such August 1st or February 1st. A
Participant will be charged a fee by the Custodian for each such withdrawal. The
amount of such fee shall be as agreed from time to time by the Custodian and the
Company. The Custodian shall deliver to such Participant a share certificate
issued in his name for the number of whole Common Shares he wishes to withdraw
from his Share Account. At least annually, there shall be delivered to each
Participant a statement of his Share Account showing the number of Common Shares
purchased during the preceding twelve months (or lesser period of existence of
the Offering), the Right to Purchase prices paid for the Common Shares, the
dates of purchase of the Common Shares, and the amount to be included in the
ordinary income of the Participant at such time as the Common Shares are sold,
as prescribed by Section 423(c) of the Code.
The initial Custodian shall be selected by the Company prior to the initial
Offering under the Plan. The Company may remove any Custodian, and any Custodian
may resign, upon 60 days' notice in writing to the other party, as the case may
be. Any successor Custodian shall be appointed by the Company. The Company shall
pay all fees and costs of the Custodian as agreed between the Company and the
Custodian from time to time, except for the withdrawal fees payable by
Participants as described above.
The Company may, at any time after the end of an Offering Period, close the
Cash Accounts of eligible employees not participating in another Offering under
the Plan, in which case any balance in such Cash Accounts will be refunded to
such eligible employees. Any balance remaining in the Cash Account of a
Participant after the end of an Offering Period shall remain in the
Participant's Cash Account for use in the next Offering.
The Company may, at any time after the end of an Offering Period, close the
Share Accounts related to such Offering, in which case the Custodian shall
deliver to each Participant in that Offering a share certificate issued in his
name for the number of whole Common Shares credited to his Share Account,
without charging a withdrawal fee.
11. Registration of Certificates. Common Shares withdrawn by Participants
will be registered, and share certificates therefor will be issued, only in the
name of the Participant.
12. Rights as Shareholders. With respect to Common Shares subject to a
Right to Purchase, pending exercise of such Right to Purchase, the Participant
shall not be deemed to be a shareholder of the Company and shall not have any of
the rights or privileges of a shareholder. A Participant who has exercised a
Right to Purchase shall have the rights and privileges of a shareholder
immediately following such exercise.
13. Use of Plan Funds. Subject to Paragraph 10 hereof, to the extent the
Company issues Common Shares to Participants upon exercise of Rights to Purchase
granted under the Plan, the amounts received by the Company may be used for any
corporate purpose or purposes of the Company.
14. Termination of Employment. If the employment of a Participant
terminates for any reason, including death, disability, retirement or other
cause, his participation in the Plan automatically and without any act on his
part shall terminate as of the date of termination of his employment. As soon as
practicable following the Participant's termination of employment, the Company
shall refund to such Participant (or his beneficiary, in the case of the
participant's death) any and all amounts in his Cash Account and the Custodian
shall deliver to such Participant (or beneficiary) a share certificate issued in
his name for the number of whole Common Shares credited to his Share Account
through prior Offerings.
15. Restriction upon Assignment. Rights to Purchase granted to a
Participant under the Plan shall not be transferable (including pledge or
hypothecation), and shall be exercisable during the Participant's lifetime only
by the Participant. The Company shall not recognize and shall be under no duty
to recognize assignment or purported assignment by a Participant of his Rights
to Purchase or of any rights under his Rights to Purchase.
16. Government Regulations. The Company's obligation to issue, sell or
deliver any Common Shares under this Plan is subject to all applicable laws and
regulations and to the approval of any governmental or regulatory authority
required in connection with the issuance, sale or delivery of such Common
Shares. The
25
<PAGE> 29
Company shall not be required to issue, sell or deliver any Common Shares under
this Plan prior to (a) the approval of such Common Shares for listing on any
national stock exchange (if such approval must be obtained), and (b) the
completion of any registration or other qualification of such Common Shares
under any state or Federal law or any ruling or regulation of any governmental
or regulatory authority which the Company in its sole discretion shall determine
to be necessary or advisable.
17. Adjustment of Shares upon Changes in Capitalization. Notwithstanding
any other provision of the Plan, in the event of any change in the outstanding
Common Shares, by reason of a dividend payable in Common Shares,
recapitalization, merger, consolidation, split-up, combination or exchange of
shares, or the like, appropriate adjustments shall be made to the aggregate
number and class of shares subject to the Plan, the number and class of shares
subject to outstanding Rights to Purchase, the purchase price per share (in the
case of shares subject to outstanding Rights to Purchase), and the number and
class of shares which may be subscribed to by any one employee, and such other
adjustments shall be made as may be deemed equitable by the Committee.
18. Dividend Reinvestment. All cash dividends paid, if any, with respect to
the Common Shares credited to a Participant's Share Account shall be added to
the Participant's Cash Account and thereby shall be applied to exercise Rights
to Purchase to purchase whole Common Shares on the Right to Purchase Date next
following the date such cash dividends are paid by the Company. An election to
leave Common Shares with the Custodian shall constitute an election to apply the
cash dividends with respect to such shares to the exercise of Rights to Purchase
hereunder. Common Shares so purchased shall be applied to the Common Shares
credited to each Participant's Share Account.
19. Amendment of the Plan. To the extent permitted by law, the Committee
may at any time and from time to time make such changes in the Plan and
additions to it as the Committee deems advisable; provided, however, that,
except as provided in Paragraph 17 hereof, and except with respect to changes or
additions in order to make the Plan comply with Section 423 of the Code, the
Committee may not make any changes or additions which would adversely affect
Rights to Purchase previously granted under the Plan and may not, without
approval of the shareholders of the Company, make any changes or additions which
would (a) increase the aggregate number of Common Shares subject to the Plan or
which may be subscribed to by an eligible employee, (b) decrease the minimum
purchase price for a Common Share, or (c) change any of the provisions of the
Plan relating to eligibility for participation in Offerings.
20. Duration and Termination of the Plan. The Plan shall terminate upon the
earlier to occur of the following two events:
(a) The purchase by eligible employees of all of the Common Shares subject
to the Plan; or
(b) The termination of the Plan by the Board.
No termination of the Plan shall affect Rights to Purchase previously
granted under this Plan.
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<PAGE> 30
Appendix II
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF CORE MATERIALS CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - MAY 28, 1998
The undersigned hereby appoints Ralph O. Hellmold and Thomas M. Hough
as proxies for the undersigned, with full power of substitution, to attend the
Annual Meeting of Stockholders of Core Materials Corporation to be held at the
Holiday Inn West, 2350 Westbelt Drive, Columbus, Ohio 43228, on May 28, 1998, at
9:00 a.m. Eastern Standard Time, and any adjournments or postponements thereof
(the "Meeting"), and to vote, as designated on the reverse, all the shares of
common stock of Core Materials Corporation, par value $.01 per share, held of
record by the undersigned at the close of business on April 14, 1998, with all
the powers the undersigned would possess if he or she were personally present at
the Meeting.
(Continued, and to be signed, on other side)
<PAGE> 31
[ ] Please mark your votes as in this example
1. Election of Directors
<TABLE>
<S> <C> <C>
[ ] FOR NOMINEES*: (1) James F. Crowley [ ] WITHHOLD AUTHORITY TO
(2) Ralph O. Hellmold VOTE FOR ALL NOMINEES
(3) Thomas M. Hough
(4) Malcolm M. Prine
(5) James L. Simonton
</TABLE>
*INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR (ANY) INDIVIDUAL
NOMINEE(S), INDICATE THE NUMBER(S) OF THE NOMINEE(S) IN THE FOLLOWING
SPACE:
2. Ratification of Appointment of Independent Certified Public
Accountants, Deloitte & Touche LLP
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of the Core Materials Corporation Employee Stock Purchase Plan
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting or any
postponements or adjournments thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CORE
MATERIALS CORPORATION. PLEASE FILL IN, DATE, SIGN AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE.
WHERE A CHOICE IS INDICATED, THE SHARES REPRESENTED BY THIS PROXY WILL
BE VOTED OR NOT VOTED AS SPECIFIED. WHERE NO CHOICE IS INDICATED, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES
LISTED IN PROPOSAL NO. 1 AS DIRECTORS, "FOR" THE RATIFICATION OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS, DELOITTE & TOUCHE LLP, "FOR" APPROVAL OF THE
COMPANY'S EMPLOYEE STOCK PURCHASE PLAN, AND, IN THE DISCRETION OF THE PROXY OR
PROXIES, ON ANY OTHER BUSINESS PROPERLY BROUGHT BEFORE THE MEETING OR ANY
POSTPONEMENT(S) OR ADJOURNMENT(S) THEREOF.
Signature: ____________________
Signature: ____________________
Dated: ________________________
NOTE: THIS PROXY MUST BE SIGNED EXACTLY AS NAME(S) APPEARS HEREON. IF
SHARES ARE HELD JOINTLY, EACH STOCKHOLDER NAMED SHOULD SIGN. PLEASE MARK, DATE
AND SIGN AS YOUR NAME APPEARS ABOVE AND RETURN IT IN THE ENCLOSED ENVELOPE
PROMPTLY. IF ACTING AS EXECUTOR, ADMINISTRATOR, TRUSTEE, GUARDIAN, ETC., YOU
SHOULD SO INDICATE WHEN SIGNING. IF THE SIGNER IS A CORPORATION, PLEASE SIGN THE
FULL CORPORATE NAME, BY DULY AUTHORIZED OFFICER.
