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 ss. 240.14a-11(c) or ss. 240.14a-12
- --------------------------------------------------------------------------------
STARCRAFT CORPORATION
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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:
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2) Form, Schedule or Registration Statement No:
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4) Date Filed:
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<PAGE>
[STARCRAFT CORPORATION LOGO]
P.O. Box 1903
2703 College Avenue
Goshen, Indiana 46527-1903
(219) 533-1105
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On February 9, 2000
Notice is hereby given that the Annual Meeting of Shareholders of Starcraft
Corporation (the "Company") will be held at the Goshen Inn and Conference
Center, 1375 Lincoln Way East (U.S. 33 East), Goshen, Indiana, on Wednesday,
February 9, 2000 at 9:00 A.M., Goshen time.
The Annual Meeting will be held for the following purposes:
1. Election of Directors. Election of two directors of the Company in
Class I for a term to expire in the year 2003.
2. Ratification of Auditors. Ratification of the appointment of Crowe,
Chizek and Company LLP as auditors for the Company for the fiscal year
ending October 1, 2000.
3. Approval of Amendment of Stock Incentive Plan. Approval of an increase
in the number of shares available for issuance under the Starcraft
Corporation 1997 Stock Incentive Plan by 250,000 shares.
4. Other Business. Such other matters as may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on December 24, 1999, are
entitled to vote at the meeting or any adjournment thereof.
We urge you to read the enclosed Proxy Statement carefully so that you may
be informed about the business to come before the meeting, or any adjournment
thereof. At your earliest convenience, please sign and return the accompanying
proxy in the postage-paid envelope furnished for that purpose.
A copy of our Annual Report for the fiscal year ended October 3, 1999, is
enclosed. The Annual Report is not a part of the proxy soliciting material
enclosed with this letter.
By Order of the Board of Directors
/s/ Kelly L. Rose
Kelly L. Rose, Chairman of the Board
and Chief Executive Officer
Goshen, Indiana
January 7, 2000
IT IS IMPORTANT THAT THE PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER
OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN, DATE
AND COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
[STARCRAFT CORPORATION LOGO]
P.O. Box 1903
2703 College Avenue
Goshen, Indiana 46527-1903
(219) 533-1105
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
February 9, 2000
This Proxy Statement is being furnished to the holders of common stock,
without par value (the "Common Stock"), of Starcraft Corporation (the
"Company"), an Indiana corporation, in connection with the solicitation of
proxies by the Board of Directors of the Company to be voted at the Annual
Meeting of Shareholders to be held at 9:00 A.M., Goshen time, on February 9,
2000, at the Goshen Inn and Conference Center, 1375 Lincoln Way East (U.S. 33
East), Goshen, Indiana, and at any adjournment of such meeting. This Proxy
Statement is expected to be mailed to shareholders on or about January 7, 2000.
The proxy solicited hereby, if properly signed and returned to the Company
and not revoked prior to its use, will be voted in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted for each of the matters described below and, upon
the transaction of such other business as may properly come before the meeting,
in accordance with the best judgment of the persons appointed as proxies.
Any shareholder giving a proxy has the power to revoke it at any time
before it is exercised by (i) filing with the Secretary of the Company written
notice thereof (Michael H. Schoeffler, P.O. Box 1903, 2703 College Avenue,
Goshen, Indiana 46527-1903), (ii) submitting a duly executed proxy bearing a
later date, or (iii) by appearing at the Annual Meeting and giving the Secretary
notice of his or her intention to vote in person. Proxies solicited hereby may
be exercised only at the Annual Meeting and any adjournment thereof and will not
be used for any other meeting.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only voting shareholders of record at the close of business on December 24,
1999 ("Voting Record Date"), will be entitled to vote at the Annual Meeting. On
the Voting Record Date, there were 4,199,928 shares of the Common Stock issued
and outstanding, and the Company had no other class of equity securities
outstanding. Each share of Common Stock is entitled to one vote at the Annual
Meeting on all matters properly presented at the Annual Meeting. The following
table provides certain information regarding the beneficial ownership of the
Common Stock as of December 24, 1999, by each person who is known by the Company
to own beneficially 5% or more of the Common Stock. Unless otherwise indicated,
the named beneficial owner has sole voting and dispositive power with respect to
the shares reported.
Number of Shares
Name and Address of of Common Stock Percent of
Beneficial Owner Beneficially Owned(1) Class (1)
- ---------------- --------------------- ---------
Kelly L. Rose 1,553,179 (2) 34.7 %
2703 College Avenue
Goshen, Indiana 46528
Investment Counselors of Maryland, Inc. 210,000 (3) 5.0 %
(1) Based upon 4,199,928 shares of Common Stock outstanding (and in the case of
Mr. Rose, 75,000 exercisable stock options and 200,000 exercisable warrants
held by Mr. Rose). The number of shares deemed outstanding does not include
exercisable stock options and warrants held by other employees, management
and directors for 593,849 shares of Common Stock including options which
currently are or will become exercisable within the next 60 days.
(2) Includes 100,000 shares owned by Karen K. Rose, Mr. Rose's spouse, 75,000
stock options and 200,000 warrants which are or will become exercisable
within the next 60 days, and 10,450 shares held in a charitable foundation
as to which Mr. Rose disclaims beneficial ownership.
(3) Investment Counselors of Maryland, Inc. has dispositive power with respect
to all such shares and voting power with respect to 210,000 shares. Based
solely on Schedule 13G filed by shareholder.
- 1 -
<PAGE>
PROPOSAL I -- ELECTION OF DIRECTORS
The Board of Directors will have five members effective as of the 2000
Annual Meeting.
The Board, in accordance with the Articles of Incorporation and By-laws of
the Company, adopted a resolution to increase the size of the Board from four
members to five effective November 1999. In accordance with the Company's
Articles of Incorporation and By-laws, in November 1999 the members of the Board
acting by unanimous consent appointed Michael H. Schoeffler as a Class II
director.
The Company's Articles of Incorporation provide that the Board of Directors
is comprised of three classes as nearly equal in number as possible. The members
of each class are to be elected for a term of three years and until their
successors are elected and qualified. One class of directors is to be elected
annually.
The nominees for director from Class I are Kelly L. Rose and David J.
Matteson. Messrs. Rose and Matteson are current directors of the Company. If
elected by the shareholders at the Annual Meeting, the terms of Messrs. Rose and
Matteson will expire in 2003.
Unless otherwise directed, each proxy executed and returned by a
shareholder will be voted for the election of Messrs. Rose and Matteson. If
Messrs. Rose and Matteson should be unable or unwilling to stand for election at
the time of the Annual Meeting, the proxy holders will nominate and vote for a
replacement nominee recommended by the Board of Directors. At this time, the
Board of Directors knows of no reason why the nominee may not be able to serve
as director if elected.
The following table sets forth certain information regarding the nominee
for election as director and the other incumbent directors, including the number
and percent of shares of Common Stock beneficially owned by such persons as of
the Voting Record Date. No director or nominee for director is related to any
other director or nominee for director or executive officer of the Company by
blood, marriage, or adoption, and there are no arrangements or understandings
between any nominee and any other person pursuant to which such nominee was
selected. The table also sets forth the number of shares of Common Stock
beneficially owned by each executive officer of the Company and by all directors
and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Common Stock
Director of Beneficially
Expiration of Company Owned as of Percentage
Name Term as Director Since December 24, 1999(1) of Class
- --------------------------------- --------------- ----------- -------------------- ----------
<S> <C> <C> <C> <C>
Directors and Nominees
Class I:
Kelly L. Rose (Nominee) 2000 1991 1,553,179 (2)(3)(6) 34.7%
David J. Matteson (Nominee) 2000 1993 3,000 *
Class II:
Allen H. Neuharth 2002 1993 12,600 (5) *
Michael H. Schoeffler 2002 1999 158,257 (3) 3.7%
Class III:
G. Raymond Stults 2001 1998 216,600 (6) 4.9%
All directors and executive officers
as a group (5 persons) 1,943,636 (4)(6) 40.4%
</TABLE>
* Indicates less than 1%.
(1) Based upon information furnished by the respective director nominees. Under
applicable regulations, shares are deemed to be beneficially owned by a
person if he directly or indirectly has or shares the power to vote or
dispose of the shares, whether or not he has any economic interest with
respect to the shares. Includes shares beneficially owned by members of the
immediate families of the directors or director nominees residing in their
homes and also includes options held by the individual or group that
currently are or will become exercisable within the next 60 days.
(2) Includes 100,000 shares owned by Mr. Rose's spouse, and 10,450 shares held
in a charitable foundation as to which Mr. Rose disclaims beneficial
ownership.
- 2 -
<PAGE>
(3) Includes the following shares subject to currently exercisable options
granted under the Starcraft Corporation 1993 Stock Incentive Plan (the
"1993 Incentive Plan") and/or the Starcraft Corporation 1997 Stock
Incentive Plan ("1997 Incentive Plan" and together with the 1993 Incentive
Plan, the "Incentive Plans"): 75,000 shares subject to currently
exercisable options held by Mr. Rose; 130,000 shares subject to currently
exercisable options held by Mr. Schoeffler.
(4) This total includes 209,500 shares subject to stock options granted under
the Incentive Plans which are exercisable or will be exercisable within the
next 60 days.
(5) Includes 100 shares currently held by trust under which Mr. Neuharth serves
as Trustee.
(6) Includes 400,000 warrants issued (200,000 each) to Messrs. Rose and Stults
in connection with the November 1998 refinancing of the Company's revolving
credit arrangements.
The business experience of each director, director nominee and executive
officer is set forth below.
Class I - Director Nominees
Mr. Rose (age 47) founded the Company in 1990. He has served as Chairman of
the Board since January 18, 1991, and as Chief Executive Officer since April 16,
1993. He also serves as Chairman of the Board and Chief Executive Officer of
Starcraft Automotive Group, Inc., Imperial Automotive Group, Inc., National
Mobility Corporation and Tecstar, LLC. Mr. Rose was co-founder and 50% owner of
ASA Corporation from January 1977 to July 1990. ASA Corporation is an importer
and international distributor of electronic components to manufacturers in the
van conversion and recreational vehicle industries. Mr. Rose is immediate past
Chairman and serves on the Executive Board of the Recreational Vehicle Industry
Association and serves on the boards of numerous charitable organizations.
Mr. Matteson (age 63) was elected Director of the Company in April 1993.
Presently retired, he served as the Associate Pastor of Granger Missionary
Church in Granger, Indiana, from September 1985 to May 1994. Prior to that
appointment, he was associated with Bethel College, Mishawaka, Indiana, where he
served as Vice President for Business and Finance, Registrar, Director of
Admissions, and Director of Financial Aid over a period of twenty years.
Class II
Mr. Neuharth (age 75) was elected Director of the Company in September
1993. The founder of the nationally distributed daily newspaper, USA TODAY, Mr.
Neuharth retired as Chairman and CEO of Gannet Co., Inc. in March 1989.
Presently, he serves as Chairman of the Freedom Forum, which he founded, and is
self-employed as an author, columnist, consultant and public speaker.
Mr. Schoeffler (age 39) a Certified Public Accountant, joined the Company
in 1995 as Senior Vice President, Treasurer, and Chief Financial Officer and was
appointed Secretary in 1995. Effective December 12, 1996, Mr. Schoeffler was
appointed President and Chief Operating Officer. Prior to joining the Company he
was Executive Vice President/Chief Financial Officer of General Products
Corporation, an automotive parts supplier, from 1989 to 1995; Assistant
Controller for Sudbury, Inc., a diversified manufacturer, from 1986 to 1989; and
a Certified Public Accountant with Ernst & Whinney from 1982 to 1986.
Class III
Mr. Stults (age 51) was appointed Director of the Company in December 1998.
He is currently owner and Chairman of Babsco Supply Company, an electrical
contractor supplier and Galleries, Ltd., a retail lighting company. Previously,
Mr. Stults was President of Shelter Components Corporation, a supplier to the
manufactured housing industry, until the corporation was sold in early 1998 and
President and owner of Babsco, Inc., a regional distributor to the contractor
and OEM markets, from January 1981 through January 1995. He is also a director
and part owner of CopperCon Wire and Cable, LLP, a manufacturer of wire
products.
THE DIRECTOR NOMINEES SHALL BE ELECTED UPON RECEIPT OF A PLURALITY OF VOTES
CAST IN PERSON OR BY PROXY AT THE ANNUAL SHAREHOLDERS' MEETING OR AT ANY
ADJOURNMENT THEREOF.
Meetings and Committees of the Board of Directors
During the fiscal year ended October 3, 1999, the Board of Directors of the
Company met four (4) times, including teleconferences, in addition to taking a
number of actions by unanimous written consent. During fiscal 1999, no incumbent
director of the Company attended fewer than 75% of the aggregate of the total
number of Board meetings and the total number of meetings held by the committees
of the Board of Directors on which he served.
- 3 -
<PAGE>
The Company's Audit Committee is responsible for recommending the
appointment of the Company's independent accountants; meeting with the
independent accountants to outline the scope and review the results of the
annual audit; and reviewing with the internal auditor the systems of internal
control and audit reports. The current members of this Committee are directors
Stults (Chairman), Matteson, Neuharth and Rose. The Audit Committee held one
meeting during the year ended October 3, 1999.
The Compensation Committee of the Board of Directors is comprised of
Messrs. Matteson, Martin, Neuharth and Stults. The Compensation Committee
recommends employee compensation, benefits and personnel policies to the Board
of Directors and establishes for Board approval salary and cash bonuses for
senior officers. The Compensation Committee also administers the Incentive Plans
and has certain interpretive responsibilities for the Directors' Share Plan. The
Compensation Committee met twice during the fiscal year ending October 3, 1999.
Management Remuneration and Related Transactions
Report of the Compensation Committee
The objectives of the Compensation Committee with respect to executive
compensation are the following:
(1) provide compensation opportunities generally comparable to those
offered by other similarly situated companies to ensure the Company's
ability to attract and retain talented executives who are essential to
the Company's long-term success;
(2) reward executive officers based upon their ability to achieve
short-term and long-term strategic goals and objectives and to enhance
shareholder value; and
(3) align the interests of the executive officers with the long-term
interests of shareholders by granting stock options which will become
more valuable to the executives as the value of the Company's shares
increases.
At present, the Company's executive compensation program is comprised of
base salary, annual incentive bonuses and long-term incentive opportunities
provided in the form of stock options. The Company has employment contracts with
the named executives which help the Company retain its executive officers and
currently provide for the executives' base salaries. Annual incentive bonuses
are tied to the Company's financial performance during the fiscal year and the
executive's individual performance, and stock options have a direct relation to
long-term enhancement of shareholder value. In years in which the Company's
performance goals are met or exceeded, executive compensation should tend to be
higher than in years in which performance is below expectations.
Base Salary. The base salary levels of the Company's executive officers are
intended to be generally comparable to those offered to executives with similar
talent and experience by other similarly situated public companies. In
determining base salaries, the Compensation Committee also takes into account
individual performance and experience. While desiring to maintain executive
salaries at competitive levels, the Compensation Committee does not give
particular weight to compensation paid by any specific comparable public
company.
For fiscal year 1999, under the terms of Mr. Rose's employment agreement,
his base salary was $300,000. Such base salary was determined by the
Compensation Committee after considering the individual performance and
experience of Mr. Rose and the base salary levels of executives with similar
talent and experience who are employed with similarly situated public companies.
Effective December 1, 1999, Mr. Rose's salary increased to $375,000.
Under Mr. Schoeffler's employment agreement, his base salary for fiscal
1999 was $200,000. Such base salary for Mr. Schoeffler was determined by the
Compensation Committee after considering the individual performance and
experience of Mr. Schoeffler and the base salaries of executives with similar
talent and experience employed by similarly situated public companies. Effective
December 1, 1999, Mr. Schoeffler's salary increased to $250,000.
Annual Incentive Bonuses. Since the Company's performance did not exceed
expectations, no bonuses were paid in fiscal years 1997, 1998 or 1999.
Stock Options and Restricted Stock. The 1997 Incentive Plan and the 1993
Incentive Plan are the Company's long-term incentive plans for directors,
executive officers and other key employees. The objective of the Incentive Plans
is to align executive and shareholder long-term interests by creating a strong
and direct link between executive compensation and shareholder return, and to
enable executive officers and other key employees to develop and maintain a
significant long-term ownership position in the Company's Common Stock. The
Incentive Plans authorize the Compensation Committee to award executive officers
and other key employees stock options, shares of restricted stock or certain
cash awards.
- 4 -
<PAGE>
Options have been granted to the named executive officers as follows: Mr.
Rose 175,000; and Mr. Schoeffler, 155,000. This includes 100,000 and 25,000
options granted in fiscal 2000 to Mr. Rose and Mr. Schoeffler, respectively.
Such options are incentive stock options with exercise prices ranging from $1.50
to $7.25 per and are described in greater detail elsewhere in this Proxy
Statement. Mr. Schoeffler's grant of additional options during fiscal 1999 was
deemed appropriate to provide him with a significant additional equity-based
performance incentive. Stock options are generally granted with exercise prices
at the prevailing market price and will only have a value to the executives if
the stock price increases above the exercise price.
To date the Compensation Committee has not taken steps to cause the
Company's executive compensation arrangements to accommodate the provisions of
ss.162(m) of the Internal Revenue Code of 1986, which limit the deductibility of
an executive's compensation to $1 million annually, because it does not
presently anticipate that any executive officer's remuneration will exceed $1
million per year.
The Compensation Committee believes that linking executive compensation
generally to corporate performance results in better alignment of compensation
with corporate goals and the interests of the Company's shareholders. As
performance goals are met or exceeded, most probably resulting in increased
value to shareholders, executives are appropriately rewarded. Fiscal 1999 was
another challenging year for the Company and its executive officers during which
the Company saw a return to profitability and positive developments on several
fronts. The Committee believes that compensation levels during fiscal 1999 for
Mr. Rose and Mr. Schoeffler adequately reflect the Company's compensation goals
and policies.
Compensation
Committee Members
David J. Matteson, Chairman
Allen H. Neuharth
G. Raymond Stults
Remuneration of Named Executive Officers
The following table sets forth for each of the Company's last three fiscal
years information with respect to Mr. Rose and Mr. Schoeffler who are the
executive officers of the Company.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
---------------------------------------------- Awards All
Other Annual Securities Other
Fiscal Compen- Underlying Compen-
Name and Principal Position Year Salary Bonus sation (1) Options/SARs (#) sation(2)
- --------------------------- ---- ------ ----- ---------- ---------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Kelly L. Rose (3) 1999 $300,000 $ -- $25,632 -- $ 519
Chairman and 1998 56,500 -- 25,878 50,000 0
Chief Executive Officer 1997 271,500 -- 24,204 -- 3,750
Michael H. Schoeffler (3) 1999 $200,000 $ -- $6,273 50,000 $2,272
President, Chief Operating 1998 198,000 -- 5,985 25,000 0
Officer, Chief Financial 1997 180,400 -- 6,709 15,000 33,750
Officer, Treasurer and Secretary
</TABLE>
(1) Other annual compensation for 1997, 1998 and 1999 consisted of taxes paid
and other various benefits. The value of perquisites or other personal
benefits received by the named executives in 1997, 1998 and 1999 did not
exceed the lesser of $50,000 or 10% of the executive's salary and bonus.
(2) These amounts represent Company contributions, on behalf of each of the
named executives, to the 401(k) Plan. In January, 1997 Mr. Schoeffler
received a $30,000 special commitment fee in connection with his execution
of his employment agreement.
(3) Mr. Rose agreed to forgo $240,000 in salary during fiscal 1998.
Stock Incentive Plans
Mr. Rose and Mr. Schoeffler had received options to purchase 205,000 shares
of Common Stock under the Incentive Plans as of the end of fiscal 1999. The
purpose of the Incentive Plans is to provide to certain directors, officers
(including officers who are members of the Board of Directors) and other key
employees of the Company who are materially responsible for the management or
operations of the Company and have provided valuable services to the Company a
favorable opportunity to acquire Common Stock of the Company, thereby providing
them with an increased incentive to work for the success of the Company and
better enabling the Company to attract and retain capable directors and
executive personnel.
- 5 -
<PAGE>
The following sets forth information related to options granted during
fiscal 1999 to the following executive officer.
Options Granted -- Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realized
Individual Grants Value at Assumed
% of Total Annual Rates of
Options Granted Exercise of Stock Price Appreciation
Options to Employees in Base Price Expiration for Option Term (1)
Name Granted Fiscal Year ($/share) Date 5% 10%
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Michael H. Schoeffler 50,000 31% $1.50 10/23/03 $20,721 $45,788
- -----------
</TABLE>
(1) Based upon a market value of the Common Stock of $1.50 per share at October
23, 1998.
The following table includes the number of shares covered by both
exercisable and unexercisable stock options held by the executive officers as of
October 3, 1999.
Fiscal Year-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Shares Underlying Unexercised Value of Unexercised In-The-Money
Options at Fiscal Year End Options at Fiscal Year End(1)
Name Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kelly L. Rose 75,000 -0- $153,125 -0-
Michael H. Schoeffler 130,000 -0- $242,500 (2) -0-
</TABLE>
(1) Based on market value of the Common Stock of $4.625 per share at October 1,
1999.
(2) Excludes 45,000 options granted as of the end of the last fiscal year that
are not "in-the-money."
Employment Agreements
The Company has entered into a five-year employment contract with Kelly
L. Rose ("Rose"). The contract, effective as of December 12, 1996, extends
annually to maintain its five-year term unless notice not to extend is properly
given by either party to the contract. Rose is entitled to receive a base salary
under the contract for 2000 of $375,000. Mr. Rose's base salary is subject to
increases as approved by the Company. The contract also provides, among other
things, for participation in other fringe benefits and benefit plans available
to the Company's employees. Rose may terminate his employment upon sixty days'
written notice to the Company. The Company may discharge Rose for "cause" (as
defined in the contract) at any time. If Rose terminates his own employment for
"cause" (as defined in the contract), or if the Company, in arbitration or
judicial proceedings, is found to have breached any of the material terms or
conditions of the agreement, Rose shall be entitled to receive his base
compensation under the contract for an additional five years from the
termination date. In addition, during such period, Rose shall be entitled to
continue to participate in the Company's group insurance plans or receive
comparable benefits. Alternatively, Rose may elect to receive his base
compensation under the contract for such five year period, payable in one lump
sum payment within thirty days of the date of termination; but shall not be
entitled to continue to participate in the Company's group insurance plans or
receive comparable benefits. Moreover, within the three month period after
Rose's employment is terminated for any reason including Rose's termination of
his employment with the Company without cause, Rose will have the right to cause
the Company to purchase any stock options he holds for a price equal to the fair
market value (as defined in the contract) of the shares subject to such options
minus their option price. In the event of Rose's disability, Rose will be
entitled to receive his base compensation for five additional years during the
continuance of such disability. In addition, during such period, Rose shall be
entitled to continue to participate in the Company's group insurance plans or
receive comparable benefits. In the event of Rose's death, Rose's spouse will be
entitled to receive Rose's base compensation for an additional five years.
During such period, Rose's spouse will also continue to receive the benefit of
the Company's insurance plans. The contract provides for certain additional
insurance coverage and other perquisites to be paid for by the Company. The
contract also requires Rose to protect the confidential business information of
the Company.
On December 12, 1996, the Company entered into a one-year employment
contract with Michael H. Schoeffler ("Schoeffler"). The contract was
automatically extended for an additional one year term on December 12, 1998.
- 6 -
<PAGE>
Schoeffler is entitled to receive a base salary under the contract for 2000 of
$250,000. Mr. Schoeffler's base salary is subject to increases approved by the
Company. Additionally, prior to a "change of control" (as defined in the
contract), the Company may decrease the salary it pays to Schoeffler if the
operating results of the Company are significantly less favorable than those for
the fiscal year then ending, and the Company decreases the salaries it pays to
all other senior executive officers. The contract also provides, among other
things, for participation in other fringe benefits and benefit plans available
to the Company's employees. Schoeffler may terminate his employment upon sixty
days' written notice to the Company. The Company may discharge Schoeffler for
"cause" (as defined in the contract) at any time. If the Company terminates
Schoeffler's employment for other than cause or if Schoeffler terminates his own
employment for "cause" (as defined in the contract), Schoeffler shall be
entitled to receive his base compensation under the contract for an additional
one year from the termination date, provided, that in the event such termination
follows a change of control, Schoeffler shall be entitled to receive his base
compensation under the contract for an additional three years from the
termination date. In addition, during such period Schoeffler shall be entitled
to continue to participate in the Company's group insurance plans or receive
comparable benefits, unless substantially equivalent and no less favorable
benefits are provided by a subsequent employer. In the event that Schoeffler is
entitled to receive his base salary for an additional three years, he may elect
to receive such compensation in one lump sum payment within thirty days of the
date of termination. If Schoeffler makes such an election he shall not be
entitled to continue to participate in the Company's group insurance plans or
receive comparable benefits. Moreover, within a period of three months after the
Company terminates Schoeffler's employment for other than cause or if Schoeffler
terminates his own employment for cause, Schoeffler shall have the right to
cause the Company to purchase any stock options he holds for a price equal to
the fair market value (as defined in the contract) of the shares subject to such
options minus their option price. The employment contract provides the Company
protection for two years from competition by Schoeffler should he voluntarily
terminate his employment without cause or be terminated by the Company for
cause. The employment contract also requires protection of confidential business
information.
Defined Benefit Plans
401(k) Savings Plan. The employees of the Company with more than six months
of service and who have attained age 18 are entitled to participate in the
401(k) Savings Plan of the Company (the "401(k) Plan"). The Company has
discretion to make a matching contribution to each participating employee based
on the employee's contribution up to a maximum of 6% of the employee's
compensation. The Company also has discretion to make additional profit-sharing
contributions. Benefits under the 401(k) Plan are payable upon the employee's
retirement, death, disability or other termination of employment.
Compensation of Directors
Director Compensation. Directors of the Company who are salaried employees
of the Company do not receive additional compensation for serving as director.
Non-employee directors of the Company receive a retainer of $5,000 per year for
serving on the Board of Directors and $1,250 for each meeting of the Board of
Directors of the Company, $625 for each committee meeting of the Board of
Directors and $625 for a meeting of the Board of Directors of one of the
Company's subsidiaries. Pursuant to the Directors' Share Plan and a related
compensation deferral plan, non-employee directors may elect to receive their
cash director fees in the form of Company Common Stock or to have the payment of
their fees deferred. In the event of deferral, the director may elect to have
the deferred amount deemed invested in Company shares (with dividend-equivalent
value deemed reinvested in shares) or as a general interest bearing obligation
of the Company.
Non-employee directors are eligible to receive supplemental life,
accidental death and disability and health insurance. Premiums paid for Messrs.
Neuharth, Matteson and Stults during fiscal 1999 were $432, $1,187 and $126,
respectively. Non-employee directors are also eligible to receive personal use
of a demonstrator Starcraft conversion vehicle. The estimated values of vehicles
provided to Mr. Neuharth was approximately $6,850, during fiscal 1999. A vehicle
was not provided to Messrs. Stults or Matteson during fiscal 1999.
The Company entered into a consulting agreement with Allen H. Neuharth as
of September 15, 1993 for a period of one year, subject to automatic extension
unless cancelled by either party upon thirty days' written notice. The agreement
is intended to help the Company take optimal advantage of Mr. Neuharth's
experience and expertise in entrepreneurship, public relations, management
motivation and the investment community. Mr. Neuharth will be available to the
Company to provide consultation, assistance and advice, generally as management
requests. He will also make at least two speaking appearances on the Company's
behalf each year. Under the agreement, Mr. Neuharth receives $6,500 per month
for his consulting services, reimbursement for reasonable out-of-pocket
expenses, including first-class travel and lodging accommodations, and certain
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other perquisites appropriate to the performance of his services. As a Director
of the Company, Mr. Neuharth is also entitled to receive such retainers, fees,
stock options and other benefits that accrue to non-employee members of the
Board of Directors. See "Certain Transactions" below.
Performance Graph
The graph below shows the performance of the Company's Common Stock for
fiscal years 1994 through 1999, in comparison to the NASDAQ Composite Index and
certain peer groups described below.
COMPARATIVE PERFORMANCE GRAPH
[GRAPH OMITTED]
1994 1995 1996 1997 1998 1999
---- ------ ------ ------ ------ ------
Starcraft 100 100.00 74.51 32.35 27.45 72.55
Peers (1) 100 92.81 111.96 156.43 130.21 130.19
NASDAQ Market Index 100 121.41 141.75 192.67 200.23 323.92
(1) Featherlite, Inc., First Priority Group, Inc., MascoTech, Inc., R&B, Inc.
and Simpson Industries, Inc. The peer group, consisting of Simpson
Industries, Inc., Excel Industries, Inc. and Walbro Corporation for the
fiscal year 1998, has been changed due to the business combinations of
Excel Industries, Inc. and Walbro Corporation as a result of which those
companies are no longer publicly traded.
Peer group comparisons. Management believes the vehicle conversion business
has similarities to, and can be affected by factors in the general automotive
industry. The Company is the only publicly-traded company whose principal line
of business is vehicle conversions, so a directly comparable peer group is not
available. The peer group presented consists of companies in the automotive
business, primarily suppliers to original equipment manufacturers.
Compensation Committee Interlocks and Insider Participation
During fiscal 1999 the members of the Company's Compensation Committee have
been outside directors Matteson, Stults and Neuharth. See "--Compensation of
Directors" above.
Certain Transactions
In November 1998, the Company refinanced its revolving and term credit
arrangements and entered into a new credit agreement with a financial
institution. The Company's former principal lending bank retained a subordinated
term loan position. To induce such bank to proceed with the refinancing, Kelly
L. Rose and G. Raymond Stults guaranteed up to $500,000 each of the Company's
indebtedness ($1 million in the aggregate) and provided a letter of credit to
secure payment. To induce Mr. Rose and Mr. Stults to provide the Company with
such credit support, the Company issued to each of Mr. Rose and Mr. Stults a
warrant to purchase 200,000 shares of the Company's common shares at a purchase
price of $2.20 per share. The warrants have a term of five years. The exercise
price represents the average market value of the Company's Common Stock for the
ten trading days preceding the date of the issuance. Mr. Stults was not a
director of the Company at the time of this transaction. The issuance of the
warrants to both Mr. Rose and Mr. Stults was approved by the independent
directors of the Company.
The Company from time to time utilizes an airplane for business
transportation purposes which is owned by a partnership in which Mr. Rose and
Mr. Stults each hold a one-third interest. During 1999, payments by the Company
for use of the plane totaled $87,500.
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PROPOSAL II-- RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors proposes the ratification by the shareholders at the
Annual Meeting the appointment of the accounting firm of Crowe, Chizek and
Company LLP as independent auditors for the fiscal year ended October 1, 2000.
The Board of Directors of the Company approved the engagement of Crowe, Chizek
and Company LLP as the Company's independent auditors by unanimous resolution at
a November 10, 1999 upon the recommendation of the Audit Committee. Crowe,
Chizek and Company has served as auditors for the Company since July 27, 1998.
Prior to the appointment of Crowe, Chizek and Company, Ernst & Young LLP,
served as auditors for the Company during fiscal years 1996 and 1997. On July
21, 1998, the Company received a letter dated July 17, 1998, from Ernst & Young
LLP terminating the client-auditor relationship between Starcraft Corporation
and Ernst & Young LLP.
The reports of Ernst & Young LLP on the Company's financial statements for
the past two fiscal years did not contain an adverse opinion or a disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope, or
accounting principles.
In connection with the audits of the Company's financial statements for the
fiscal years ended September 28, 1997 and September 29, 1996, and in the
subsequent interim period, there were no disagreement with Ernst & Young LLP on
any matters of accounting principles or practices, financial statement
disclosure, or auditing scope or procedures which, if not resolved to the
satisfaction of Ernst & Young LLP, would have caused Ernst & Young LLP to make
reference to the matter in its report. The Company requested Ernst & Young LLP
to furnish it a letter addressed to the Commission stating whether it agrees
with the above statements. A copy of that letter, dated July 24, 1998 was filed
as an exhibit to a Form 8-K filed by the Company as of July 24, 1998.
A representative of Crowe, Chizek and Company LLP is expected to be present
at the Annual Meeting with the opportunity to make a statement if he so desires.
He will also be available to respond to any appropriate questions shareholders
may have.
RATIFICATION OF THE APPOINTMENT OF AUDITORS REQUIRES THAT THE VOTES CAST IN
PERSON OR BY PROXY AT THE ANNUAL MEETING OR AT ANY ADJOURNMENT THEREOF IN FAVOR
OF RATIFICATION EXCEED THOSE CAST AGAINST.
PROPOSAL III -- APPROVAL OF AMENDMENT OF THE 1997 STOCK INCENTIVE PLAN
The Company's shareholders are being asked to approve the additional
allocation of 250,000 shares of the Company's Common Stock to the Starcraft
Corporation 1997 Stock Incentive Plan (the "1997 Incentive Plan"). The 1997
Incentive Plan, including this proposed modification, is summarized below.
Purpose
The purpose of the 1997 Incentive Plan is to provide to certain directors,
officers (including officers who are members of the Board of Directors) and
other key employees of the Company who are materially responsible for the
management or operations of the Company and have provided valuable services to
the Company a favorable opportunity to acquire Common Stock of the Company,
thereby providing them with an increased incentive to work for the success of
the company and better enabling the company to attract and retain capable
directors and executive personnel.
Administration
The 1997 Incentive Plan is administered by the Company's Compensation
Committee. Additionally, the Company's Board of Directors, and the extent
authorized by the Compensation Committee or the Board of Directors, the Employee
Options Committee or the Section 16 Transactions Committee may make
determinations with respect to awards to be granted under the 1997 Incentive
Plan (for the purposes of determining awards under the 1997 Incentive Plan the
Company's Compensation Committee, Employee Options Committee, Section 16
Transactions Committee and Board of Directors are collectively referred to as
the "Committee".) Consistent with the terms of the 1997 Incentive Plan, the
Committee selects the individuals to whom options or cash awards will be
granted, determines the time of grant, the number of shares or amount of any
cash awards, the option price, the price, if any, for restricted shares, the
period during which an option may be exercised, the extent to which an option is
an incentive stock option or a non-qualified stock option, the period of
restrictions for restricted share grants, and any other terms or conditions
applicable to options granted. The Compensation Committee has full power to
construe and interpret the 1997 Incentive Plan, to establish, amend, waive or
rescind rules and regulations relating thereto, to accelerate the vesting of any
stock options or cash awards made under the 1997 Incentive Plan, and to amend
the terms and conditions of outstanding awards to the extent such terms and
conditions are within the discretion of the Compensation Committee.
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<PAGE>
Shares Subject to the 1997 Incentive Plan
Shares issued under the 1997 Incentive Plan may be authorized but unissued
shares of Common Stock of the Company. In the event of corporate changes
affecting the Company's Common Stock, such as reorganizations,
recapitalizations, stock splits, consolidation or merger, or the sale, lease, or
conveyance of substantially all of the assets of the Company, the Committee will
make appropriate adjustments in the number and kind of shares remaining subject
to outstanding options granted under the 1997 Incentive Plan. If any option
expires or terminates for any reason without having been exercised in full, or
if any restricted share grant is forfeited in whole or in part, the unpurchased
or forfeited shares will (unless the 1997 Incentive Plan shall have terminated)
become available for issuance under the 1997 Incentive Plan. The 1997 Incentive
Plan has a current allocation of 250,000 shares of the Company's Common Stock.
To date, 249,849 options have been granted under the 1997 Incentive Plan to 14
directors, officers and other key employees of the Company, leaving an
insufficient number of shares currently available for future grants. The Board
of Directors proposes that shareholders approve the allocation of an additional
250,000 shares of the Company's Common Stock for issuance under the 1997
Incentive Plan.
Eligibility
Awards may be granted under the 1997 Incentive Plan to directors, officers
(including officers who are members of the Board of Directors) and other key
employees of the Company who, in the opinion of the Committee, are from time to
time materially responsible for the management or operation of the business of
the Company.
Terms of the Options
At the time it grants an option, the Committee sets the price at which the
shares may be purchased upon exercise of the option (except that the exercise
price of options granted to outside directors is set automatically). The
purchase price to be paid for shares of Common Stock subject to an incentive
stock option must not be less than the fair market value of such shares on the
date on which the option is granted, as determined by the Committee consistent
with the requirements of the Internal Revenue Code of 1986, as amended (the
"Code"). However, the Committee does have the discretion to award non-qualified
stock options to eligible employees at a price less than 85% of the fair market
value of such shares on the date on which the option is granted. The option
price is subject to adjustment by the Committee for corporate changes affecting
the company's outstanding shares of Common Stock. Incentive stock options
granted to holders of more than 10% of the combined voting power of all classes
of stock of the company may be granted at an option price no less than 110% of
the market value of the stock on the date of grant.
No option may have a term which is longer than ten years and one day from
the date of grant. However under the Code, incentive stock options may not have
terms in excess of ten years. Incentive stock options granted to holders of 10%
of the combined voting power of all classes of stock of the Company may not have
terms in excess of five years.
The option price of each share of stock is to be paid in full in cash at
the time of exercise. Under certain circumstances, the 1997 Incentive Plan
permits optionees to deliver a notice to their broker to deliver to the Company
the total option price in cash and the amount of any taxes to be withheld from
the optionee's compensation as a result of any withholding tax obligations of
the Company. Subject to the approval by the Committee of a stock swap feature,
payment of the option price may also be effected by tendering whole shares of
the company's Common Stock owned by the optionee and cash having a fair market
value equal to the cash exercise price of the shares with respect to which the
option is being exercised. Options may be exercisable in full at any time during
their term or in such installments, on a cumulative basis, as the Committee may
determine, except that no option may be exercised at any time as to fewer than
100 shares unless the exercise is with respect to an entire residue of fewer
than 100 shares. Moreover, no option may be exercised during the first six
months of its term.
Except as provided below or as otherwise provided by the Committee in an
option agreement, upon termination of an optionholder's employment by the
company, all rights under any options granted to him but not yet exercised
terminated. In the event that an optionee retires pursuant to any then existing
pension plan of the company, his option may be exercised by him in whole or in
part within three months after his retirement whether or not the option was
otherwise exercisable by him at his date of retirement. If an optionee's
employment by the Company terminates by reason of permanent and total
disability, his option may be exercised by him in whole or in part within one
year after such termination of employment, whether or not the option was
otherwise exercisable by him at the time of such termination of employment. If
the optionee dies while employed by the Company or its subsidiaries, within
three months after his retirement, or within one year after his termination of
employment because of permanent and total disability, his option may be
exercised by his estate or by the person or persons entitled thereto by will or
by the applicable laws of descent or distribution at any time within one year
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<PAGE>
after the date of such death, whether or not the option was otherwise
exercisable by the optionee at the time of his death. Notwithstanding the
foregoing, in no event may any option be exercised after the expiration of the
option term set by the Committee.
Options granted to outside directors terminate six months after the date
such outside director ceases to be a director for any reason. In the event of
the death of an outside director while serving as a director of the Company or
its subsidiaries, or within six months after he ceases to be a director of the
Company, any option granted to him may be exercised by his estate at any time
within one year after the date of death or by the person or persons entitled
thereto by will or by the applicable laws of descent or distribution until the
expiration of the option term fixed by the Committee, whether or not the option
was exercisable by the optionee at the date of his death. Notwithstanding the
foregoing, in no event may any option be exercised after the expiration of the
option term set by the Committee.
Except for transfers specifically approved in advance by the Company's
Board of Directors only with respect to non-qualified stock options, options may
not be transferred except by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order. During the lifetime of an
optionee, options may be exercised only by him or his guardian or legal
representative.
The aggregate fair market value of stock with respect to which incentive
stock options are exercisable for the first time by an optionee during any
calendar year under the 1997 Incentive Plan may not exceed $100,000. For
purposes of these computations, the fair market value of the shares is to be
determined as of the date the option is granted and computed in the manner
determined by the Committee consistent with the requirements of the Code. This
limitation does not apply to non-qualified stock options granted under the 1997
Incentive Plan.
Replacement and Extension of the Terms of Options and Cash Awards
The Committee from time to time may permit an optionee (other than on
outside director) under the 1997 Incentive Plan or any other stock option plan
adopted by the Company or any of its subsidiaries to surrender for cancellation
any unexercised outstanding stock option and receive from the optionee's
employing Corporation in exchange therefor an option for such number of shares
of Common Stock as may be designated by the Committee. Such optionees may also
be granted related cash awards as described in the next paragraph.
The Committee may, in its sole discretion, include a provision in any
option agreement or restricted share agreement that provides for an additional
cash payment from the Company to the grantee of such option or award equal to
the tax benefit to be received by the Company attributable to its federal income
tax deduction, if any, resulting from the exercise, vesting, cancellation,
disposition or other transaction involving the option or the shares subject to
the option or restricted share award.
Restricted Share Awards
The Committee may also grant restricted share awards of Common Stock which
entitle awardees to receive shares of Common Stock. Each restricted share award
must be evidenced by a restricted share agreement between the Company and the
awardee setting forth the terms and conditions of the award consistent with the
provisions of the 1997 Incentive Plan. A restricted share award may provide for
the crediting or payment to the awardee, on each dividend payment date, of an
amount equal to the dividends on awarded shares.
A restricted share award may also provide for the distribution of shares
subject to the following conditions: (a) the shares may not be distributed
earlier than six (6) months after grant; (b) the shares may not be transferred
until the lapsing of the forfeiture provisions; (c) the shares shall be
deposited with the Secretary of the Corporation; (d) dividends on awarded shares
shall be distributed at such times as determined under the 1997 Incentive Plan;
and (e) the shares shall be subject to forfeiture under the circumstances
described in the restricted share agreement between the Company and the awardee.
Each restricted share award shall provide for the distribution of the awarded
shares free of all restrictions at such time or times as the Committee shall
determine and specify in the restricted share agreement.
Other Provisions
The Committee may provide for such other terms, provisions and conditions
of an option as are not inconsistent with the 1997 Incentive Plan. The Committee
may also prescribe, and amend, waive and rescind rules and regulations relating
to the 1997 Incentive Plan, accelerate the vesting of stock options under the
1997 Incentive Plan, and make all other determinations necessary or advisable in
the administration of the 1997 Incentive Plan.
Amendment and Termination
The Company's Board of Directors may terminate the 1997 Incentive Plan at
any time and no award shall be granted thereafter. Such termination, however,
shall not affect the validity of any award theretofore granted under the 1997
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Incentive Plan. In any event, no incentive stock option may be granted under the
1997 Incentive Plan after the conclusion of a ten (10) year period commencing on
the date the 1997 Incentive Plan was adopted.
The Company's Board of Directors may amend or modify the 1997 Incentive
Plan from time to time, and, with the consent of the optionee, may amend the
terms and provisions of his or her options, restricted shares, or cash awards,
except that without the approval of the holders of at least a majority of the
shares of the Company voting in person or by proxy at a duly constituted
meeting, or adjournment thereof: (1) the number of shares of stock which may be
reserved for issuance under the 1997 Incentive Plan may not be increased except
for certain adjustments made in response to corporate changes (such as
recapitalization, stock splits or stock dividends) that affect the nature of the
shares of the Company; (2) the period during which an option may be exercised
may not be extended beyond ten (10) years and one day from the date on which the
option was granted; and (3) the class of persons to whom options, restricted
share, or cash awards may be granted under the 1997 Incentive Plan may not be
modified materially. No amendment of the 1997 Incentive Plan, however, may
without the consent of the awardees, make any changes in any outstanding
options, restricted shares, or cash awards previously granted under the 1997
Incentive Plan which would adversely affect the rights of such awardees.
Federal Income Tax Consequences
The grant of incentive and non-qualified stock options under the 1997
Incentive Plan will have no immediate tax consequences to the Company or the
optionee. Moreover, if an incentive stock option is exercised (a) while the
employee is employed by the company or its subsidiaries, (b) within three months
after the optionee ceases to be an employee of the company or its subsidiaries,
(c) after the optionee's death, or (d) within one year after the optionee ceases
to be an employee of the Corporation or its subsidiaries if the optionee's
employment is terminated because of permanent and total disability (within the
meaning of ss.22(e)(3) of the Code), the exercise of the incentive stock option
will ordinarily have no federal income tax consequences to the Company or the
optionee. However, the amount by which the fair market value of the shares at
the time of exercise exceeds the option price of the option will, along with
other specified terms, be considered taxable income in the taxable year of the
optionee in which the option was exercised for purposes of determining the
applicability of the alternative minimum tax. As a result, the exercise of an
incentive stock option may subject an optionee to an alternative minimum tax
depending on the optionee's particular circumstances.
On the other hand, the recipient of a non-qualified stock option generally
will realize taxable ordinary income at the time of exercise of this option in
an amount equal to the excess of the fair market value of the shares acquired at
the time of such exercise over the option price. A like amount is generally
deductible by the Company for federal income tax purposes as of that date, as
long as the Company includes the amount in the recipient's gross income. The
1997 Incentive Plan permits, under certain circumstances, holders of
non-qualified stock options to satisfy their withholding obligation by having
shares equal in value to the applicable withholding taxes withheld from the
shares which they would otherwise receive upon the exercise of a non-qualified
stock option.
Upon the sale of the shares acquired upon the exercise of an incentive
stock option no sooner than two years after the grant of an option and no sooner
than one year after receipt of the shares by the optionee, any capital gain
recognized would be taxed to the optionee at long-term rates. Upon the sale of
shares acquired upon the exercise of an incentive stock option prior to two
years after the grant of an option or prior to one year after receipt of the
shares by the optionee, the optionee will generally recognize, in the year of
disposition, ordinary income equal to the lesser of (a) the spread between the
fair market value of the shares on the date of exercise and the exercise price;
and (b) the gain realized upon the disposition of those shares. The Company will
be entitled to a deduction equal to the amount of income recognized as ordinary
income by the optionee, so long as the Company includes the amount in the
recipient's gross income. If the spread is the basis for determining the amount
of ordinary income realized by the optionee, there will be additional long-term
or short-term capital gain realized if the proceeds of such sale exceed such
spread.
Upon subsequent sale of shares acquired upon exercise of a non-qualified
stock option, the optionholder will recognize long-term capital gain or loss if
the shares are deemed to have been held for more than 12 months, and short-term
capital gain or loss in all other cases. Long-term capital gains are currently
subject to a maximum rate of 20%.
An award of restricted shares under the 1997 Incentive Plan would not
normally be included in an optionee's gross income or be deductible by the
Company for federal income tax purposes, as long as the shares granted are
subject to forfeiture in the event an optionee terminates his employment during
a period of restriction and assuming the optionee does not file a special
election under ss.83(b) of the Code to have the shares taxed to him as of the
date of grant. At the time the transfer restrictions lapse, the optionee would
be deemed to have received ordinary income measured by the fair market value of
the shares received at the time of lapse. The Company would be entitled to a
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federal income tax deduction at that time in the same amount. Income reporting
is required as though cash compensation had been paid. If the payment of
dividends has been deferred, holders of restricted shares will also recognize
ordinary income equal to their dividends when such payments are received. Except
for dividends on shares as to which a Section 83(b) election has been made, such
dividends should also be deductible by the Company, and the Committee may
withhold from them the amount of any taxes the Company is required to withhold
with respect to such dividends.
Upon the subsequent sale of restricted shares, the optionee will recognize
long-term capital gain or loss if the shares are deemed to have been held for
more than 12 months, and short-term capital gain or loss in all other cases.
Recommendation of the Board of Directors
The Board of Directors determined to adopt the 1997 Incentive Plan to
provide an incentive for best effort by its directors, executive officers and
other key employees in the successful operation of the Company and to tie
compensation of management more closely with the performance of the Company's
Common Stock. The Board of Directors continues to believe that such equity-based
awards provide the most direct link between management's performance incentive
and the interests of shareholders. The Board of Directors believes the
additional allocation of 250,000 shares of the Company's Common Stock to the
1997 Incentive Plan is necessary and appropriate to provide for the Company's
ongoing management compensation objectives.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
AMENDMENT TO THE 1997 INCENTIVE PLAN. SUCH ACTION REQUIRES THE APPROVAL OF THE
HOLDERS OF AT LEAST A MAJORITY OF THE SHARES OF THE COMPANY'S COMMON STOCK
VOTING IN PERSON OR BY PROXY AT THE ANNUAL MEETING, OR ANY ADJOURNMENT THEREOF,
PROVIDED A QUORUM REPRESENTING A MAJORITY OF ALL OUTSTANDING SHARES IS PRESENT.
SHAREHOLDER PROPOSALS
Any proposal that a shareholder wishes to have presented at the next Annual
Meeting of the Company to be held in 2001 must be received at the main office of
the Company for the inclusion in the proxy statement no later than 120 days in
advance of January 7, 2001. Any such proposal should be sent to the attention of
Michael H. Schoeffler, Secretary of the Company, at P.O. Box 1903, 2703 College
Avenue, Goshen, Indiana 46527-1903.
FILINGS UNDER SECTION 16(a) OF THE 1934 ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that the Company's officers and directors and persons who own more than 10% of
the Company's Common Stock file reports of ownership and changes in ownership
with the Securities and Exchange Commission (the "SEC"). Officers, directors and
greater than 10% shareholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms that they file.
Based solely on its review of the copies of such forms received by it,
and/or written representations from certain reporting persons that no Forms 5
were required for those persons, the Company believes that during the fiscal
year ended October 3, 1999, all filing requirements applicable to its officers,
directors and greater than 10% beneficial owners with respect to Section 16(a)
of the 1934 Act were complied with.
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OTHER MATTERS
Management is not aware of any business to come before the Annual Meeting
other than those matters described in the Proxy Statement. However, if any other
matters should properly come before the Annual Meeting, it is intended that the
proxies solicited hereby will be voted with respect to those other matters in
accordance with the judgment of the persons voting the proxies.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy material
to the beneficial owners of the Common Stock. In addition to solicitation by
mail, directors, officers, and employees of the Company may solicit proxies
personally or by telephone without additional compensation.
Each Shareholder is urged to complete, date and sign the proxy and return
it promptly in the enclosed return envelope.
Insofar as any of the information in this Proxy Statement may rest within
the knowledge of persons other than the Company, the Company relies upon
information furnished by others for the accuracy and completeness thereof.
By Order of the Board of Directors
/s/ Kelly L. Rose
Kelly L. Rose, Chairman of the Board
and Chief Executive Officer
January 7, 2000
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<PAGE>
REVOCABLE PROXY REVOCABLE PROXY
STARCRAFT CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS, FEBRUARY 9, 2000
The undersigned hereby appoints Kelly L. Rose and Michael H. Schoeffler,
with full powers of substitution, to act as attorneys and proxies for the
undersigned to vote all shares of capital stock of Starcraft Corporation (the
"Company") that the undersigned is entitled to vote at the Annual Meeting of
Shareholders to be held at the Goshen Inn and Conference Center, 1375 Lincoln
Way East (U.S. 33 East), Goshen, Indiana, on Wednesday, February 9, 2000, at
9:00 A.M., Goshen time, and at any and all adjournments thereof, as follows:
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED. IF ANY OTHER
BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED
IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
(Continued and to be signed on reverse side.)
<PAGE>
STARCRAFT CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
The Board of Directors recommends a vote "FOR" each of the listed propositions.
1. Election of Directors to serve for three year terms For All
expiring in 2003. For Withhold Except
Nominees: 01-Kelly L. Rose, 02-David J. Matteson [ ] [ ] [ ]
_____________________________________
(Except Nominee(s) written above.
2. Ratification of the appointment of Crowe, For Against Abstain
Chizek and Company LLP as auditors [ ] [ ] [ ]
for the year ending October 1, 2000.
3. Approval of Amendment to Starcraft For Against Abstain
Corporation 1997 Stock Incentive Plan. [ ] [ ] [ ]
Please check this box if you intend
to attend the Annual Meeting of Shareholders. [ ]
In their discretion, the proxies are authorized to vote on any other
business that may properly come before the Meeting or any adjournment
thereof.
This Proxy may be revoked at any time prior to the voting thereof.
The undersigned acknowledges receipt from the Company, prior to the
execution of this proxy, of notice of the meeting, a proxy statement and an
Annual Report to Shareholders.
Dated: _________________________, 2000
Signature _________________________________________________________________
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Please sign as your name appears on the envelope in which this card was mailed.
When signing as attorney, executor, administrator, trustee or guardian, please
give your full title. If shares are held jointly, each holder should sign.
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^ FOLD AND DETACH HERE ^
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
