SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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<Table>
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</Table>
LEXINGTON PRECISION CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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LEXINGTON PRECISION CORPORATION
767 THIRD AVENUE
NEW YORK, NEW YORK 10017
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 12, 2002
Notice is hereby given that the Annual Meeting of Stockholders of LEXINGTON
PRECISION CORPORATION (the "Company") will be held at the offices of Nixon
Peabody LLP, 437 Madison Avenue, 24th Floor, New York, New York, on Wednesday,
June 12, 2002, at 10:30 A.M., for the purpose of considering and acting upon the
following matters:
1. The election of six directors by the holders of Common Stock and $8
Cumulative Convertible Preferred Stock, Series B, as set forth in the
accompanying Proxy Statement;
2. The ratification or disapproval of Ernst & Young LLP as independent
auditors of the Company for the year ending December 31, 2002; and
3. The transaction of such other business as may properly come before the
meeting and any adjournments thereof.
The Board of Directors has fixed the close of business on May 13, 2002, as
the record date for determining the stockholders of the Company entitled to
receive notice of and to vote at the meeting and any adjournments thereof.
PLEASE SIGN, DATE, AND MAIL THE ENCLOSED PROXY PROMPTLY. A POSTAGE-PAID
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
By Order of the Board of Directors,
Kenneth I. Greenstein
Secretary
May 20, 2002
New York, New York
LEXINGTON PRECISION CORPORATION
767 THIRD AVENUE
NEW YORK, NEW YORK 10017
------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 12, 2002
This Proxy Statement is being mailed to stockholders on or about May 23,
2002, in connection with the solicitation by the Board of Directors of LEXINGTON
PRECISION CORPORATION, a Delaware corporation (the "Company"), of proxies to be
voted at the annual meeting of stockholders of the Company to be held on June
12, 2002 (the "Annual Meeting"). Accompanying this Proxy Statement are the
Notice of Annual Meeting of Stockholders and a form of proxy for such meeting
and a copy of the Company's Annual Report for the year ended December 31, 2001,
which contains financial statements and related data.
All proxies that are properly completed, signed, and returned to the
Company in time will be voted in accordance with the instructions thereon.
Proxies may be revoked by any stockholder prior to the exercise thereof upon
written notice to the Secretary of the Company. Stockholders who are present at
the Annual Meeting may withdraw their proxies and vote in person if they so
desire.
The cost of preparing and mailing the accompanying form of proxy and
related materials and the cost of soliciting proxies will be borne by the
Company. The Company has requested brokers, custodians, and other like parties
to distribute proxy materials to the beneficial owners of shares and to solicit
their proxies and will reimburse such persons for their services in doing so.
Without additional compensation, officers and regular employees of the Company
may solicit proxies personally or by telephone. The cost of additional
solicitation incurred other than by use of the mails is estimated not to exceed
$3,000.
Only stockholders of record at the close of business on the record date,
May 13, 2002, are entitled to notice of, and to vote at, the Annual Meeting and
any adjournments thereof. As of the record date, there were outstanding
4,828,036 shares of the Company's common stock, $0.25 par value (the "Common
Stock"), and 3,300 shares of its Series B Preferred Stock, each entitling the
holder thereof to one vote per share. The holders of a majority of the
outstanding shares of Common Stock and Series B Preferred Stock, voting
together, present in person or represented by proxy, will constitute a quorum
for all matters before the Annual Meeting. The affirmative vote of a plurality
of the shares of Common Stock and Series B Preferred Stock, voting together,
present in person or represented by proxy and entitled to vote at the Annual
Meeting is required for the election of the six directors. All other matters
require the affirmative vote of a majority of the shares of Common Stock and
Series B Preferred Stock present in person or represented by proxy and entitled
to vote at the Annual Meeting.
With regard to the election of directors, votes may be cast in favor or
withheld. Votes withheld from the election of directors will be counted to
determine the presence or absence of a quorum for the transaction of business at
the Annual Meeting, but they have no legal effect under Delaware law and,
consequently, will not affect the outcome of the voting on such proposal. With
regard to other proposals, abstentions may be specified and will have the same
effect as votes against the subject proposal at the Annual Meeting. Broker
nonvotes (that is, proxies from brokers or nominees indicating that such persons
have not received instructions from the beneficial owners or other persons
entitled to vote shares on a particular matter as to which the brokers or
nominees do not have discretionary power) are counted for
purposes of determining a quorum for the transaction of business at the Annual
Meeting but are not considered as votes for purposes of determining the outcome
of a vote.
PROPOSAL 1 -- ELECTION OF DIRECTORS
The Bylaws of the Company provide for the election of directors for terms
expiring in 2003. The holders of Common Stock and Series B Preferred Stock,
voting together, will be asked to vote at the Annual Meeting for the election of
six directors, each to serve until the annual meeting of stockholders to be held
in 2003 and until his successor has been elected and qualified. Unless authority
to vote for the election of a director is specifically withheld by appropriate
designation on the face of the proxy, it is the intention of the persons named
in the accompanying proxy to vote such proxy for the election of William B.
Conner, Warren Delano, Kenneth I. Greenstein, Michael A. Lubin, Joseph A. Pardo,
and Elizabeth H. Ruml as directors to be elected by the holders of Common Stock
and Series B Preferred Stock, voting together, to serve until the 2003 annual
meeting of stockholders and until their respective successors shall have been
elected and qualified. Messrs. Conner, Delano, Greenstein, Lubin, and Pardo are
presently members of the Board of Directors. The proxies cannot be voted for a
greater number of persons than six in respect of Proposal 1. Management has no
reason to believe that the named nominees will be unable or unwilling to serve,
if elected. However, in such case, it is intended that the individuals named in
the accompanying proxy will vote for the election of such substituted nominees
as the Board of Directors may recommend.
Certain information concerning the nominees for election pursuant to
Proposal 1 is set forth in the following table.
PRINCIPAL OCCUPATION, BUSINESS
NAME AGE EXPERIENCE, AND DIRECTORSHIPS
---- --- -----------------------------
William B. Conner 69 Private Investor. President and director of Conner Holding Company, a
holding company for aviation companies, and Chairman of the Board of the
subsidiaries thereof for more than five years. Director of the Company
since 1981.
Warren Delano 51 President of the Company for more than five years. Partner of Lubin, Delano
& Company, an investment banking and consulting firm, for more than five
years. Director of the Company since 1985.
Kenneth I. Greenstein 72 Secretary of the Company since September 1979. Consultant since January
1998. For more than five years prior thereto, stockholder of a professional
corporation that was a partner in Nixon, Hargrave, Devans & Doyle LLP (now
known as Nixon Peabody LLP), a law firm. Director of the Company since 1978.
- 2 -
Michael A. Lubin 52 Chairman of the Board of the Company for more than five years. Partner of
Lubin, Delano & Company, an investment banking and consulting firm, for more
than five years. President and Chief Operating Officer of Salant
Corporation, a manufacturer of men's, women's, and children's apparel, from
April 1997 through July 1997 and Executive Vice President and Chief
Operating Officer of Salant Corporation from October 1995 through March
1997. On December 29, 1998, Salant Corporation filed a petition seeking
relief from creditors under chapter 11 of the U.S. Bankruptcy Code.
Director of the Company since 1985.
Joseph A. Pardo 68 Attorney and financial consultant. Chairman of Phoenix Advisors, LLC since
July 2000. During the past five years, Mr. Pardo has served as a financial
consultant to a number of public and private companies, including, Trustee
of various creditor trusts in connection with reorganizations under Chapter
11 of the federal bankruptcy code, Chairman of the Board of Brothers Gourmet
Coffee Co. since October 2000, and Director of Weblink Wireless, Inc., a
wireless communications company, since March 2001. Director of the Company
since March 2002.
Elizabeth H. Ruml 49 Retired Banker. From June 1999 through October 1999, Ms. Ruml was Managing
Director and Co-Head of the Group Market Risk Management Function at
Deutsche Bank. From March 1998 through June 1999, she was Managing Director
and Head of the Corporate Portfolio Management Group at Bankers Trust
Company. From May 1993 through December 1997, she was Managing Director and
Chief Credit Officer at Salomon Brothers. Ms. Ruml was a Director of
Benjamin Moore & Company from July 2000 through December 2000. Ms. Ruml is
not currently a Director of the Company.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors met three times during 2001. During 2001, each
director attended all meetings held by the Board of Directors and all meetings
held by the Committees of the Board of Directors on which such person served.
The Board of Directors has a standing Audit Committee and a standing
Compensation Committee. The members of those committees are as follows:
NAME OF COMMITTEE CHAIRMAN OTHER MEMBER(S)
----------------- -------- ---------------
Audit Committee Kenneth I. Greenstein William B. Conner
Joseph A. Pardo
Compensation Committee William B. Conner Kenneth I. Greenstein
The Audit Committee, which is comprised of three non-employee members of
the Board of Directors, met two times during 2001. Its primary purpose is to
review the financial information provided
- 3 -
to the Company's stockholders and others, to oversee the system of internal
financial controls, and to monitor the independent audit process. Its functions
include recommending the independent auditors for appointment by the Board of
Directors, consulting periodically with the Company's independent auditors as to
the nature, scope, and results of their audit of the accounts of the Company,
reviewing the Company's internal accounting controls and procedures, and such
other related matters as the Audit Committee deems advisable.
The Compensation Committee, which is comprised of two non-employee members
of the Board of Directors, met once during 2001. Its functions included
reviewing salaries, cash bonus awards, and existing or potential compensation
plans for the Company's executive officers and other eligible employees and
making recommendations to the Board of Directors regarding such salaries, cash
bonus awards, and compensation plans. Additionally, the Committee administered
the Company's 1986 Restricted Stock Award Plan, which expired on December 31,
2001.
Each member of the Board of Directors receives an annual fee of $12,000.
Directors receive $1,000 for each Board or Committee meeting attended in person
as well as reasonable out-of-pocket expenses incurred in connection with
attending such meetings. Directors receive $250 for each Board or Committee
meeting attended by telephone. There are no other fees paid to directors for
services rendered as members of the Board.
EXECUTIVE OFFICERS
The following table sets forth certain information concerning the executive
officers of the Company.
NAME POSITION AND OFFICES AGE
---- -------------------- ---
Michael A. Lubin Chairman of the Board 52
Warren Delano President and Director 51
Dennis J. Welhouse Senior Vice President, Chief Financial Officer, 53
and Assistant Secretary
James R. Bower Treasurer 37
Mr. Lubin has been Chairman of the Board of the Company for more than five
years. For more than five years, Mr. Lubin has been a partner of Lubin, Delano &
Company, an investment banking and consulting firm. Mr. Lubin was President and
Chief Operating Officer of Salant Corporation, a manufacturer of men's, women's,
and children's apparel, from April 1997 through July 1997 and was Executive Vice
President and Chief Operating Officer of Salant Corporation from October 1995
through March 1997. On December 29, 1998, Salant Corporation filed a petition
seeking relief from creditors under chapter 11 of the U.S. Bankruptcy Code.
Mr. Delano has been President of the Company for more than five years. For
more than five years, Mr. Delano has been a partner of Lubin, Delano & Company,
an investment banking and consulting firm.
Mr. Welhouse has been Senior Vice President, Chief Financial Officer, and
Assistant Secretary of the Company for more than five years.
- 4 -
Mr. Bower has been Treasurer of the Company since December 29, 2000. From
February 1994 through September 2000, Mr. Bower was Director of Finance of the
Alan Ross Insurance Agency, Inc.
Each of the Company's executive officers serves at the pleasure of the
Board of Directors.
SECURITY OWNERSHIP
The following table sets forth the beneficial ownership of the Company's
Common Stock, as of May 3, 2002, by (i) each director and director nominee, (ii)
each of the named executive officers, (iii) all directors and executive officers
as a group, and (iv) each person known by the Company to be the beneficial owner
of more than 5% of its outstanding Common Stock. Except as set forth below, the
business address of each officer, director, or stockholder listed below is c/o
Lexington Precision Corporation, 767 Third Avenue, 29th Floor, New York, NY
10017.
NAME OF BENEFICIAL SHARES OF COMMON STOCK PERCENT OF
OWNER BENEFICIALLY OWNED (1) CLASS OWNED
------------------ ---------------------- -----------
Michael A. Lubin 1,516,242 (2) 31.4%
Warren Delano 1,385,855 (3) 28.7
William B. Conner 281,906 (4) 5.8
Dennis J. Welhouse 90,842 (5) 1.9
Kenneth I. Greenstein 35,636 (6) *
James R. Bower - -
Joseph A. Pardo - -
Elizabeth H. Ruml - -
Directors and executive
officers as a group (8
persons) 3,221,419 (7) 66.7
* Less than 1 percent.
(1) The persons named in the table have sole voting and dispositive power with
respect to all shares of the Company's Common Stock shown as beneficially
owned by them, subject to community property laws, where applicable, except
as set forth in the notes to the table.
(2) Includes (a) 35,000 shares owned by each of Mr. Lubin's two minor children,
with respect to which Mr. Lubin acts as custodian under the New York
Uniform Gifts to Minors Act and (b) 50,000 shares owned by an individual
retirement account of Mr. Lubin. Also includes 89,062 shares owned by a
retirement benefit plan of which Mr. Lubin and Mr. Delano are both
beneficiaries.
(3) Includes 110,750 shares owned by individual retirement accounts of Mr.
Delano. Also includes 89,062 shares owned by a retirement benefit plan of
which Mr. Delano and Mr. Lubin are both beneficiaries.
(4) Includes 220,594 shares owned by Conner Holding Company, a Nevada
corporation, of which Mr. Conner is president, a director, and majority
stockholder. Mr. Conner's address is c\o Conner Holding Company, 1030 State
Street, Erie, Pennsylvania 16501.
- 5 -
(5) Includes 15,000 shares granted to Mr. Welhouse on January 28, 2000,
pursuant to the Company's Restricted Stock Award Plan that are scheduled to
vest during the years 2003 through 2005.
(6) Includes 8,170 shares owned by a retirement benefit plan of which Mr.
Greenstein is the sole beneficiary.
(7) See footnotes 1 through 6, above. Total includes 89,062 shares owned by a
retirement benefit plan of which Messrs. Delano and Lubin are beneficiaries
that are reported in the shares beneficially owned by both Mr. Delano and
Mr. Lubin.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, and the
rules promulgated thereunder require the Company's officers and directors and
persons who own more than 10 percent of the Common Stock to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC") and to furnish to the Company copies of all such filings.
Based solely on its review of the copies of such reports and written
representations from certain reporting persons that certain reports were not
required to be filed by such persons, the Company believes that all of its
directors, officers, and beneficial owners complied with all of the filing
requirements applicable to them with respect to transactions during the year
ended December 31, 2001.
EXECUTIVE COMPENSATION
The following table summarizes, for the Company's past three fiscal years,
the compensation paid to each of the Company's executive officers whose total
annual salary and bonus exceeded $100,000.
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
----------------------------- --------------
RESTRICTED ALL OTHER
NAME AND POSITION FISCAL YEAR SALARY($) BONUS($)(1) STOCK AWARD($) COMPENSATION($)
- ------------------------- ----------- ------------ ----------- -------------- ---------------
Michael A. Lubin 2001 263,500 (2) - - -
Chairman of the Board 2000 263,000 (2) - - -
1999 267,000 (2) 93,750 - -
Warren Delano 2001 263,500 (3) - - -
President and Director 2000 263,000 (3) - - -
1999 267,000 (3) 93,750 - -
Dennis J. Welhouse 2001 148,500 - - 5,474 (5)
Senior Vice President 2000 148,500 - 27,344 (4) 5,591 (5)
Chief Financial Officer 1999 144,200 32,445 - 7,645 (5)
and Assistant Secretary
(1) Amounts reported in a particular year reflect bonuses earned for services
rendered in that year and paid in the following year.
(2) Includes (a) compensation, paid indirectly to Mr. Lubin through Lubin,
Delano & Company, in the amounts of $250,000 during 2001, 2000, and 1999,
for services rendered as an executive officer of the Company and (b) fees
paid to Mr. Lubin for serving as a member of the Company's Board of
Directors. Lubin, Delano & Company is an investment banking and consulting
firm of which Messrs. Lubin and Delano are the only partners. See
"Compensation Committee Report on Executive Compensation" and "Certain
Relationships and Transactions."
- 6 -
(3) Includes (a) compensation, paid indirectly to Mr. Delano through Lubin,
Delano & Company, in the amounts of $250,000 during 2001, 2000, and 1999,
for services rendered as an executive officer of the Company and (b) fees
paid to Mr. Delano for serving as a member of the Company's Board of
Directors. See "Compensation Committee Report on Executive Compensation"
and "Certain Relationships and Transactions."
(4) Represents the fair market value of 25,000 shares of restricted common
stock on January 28, 2000, the date on which the restricted shares were
awarded to Mr. Welhouse. The restricted shares vest over a five-year
period.
(5) Includes (a) Company contributions of $4,471, $4,627, and $7,219, made to
Mr. Welhouse's account under the Company's 401(k) Plan in 2001, 2000, and
1999, respectively, (b) insurance premiums of $477, $360, and $426 paid by
the Company in 2001, 2000, and 1999, respectively, for term life insurance
owned by Mr. Welhouse, and (c) imputed interest of $526 and $604 in 2001
and 2000, respectively.
No stock options or stock appreciation rights were granted to, exercised
by, or held by any of the persons named in the Summary Compensation Table above
during 2001, 2000, or 1999.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is composed of two non-employee members of the
Company's Board of Directors. The Compensation Committee is responsible, subject
to the approval of the Board of Directors, for reviewing salaries, cash bonus
awards, and existing or potential compensation plans for the Company's executive
officers and other eligible employees and making recommendations to the Board of
Directors regarding such salaries, cash bonus awards, and compensation plans.
Additionally, the Committee administered the Company's 1986 Restricted Stock
Award Plan, which expired on December 31, 2001.
COMPENSATION PHILOSOPHY AND POLICY
The Company's compensation program generally is designed to motivate and
reward the Company's executive officers for attaining financial, operational,
and strategic objectives that will contribute to the overall goal of enhancing
stockholder value. The principal elements of the compensation plan include base
salary and cash bonus awards.
BASE SALARY. In determining the base pay levels for executive officers of
the Company, the Compensation Committee considers the compensation paid by a
group of industrial companies that are generally similar to the Company. The
group of companies with which the Company compares itself for this purpose is
subject to change as the companies change size or focus, merge, or are acquired.
Base pay levels, prior to taking into account other factors considered by the
Compensation Committee, are at the mid-range of base pay levels for such group
of companies. The Compensation Committee believes that the Company's most direct
competitors are private companies that do not publicly disclose information
regarding executive compensation, financial condition, or operating performance.
The Compensation Committee also believes that the companies with which the
Company compares itself for the purpose of determining executive compensation
are not necessarily included in the indices used to compare stockholder returns
that are contained elsewhere in this Proxy Statement. In determining the salary
component of compensation packages for executive officers, the Compensation
Committee also takes into consideration the recent performance of the individual
and the Company, the experience of the individual, and the scope and complexity
of the position. The Compensation Committee does not assign weights to these
factors and does not consider any one factor more important than another.
INCENTIVE COMPENSATION PLAN. To provide incentives to increase
profitability, the Company has an incentive compensation plan that provides for
the payment of cash bonus awards to executive officers and other eligible
employees of the Company. Bonus awards for eligible divisional employees are
based
- 7 -
upon the attainment of predetermined profit targets at each respective division.
Bonus awards for executive officers and other eligible corporate employees are
based upon the attainment of predetermined consolidated profit targets. The
Compensation Committee is responsible for the supervision of the plan. Until
December 31, 2001, the Company also had a restricted stock plan that permitted
it to award restricted shares of common stock to officers and key employees of
the Company. During 2001 and 1999, no shares of restricted stock were awarded or
outstanding. In January 2000, the Compensation Committee awarded 125,000 shares
of restricted common stock to key employees of the Company. Under the terms of
the restricted stock award plan, the shares issued during January 2000 vest over
a five-year period.
COMPENSATION OF MESSRS. DELANO AND LUBIN. Messrs. Delano and Lubin are
compensated indirectly by the Company through payments made to Lubin, Delano &
Company, an investment banking and consulting firm of which they are the only
partners. During 2001, the aggregate payments made to Lubin, Delano & Company
for services provided by Messrs. Delano and Lubin in their capacities as
President and Chairman of the Board, respectively, totaled $500,000. The
Company's arrangements with Lubin, Delano & Company also provide for an
incentive fee based upon the attainment of predetermined consolidated profit
targets and additional compensation, as mutually agreed upon, for services
provided by Lubin, Delano & Company in connection with acquisitions,
divestitures, financings, or other similar transactions involving the Company.
Messrs. Delano and Lubin received no payments under the incentive compensation
plan for 2001 and no additional compensation for services provided in connection
with acquisitions, divestitures, financings, or similar transactions during
2001.
The compensation paid for the combined services of Messrs. Delano and Lubin
as President and Chairman of the Board of the Company, respectively, was agreed
to after considering the responsibilities of such positions and the competitive
marketplace for executive talent. The Compensation Committee believes that the
compensation paid to Lubin, Delano & Company during 2001 for the combined
services of Messrs. Delano and Lubin as executive officers of the Company
comports with the Compensation Committee's subjective perception of the base
compensation levels of chief executives employed by other industrial companies,
both public and private.
COMPENSATION COMMITTEE
William B. Conner, Chairman
Kenneth I. Greenstein, Member
- 8 -
AUDIT COMMITTEE REPORT
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors and performs the other duties and
responsibilities set forth in the Audit Committee Charter. It is the
responsibility of the Company's independent auditors to perform an independent
audit of and express an opinion on the Company's financial statements. The Audit
Committee's responsibility is one of review and oversight. In fulfilling its
oversight responsibilities:
(1) The Audit Committee has reviewed and discussed with the Company's
management the audited financial statements.
(2) The Audit Committee has discussed with Ernst & Young LLP, the
Company's independent auditors, the matters required to be discussed
by Statement on Auditing Standards No. 61, "Codification of Statements
on Auditing Standards, AU sec. 380."
(3) The Audit Committee has received the written disclosures and the
letter from Ernst & Young LLP required by the Independence Standards
Board Standard No. 1, "Independence Discussions with Audit
Committees," and has discussed with Ernst & Young LLP the independence
of that firm as the Company's auditors.
(4) Based on the Audit Committee's review and discussions referred to
above, the Audit Committee recommended to the Board of Directors that
the Company's audited financial statements be included in the
Company's Annual Report on Form 10-K for the year ended December 31,
2001, for filing with the Securities and Exchange Commission.
On September 12, 2000, the Board of Directors formally adopted a written
charter for the Audit Committee, which sets forth the operating practices and
responsibilities of the Audit Committee. Each of the Audit Committee members is
independent, as defined in Rule 4200(a) of the National Association of
Securities Dealers' listing standards.
The members of the Audit Committee are not professionally engaged in the
practice of auditing or accounting and are not experts in the fields of
accounting or auditing, including in respect of auditor independence. Members of
the Committee rely without independent verification on the information provided
to them and on the representations made by management and the independent
auditors. Accordingly, the Audit Committee's oversight does not provide an
independent basis to determine that management has maintained appropriate
accounting and financial reporting principles or appropriate internal controls
and procedures designed to assure compliance with accounting standards and
applicable laws and regulations. Furthermore, the Audit Committee's
considerations and discussions referred to above do not assure that the audit of
the Company's financial statements has been carried out in accordance with
generally accepted auditing standards, that the financial statements are
presented in accordance with accounting principles generally accepted in the
United States, or that Ernst & Young LLP is in fact "independent."
AUDIT COMMITTEE
Kenneth I. Greenstein, Chairman
Joseph A. Pardo, Member
William B. Conner, Member
- 9 -
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee are William B. Conner
and Kenneth I. Greenstein. Neither of Messrs. Conner and Greenstein have ever
been employees of the Company, and Mr. Conner, who is the Chairman of the
Compensation Committee, has never been an officer of the Company. Mr. Greenstein
has served as Secretary of the Company since 1979.
STOCK PRICE PERFORMANCE
Set forth below is a line graph comparing the yearly cumulative total
return on the Company's Common Stock, based on the market price of the Common
Stock, with the yearly cumulative total return on the common stock of companies
in the Standard & Poors 500 Index and the NASDAQ Composite Index.
COMPARISON OF FIVE-YEAR TOTAL RETURN FOR
LEXINGTON PRECISION CORPORATION, S & P 500 INDEX, AND NASDAQ COMPOSITE INDEX
LEXINGTON PRECISION
CORPORATION S&P 500 INDEX NASDAQ COMPOSITE INDEX
------------------- ------------- ----------------------
1996 100 100 100
1997 126.47 131.01 121.64
1998 70.59 165.95 169.84
1999 55.88 198.35 315.2
2000 37.18 178.24 191.36
2001 14.59 154.99 151.07
YEAR ENDED DECEMBER 31
At December 31, 1996, 1997, 1998, 1999, 2000, and 2001, the last trade
listed on the OTC Bulletin Board, provided by the National Association of
Securities Dealers, was $2.125, $2.6875, $1.50, $1.1875, $0.79, and $0.31 per
share, respectively. The Company believes that twelve brokerage firms currently
make a market in the Company's Common Stock, although both bid and asked
quotations may be limited.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Warren Delano and Michael A. Lubin beneficially own 28.7% and 31.4%,
respectively, of the Common Stock of the Company.
- 10 -
Messrs. Delano and Lubin are compensated indirectly by the Company through
payments made to Lubin, Delano & Company, an investment banking and consulting
firm of which they are the only partners. During 2001, the aggregate payments
made to Lubin, Delano & Company for services provided by Messrs. Delano and
Lubin in their capacities as President and Chairman of the Board, respectively,
were $500,000. The Company's arrangements with Lubin, Delano & Company also
provide for an incentive fee based upon the attainment of predetermined
consolidated profit targets and additional compensation, as mutually agreed
upon, for services provided by Lubin, Delano & Company in connection with
acquisitions, divestitures, financings, or other similar transactions involving
the Company. Messrs. Delano and Lubin received no payments under the incentive
compensation plan for 2001 and no additional compensation for services provided
in connection with acquisitions, divestitures, financings, or similar
transactions during 2001.
Messrs. Delano and Lubin and their affiliates are holders of $1,500,000
principal amount of the Company's senior subordinated notes due February 1,
2000, and $347,000 principal amount of the Company's junior subordinated
nonconvertible notes due May 1, 2000. On February 1, 2000, Messrs. Delano and
Lubin converted the $1,000,000 principal amount of the Company's junior
subordinated convertible notes due May 1, 2000, into 440,000 shares of Common
Stock in accordance with the terms of such notes. The Company is in default in
respect of its senior subordinated notes because it did not make payments of
principal of $27,412,000, and interest of $1,748,000, on the senior subordinated
notes that were due on February 1, 2000. As a result, the Company is prohibited
from paying interest on the junior subordinated notes until the payment default
on the senior subordinated notes is remedied.
PROPOSAL 2 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, on the recommendation of the Audit Committee, has
appointed the firm of Ernst & Young LLP, independent public accountants, to
audit the accounts of the Company for the year ending December 31, 2002. Ernst &
Young LLP has been employed by the Company as its independent auditor since the
fiscal year ended May 31, 1989.
AUDIT FEES
Ernst & Young LLP billed the Company $186,000 for professional services
rendered in connection with the audit of the Company's annual financial
statements for the year ended December 31, 2001, and the review of the financial
statements included in the Company's Quarterly Reports on Form 10-Q for the
year.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
No fees were billed by Ernst & Young LLP for professional services rendered
to the Company relating to financial information systems design and
implementation during the fiscal year ended December 31, 2001.
OTHER FEES
Ernst & Young LLP billed the Company $15,000 for all other professional
services rendered during 2001. These fees related to services rendered in
connection with the preparation of income tax returns and other miscellaneous
services.
Stockholders are asked to approve the action of the Board of Directors in
appointing Ernst & Young LLP. It is intended that, unless any proxy is marked to
the contrary, the shares represented by such
- 11 -
proxy shall be voted for the ratification of such appointment. It is expected
that a representative of Ernst & Young LLP will be present at the Annual Meeting
to answer questions of stockholders and will have the opportunity, if desired,
to make a statement.
The Audit Committee and the Board of Directors recommend that shareholders
vote "FOR" such ratification.
STOCKHOLDER PROPOSALS
Proposals by stockholders intended to be presented at the next annual
meeting (to be held in 2003) must be received by the Secretary of the Company on
or before December 25, 2002, in order to be included in the proxy statement and
the proxy for that meeting. Proposals should be directed to the Secretary,
Lexington Precision Corporation, 767 Third Avenue, New York, NY 10017 and must
comply with the applicable requirements of the federal securities laws and the
Company's Bylaws.
OTHER MATTERS
Management does not know of any other matters that are likely to be brought
before the Annual Meeting. However, in the event that any other matters properly
come before the Annual Meeting, the persons named in the enclosed proxy will
vote in accordance with their judgment on such matters.
A copy of the Company's Annual Report for the year ended December 31, 2001,
which includes financial statements and related data, accompanies this Proxy
Statement.
According to SEC rules, the information presented in this Proxy Statement
under the captions "Compensation Committee Report on Executive Compensation" and
"Stock Price Performance" will not be deemed to be "soliciting material" or to
be filed with the SEC under the Securities Act of 1933 or the Securities
Exchange Act of 1934, and nothing contained in any previous filings made by the
Company under such Acts shall be interpreted as incorporating by reference the
information presented under the specified captions.
By Order of the Board of Directors,
Kenneth I. Greenstein
Secretary
Dated: May 20, 2002
New York, New York
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- --------------------------------------------------------------------------------
PROXY - LEXINGTON PRECISION CORPORATION
- --------------------------------------------------------------------------------
767 THIRD AVENUE, NEW YORK, NEW YORK 10017
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY FOR THE
ANNUAL MEETING OF STOCKHOLDERS ON JUNE 12, 2002
The undersigned hereby appoints as Proxies, each of WARREN DELANO and DENNIS J.
WELHOUSE, each with full power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all shares of capital stock
of Lexington Precision Corporation held of record by the undersigned on May 13,
2002, at the Annual Meeting of Stockholders to be held on June 12, 2002, and any
adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. YOU ARE ENCOURAGED
TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE BOXES ON THE REVERSE SIDE OF
THIS CARD, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. IF NO DIRECTION IS GIVEN WITH
RESPECT TO A PARTICULAR PROPOSAL, THIS PROXY WILL BE VOTED FOR SUCH PROPOSAL.
THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
000000 0000000000 0 0000
Lexington Precision Corporation 000000000.000 ext
000000000.000 ext
000000000.000 ext
000000000.000 ext
[BAR CODE] 000000000.000 ext
000000000.000 ext
MRA SAMPLE 000000000.000 ext
DESIGNATION(IFANY)
ADD 1
ADD 2 Holder Account Number
ADD 3
ADD 4 C 1234567890 JNT
ADD 5
ADD 6 [BAR CODE]
Use a BLACK pen. Mark with Mark this box with an X if you have made
an X inside the grey areas [X] [ ] changes to your name or address details above.
as shown in this example.
- ------------------------------------------------------------------------------------------------------------------
ANNUAL MEETING PROXY CARD
- ------------------------------------------------------------------------------------------------------------------
A ELECTION OF 6 DIRECTORS
1. The Board of Directors recommends a vote FOR the listed nominees.
For Withhold For Withhold
01 - William B. Conner [ ] [ ] 04 - Michael A. Lubin [ ] [ ]
02 - Warren Delano [ ] [ ] 05 - Joseph A. Pardo [ ] [ ]
03 - Kenneth Greenstein [ ] [ ] 06 - Elizabeth H. Ruml [ ] [ ]
B ISSUE
2. The Board of Directors recommends a vote FOR the following proposal.
For Against Abstain
Ratify the appointment of Ernst & Young LLP [ ] [ ] [ ]
as independent auditors.
C OTHER MATTERS
3. Proxies may vote on such other matters as may properly come before the meeting and any adjournments thereof.
D AUTHORIZED SIGNATURES - SIGN HERE - THIS SECTION MUST BE COMPLETED FOR YOUR INSTRUCTIONS TO BE EXECUTED.
Please mark, date, sign, and return this proxy card promptly, using the enclosed envelope. No postage is
required if mailed in the United States of America.
Signature 1 - Please keep signature within Signature 2 - Please keep signature within Date (dd/mm/yyyy)
the box the box
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