<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
LEXINGTON PRECISION CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NOT APPLICABLE
(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: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
================================================================================
<PAGE> 2
LEXINGTON PRECISION CORPORATION
767 THIRD AVENUE
NEW YORK, NEW YORK 10017
----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 15, 1997
The Annual Meeting of Stockholders of LEXINGTON PRECISION CORPORATION
(the "Company") will be held at the offices of Nixon, Hargrave, Devans & Doyle
LLP, 437 Madison Avenue, 24th Floor, New York, New York, on Thursday, May 15,
1997, at 10:30 A.M. for the purpose of considering and acting upon the following
matters.
(1) The election of one director 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, 1997.
(3) The transaction of such other business as may properly come
before the meeting and any adjournments thereof.
Pursuant to the provisions of the By-Laws, the Board of Directors has
fixed the close of business on April 1, 1997, as the record date for determining
the stockholders of the Company entitled to 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
April 16, 1997
New York, New York
<PAGE> 3
LEXINGTON PRECISION CORPORATION
767 THIRD AVENUE
NEW YORK, NEW YORK 10017
----------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 15, 1997
This Proxy Statement is being mailed to stockholders on or about
April 18, 1997, in connection with the solicitation of proxies by the Board of
Directors of LEXINGTON PRECISION CORPORATION, a Delaware corporation (the
"Company"), to be used at the Annual Meeting of Stockholders of the Company (the
"Annual Meeting"), to be held on May 15, 1997. Accompanying this Proxy Statement
is a Notice of Annual Meeting of Stockholders and a form of proxy for such
meeting. A copy of the Company's Annual Report for the year ended December 31,
1996, which contains financial statements and related data, also accompanies
this Proxy Statement.
All proxies which 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 upon written notice to the Secretary
of the Company prior to the exercise thereof and 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 otherwise than by use of the mails is estimated not to
exceed $3,000. In addition, the Company may employ a proxy solicitation
organization at a cost not to exceed $15,000.
Only stockholders of record at the close of business on the record
date, April 1, 1997, are entitled to notice of, and to vote at, the Annual
Meeting and any adjournments thereof. As of the record date, the Company had
outstanding 4,263,036 shares of its common stock, $0.25 par value (the "Common
Stock"), and 4,650 shares of its $8 Cumulative Convertible Preferred Stock,
Series B, $100 par value (the "Series B Preferred Stock"), each entitling the
holder thereof to one vote per share. The affirmative vote of a plurality of the
shares of the Company's Common Stock and Series B Preferred Stock present in
person or represented by proxy and entitled to vote at the Annual Meeting is
required for the election of the director. The affirmative vote of a majority of
shares of the Company's Common Stock and Series B Preferred Stock present in
person or represented by proxy and entitled to vote at the Annual Meeting is
required for the ratification of the selection of auditors.
With regard to the election of the director, votes may be cast in favor
or withheld. Votes withheld from the director will be counted for purposes of
determining the presence or absence of a quorum for the transaction of business
at the Annual Meeting, but have no legal effect under Delaware law and,
-1-
<PAGE> 4
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
non-votes (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 having voted for purposes of determining the outcome of a
vote.
PRINCIPAL STOCKHOLDERS
The following table sets forth the beneficial ownership of the
Company's Common Stock, as of April 1, 1997, by each person known to, or
believed by the Company to, own beneficially more than 5% of its outstanding
Common Stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF SHARES OF COMMON STOCK PERCENT OF
BENEFICIAL OWNER BENEFICIALLY OWNED (1) CLASS OWNED
------------------- ---------------------- ----------
<S> <C> <C>
Michael A. Lubin 1,477,180(2) 32.9%
Lubin, Delano & Company
767 Third Avenue
New York, New York 10017
Warren Delano 1,346,793(3) 30.1
Lubin, Delano & Company
767 Third Avenue
New York, New York 10017
William B. Conner 219,906(4) 5.2
Conner Holding Company
1030 State Street
Erie, Pennsylvania 16501
</TABLE>
(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, except as set forth in the notes to the
table and subject to community property laws, where applicable.
(2) Includes (i) 35,000 shares owned by each of Mr. Lubin's two min children
with respect to which Mr. Lubin acts as custodian under the New York
Uniform Gifts to Minors Act, (ii) 222,200 shares which Mr. Lubin has the
right to acquire upon the conversion of $505,000 principal amount of the
Company's 14% Junior Subordinated Convertible Notes, due May 1, 2000 (the
"14% Convertible Notes") owned by Mr. Lubin, at a conversion price
(subject to adjustment) of $2.27273 per share, (iii) 50,000 shares owned
by an Individual Retirement Account of Mr. Lubin and (iv) 50,000 shares
owned by a retirement benefit plan of which Mr. Lubin is a beneficiary.
(3) Includes (i) 217,800 shares which Mr. Delano has the right to acquire
upon the conversion of $495,000 principal amount of the Company's 14%
Convertible Notes owned by Mr. Delano, at a conversion price (subject
to adjustment) of $2.27273 per share, (ii) 110,750 shares owned by
Individual Retirement Accounts of Mr. Delano and (iii) 50,000 shares
owned by a retirement benefit plan of which Mr. Delano is a
beneficiary.
(4) Includes 158,594 shares owned by Conner Holding Company, a Nevada
corporation, of which Mr. Conner is President, a director and majority
stockholder.
- 2 -
<PAGE> 5
PROPOSAL 1 - ELECTION OF A DIRECTOR
The By-Laws of the Company provide that the Board of Directors shall be
divided into three classes, as nearly equal in number as possible, and that
directors shall be elected for terms of three years on a staggered basis. There
are presently five directors, one whose term expires in 1997, two whose terms
expire in 1998 and two whose terms expire in 1999. 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 form of proxy to vote such proxy for the election at the Annual
Meeting of Michael A. Lubin as director, to serve until the 2000 Annual Meeting
of Stockholders and until his successor shall have been elected and qualified.
Mr. Lubin is presently a member of the Company's Board of Directors. The proxies
cannot be voted for a greater number of persons than one. Management has no
reason to believe that the named nominee will be unable or unwilling to serve if
elected. However, in such case, it is intended that the individuals named in the
enclosed proxy will vote for the election of such substituted nominee as the
Company's Board of Directors may recommend.
Certain information concerning the nominee and directors continuing in
office is set forth in the following table.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION, BUSINESS
NAME AGE EXPERIENCE AND DIRECTORSHIPS
---- --- ----------------------------
<S> <C> <C>
NOMINEE FOR TERM EXPIRING IN 2000
Michael A. Lubin 47 Chairman of the Board of the Company since May 1991
and also Chief Executive Officer of the Company from
January 1988 through May 1991. 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,
since April 1, 1997, and Executive Vice President and
Chief Operating Officer of Salant Corporation from
October 1995 to March 1997. Director of the Company
since 1985.
DIRECTORS WHOSE TERMS EXPIRE IN 1999
William B. Conner 64 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 Acordia,
Inc., a holding company for insurance brokerage, claims
administration and employee benefits consulting
companies, from April 1991 until May 1996. President of
Robinson-Conner, Inc., an insurance brokerage firm
which became a subsidiary of Acordia, Inc. in April 1991,
from 1967 until June 1993. Executive Vice President of
Acordia, Inc. from April 1991 until March 1993. Director
of the Company since 1981.
</TABLE>
- 3 -
<PAGE> 6
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION, BUSINESS
NAME AGE EXPERIENCE AND DIRECTORSHIPS
---- --- ----------------------------
<S> <C> <C>
Phillips E. Patton 59 Private Investor. Chairman of the Board and President of
Specialty Packaging Products Inc., a manufacturer of
metal and plastic packaging components, from February
1984 until November 1992. Director of Regency Bank, a
Richmond, Virginia, commercial bank, since 1987.
Director of the Company since 1993.
DIRECTORS WHOSE TERMS EXPIRE IN 1998
Warren Delano 46 President of the Company since January 1988 and also
Chief Operating Officer of the Company from January
1988 through May 1991. 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 67 Secretary of the Company since September 1979.
Stockholder of a professional corporation which is a
partner in Nixon, Hargrave, Devans & Doyle LLP, a law
firm, for more than five years. Director of the Company
since 1978.
</TABLE>
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors met five times during 1996. During 1996, each of
the directors attended all of the meetings held by the Board of Directors and
all of the meetings held by the Committees of the Board of Directors on which
such person served.
As of December 31, 1996, the Board of Directors had standing an Audit
Committee and a Compensation Committee. The members of those Committees were as
follows:
<TABLE>
<CAPTION>
NAME OF COMMITTEE CHAIRMAN OTHER MEMBER
----------------- -------- ------------
<S> <C> <C>
Audit Committee Phillips E. Patton Kenneth I. Greenstein
Compensation Committee William B. Conner Phillips E. Patton
</TABLE>
The Audit Committee, which is comprised of two non-management members
of the Board of Directors, met two times during 1996. Its functions included
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 deemed advisable.
The Compensation Committee, which is comprised of two members of the
Board of Directors who are not employees of the Company or eligible to receive
restricted stock awards pursuant to the Company's 1986 Restricted Stock Award
Plan, met once during 1996. Its functions included reviewing salaries, cash
- 4 -
<PAGE> 7
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 incentive
compensation plans. Additionally, the Committee administers the Company's 1986
Restricted Stock Award Plan and is responsible for determining the employees of
the Company to whom, and the time or times at which, awards will be granted.
Each member of the Board of Directors receives an annual fee of $8,000.
Each member of the Company's Audit Committee receives an additional annual fee
of $4,000. 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.
<TABLE>
<CAPTION>
NAME POSITION AND OFFICES AGE
---- -------------------- ---
<S> <C> <C>
Michael A. Lubin Chairman of the Board 47
Warren Delano President and Director 46
Dennis J. Welhouse Senior Vice President, Chief Financial
Officer and Assistant Secretary 48
Kelly L. MacMillan Treasurer 31
</TABLE>
Mr. Lubin has been Chairman of the Board of the Company since May 1991.
Mr. Lubin also held the office of Chief Executive Officer of the Company from
January 1988 through May 1991. For more than five years, Mr. Lubin has been a
partner of Lubin, Delano & Company, an investment banking and consulting firm
that has been retained by the Company. Mr. Lubin has been President and Chief
Operating Officer of Salant Corporation, a manufacturer of men's, women's and
children's apparel since April 1, 1997, and was Executive Vice President and
Chief Operating Officer of Salant Corporation from October 1995 to March 1997.
Mr. Delano has been President of the Company since January 1988. Mr.
Delano also held the office of Chief Operating Officer of the Company from
January 1988 through May 1991. For more than five years, Mr. Delano has been a
partner of Lubin, Delano & Company, an investment banking and consulting firm
that has been retained by the Company.
Dennis J. Welhouse has been Senior Vice President of the Company since
March 1992 and Chief Financial Officer and Assistant Secretary of the Company
since November 1988. Mr. Welhouse was Vice President-Finance of the Company from
November 1988 through March 1992.
- 5 -
<PAGE> 8
Kelly L. MacMillan has been Treasurer of the Company since July 1995.
Ms. MacMillan served as Assistant Treasurer of the Company from November 1991
through June 1995. Prior to joining the Company in July 1991, Ms. MacMillan was
employed as an audit senior for Arthur Andersen LLP.
Each of the Company's executive officers serves at the pleasure of the
Board of Directors.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of the
Company's Common Stock, as of April 1, 1997, by each director and director
nominee, by each of the named executive officers and by all directors and
executive officers as a group.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED (1) CLASS OWNED
- ------------------------ --------------------------- -----------
<S> <C> <C>
Michael A. Lubin 1,477,180(2) 32.9%
Warren Delano 1,346,793(3) 30.1
William B. Conner 219,906(4) 5.2
Phillips E. Patton 92,000 2.2
Dennis J. Welhouse 65,842 1.5
Kenneth I. Greenstein 35,636(5) *
Directors and executive officers
as a group (7 persons) 3,237,357(6) 68.8
</TABLE>
* Less than one 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, except as set forth in the notes to the
table and subject to community property laws, where applicable.
(2) Includes (i) 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, (ii) 222,200 shares which Mr.
Lubin has the right to acquire upon the conversion of $505,000
principal amount of the Company's 14% Convertible Notes owned by Mr.
Lubin, at a conversion price (subject to adjustment) of $2.27273 per
share, (iii) 50,000 shares owned by an Individual Retirement Account of
Mr. Lubin and (iv) 50,000 shares owned by a retirement benefit plan of
which Mr. Lubin is a beneficiary.
(3) Includes (i) 217,800 shares which Mr. Delano has the right to acquire
upon the conversion of $495,000 principal amount of the Company's 14%
Convertible Notes owned by Mr. Delano, at a conversion price (subject
to adjustment) of $2.27273 per share, (ii) 110,750 shares owned by
Individual Retirement Accounts of Mr. Delano and (iii) 50,000 shares
owned by a retirement benefit plan of which Mr. Delano is a
beneficiary.
(4) Includes 158,594 shares owned by Conner Holding Company, a Nevada
corporation, of which Mr. Conner is President, a director and majority
stockholder.
(5) Includes 8,170 shares owned by a retirement benefit plan of which Mr.
Greenstein is sole beneficiary.
(6) See footnotes 1 through 5, above.
- 6 -
<PAGE> 9
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
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 ten percent of a registered class of the Company's
equity securities 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.
The Company has determined, based solely upon a review of (i) those
reports and amendments thereto furnished to the Company during and with respect
to the year ended December 31, 1996, and (ii) written representations from
certain reporting persons, that each of Mr. Lubin and Mr. Delano was
inadvertently late in filing two Forms 4 reporting the purchase of 6,496 and
1,496 shares, respectively, of the Company's Common Stock.
EXECUTIVE COMPENSATION
The following table summarizes compensation, for the Company's past
three fiscal years, paid to the Company's executive officers whose total annual
salary and bonus exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
NAME AND FISCAL ------------------------------ ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) COMPENSATION($)
------------------ ------ ---------- ----------- ---------------
<S> <C> <C> <C> <C>
Michael A. Lubin 1996 211,250(2) - -
Chairman of the 1995 211,250(2) 175,000(3) -
Board and Director 1994 188,667(2) - -
Warren Delano 1996 211,250(4) - -
President and Director 1995 211,250(4) 175,000(3) -
1994 188,417(4) - -
Dennis J. Welhouse 1996 131,000 9,825 8,449(5)
Senior Vice President, 1995 126,552 28,474 6,741(5)
Chief Financial Officer and 1994 121,680 - 7,525(5)
Assistant Secretary
</TABLE>
(1) Amounts reported in a particular year reflect bonuses earned for
services rendered in that year and paid in that year or the following
year.
(2) Represents (i) compensation in the amounts of $200,000, $200,000 and
$175,000 paid in 1996, 1995 and 1994, respectively, paid indirectly to
Mr. Lubin through Lubin, Delano & Company for services rendered as an
executive officer of the Company and (ii) 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 two partners. See "Compensation Committee
Report on Executive Compensation" and "Certain Relationships and
Transactions."
(3) Amount represents (i) a incentive bonus payment of $75,000 and (ii) 50%
of a $200,000 fee paid on January 31, 1995, to Lubin, Delano & Company
for services rendered in connection with the refinancing of certain of
the Company's indebtedness.
- 7 -
<PAGE> 10
(4) Represents (i) compensation in the amounts of $200,000, $200,000 and
$175,000 in 1996, 1995 and 1994, respectively, paid indirectly to Mr.
Delano through Lubin, Delano & Company for services rendered as an
executive officer of the Company and (ii) 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."
(5) Represents (i) Company contributions of $7,939, $6,252 and $7,064 made
to Mr. Welhouse's account under the Company's 401(k) Plan in 1996, 1995
and 1994, respectively; and (ii) insurance premiums of $510, $489 and
$461 paid by the Company in 1996, 1995 and 1994, respectively for term
life insurance owned by Mr. Welhouse.
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 1996.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is comprised of two non-employee directors
of the Company. The Compensation Committee is responsible, subject to the
approval of the Board of Directors, for reviewing compensation levels of
executive officers, evaluating the performance of corporate management and for
administering the Company's incentive compensation plan.
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 which are generally similar to the Company. The
number and composition of the group 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 which do not publicly
disclose executive compensation, financial condition or operating performance
information. 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 which are contained elsewhere in the Proxy Statement in
which this report appears. 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 which provides for
the payment of cash bonus awards to executive officers and other eligible
employees of the Company. Bonus awards for eligible operating company employees
are based upon the attainment of predetermined profit targets at each respective
operating company. Bonus awards for executive officers and other eligible
corporate employees are based upon the attainment of predetermined consolidated
profit targets. The Compensation Committee of the Company's Board of Directors
is responsible for the supervision of the plan. The Company also has a
restricted stock plan but has not utilized the plan for incentive compensation
in recent years.
-8-
<PAGE> 11
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 1996, 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 $400,000. The Company's
arrangements with Lubin, Delano & Company also provided 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 similar transactions involving the Company. Messrs. Delano and
Lubin received no payments under the incentive compensation plan for 1996 or for
services provided in connection with acquisitions, divestitures, financings or
similar transactions during 1996. During 1997, Lubin, Delano & Company is being
compensated for the services provided by Messrs. Delano and Lubin in their
capacities as President and Chairman of the Board, respectively, at the base
rate of $400,000 per year.
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 competitive marketplace for executive talent and
the responsibilities of such positions. From October 1995 to March 1997, Mr.
Lubin was Executive Vice President and Chief Operating Officer of Salant
Corporation ("Salant"). On April 1, 1997 Mr. Lubin was elected President and
Chief Operating Officer of Salant. The Compensation Committee believes that,
notwithstanding Mr. Lubin's engagement by Salant, the compensation package
payable to Lubin, Delano & Company for the combined services of Messrs. Delano
and Lubin over the course of the year 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
Phillips E. Patton
-9-
<PAGE> 12
STOCK PRICE PERFORMANCE
Set forth below is a line graph comparing the yearly cumulative total
stockholder return on the Company's Common Stock, based on the market price of
the Common Stock, with the cumulative total return of companies in the S & P 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
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
LEXINGTON PRECISION CORPORATION
SHARE OF COMMON STOCK S&P 500 INDEX NASDAQ COMPOSITE INDEX
- --------------------------------------------------------------------------------------------
CLOSING INDEXED TO INDEXED TO INDEXED TO
DATE PRICE 12/31/91 CLOSE 12/31/91 CLOSE 12/31/91
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12/31/91 $0.250 $ 100.00 417.09 $100.00 586.34 $100.00
12/31/92 0.250 100.00 435.71 104.46 676.95 115.45
12/31/93 1.000 400.00 466.45 111.83 776.82 132.49
12/31/94 1.750 700.00 459.27 110.11 751.96 128.25
12/31/95 2.500 1,000.00 615.93 147.67 1,052.14 179.44
12/31/96 2.125 850.00 740.74 177.60 1,291.03 220.18
- --------------------------------------------------------------------------------------------
</TABLE>
As of December 31, 1991, 1992 and 1993, no material trading data for
the Company's Common Stock was publicly available. Based upon then current
conversations with market-makers in the Common Stock, the Company believes that
the bid quotation for the Common Stock was $0.25 per share as of December 31,
1991 and 1992 and $1.00 per share as of December 31, 1993. As of December 31,
1994, 1995 and 1996 the last trade listed on the OTC Bulletin Board, provided by
the National Association of Securities Dealers, was $1.75, $2.50 and $2.125 per
share, respectively. The Company believes that five brokerage firms currently
make a market in the Company's Common Stock, although both bid and asked
quotations may at times be limited.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Warren Delano and Michael A. Lubin beneficially own 30.1% and 32.9%,
respectively, of the Common Stock of the Company.
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 1996, 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 $400,000. 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
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<PAGE> 13
upon, for services provided by Lubin, Delano & Company in connection with
acquisitions, divestitures, financings or similar transactions involving the
Company. Messrs. Delano and Lubin received no payments under the incentive
compensation plan for 1996 or for services provided in connection with
acquisitions, divestitures, financings or similar transactions during 1996.
During 1997, Lubin, Delano & Company is being compensated for the services
provided by Messrs. Delano and Lubin in their capacities as president and
Chairman of the Board, respectively, at the base rate of $400,000 per year.
Messrs. Delano and Lubin and their affiliates are holders of $1,500,000
principal amount of the Company's 12.75% Senior Subordinated Notes due
February 1, 2000, $1,000,000 principal amount of the Company's 14% Junior
Subordinated Convertible Notes due May 1, 2000, and $347,000 principal amount
of the Company's 14% Junior Subordinated Nonconvertible Notes due May 1, 2000.
In 1996, Messrs. Delano and Lubin and their affiliates received interest
payments on these notes in the aggregate amount of $379,783.
The Company made cash payments in respect of fees and expenses of
approximately $442,000 to the law firm of Nixon, Hargrave, Devans & Doyle LLP
during 1996. Kenneth I. Greenstein, Secretary and a director of the Company, is
a stockholder of a professional corporation which is a partner in that law firm.
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, 1997. Ernst &
Young LLP has been employed by the Company as its independent auditor since the
fiscal year ended May 31, 1989.
Stockholders are asked to approve the action of the Board of Directors
in appointing Ernst & Young LLP. It is intended that, unless marked to the
contrary, the shares represented by 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.
STOCKHOLDER PROPOSALS
Proposals by stockholders intended to be presented at the next annual
meeting (to be held in 1998) must be received by the Secretary of the Company on
or before January 5, 1998, in order to be included in the proxy statement and
the proxy for that meeting. Proposals should be directed to Secretary, Lexington
Precision Corporation, 767 Third Avenue, New York, NY 10017.
OTHER MATTERS
Management does not know of any other matters which 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 Report to Stockholders for the year ended
December 31, 1996, which includes financial statements and related data,
accompanies this Proxy Statement.
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<PAGE> 14
According to SEC rules, the information presented in this Proxy
Statement under the captions "Compensation Committee Report on Executive
Compensation" and "Stock Price Performance" shall 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: April 16, 1997
New York, New York
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<PAGE> 15
LEXINGTON PRECISION CORPORATION
767 THIRD AVENUE
NEW YORK, NEW YORK 10017
P
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
R THE COMPANY FOR THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 15, 1997
O The undersigned hereby appoints as Proxies, each of WARREN DELANO and
DENNIS J. WELHOUSE, each with full power to appoint his substitute,
X and hereby authorizes them to represent and to vote, as designated
below, all shares of capital stock of Lexington Precision
Y Corporation held of record by the undersigned on April 1, 1997,
at the Annual Meeting of Stockholders to be held on May 15, 1997
and any adjournments thereof.
<TABLE>
<S> <C>
Nominee for election as director: COMMENTS OR CHANGE OF ADDRESS
Michael A. Lubin ___________________________________________
(see reverse side to vote for
or withhold vote for nominee) ___________________________________________
___________________________________________
(If you have written in the above space,
please mark the corresponding box on the
reverse side of this card.)
</TABLE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. YOU ARE
ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE
REVERSE SIDE, 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 (OTHER THAN PROPOSAL 3),
THIS PROXY WILL BE VOTED FOR SUCH PROPOSAL. THE PROXIES CANNOT VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
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.
SEE REVERSE
SIDE
<PAGE> 16
<TABLE>
<S> <C> <C>
X PLEASE MARK YOUR SHARES IN YOUR NAME
VOTES AS IN THIS
EXAMPLE.
</TABLE>
<TABLE>
<CAPTION>
FOR WITHHELD FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C>
1. Election of / / / / 2. Ratify the appointment / / / / / /
Director of Ernst & Young LLP
(see reverse) as independent auditors.
3. In their discretion, the Proxies are authorized to vote
upon any other business that may properly come
before the meeting.
Comments / /
or
Change of
Address
Plan to / /
Attend
Meeting
IF SHARES ARE REGISTERED IN MORE THAN ONE NAME,
THE SIGNATURES OF ALL SUCH PERSONS ARE REQUIRED.
A CORPORATION SHOULD SIGN IN ITS FULL CORPORATE
NAME BY A DULY AUTHORIZED OFFICER STATING HIS
TITLE. TRUSTEES, GUARDIANS, EXECUTORS AND
ADMINISTRATORS SHOULD SIGN IN THEIR OFFICIAL
CAPACITY GIVING THEIR FULL TITLE AS SUCH.
IF A PARTNERSHIP, PLEASE SIGN IN THE PARTNERSHIP
NAME BY AUTHORIZED PERSONS.
SIGNATURE(S)_______________________________________________ DATE__________
SIGNATURE(S)_______________________________________________ DATE__________
NOTE: Please sign exactly as name appears hereon.
</TABLE>
