<PAGE>
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 Rule 14a-11(c) or Rule 14a-12
LBP, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(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)(1) 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>
LBP, INC.
200 MAMARONECK AVENUE
WHITE PLAINS, NEW YORK 10601
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 1999
------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of LBP, INC.,
formerly known as Leslie Building Products, Inc. (the "Company"), will be held
at the Park Avenue Center Room, The Waldorf-Astoria Hotel, 301 Park Avenue, New
York, N.Y. 10022 on May 20, 1999 at 10:00 o'clock A.M., for the following
purposes:
(1) To elect a Board of four Directors;
(2) To ratify the selection of KPMG LLP as independent auditors for
the Company for the year ending December 31, 1999; and
(3) To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Holders of record of the Company's Common Stock at the close of business on
the 15th day of April, 1999 shall be entitled to vote on all matters to be
considered at the meeting or any adjournment or postponement thereof.
A list of all stockholders entitled to vote at the meeting will be
available for inspection for the ten days prior to the meeting at the office of
the Company and at the offices of the Company's transfer agent, ChaseMellon
Shareholder Services, L.L.C., 85 Challenger Road, Overpeck Center, Ridgefield
Park, New Jersey 07660, and will be available for inspection at the time of the
meeting, at the place thereof.
By Order of the Board of Directors
EDWARD W. ROSE, III
Chairman of the Board of Directors
Dated: April 20, 1999
White Plains, N.Y.
________________________________________________________________________________
NOTICE TO HOLDERS OF COMMON STOCK
IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THE ENCLOSED
PROXY SO THAT YOU WILL BE REPRESENTED. A POST-PAID ENVELOPE IS ENCLOSED
FOR YOUR CONVENIENCE.
________________________________________________________________________________
<PAGE>
LBP, INC.
200 MAMARONECK AVENUE
WHITE PLAINS, NEW YORK 10601
------------------------
PROXY STATEMENT
------------------------
The accompanying Proxy is solicited by Management of LBP, Inc., a Delaware
corporation, formerly known as Leslie Building Products, Inc. (the "Company"),
for use at the Annual Meeting of Stockholders to be held at the Park Avenue
Center Room, The Waldorf-Astoria Hotel, 301 Park Avenue, New York, N.Y. 10022 on
May 20, 1999 at 10:00 A.M., or any adjournment or postponement thereof, at which
holders of record of the Company's Common Stock, par value $0.01 per share (the
"Common Stock"), at the close of business on April 15, 1999 shall be entitled to
vote on all matters considered at the meeting.
The cost of solicitation by Management, including postage, printing and
handling, and the expenses incurred by brokerage firms, custodians, nominees and
fiduciaries in forwarding proxy material to beneficial owners will be borne by
the Company. The solicitation is to be made primarily by mail, but may be
supplemented by telephone calls, telegrams and personal solicitation. Management
may also use the services of directors and employees of the Company to solicit
Proxies, without additional compensation.
Each Proxy executed and returned by holders of the Common Stock may be
revoked at any time thereafter, except as to matters upon which, prior to such
revocation, a vote shall have been cast pursuant to the authority conferred by
such Proxy. A Proxy may be revoked by giving written notice of revocation to the
Secretary of the Company or to any of the other persons named as proxies, or by
giving a Proxy with a later date. The Proxies will be voted at the meeting for
the Directors set forth herein in the manner indicated (see "ELECTION OF
DIRECTORS"), and if no contrary instructions are indicated, in favor of the
other matters set forth herein; if specific instructions are indicated, the
Proxies will be voted in accordance therewith. This Statement and the form of
Proxy solicited from holders of the Common Stock are expected to be sent or
given to stockholders on or about April 21, 1999.
The Annual Report to Stockholders of the Company for the year ended
December 31, 1998 is being mailed herewith to each stockholder of record.
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31,
1998, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (INCLUDING THE
CONSOLIDATED FINANCIAL STATEMENTS AND THE SCHEDULE THERETO) WILL BE FURNISHED TO
ANY STOCKHOLDER WITHOUT CHARGE UPON REQUEST TO THE COMPANY AT 200 MAMARONECK
AVENUE, WHITE PLAINS, NEW YORK 10601, TELEPHONE (914) 421-2545.
THE COMPANY
The Company was incorporated under the laws of Delaware on February 16,
1994. The Company's principal executive and administrative offices are located
at 200 Mamaroneck Avenue, White Plains, New York 10601; telephone number (914)
421-2545.
On April 19, 1994, the Board of Directors of Drew Industries Incorporated
("Drew"), the parent company of the Company at that time, approved a plan to
transfer the stock of its subsidiary, Leslie-Locke, Inc. ("Leslie-Locke," now
known as Prime Acquisition Corp.), to the Company and to distribute the common
stock of the Company to Drew's stockholders on a one-for-one basis (the
"Spin-off"). The transfer of the stock of Leslie-Locke to the Company was
effective May 10, 1994,
<PAGE>
and the Spin-off was effective July 29, 1994. Since the Spin-off, the Company
has been a stand-alone company, the Common Stock of which is traded on the OTC
Bulletin Board (symbol: LBPI).
Pursuant to a Shared Services Agreement, following the Spin-off, Drew and
the Company share certain administrative functions and employee services, such
as management overview and planning, tax preparation, financial reporting,
coordination of the independent audit, stockholder relations, and regulatory
matters. Drew is reimbursed by the Company for the fair market value of such
services. The agreement was extended to December 31, 1999. For the fiscal year
ended December 31, 1998, the cost of such services to the Company was $512,000.
See "ELECTION OF DIRECTORS--Executive Compensation."
On November 12, 1997, the Company announced that its Board of Directors was
considering strategic alternatives for the Company's long-range business plans.
In this connection, the Company retained Harris Williams & Co. to assist in
evaluating, and possibly disposing of, all or certain of the three major
operating divisions of the Company's sole operating subsidiary, Leslie-Locke, a
manufacturer and marketer of a wide variety of specialty building products for
the professional and do-it-yourself remodeling and residential construction
industry.
The Board's decision was motivated by the Company's desire to achieve
greater per share value for its stockholders. The home improvements products
business is in the midst of fundamental changes, including the rapid
consolidation of manufacturers and retailers, resulting in intense competitive
pressure. As a result, the Company's Board of Directors believed that the goal
of increased per share return to its stockholders was unlikely to be realized in
the near future. Although operating management was optimistic about the growth
opportunities available to Leslie-Locke, the Board of Directors believed that
these opportunities could best be realized by a significantly larger company
which is in a better position than the Company to compete in the changing
industry. In connection with its decision concerning Leslie-Locke, the Board of
Directors adopted resolutions regarding the Company's intent that, subsequent to
the sale of assets, Leslie-Locke would acquire an operating company and would be
engaged in a business other than that of investing, reinvesting or trading
securities, as soon as it is reasonably possible.
Almost 300 potential buyers were contacted by Harris Williams & Co. and
were provided with preliminary information concerning the assets and businesses
for sale. Those potential buyers which expressed interest were provided with a
confidential memorandum describing in detail the operations of Leslie-Locke's
three business units. Twelve of these buyers attended presentations by
management, and eight submitted bids for all or part of the assets and
businesses for sale. The Company considered (i) price, (ii) payment terms, (iii)
"caps," "baskets," escrow requirements, and time periods relating to
Leslie-Locke's liability for representations and warranties, (iv) financing
considerations, and (v) exclusivity requirements of buyers. After consideration
of these and other factors, four bidders were selected as "finalists." After
further negotiations with these bidders, Building Materials Corporation of
America, d/b/a GAF Materials Corporation, was selected as the most desirable
purchaser.
Pursuant to an Asset Purchase Agreement, dated May 26, 1998 (the
"Agreement"), Leslie-Locke sold substantially all of its net assets to LL
Building Products, Inc., a newly-formed Delaware subsidiary of Building
Materials Corporation of America, d/b/a GAF Materials Corporation. The purchase
price was approximately $44 million in cash. The transaction was consummated on
June 18, 1998 (the "Closing Date"), as of May 31, 1998. Immediately after the
closing of the transaction, the name of Leslie-Locke was changed to Prime
Acquisition Corp. ("Prime") and the name of the Company was changed from Leslie
Building Products, Inc. to LBP, Inc. From this point throughout this Proxy
Statement, Leslie-Locke is referred to as Prime, unless the context otherwise
requires.
After payment of all its outstanding debt, closing costs, and income taxes,
approximately $28 million of the proceeds of the sale are available to acquire
other businesses and for certain other purposes. Stockholders' equity at
December 31, 1998 was $23.4 million, or $4.89 per share. Pursuant to the
Agreement, $25 million of such proceeds was deposited in escrow for two years
2
<PAGE>
from the Closing Date, initially invested primarily in liquid U.S. Treasury
money market accounts. However, approximately $21 million of the escrow deposit
may be released from escrow and used by Prime at any time to acquire other
businesses, for certain investments, and for certain other permitted payments.
RECENT EVENT
On December 22, 1998, Prime purchased 800,000 shares of the Series B 10.5%
Cumulative Convertible Preferred Stock, liquidation preference $25 per share
(the "Preferred Stock"), of Impac Mortgage Holdings, Inc. ("IMH"). The purchase
price for the Preferred Stock was $20,000,000, which was withdrawn from the
escrow deposit, and the Preferred Stock was deposited in escrow. The Preferred
Stock is convertible into the Common Stock of IMH at $4.95 per share, or an
aggregate of 4,040,000 shares, representing 13.2% of IMH. The Common Stock of
IMH is traded on the American Stock Exchange (symbol: IMH). The conversion price
may be adjusted downward if, among other things, certain earning levels are not
attained by IMH through June 30, 1999. In addition, Prime is entitled to receive
as a dividend each quarter, payable in cash or shares of IMH Common Stock, the
higher of 10.5% or the amount paid as dividends to common stockholders of IMH.
IMH is a publicly-owned specialty finance company, which, together with its
subsidiaries and related companies, operates three businesses: (1) the Long-Term
Investment Operations, (2) the Conduit Operations, and (3) the Warehouse Lending
Operations. The Long-Term Investment Operations invests primarily in
non-conforming residential mortgage loans and securities backed by such loans.
The Conduit Operations purchases and sells or securitizes primarily
non-conforming mortgage loans, and the Warehouse Lending Operations provides
warehouse and repurchase financing to originators of mortgage loans. IMH is
organized as a real estate investment trust ("REIT") for federal income tax
purposes, which generally allows it to pass through qualified income to
stockholders without federal income tax at the corporate level.
The investment in IMH was made in order for the Company to enhance
stockholder value while efforts to acquire an operating company continue. In
that regard, on December 17, 1998, the Company's Board of Directors reaffirmed
the previously adopted resolutions regarding the Company's intent that Prime be
engaged in a business other than that of investing, reinvesting or trading in
securities, as soon as it is reasonably possible.
3
<PAGE>
VOTING SECURITIES
The Company had outstanding on the record date 4,932,390 shares of Common
Stock. Each holder of Common Stock is entitled to one vote for each share of
stock held.
PRINCIPAL HOLDERS OF VOTING SECURITIES
Set forth below is information with respect to each person known to the
Company on April 15, 1999 to be the beneficial owner of more than five percent
of any class of the Company's voting securities, which consists of Common Stock
only (including options):
AMOUNT AND
NATURE OF APPROXIMATE
NAME AND ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP CLASS
- ----------------------------------- ---------- -----------
Edward W. Rose, III (1) ........... 1,694,092(2)(3) 34.0%
500 Crescent Court
Dallas, Texas 75201
- ------------------
(1) The person named has sole voting and investment power with respect to such
shares.
(2) See "VOTING SECURITIES--Security Ownership of Management."
(3) Pursuant to Rules 13-1(f)(1)-(2) of Regulation 13-D of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") on August 8, 1994 (as amended on June 2, 1995), the
above-named person, together with certain other persons and entities,
jointly filed a single Schedule 13-D Statement with respect to the
securities listed in the foregoing table. Such persons made the single,
joint filing because they may be deemed to constitute a "group" within the
meaning of Section 13(d)(3) of the Exchange Act, although neither the fact
of the filing nor anything contained therein shall be deemed to be an
admission by such persons that a group exists.
4
<PAGE>
To the knowledge of the Company, other than persons acting as nominees or
custodians for various stock brokerage firms and banks, which persons do not
have beneficial ownership of the Common Stock, no other person owns of record or
beneficially more than five percent of the voting securities of the Company.
SECURITY OWNERSHIP OF MANAGEMENT
Set forth below is information with respect to beneficial ownership at
April 15, 1999 of the Common Stock (including options) by each Director and
nominee and by all Directors, nominees and Executive Officers of the Company as
a group.
AMOUNT AND
NATURE OF APPROXIMATE
NAME AND ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP CLASS
- ----------------------------------- ---------- -----------
Leigh J. Abrams (1) ............... 111,527(2) 2.2%
200 Mamaroneck Avenue
White Plains, New York 10601
Edward W. Rose, III (1) ........... 1,694,092(3) 34.0%
500 Crescent Court
Dallas, Texas 75201
James F. Gero (1) ................. 70,400(4) 1.4%
11900 North Anna Cade Road
Rockwall, Texas 75087
Marshall B. Payne (1) ............. 145,850(5) 2.9%
500 Crescent Court
Dallas, Texas 75201
All Directors and Executive
Officers as a group (7 persons
including the above-named)....... 2,066,569(6)(7) 41.4%
- ------------------
(1) Pursuant to Rules 13-1 (f)(1)-(2) of Regulation 13-D of the General Rules
and Regulations under the Exchange Act, on August 8, 1994 (as amended on
June 2, 1995), the persons indicated, together with certain other persons,
jointly filed a single Schedule 13-D Statement with respect to the
securities listed in the foregoing table. Such persons made the single,
joint filing because they may be deemed to constitute a "group" within the
meaning of Section 13(d)(3) of the Exchange Act, although neither the fact
of the filing nor anything contained therein shall be deemed to be an
admission by such persons that a group exists.
(2) Mr. Abrams has sole voting and investment power with respect to the shares
owned by him. Includes 4,002 shares of Common Stock held by Mr. Abrams as
Custodian under the New York Uniform Gifts to Minors Act for the benefit of
his children. Mr. Abrams disclaims any beneficial interest in the shares
held as Custodian. In May 1995, Mr. Abrams was granted an option pursuant to
the Company's Stock Option Plan to purchase 10,000 shares of Common Stock at
$1.55 per share. Although no part of such option has been exercised, all
shares subject to such option are included in the above table as
beneficially owned.
(3) Mr. Rose has sole voting and investment power with respect to the shares
owned by him. Includes 42,000 shares owned by each of Cardinal Investment
Company, Inc. Pension Plan and Cardinal Investment Company, Inc. Profit
Sharing Plan, of each of which Mr. Rose is Trustee. Mr. Rose has the power
to vote and dispose of such shares. Excludes 36,100 shares of Common Stock
held in trust for the benefit of Mr. Rose's daughter. Mr. Rose disclaims any
beneficial interest in such shares. Mr. Rose's wife has sole voting and
investment power with respect to such shares and an additional 300 shares
owned by her of record. As a member of the Stock
(Footnotes continued on next page)
5
<PAGE>
(Footnotes continued from previous page)
Option Committee, Mr. Rose was automatically awarded the following options
to purchase shares of Common Stock: on December 31, 1994, 5,000 shares at
$2.26 per share; on December 31, 1995, 2,500 shares at $2.2125 per share; on
December 31, 1996, 2,500 shares at $3.208 per share; on December 31, 1997,
2,500 shares at $2.046 per share; and on December 31, 1998 2,500 shares at
$3.179 per share. See "ELECTION OF DIRECTORS--Stock Option Plan." Although
no part of such options has been exercised, all shares subject to such
options are included in the above table as beneficially owned.
(4) Mr. Gero shares voting and investment power with respect to such shares with
his wife. As a member of the Stock Option Committee, Mr. Gero was
automatically awarded the following options each of which is to purchase
2,500 shares of Common Stock: on December 31, 1995 at $2.2125 per share; on
December 31, 1996 at $3.208 per share; on December 31, 1997 at $2.046 per
share; and on December 31, 1998 at $3.179 per share. Although no part of
such options has been exercised, all shares subject to such options are
included in the above table as beneficially owned.
(5) Mr. Payne has sole voting and investment power with respect to 132,100 of
such shares, including 2,000 shares held by Payne & Madole, a general
partnership. In addition, Mr. Payne has beneficial ownership of 3,750 shares
representing a 25% interest in 15,000 shares held by Scout Ventures, a
general partnership. As a member of the Stock Option Committee, Mr. Payne
was automatically awarded the following options each of which is to purchase
2,500 shares of Common Stock: on December 31, 1995 at $2.2125 per share; on
December 31, 1996 at $3.208 per share; on December 31, 1997 at $2.046 per
share; and on December 31, 1998 at $3.179 per share. Although no part of
such options has been exercised, all shares subject to such options are
included in the above table as beneficially owned.
(6) Includes 56,500 shares subject to options.
(7) Ralph C. Pepper, a director of the Company from July 1994, and President of
Leslie-Locke from 1989, resigned as a director of the Company and as an
officer of Leslie-Locke on June 18, 1998 in connection with the sale of
Leslie-Locke's assets. Mr. Pepper became employed by the purchaser. Mr.
Pepper had sole voting and investment power with respect to 89,933 shares of
Common Stock as of the date of the sale of Leslie-Locke's assets. In
December 1994, Mr. Pepper was granted an option pursuant to the Company's
Employee Stock Option Plan to purchase 50,000 shares of Common Stock at
$1.663 per share, which option was exercised on January 29, 1999.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who beneficially own more than ten percent of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and
greater than ten-percent shareholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file.
Based on its review of the copies of such forms received by it, the Company
believes that during 1998 all such filing requirements applicable to its
officers and directors (the Company not being aware of any ten percent holder
other than Edward W. Rose, III, a director) were complied with.
I. ELECTION OF DIRECTORS
It is proposed to elect a Board of four directors to serve until the next
annual election or until their successors are elected and qualify.
Unless contrary instructions are indicated, the persons named as proxies in
the form of Proxy solicited from holders of the Common Stock will vote for the
election of the nominees indicated below. All such nominees are presently
directors of the Company. If any such nominees should be
6
<PAGE>
unable or unwilling to serve, the persons named as proxies will vote for such
other person or persons as may be proposed by Management. Management has no
reason to believe that any of the named nominees will be unable or unwilling to
serve. Election of directors by holders of the Common Stock will be by a
plurality of the votes cast at the meeting, in person or by proxy, by holders of
the Common Stock entitled to vote at the meeting.
The following table lists the current directors of the Company and the
nominees proposed by Management for election by the holders of the Common Stock,
all other positions and offices with the Company presently held by them and
their principal occupations, in each case as furnished by them to the Company.
NAME AND AGE DIRECTOR
OF NOMINEE POSITION SINCE
- ---------------------- -------------------------- --------
Leigh J. Abrams ...... President, Chief Executive 1994
(Age 56) Officer and Director.
Edward W. Rose, III .. Chairman of the Board of 1994
(Age 58) Directors.
James F. Gero ........ Director. 1994
(Age 54)
Marshall B. Payne .... Director. 1994
(Age 42)
LEIGH J. ABRAMS, for more than the past five years has also been President,
Chief Executive Officer and a Director of Drew.
EDWARD W. ROSE, III, for more than the past five years, has been President
and principal stockholder of Cardinal Investment Company, Inc., an investment
firm. Mr. Rose also serves as a director of the following public companies:
Liberte Investors Inc., engaged in real estate loans and investments; and ACE
Cash Express, Inc., engaged in check cashing services. Mr. Rose is also Chairman
of the Board of Drew.
JAMES F. GERO, since March 1992, has been Chairman and Chief Executive
Officer of Sierra Technologies, Inc., a manufacturer of defense systems
technologies. From July 1987 to October 1989, Mr. Gero was Chairman and Chief
Executive Officer of Varo, Inc., a manufacturer of defense electronics, and from
1985 to 1987, Mr. Gero was President and Chief Executive Officer of Varo, Inc.
Mr. Gero also serves as a director of the following public companies: Orthofix
International NV, an international supplier of orthopedic devices for bone
fixation and stimulation; and Spar Aerospace Ltd., engaged in space robotics,
communications equipment and aerospace products and services. Mr. Gero is also a
director of Drew.
MARSHALL B. PAYNE, for more than the past five years, has been Vice
President of Cardinal Investment Company, Inc., an investment firm. Mr. Payne
also serves as a director of the following public companies: ACE Cash Express,
Inc., engaged in check cashing services; and Restoration Hardware, Inc., a
specialty retailer of home furnishings.
FREDRIC M. ZINN, not a nominee for election as a director, has been Chief
Financial Officer of the Company since August 1994 and has also served as Chief
Financial Officer of Drew for more than the past five years. Mr. Zinn is a
Certified Public Accountant.
HARVEY J. KAPLAN, not a nominee for election as a director, has been
Secretary and Treasurer of the Company since August 1994 and has also served as
Secretary and Treasurer of Drew for more than the past five years. Mr. Kaplan is
a Certified Public Accountant.
RALPH C. PEPPER, a director of the Company from July 1994, and President of
Leslie-Locke from 1989, resigned as a director of the Company and as an officer
of Leslie-Locke on June 18, 1998 in connection with the sale of Leslie-Locke's
assets. Mr. Pepper became employed by the purchaser.
7
<PAGE>
Directors of the Company serve until the Company's next annual meeting of
stockholders, and until their successors are elected and qualified. Executive
officers serve at the discretion of the Board of Directors. To the knowledge of
the Company, no Executive Officer or director is related by blood, marriage or
adoption to any other. Each of the nominees named above was elected to his
present term of office at the Annual Meeting of Stockholders held on May 21,
1998. During the year ended December 31, 1998, the Board of Directors held seven
meetings. All directors attended all meetings of the Board of Directors, except
that Mr. Payne did not attend two meetings.
The Company has an Audit Committee of the Board of Directors consisting of
Messrs. Rose, Abrams and Gero. The functions of the Audit Committee are to
review the Company's annual and quarterly reports, review the independence of
and ratify the selection of the independent auditors for the Company, conduct
pre-audit and post-audit reviews with both financial management and the
independent auditors, and assist in the development of the Company's annual
business plan. The Audit Committee held one meeting during the year ended
December 31, 1998.
The Company has a Stock Option Plan Committee, consisting of Messrs. Rose,
Gero and Payne, to determine and designate officers, directors and key employees
of the Company and of Prime who are to be granted options, the number of shares
subject to options, the nature and terms of the options to be granted, and to
otherwise administer the Employee Stock Option Plan. Members of the Stock Option
Plan Committee automatically receive options pursuant to the Employee Stock
Option Plan under certain circumstances. See "ELECTION OF DIRECTORS--Executive
Compensation--Stock Option Plan." The Stock Option Plan Committee held one
meeting during the year ended December 31, 1998.
The Company has a Compensation Committee of the Board of Directors
consisting of Messrs. Rose and Gero. The functions of the Compensation Committee
are to develop compensation policies with respect to the Company's and Prime's
executive officers based, in part, on performance-related criteria, and to make
recommendations to the Board of Directors regarding compensation of executive
officers in accordance with such policies. The Compensation Committee held one
meeting during the year ended December 31, 1998.
EXECUTIVE COMPENSATION
Each of the Company's executive officers is an officer of Drew and is
compensated by Drew. The Company does not compensate its executive officers;
however, pursuant to the Shared Services Agreement, the Company reimburses Drew
for the fair market value of the services rendered by such persons. The Company
and Drew have agreed that the aggregate fair market value of the services
rendered to the Company during the year ended December 31, 1998 was $512,000,
including the fair market value of support staff and office expenses. See "THE
COMPANY."
Pursuant to an agreement, Leigh J. Abrams, President and Chief Executive
Officer of the Company, is entitled to receive an incentive bonus equal to
2 1/2% of the Company's annual income before income taxes and extraordinary
items, subject to certain adjustments. No incentive compensation was payable for
1996 or 1997. For 1998, Mr. Abrams received incentive compensation of $324,778,
of which $267,726, paid by the Company, resulted from the sale of Leslie-Locke's
assets, and the balance of $57,052, paid by Drew and charged to the Company
pursuant to the Shared Services Agreement, resulted from income from operations
and investments. The incentive bonus paid to Mr. Abrams is net of $82,000
allocated by Mr. Abrams to other Drew employees who rendered services to the
Company.
8
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Summary Compensation
The following table sets forth the annual and long-term cash and noncash
compensation for each of the last three calendar years, awarded to or earned by
Leigh J. Abrams, President and Chief Executive Officer and a director of the
Company, and by Ralph C. Pepper, President of Leslie-Locke, and a director of
the Company until June 18, 1998:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------- ---------------
NAME AND PRINCIPAL CALENDAR OTHER ANNUAL NUMBER OF STOCK ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION OPTIONS AWARDED COMPENSATION
- ------------------ -------- -------- -------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Leigh J. Abrams... 1998 $ 0 $324,778(1) $ 0 0 $ 0
President and 1997 0 0 0 0 0
Chief Executive 1996 0 0 0 0 0
Officer of the
Company
Ralph C. Pepper... 1998 62,500 378,800(2) 1,772 0 0
President of 1997 150,000 88,300(2) 1,375 0 1,800
Leslie-Locke 1996 150,000 126,975 1,395 0 2,001
</TABLE>
- ------------------
(1) For 1998, Mr. Abrams received incentive compensation equal to 2 1/2% of the
Company's income before income taxes, subject to certain adjustments. Of
such amount, $57,052 was paid by Drew and charged to the Company pursuant to
the Shared Services Agreement.
(2) For 1997, Mr. Pepper received a bonus of $88,300, $38,300 of which was based
on Leslie-Locke's operating profit (as defined) and $50,000 of which was
discretionary. For 1998, Mr. Pepper received a bonus of $378,800, $128,800
of which was based on Leslie-Locke's operating profit (as defined) and
$250,000 of which was a stay bonus related to the sale of Leslie-Locke's
assets.
STOCK OPTION PLAN
The Company maintains an Employee Stock Option Plan (the "Stock Option
Plan") pursuant to which the Company may grant officers, directors and key
employees of the Company and of Prime options to purchase Common Stock. The
Stock Option Plan provides for the grant of stock options that qualify as
incentive stock options ("ISOs") under Section 422 of the Code and non-
qualified stock options.
Under the Stock Option Plan, the Stock Option Committee (the "Committee")
is authorized to grant options to purchase up to an aggregate of 300,000 shares
of Common Stock, of which currently 50,000 shares are allocated to members of
the Committee and 250,000 shares are allocated to eligible employees,
non-employee directors and non-employee officers, subject to maximum options to
purchase 50,000 shares granted to any one eligible employee. The Committee has
sole and complete authority to determine the individuals eligible to receive
stock options under the Stock Option Plan, and to determine the number of stock
options to be granted to eligible individuals, as well as the terms and
conditions under which grants will be made (including limitations, restrictions
or prohibitions upon the exercise of stock options). The Committee determines
the period for which each stock option may be exercisable, but in no event may a
stock option be exercisable more than 10 years from the date of grant thereof.
The number of shares available under the Stock Option Plan, and the exercise
price of options granted under the Stock Option Plan, are subject to adjustments
that may be made by the Committee to reflect stock splits, stock dividends,
recapitalizations, mergers, or other major corporate action.
The exercise price for options granted under the Stock Option Plan is
determined by the Committee in its sole discretion; provided, however, in the
case of an ISO granted to an optionee, the exercise price will be at least equal
to 100% of the fair market value of the shares subject to
9
<PAGE>
such option on the date of grant. The exercise price may be paid in cash or in
shares of Common Stock. Options granted under the Stock Option Plan become
exercisable in annual installments determined by the Committee and are also
subject to performance criteria.
Each Committee Member is automatically awarded an option ("Formula Option")
to purchase 2,500 shares of Common Stock on the December 31st of each year in
which such Committee Member has served not less than 12 consecutive months as a
director of the Company. Such Formula Options immediately vest and are
exercisable during the five year period following the date of grant. The
purchase price of Common Stock subject to such Formula Options is not less than
100% of the fair market value of the shares subject to option on the date such
Formula Option is granted, subject to adjustment as provided in the Stock Option
Plan.
OPTION GRANTS IN 1998
No options were granted to Messrs. Pepper or Abrams during 1998. The
following table summarizes the Formula Option automatically granted during 1998
to the Chairman of the Board of the Company.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
INDIVIDUAL GRANTS AT ASSUMED
-------------------------------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL PRICE
SHARES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM
OPTIONS EMPLOYEES EXERCISE EXPIRATION ----------------
NAME GRANTED IN 1998 PRICE DATE 5% 10%
- ---------------------- ---------- ---------- -------- ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Edward W. Rose, III... 2,500 33.3% $ 3.179 12/31/03 $2,195 $4,853
</TABLE>
OPTION-EXERCISES IN 1998 AND YEAR-END VALUES
The following table presents the value of unexercised options, at December
31, 1998, held by Mr. Pepper, by those executive officers compensated by Drew
pursuant to the Shared Services Agreement, and by the Chairman of the Board of
the Company. No stock options were exercised by these persons during 1998.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT OPTIONS AT
DECEMBER 31, 1998 DECEMBER 31, 1998(1)
EXERCISABLE (E) EXERCISABLE (E)
NAME UNEXERCISABLE (U) UNEXERCISABLE (U)
- ---------------------- ---------------------- --------------------
<S> <C> <C>
Ralph C. Pepper....... 50,000(E) $ 82,475(E)
Edward W. Rose, III... 15,000(E) $ 11,774(E)
Leigh J. Abrams....... 6,000(E) $ 10,575(E)
4,000(U) $ 7,050(U)
Fredric M. Zinn....... 4,500(E) $ 7,931(E)
3,000(U) $ 5,288(U)
Harvey J. Kaplan...... 1,200(E) $ 2,115(E)
800(U) $ 1,410(U)
</TABLE>
- ------------------
(1) Market value of Common Stock at December 31, 1998 ($3.3125) minus the
exercise price.
In connection with the sale of Leslie-Locke's assets on June 18, 1998, the
Company accelerated to June 18, 1998 the exercise date of all non-vested options
held by officers and employees of Leslie-Locke whose employment by Leslie-Locke
was terminated, and permitted exercise of such options until January 31, 1999
even though such persons were not employees of Leslie-Locke on the
10
<PAGE>
exercise date. Accordingly, through January 31, 1999, options to exercise
154,000 shares were exercised at $1.66 per share.
OTHER BENEFIT PLANS
Leslie-Locke established a noncontributory defined benefit pension plan
(the "Pension Plan"), which covered substantially all of its salaried employees.
Ralph C. Pepper, formerly a director of the Company, was a participant in the
Pension Plan.
Leslie-Locke also established a Supplemental Executive Retirement Plan
("SERP") which covered certain of its key executives. Ralph C. Pepper, formerly
a director of the Company, was a participant in the SERP. Immediately prior to
the sale of Leslie-Locke's assets, the SERP was terminated.
The purchaser of Leslie-Locke's assets assumed the assets and liabilities
of the Pension Plan and the SERP, subject to certain limitations.
COMPENSATION OF DIRECTORS
Edward W. Rose, III, Chairman of the Board of Directors, receives an annual
director's fee of $24,000, payable $2,000 per month, plus $1,000 for attendance
at each meeting of the Board of Directors and $500 for attendance at each
Committee meeting. James F. Gero and Marshall B. Payne each receive an annual
director's fee of $9,000, payable $750 per month, plus $500 for attendance at
each meeting of the Board of Directors and $500 for attendance at each Committee
meeting.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
Pursuant to a non-competition agreement dated August 28, 1985, Ralph C.
Pepper, formerly President of Leslie-Locke and a director of the Company, was
entitled to receive as severance pay in the event of the termination of his
employment by Leslie-Locke, an amount equal to two years' salary. The purchaser
of Leslie-Locke's assets assumed this obligation.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No executive officer of the Company serves on the Compensation Committee,
and there are no "interlocks," as defined by the Securities and Exchange
Commission.
11
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
COMPENSATION POLICY
The Compensation Committee of the Board of Directors (the "Committee")
consists of two non-employee directors, Edward W. Rose, III and James F. Gero.
The Committee has the responsibility of developing the policies which govern
compensation for executive officers, and making recommendations to the Board of
Directors regarding compensation of executive officers in accordance with such
policies. The Company does not compensate its executive officers, each of whom
is an officer of Drew, except for incentive compensation paid to the Company's
Chief Executive Officer. However, pursuant to the Shared Services Agreement, the
Company reimburses Drew for the fair market value of the services rendered by
such persons. See "THE COMPANY" and "ELECTION OF DIRECTORS--Executive
Compensation."
During 1998, the Company's executive compensation policy was designed to
enable the Company to attract, motivate and retain senior management by
providing a competitive compensation opportunity based significantly on
performance. The objective was to provide fair and equitable compensation to
senior management in a way that rewards management for reaching and exceeding
objectives. The compensation policy linked a significant portion of executive
compensation to the Company's performance, recognized individual contribution as
well as overall business results, and aligned executive and stockholder
interests. The primary components of the Company's executive compensation were
base salary, performance-related incentive compensation, stock options and
discretionary bonus. While the components of compensation are considered
separately in this report, the Committee took into account the full compensation
package provided to each of the executives, including pension benefits,
severance obligations, insurance and other benefits.
Each year the Committee will review the Company's compensation policy
utilizing both internal and external sources of information, and analysis
relating to corporate performance, total return to stockholders of comparable
companies, and compensation afforded to executives by competitors of the
Company. If appropriate, changes will be recommended.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER OF THE COMPANY IN 1998
Pursuant to an agreement, Leigh J. Abrams, President and Chief Executive
Officer of the Company, is entitled to receive an incentive bonus equal to
2 1/2% of the Company's annual income before income taxes and extraordinary
items, subject to certain adjustments. No incentive compensation was paid to Mr.
Abrams for 1996 or 1997. For 1998, Mr. Abrams received incentive compensation of
$324,778, of which $267,726, paid by the Company, resulted from the sale of
Leslie-Locke's assets, and the balance of $57,052, paid by Drew and charged to
the Company pursuant to the Shared Services Agreement, resulted from income from
operations and investments. The incentive bonus paid to Mr. Abrams is net of
$82,000 allocated by Mr. Abrams to other Drew employees who rendered services to
the Company.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER OF LESLIE-LOCKE IN 1998
The compensation policy applied by the Company in establishing the
compensation for Ralph C. Pepper, formerly the President of Leslie-Locke and a
director of the Company until the sale of Leslie-Locke's assets on June 18,
1998, was essentially the same as for other senior executives of Leslie-Locke--
to provide a competitive compensation opportunity that rewards Company
performance and recognizes individual contribution.
For 1998, Mr. Pepper received base compensation of $62,500 plus a bonus of
$378,800 of which $128,800 was an incentive bonus based on Leslie-Locke's
operating profit (as defined) and $250,000
12
<PAGE>
represented a stay bonus related to the sale of Leslie-Locke's assets. In
addition, Mr. Pepper received medical and life insurance, and certain other
benefits.
COMPENSATION OF EXECUTIVE OFFICERS OF LESLIE-LOCKE IN 1998
As with the President, compensation of other executive officers of
Leslie-Locke was intended to reward performance and recognize individual
contribution.
STOCK OPTIONS
The Company's Stock Option Plan provides for the grant of options to
officers, directors and key employees of the Company and Prime to purchase the
Company's Common Stock. The options may qualify as incentive stock options or
may be non-qualified stock options. The Stock Option Plan is administered by the
Stock Option Committee. See "ELECTION OF DIRECTORS--Executive Compensation--
Stock Option Plan."
During 1998, Formula Options to purchase an aggregate of 7,500 shares of
Common Stock were automatically granted to three directors of the Company.
Because all outstanding options under the plan have been granted at fair
market value, any value which is ultimately realized by executive officers
through stock options is based entirely on the Company's performance, reflected
in the Company's results of operations, as perceived by investors in the
Company's Common Stock who establish the price for the Common Stock on the open
market.
CONCLUSION
A significant portion of the Company's and Prime's executive compensation
is linked directly to individual performance and Prime's operating results. The
Committee intends to continue to determine compensation based upon these
factors.
COMPENSATION COMMITTEE
Edward W. Rose, III
James F. Gero
13
<PAGE>
COMPARATIVE STOCK PERFORMANCE
The following graph compares, for the period from August 4, 1994 through
the end of calendar year 1998, the cumulative stockholder return on the Common
Stock of the Company with the cumulative return on the common stocks of the
companies included in the Russell 2000 Index and on the common stocks of the
companies included in the S & P Building Materials Index.
The graph assumes investment of $100 on August 4, 1994 in the Company's
Common Stock and on July 31, 1994 in the common stocks of the companies included
in the Russell 2000 Index and the S & P Building Materials Index, and assumes
that any dividends were reinvested.
COMPARISON OF 53 MONTH CUMULATIVE TOTAL RETURN*
AMONG LBP, INC., THE RUSSELL 2000 INDEX
AND THE S & P BUILDING MATERIALS INDEX
[PERFORMANCE GRAPH]
8/4/94 12/94 12/95 12/96 12/97 12/98
------ ----- ----- ----- ----- -----
LBP, INC. $100 $110 $142 $200 $167 $221
RUSSELL 2000 100 103 133 155 189 188
S & P BUILDING MATERIALS 100 94 127 152 185 197
* $100 INVESTED ON 8/4/94 IN STOCK OR ON 7/31/94 IN INDEX -- INCLUDING
REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
CERTAIN TRANSACTIONS
See "ELECTION OF DIRECTORS--Employment Contracts and Termination of
Employment Arrangements."
INDEMNIFICATION
The Company's Certificate of Incorporation (the "Certificate") provides for
indemnification of directors and officers to the full extent permitted under
Delaware Law. Delaware Law provides that a corporation has the power to
indemnify a director, officer, employee or agent of the corporation and certain
other persons serving at the request of the corporation in related capacities
against amounts paid and expenses incurred in connection with an action or
proceeding to which he is or is threatened to be made a party by reason of such
position, if such person shall have acted
14
<PAGE>
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interest of the corporation, provided that no indemnification shall be
made with respect to any matter as to which such person shall have been adjudged
not to be entitled to indemnification under such law.
The Certificate also provides for indemnification of directors and officers
of the Company against liabilities and expenses in connection with any legal
proceedings to which they may be made a party or with which they may become
involved or threatened by reason of having been an officer or director of the
Company or of any other entity at the request of the Company. The Certificate
generally provides that a director or officer of the Company (i) shall be
indemnified by the Company for all expenses of such legal proceedings unless he
has been adjudicated not to have acted in good faith in the reasonable belief
that his action was in or not opposed to the best interest of the Company, and
(ii) shall be indemnified by the Company for the expenses, judgments, fines and
amounts paid in settlement and compromise of such proceedings. Indemnification
will be made to cover costs of settlements and compromises if the Board of
Directors determines by a majority vote of a quorum consisting of disinterested
directors (or, if such quorum is not obtainable, by a majority of the
disinterested directors of the Company), that such settlement or compromise is
proper in the circumstances.
The Certificate permits the payment by the Company of expenses incurred in
defending a civil or criminal action in advance of its final disposition,
subject to receipt of an undertaking by the indemnified person to repay such
payment if it is ultimately determined that such person is not entitled to
indemnification under the Certificate. No advance may be made if the Board of
Directors determines, by a majority vote of a quorum consisting of disinterested
directors (or, if such quorum is not obtainable, by a majority of the
disinterested directors of the Company), that such person did not act in good
faith in the reasonable belief that his action was in or not opposed to the best
interest of the Company.
The Certificate provides that no director shall be liable to the Company or
its stockholders for monetary damages for breach of his fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) for unauthorized distributions and certain insiders' loans, or
(iv) for any transaction from which the director derived an improper personal
benefit.
EMPLOYEE STOCK PURCHASE PLAN
A total of 375,000 shares of Common Stock of the Company were made
available for purchase by regular full-time employees of the Company under the
1995 Employee Stock Purchase Plan, of which 78,997 shares have been purchased.
The Company currently has no full-time employees, and the Stock Purchase Plan
has been inactive since the sale of Leslie-Locke's assets.
II. APPOINTMENT OF AUDITORS
It is proposed that the stockholders ratify the appointment, by the Board
of Directors, of KPMG LLP as independent auditors for the purpose of auditing
and reporting upon the consolidated financial statements of the Company for the
year ending December 31, 1999. It is expected that a representative of that firm
will be present at the Annual Meeting of Stockholders to be held on May 20, 1999
and will be afforded the opportunity to make a statement and respond to
appropriate questions from stockholders present at the meeting.
Management recommends that you vote FOR ratification of the appointment of
KPMG LLP as independent auditors for the year ending December 31, 1999.
15
<PAGE>
III. TRANSACTION OF OTHER BUSINESS
As of the date of this Proxy Statement, the only business which Management
intends to present or knows that others will present at the meeting is that set
forth herein. If any other matter or matters are properly brought before the
meeting, or any adjournment or postponement thereof, it is the intention of the
persons in the form of Proxy solicited from holders of the Common Stock to vote
the Proxy on such matters in accordance with their judgment.
STOCKHOLDER PROPOSALS
All proposals which stockholders of the Company desire to have presented at
the Annual Meeting of Stockholders to be held in May, 2000 must be received by
the Company at its principal executive offices on or before February 1, 2000.
By Order of the Board of Directors
EDWARD W. ROSE, III
Chairman of the Board of Directors
April 20, 1999
16
<PAGE>
LBP, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS--MAY 20, 1999
THIS PROXY IS SOLICITED ON BEHALF OF MANAGEMENT
The undersigned, revoking any proxy heretofore given, hereby appoints
LEIGH J. ABRAMS and FREDRIC M. ZINN, or either of them, proxies of the
undersigned, with full power of substitution, with respect to all the shares of
the Common Stock which the undersigned is entitled to vote at the Annual Meeting
of Stockholders of LBP, Inc., to be held at the Park Avenue Center Room, The
Waldorf-Astoria Hotel, 301 Park Avenue, New York, New York 10022 on May 20, 1999
at 10:00 A.M. and at any adjournment or postponement thereof, upon the following
items as set forth in the Notice of Annual Meeting and Proxy Statement, and in
their discretion on any other matter that may properly come before the meeting
or any adjournment or postponement thereof.
(Continued and to be signed on the reverse side)
FOLD AND DETACH HERE
<PAGE>
The Board of Directors Recommends a Vote FOR Authority to Vote for Directors
and for Proposition "2"
Please mark your votes as indicated in this example [x]
1. ELECTION OF DIRECTORS
NOMINEES: EDWARD W. ROSE, III, LEIGH J. ABRAMS, JAMES F. GERO,
MARSHALL B. PAYNE
FOR all named nominees WITHHOLD
(except as indicated AUTHORITY
to the contrary below) from nominees
[ ] [ ]
(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name on the space provided below.)
________________________________________________________________
2. TO RATIFY THE APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Please sign exactly as name appears hereon. If the stock is registered in the
names of two or more persons each should sign. Executors, Administrators,
Trustees, Guardians, Attorneys, and corporate officers should add their titles.
Please check if you plan to attend the meeting [ ]
__________________________ __________________________ Dated: ___________, 1999
SIGNATURE OF SHAREHOLDER SIGNATURE OF SHAREHOLDER
Please mark boxes [x] in blue or black ink. This Proxy should be returned to:
ChaseMellon Shareholder Services, L.L.C., 85 Challenger Rd., Overpeck Center,
Ridgefield Park, New Jersey 07660
FOLD AND DETACH HERE
