LANCER CORPORATION
235 West Turbo
San Antonio, Texas 78216
April 22, 1996
Dear Shareholders:
You are cordially invited to attend the Annual Meeting of
Shareholders (the "Meeting") of Lancer Corporation (the
"Company") to be held at the Sheraton Fiesta San Antonio Hotel,
37 NE Loop 410, San Antonio, Texas, on Thursday, May 23, 1996 at
9:30 a.m., local time.
The attached Notice of Annual Meeting and Proxy Statement fully
describes the formal business to be transacted at the Meeting,
which includes: electing seven directors of the Company;
approving the appointment of KPMG Peat Marwick LLP as independent
auditors for the Company for the ensuing year; approving the
Company's 1996 Stock Incentive Plan (the "1996 Plan"); and
transacting such other matters as may properly come before the
Meeting or any adjournments thereof.
Directors and officers of the Company, as well as a
representative of the Company's independent auditors, will be
present at the annual meeting to respond to any questions that
our shareholders may have.
The Company's Board of Directors believes that a favorable vote
on each of the matters to be considered at the Meeting is in the
best interest of the Company and its shareholders and unanimously
recommends a vote "FOR" each such matter. Accordingly, we urge
you to review the accompanying material carefully and to please
sign, date and return the enclosed Proxy promptly. If you attend
the Meeting, you may vote in person even if you have previously
mailed a Proxy.
Sincerely,
/s/ George F. Schroeder
George F. Schroeder
President
LANCER CORPORATION
235 W. Turbo
San Antonio, Texas 78216
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 23, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders
(the "Meeting") of Lancer Corporation (the "Company" or "Lancer")
will be held at the Sheraton Fiesta San Antonio Hotel, 37 NE Loop
410, San Antonio, Texas, on Thursday, May 23, 1996 at 9:30 a.m.,
local time. A form of Proxy and a Proxy Statement for the
Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of a Board of Directors consisting of seven
directors for the ensuing year;
2. The approval of the appointment of KPMG Peat Marwick LLP as
independent auditors for the Company for the ensuing year;
3. The approval of the Company's 1996 Stock Incentive Plan
(the "1996 Plan") which would reserve
150,000 shares of Common Stock for issuance upon exercise of
options to be granted under the 1996
Plan; and
4. Such other matters as may properly come before the Meeting
or any adjournments thereof.
The close of business on April 8, 1996 has been fixed by the
Board of Directors as the record date for determining
shareholders entitled to notice of and to vote at the Meeting or
any adjournments thereof. For a period of at least 10 days prior
to the Meeting, a complete list of shareholders entitled to vote
at the Meeting shall be open to the examination of any
shareholder during ordinary business hours at the Company's
Corporate Headquarters, 235 West Turbo, San Antonio, Texas
78216.
Information concerning the matters to be acted upon at the
Meeting is set forth in the accompanying Proxy Statement.
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING IN
PERSON ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED
PROXY CARD, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON EVEN
IF YOU HAVE PREVIOUSLY MAILED A PROXY.
By Order of the Board of Directors
/s/ John P. Herbots
John P. Herbots
Secretary
San Antonio, Texas
April 22, 1996
LANCER CORPORATION
235 W. Turbo
San Antonio, Texas 78216
PROXY STATEMENT
For
ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 23, 1996
THE PROXY
This Proxy Statement is being furnished to shareholders of Lancer
Corporation (the "Company" or "Lancer") in connection with the
solicitation of Proxies (the "Proxies") for use at the Annual
Meeting of Shareholders (the "Meeting") to be held at the Sheraton
Fiesta San Antonio Hotel, 37 NE Loop 410, San Antonio, Texas, on
Thursday, May 23, 1996, at 9:30 a.m., local time, or at such other
time and place to which the Meeting may be adjourned. The enclosed
Proxy is solicited by the Board of Directors of the Company. Where
a shareholder has appropriately specified how a Proxy is to be
voted, it will be voted accordingly.
The Proxy may be revoked at any time by providing written notice of
such revocation to Bank of New York, Securities Transfer Services,
1301 Fannin, Suite 2215, Houston, Texas 77002, Attention: Proxy
Department. This notice must be received prior to 5:00 p.m., local
time on May 8, 1996. If notice of revocation is not actually
received by the Proxy Department by such date, a shareholder may
nevertheless revoke a Proxy by attending the Meeting and voting in
person.
The address of the principal executive offices of the Company is 235
W. Turbo, San Antonio, Texas 78216. This Proxy Statement and
enclosed Proxy are first being mailed to shareholders on or about
April 23, 1996.
RECORD DATE AND VOTING SECURITIES
The record date for determining the shareholders entitled to vote at
the Meeting is the close of business on April 8, 1996 (the "Record
Date"), at which time the Company had issued and outstanding
3,874,033 shares of Common Stock, par value $.01 per share (the
"Common Stock"), which class of stock constitutes the only
outstanding securities of the Company entitled to vote at the
Meeting.
QUORUM AND VOTING
The presence at the Meeting, in person or by Proxy, of the holders
of a majority of the outstanding shares of Common Stock is necessary
to constitute a quorum. Each share of Common Stock is entitled to
one vote with respect to each matter to be voted on at the Meeting.
The approval of all proposals requires the affirmative vote of a
majority of the outstanding shares of Common Stock present in person
or by Proxy at the Meeting. Neither the Company's Articles of
Incorporation nor Bylaws provide for cumulative voting.
ACTIONS TO BE TAKEN AT THE MEETING
All shares represented by valid Proxies, unless the shareholder
otherwise specifies, will be voted FOR (i) the election of the seven
persons named under "Election of Directors" of the Company; (ii) the
proposal to approve KPMG Peat Marwick LLP as independent auditors
for the Company for the ensuing year; (iii) the proposal to approve
the Company's 1996 Stock Incentive Plan (the "1996 Plan"); and (iv)
at the discretion of the proxy holders, any other matter that may
properly come before the Meeting or any adjournment thereof.
PROPOSAL I - ELECTION OF DIRECTORS
There are seven directors to be elected. It is intended that the
names of the persons indicated in the following table will be placed
in nomination and that the persons named in the Proxy will vote for
their election unless otherwise instructed. Each of the nominees
has indicated his or her willingness to serve as a member of the
Board of Directors if elected; however, in case any nominee shall
become unavailable for election to the Board of Directors for any
reason not presently known or contemplated, the proxy holders will
have discretionary authority in that instance to vote the Proxy for
a substitute. To be elected, a nominee must receive the affirmative
vote of the holders of a majority of the shares of Common Stock
present, in person or by Proxy, at the Meeting. Each nominee
elected will serve as director for the ensuing year and until his or
her successor shall have been duly qualified and elected.
<TABLE>
The nominees are as follows:
<CAPTION>
Name Age Position
- ---------------------- ---- ---------------------------
<S> <C> <C>
Alfred A. Schroeder (1) 59 Chairman of the Board
George F. Schroeder (1) 56 President, Chief Executive
Officer and Director
John P. Herbots 48 Vice President Finance &
Administration and Director
Walter J. Biegler(2)(3) 54 Director
Jean M. Braley (3) 66 Director
Robert A. Shuey,III(2)(3) 42 Director
Michael E. Smith (2)(3) 55 Director
</TABLE>
(1) Alfred A. Schroeder and George F. Schroeder are brothers. No
other nominee is related by blood, marriage or
adoption to another nominee or to any executive officer of the
Company or its subsidiaries.
(2) Member of the Compensation and Stock Option Committees.
(3) Member of the Audit Committee.
Mr. Alfred A. Schroeder is a co-founder of the Company and has
served as Chairman of the Board of Directors of the Company since
its inception in 1967. His primary responsibilities include
conceptual engineering design, new product development and corporate
planning. He is the brother of George F. Schroeder, and is also a
partner in Lancer Properties. See "Compensation and Certain
Transactions."
Mr. George F. Schroeder is a co-founder of the Company and has
served as its Chief Executive Officer, President and director since
1967. His primary responsibilities include strategic planning,
marketing, overall production management and corporate
administration. He is the brother of Alfred A. Schroeder, and is
also a partner in Lancer Properties. See "Compensation and Certain
Transactions."
Mr. John P. Herbots joined the Company as Vice President of Finance
and Administration in February 1995. On August 7, 1995, Mr. Herbots
was appointed Chief Financial Officer, Treasurer and Secretary.
Prior to joining Lancer, Mr. Herbots was Executive Vice President of
MK Rail Corporation and from 1990 until 1992, served as Vice
President and Chief Financial Officer for Morrison Knudsen
Corporation's Rail Systems Group. Prior to that he was Vice
President and CFO of Avline Leasing Corporation for one year, of
Lancer Corporation for one year and of Fairchild Aircraft
Corporation for four years. Mr. Herbots was elected to the Board of
Directors in May 1995.
Mr. Walter J. Biegler has served as a director of the Company since
1985. He has held the position of Chief Financial Officer of
Periodical Management Group, Inc., a San Antonio, Texas concern
which distributes periodicals, books and specialty items in the
Southwestern and Central portions of the United States, Mexico and
the Virgin Islands, since November 1991. Prior to November 1991, he
served as the Chief Financial Officer and Senior Vice President-
Finance of La Quinta Motor Inns, Inc. of San Antonio, Texas, a
national hotel chain.
Ms. Jean M. Braley has served as a director of the Company since
1976. She served as Secretary of the Company from 1982 to 1985.
Ms. Braley is currently and has been involved for the last ten years
in personal investments as her principal occupation. She is also a
partner in Lancer Properties. See "Compensation and Certain
Transactions."
Mr. Robert A. Shuey, III has served as a director of the Company
since 1985. Mr. Shuey is a principal shareholder and Vice President
of La Jolla Securities Corporation, an investment banking firm, was
employed by Dillon-Gage Securities, Inc., from 1994 to 1995, and
prior to that held the position of Senior Vice President, Corporate
Finance, of Dickinson & Company, a brokerage firm, during 1993.
From 1987 to 1993, Mr. Shuey was a Managing Partner of Empennage
Partners, Inc., a merchant banking concern.
Mr. Michael E. Smith has served as a director of the Company since
1985. Mr. Smith is presently a principal shareholder and Vice
President of Bailey-Gosling Associates, Inc., an insurance brokerage
firm. He has been employed by the same firm since 1968. Mr. Smith
has been the Company's insurance broker since 1981. See
"Compensation and Certain Transactions."
Board of Directors and Committees
The business of the Company is managed under the direction of the
Board of Directors. The Board meets on a periodic basis to review
significant developments affecting the Company and to act on matters
requiring Board approval. The Board of Directors met four times and
acted by unanimous written consent seven times during the 1995
fiscal year. During such period, each member of the Board
participated in at least 75% of all Board and applicable Committee
meetings.
The Board of Directors has established audit, compensation and stock
option committees to devote attention to specific subjects and to
assist it in the discharge of its responsibilities. The Audit
Committee is responsible for the review of the audited financial
results and coordination of the annual audit. The Compensation
Committee is responsible for officer compensation. The Stock Option
Committee is responsible for administering the Company's stock
option plans. The Compensation Committee met once and the Stock
Option Committee met twice during the 1995 fiscal year to consider
officer compensation. The Audit committee met once during the 1995
fiscal year.
PROPOSAL II - APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm KPMG Peat Marwick LLP
as independent auditors to make an examination of the accounts of
the Company for the fiscal year 1996 and has directed that the
appointment be submitted to the shareholders for their approval at
the annual meeting. KPMG Peat Marwick LLP has audited the Company's
financial statements for a period exceeding 16 years. It is
expected that a representative of the firm will be present at the
meeting with an opportunity to make a statement if he so desires and
will be available to respond to appropriate questions by
shareholders. If the shareholders do not approve this appointment,
the Board of Directors will consider the selection of other
auditors.
During the fiscal year ended December 31, 1995, KPMG Peat Marwick
LLP provided audit services to the Company consisting of the audit
of the consolidated financial statement of the Company, services
related to filings with the Securities and Exchange Commission, and
tax preparation and consultation services.
PROPOSAL III - 1996 STOCK INCENTIVE PLAN
Proposal Submitted For Approval
The Board of Directors of the Company has approved and adopted the
Company's 1996 Stock Incentive Plan (the "1996 Plan") effective as
of March 1, 1996 which provides for 150,000 shares of Common Stock
(subject to certain adjustments) to be reserved for issuance upon
exercise of options granted under the 1996 Plan. The Board of
Directors is submitting the 1996 Plan for shareholder approval.
If the 1996 Plan is not approved by the shareholders, the Company
will maintain the existing 1987 and 1992 Plans without giving effect
to this proposal.
The following summary of the provisions of the 1996 Plan is
qualified in its entirety by reference to the 1996 Plan. A copy of
the 1996 Plan is attached as Exhibit "A" to this Proxy Statement.
Description of the 1996 Plan
The 1996 Plan provides for the granting of "incentive" stock
options (as defined in Section 422A of the Internal Revenue Code of
1954, as amended) ("ISOs") and options which do not qualify as ISOs
("non-qualified stock options", or "NQSOs"), and is intended to
promote the long-term interests of the Company and its shareholders
by providing officers and other key employees of the Company and its
Affiliates and other key individuals (including non-employees) with
an additional incentive to promote the financial success of the
Company and its Affiliates. Options will be granted on such terms
and prices as determined by the Stock Option Committee of the Board
of Directors in its sole discretion; provided, however, that the per
share exercise price of incentive stock options may not be less than
the fair market value of the Common Stock on the date of grant.
Each option will be exercisable after the period or periods
specified in the option agreement, but no option shall be
exercisable after the expiration of 10 years from the date of grant.
A committee composed of three members of the Board of Directors,
none of whom is eligible to receive options under the 1996 Plan,
will administer and interpret the 1996 Plan. The committee has
authority to grant options under the 1996 Plan to all eligible
employees of the Company, including officers and directors of the
Company who are also employees.
Unless sooner terminated by action of the Board, the 1996 Plan will
terminate on February 28, 2007 and no options may thereafter be
granted under the 1996 Plan. The 1996 Plan may be amended, altered
or discontinued by the Board without the approval of the
shareholders, except that the Board does not have the power of
authority to increase the maximum number of shares for which options
may be granted under the 1996 Plan (except for certain adjustments)
either in the aggregate or as to any individual employee; change the
minimum purchase prices which may be established under the 1996 Plan
(except for certain adjustments); extend the period or periods
during which options may be granted or exercised; change the
provisions relating to the determination of employees to whom
options shall be granted and the number of shares to be covered by
such options or change the provisions relating to adjustments to be
made upon changes in capitalization. However, the Stock Option
Committee may make appropriate adjustments in the number of shares
covered by the 1996 Plan and the outstanding options, and in the
option prices, to reflect any stock dividend, stock split, share
combination or other recapitalization, and, with respect to
outstanding options and option prices, to reflect any merger,
consolidation, reorganization, liquidation or the like, of or by the
Company.
Options will be granted only to persons who are key employees of the
Company which include directors, officers, supervisory personnel, as
well as other employees of the Company or a subsidiary corporation
of the Company as determined by the Stock Option Committee. The
number of other key employees who might be eligible is not
determinable at this time. Options may be granted to persons to
whom options have previously been granted under the 1987 and 1992
Plans. The aggregate fair market value (determined at the time of
the grant) of the Common Stock with respect to which options under
the 1996 Plan are exercisable for the first time by a grantee of an
option during any calendar year shall not exceed $100,000. Other
than this restriction, there is no restriction in the 1996 Plan on
the maximum or minimum number of shares of Common Stock covered by
options that may be granted to any person or that may be made
purchasable by exercise by any person at any time.
Unless, as otherwise provided in the 1996 Plan, the option holder's
employment terminates as a result of death, disability or
retirement; or is terminated for cause, all rights to exercise
options terminate 90 days from the date the option holder ceases to
be an employee of the Company or a subsidiary of the Company.
Options may not be transferred other than by will or the laws of
descent and distribution and, during the lifetime of the optionee,
may be exercised only by him. The 1996 Plan provides that, if an
option holder dies while in the Company's employment, any
unexercisable options may be exercised by the employee's executor,
administrator, heir or devisee within one year following the
employee's death, without regard to any limitation imposed on the
number of shares then subject to exercise. If an option expires or
terminates before it is exercised in full by reason of the death or
severance of employment of optionee, the surrender of the option, or
any other cause, the shares of stock allocable to the unexercised
portion of such option become available for the granting of new
options.
A person may exercise his options by giving written notice to the
Company specifying the number of shares to be purchased and
delivering to the Company payment of the full purchase price in
cash, certified bank check, shares of the Company's Common Stock, or
any combination of the forms of payment mentioned.
Tax Status of Options
ISOs. ISOs granted under the 1996 Plan are intended to qualify
under Section 422A of the Internal Revenue Code, as amended, for
incentive stock option treatment. To receive incentive stock option
treatment, an optionee must not dispose of the acquired stock within
two years after the option is granted or within one year after
exercise. In addition, the individual must have been continuously
employed by the Company from the date of granting of the option
until three months (one year if the employee is disabled) before the
date of the exercise. The requirement that the individual be an
employee and the two-year and one-year holding periods are waived in
the case of death of the employee. If all such requirements are
met, no tax will be imposed upon exercise of the option. Any gains
upon sale of the stock will be capital gain. The employee's gain on
exercise (the excess of the fair market value at the time of
exercise over the exercise price) of an incentive stock option is a
tax preference item and, accordingly, is included in the computation
of alternative minimum taxable income.
If the two-year and one-year holding requirements are not met, but
all other requirements are met, the employee will recognize, at the
time of disposition of the stock, ordinary income in an amount equal
to the difference between the exercise price and the lower of (i)
the fair market value of the stock subject to the option on the date
of exercise or (ii) the amount realized by the employee on the
disposition of the stock; provided that, for (ii) to be applicable,
the disposition must be a transaction with respect to which a loss,
if sustained, would be recognized. If the amount realized on the
disposition of the stock exceeds the fair market value of the stock
subject to the option on the date of exercise, the excess will be
either long-term or short-term capital gain depending on the
employee's holding period for such stock.
The Company will not be entitled to any tax deduction with respect
to the grant or exercise of an incentive stock option unless there
is a disposition of the stock before the holding periods are
satisfied. In such event, the Company would be entitled to a tax
deduction equal to the amount of ordinary income recognized by the
employee.
The foregoing statements are based upon present federal income tax
laws and regulations and are subject to change if the tax laws and
regulations, or interpretations thereof, are changed.
NQSOs. An NQSO granted under the 1996 Plan is taxed in accordance
with Section 83 of the Internal Revenue Code and the regulations
thereunder. The following is a discussion of the general rules
which are applicable to holders of such NQSOs and to the Company for
federal income tax purposes under existing law, and is based upon
the assumptions that (i) the NQSOs do not have a readily
ascertainable fair market value at the date of grant and (ii) the
Common Stock acquired by exercising an NQSO is either transferable
or not subject to a substantial risk of forfeiture (as defined in
regulations under Section 83 of the Code).
The holder of an NQSO will not realize any taxable income upon the
grant of the NQSO, and the Company is not allowed a business expense
deduction by reason of such grant. The option holder will recognize
ordinary compensation income at the time of exercise of an NQSO in
an amount equal to the excess, if any, of the fair market value of
the shares on the date of exercise over the exercise price. When an
option holder sells shares which are acquired pursuant to an NQSO,
the option holder will recognize a capital gain or loss in an amount
equal to the difference between the amount realized upon the sale of
the shares and the option holder's basis in the shares. If an
option holder holds the shares for longer than one year, the gain or
loss will be a long-term capital gain or loss. In general, the
Company will be entitled to a business expense tax deduction in an
amount equal to the compensation income which is recognized by the
option holder at the time of the exercise of the option. The
Company will be entitled to take this deduction in the year in which
compensation income is recognized by the option holder.
Other Incentive Stock Option Plans of the Company
1992 Stock Option Plan. On December 18, 1991, the Board of
Directors adopted the 1992 Non-statutory Stock Option Plan (the
"1992 Plan") under which options may be granted to key management
employees of the Company, which include officers and directors of
the Company who are also employees. The 1992 Plan is intended to
encourage stock ownership by key management employees of the Company
and its subsidiaries, to provide additional incentive for such
employees to expand and improve the profitability of the Company and
to attract and retain key personnel.
The 1992 Plan provided for the issuance of up to 172,500 shares of
common stock, all of which had been granted as of December 31, 1995.
The Stock Option Committee of the Board of Directors administers and
interprets the 1992 Plan. Options are granted on such terms and
prices as determined by the Committee in its sole discretion;
provided, however, that the per share exercise price of the options
granted may not be less than the fair market value of the Common
Stock on the date of grant. Options were exercisable after six
months had elapsed from date of grant.
As of the date of this Proxy Statement, options to purchase an
aggregate of 119,295 shares of Common Stock are outstanding under
the 1992 Plan exercisable at an average exercise price of $2.92 per
share. Options granted to officers include 49,500 shares to each of
Alfred A. Schroeder and George F. Schroeder, 6,600 shares to James
R. Sprinkle and 9,900 shares to Samuel Durham, all of whom are
executive officers of the Company. No options under this plan were
exercised during 1995.
1987 Stock Option Plan. On April 14, 1987, the Board of Directors
adopted and on May 29, 1987, the Shareholders approved the 1987
Stock Option Plan (the "1987 Plan") under which options may be
granted to key employees of the Company, which include officers and
directors of the Company who are also employees, supervisory
personnel and other employees of the Company or a subsidiary
corporation of the Company. The 1987 Plan is intended to advance
the interests of the Company by providing officers and other key
employees who have substantial responsibility for the direction and
management of the Company with additional incentive and increase
their proprietary interest in the success of the Company. The 1987
Plan provides for the issuance of up to 150,000 shares of common
stock, and options granted thereunder are exercisable in incremental
amounts up to five years from date of grant. Shares by reason of
the expiration of an option that are no longer subject to purchase
pursuant to an option granted under the 1987 Plan may be issued in
connection with new options granted thereunder. All options granted
under the 1987 Plan are intended to qualify under Section 422A of
the Internal Revenue Code, as amended, for incentive stock option
treatment.
The Stock Option Committee of the Board of Directors administers and
interprets the 1987 Plan. Options are granted on such terms and
prices as determined by the "Committee" in its sole discretion;
provided, however, that the per share exercise price of the options
granted to less than 10% shareholders may not be less than the fair
market value of the Common Stock on the date of grant. The exercise
price of options granted to 10% shareholders may not be less than
110% of the fair market value of the Common stock on the date of
grant. Unless sooner terminated by action of the Board of
Directors, the 1987 Plan will be terminated on April 13, 1997 and no
options may thereafter be granted under the 1987 Plan. The 1987
Plan may be amended, altered or discontinued by the Board without
the approval of the shareholders, except that the Board does not
have the power of authority to increase the maximum number of shares
for which options may be granted under the 1987 Plan (except for
certain adjustments) either in the aggregate or as to any individual
employee, to change the minimum purchase prices that may be
established under the 1987 Plan (except for certain adjustments), to
extend the period or periods that options may be granted or
exercised, to change the provisions relating to the termination of
employees to whom options are granted and the number of shares to be
covered by such options or to change the provisions relating to
adjustments to be made upon changes in capitalization.
Each option is exercisable after the period or periods specified in
the option agreement but no option is exercisable after the
expiration of ten years from date of grant. Options are not
transferable other than by will or the laws of descent and
distribution without the consent of the Board. The aggregate fair
market value (determined at the time of the grant) of the Common
Stock with respect to which options under the 1987 Plan are
exercisable for the first time by a grantee of an option in any
calendar year shall not exceed $100,000. Other than this
restriction, there is no restriction in the 1987 Plan on the maximum
or minimum number of shares of Common Stock covered by options that
may be granted to any person or that may be made purchasable by
exercise by any person at any time.
As of the date of this Proxy Statement, options to purchase 121,932
shares of Common Stock are outstanding under the 1987 Plan
exercisable at an average exercise price of $6.87 per share. There
are no options available for grant. Options granted to executive
officers include 34,050 shares to each of Alfred A. Schroeder and
George F. Schroeder, 8,596 shares to John P. Herbots, 6,257 shares
to Michael U. Raymondi, 4,500 to Robert W. Abbott, 6,750 shares to
James R. Sprinkle and 6,810 shares to Samuel Durham. Options for
10,332 shares under this plan were exercised during 1995.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 22, 1996,
regarding the beneficial ownership of common stock of Lancer by each
person known by Lancer to own 5% or more of the outstanding shares
of each class of Lancer's Common Stock, each director of Lancer and
the directors and officers of Lancer as a group. The persons named
in the table have sole voting and investment power with respect to
all shares of Common Stock owned by them, unless otherwise noted.
The number of shares of shares beneficially owned reflects a three-
for-two stock split effective July 1995.
<TABLE>
<CAPTION>
Name of Beneficial Number of
Owner and Number Shares Percent of
of Persons in Group Title of Class Beneficially Owned Class
- ---------------------- -------------- ------------------ ----------
<S> <C> <C> <C>
Alfred A. Schroeder Common Stock 563,338 13.9
(1)(2)(7)
George F. Schroeder Common Stock 627,212 15.5
(1)(3)(7)
John P. Herbots (4) Common Stock 4,724 *
Walter J. Biegler Common Stock 3,000 *
Jean M. Braley (1)(5) Common Stock 222,847 5.5
Michael E. Smith Common Stock 2,400 *
Robert A. Shuey III Common Stock 750 *
Samuel Durham (6) Common Stock 16,860 *
Michael U. Raymondi(7) Common Stock 1,251 *
Robert W. Abbott (8) Common Stock 1,800 *
James R. Sprinkle (9) Common Stock 3,375 *
GHS Management, Inc.(10) Common Stock 366,554 9.0
Greenbriar Partners,
Ltd. (11) Common Stock 226,650 5.6
All directors and
officers as a group
(fourteen persons)(12) Common Stock 1,447,556 35.7
</TABLE>
*Less than 1%
(1) The mailing address for Mr. Alfred A. Schroeder, Mr. George F.
Schroeder and Mrs. Jean Braley is 235 West Turbo, San Antonio,
Texas 78216.
(2) Includes 76,740 shares purchasable pursuant to options which
are exercisable within the next 60 days, but
excludes 89,737 shares held of record by Mr. Alfred A. Schroeder's
two adult children
(3) Includes 198,900 shares held of record by trusts for the
children of Mr. George F. Schroeder, of which Mr. George F. Schroeder
is the trustee, and includes 76,740 shares purchasable pursuant to
options which are exercisable within the next 60 days. Excludes 6,750
shares held by Mr. George F. Schroeder's three adult children.
(4) Includes 2,824 shares purchasable pursuant to options which are
exercisable within the next 60 days.
(5) Includes 117,920 shares held by the Estate of William V. Braley
for which Mrs. Braley serves as sole independent executrix.
(6) Includes 15,348 shares purchasable pursuant to options which
are exercisable within the next 60 days.
(7) Includes 1,251 shares purchasable pursuant to options which are
exercisable within the next 60 days.
(8) Shares purchasable pursuant to options which are exercisable
within the next 60 days.
(9) Shares purchasable pursuant to options which are exercisable
within the next 60 days.
(10) GHS Management, Inc. is a Dallas-based investment firm whose
mailing address is 8235 Douglas Avenue, Suite 420, Dallas, Texas 75225.
(11) Greenbriar Partners, Ltd. is a Dallas-based investment firm
whose mailing address is 1901 N. Akard, Dallas, Texas 75201.
(12) Includes 178,078 shares purchasable pursuant to options which
are exercisable within the next 60 days.
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
The following table sets forth certain information concerning the
executive officers of the Company:
Name Age Position with the Company
- ---------------------- --- ----------------------------------
<S> <C> <C>
Alfred A. Schroeder 59 Chairman of the Board
George F. Schroeder 56 President and CEO
John P. Herbots 48 Vice President Finance &
Administration and CFO
Charles W. Thomas 42 Vice President Marketing
Robert W. Abbott 57 Vice President International Sales
Jose A. Canales, Jr. 50 Vice President Latin American Sales
James R. Sprinkle 49 Vice President Domestic Sales
Samuel Durham 47 Vice President Engineering
Michael U. Raymondi 48 Vice President Operations
</TABLE>
Mr. Alfred A. Schroeder is a co-founder of the Company and has
served as Chairman of the Board of Directors of the Company since
its inception in 1967. His primary responsibilities include
conceptual engineering design, new product development and corporate
planning. He is the brother of George F. Schroeder, and is also a
partner in Lancer Properties. See "Compensation and Certain
Transactions."
Mr. George F. Schroeder is a co-founder of the Company and has
served as Chief Executive Officer, President and director since
1967. His primary responsibilities include strategic planning,
marketing, overall production management and corporate
administration. He is the brother of Alfred A. Schroeder, and is
also a partner in Lancer Properties. See "Compensation and Certain
Transactions."
Mr. John P. Herbots joined the Company as Vice President of Finance
and Administration in February 1995. On August 7, 1995, Mr. Herbots
was appointed Chief Financial Officer, Treasurer and Secretary.
Prior to joining Lancer, Mr. Herbots was Executive Vice President of
MK Rail Corporation and from 1990 until 1992, served as Vice
President and Chief Financial Officer for Morrison Knudsen
Corporation's Rail Systems Group. Prior to that he was Vice
President and CFO of Avline Leasing Corporation for one year, of
Lancer Corporation for one year and of Fairchild Aircraft
Corporation for four years. Mr. Herbots was elected to the Board of
Directors in May 1995.
Mr. Charles W. Thomas joined the Company as Vice President of
Marketing on February 12, 1996. Prior to joining Lancer, Mr. Thomas
was employed, since 1981, by Coca-Cola Foods, a Division of The Coca-
Cola Company. While at Coca-Cola Foods, Mr. Thomas held positions
as Director of Marketing, Director of Field Sales and Director of
Technical Development.
Mr. Robert W. Abbott has been employed by the Company since 1974.
Mr. Abbott is primarily responsible for the sale of Lancer products
outside the United States and Latin America and has held the
position of Vice President International Sales since 1976. Prior to
his employment with Lancer, Mr. Abbott was employed by The Coca-Cola
Company.
Mr. Jose A. Canales, Jr., joined the Company as Vice President Latin
American Sales in August 1995. Prior to joining Lancer, Mr. Canales
was the International Sales Manager for Pioneer Flour Mills in San
Antonio. From 1982 to 1993 he held various management positions
within the Latin American steel industry with Trade Arbed of
Luxembourg, Fundidora in Mexico and Huntco Steel in the United
States. From 1972 to 1982, he represented W.W. Grainger in Mexico
and Latin America.
Mr. James R. Sprinkle joined the Company in April 1984 as Director
of National Accounts. Mr. Sprinkle assumed the responsibilities of
Vice President Domestic Sales in May 1993. Prior to his employment
with Lancer, Mr. Sprinkle was employed by The Coca-Cola Company.
Mr. Samuel Durham joined the Company in June 1979 and has held the
position of Vice President Engineering since May 1993. He is
primarily responsible for coordinating new product design through
its introduction into the market and works directly with the
engineering department of the Company's largest customer. Before
joining the Company, Mr. Durham was employed by Polyvend, a
manufacturer of vending equipment.
Mr. Michael U. Raymondi joined the Company as Vice President of
Operations in August 1994. Prior to joining Lancer, Mr. Raymondi
was employed by Minnesota Rubber, a rubber and plastics products
company, as General Manager for three years. Prior to that, Mr.
Raymondi was employed by National O-Ring as Plant Manager for five
years.
COMPENSATION AND CERTAIN TRANSACTIONS
Executive Compensation
The Company believes that compensation of its executive officers and
others should be directly and materially linked to operating
performance. For fiscal 1995, the executive compensation program
consisted of base salary and a bonus plan based on Company
profitability and individual performance. The compensation levels
of all executives were based primarily on achievement of a 20%
increase in earnings per share over 1994 in addition to qualitative
goals set at the beginning of the period.
Compensation and Stock Option Committees' Report
The Compensation and the Stock Option Committees (the "Committees")
of the Board of Directors, which usually meet once a year, determine
the Company's executive compensation. An incentive bonus pool and
awards to be made under stock option plans at the end of the ensuing
year are approved at the Committees' meeting in the first quarter
with respect to that fiscal year. Compensation for a newly-hired
executive may be established by the Committees at a special meeting.
The Committees believe that compensation of the Company's key
executives should be sufficient to attract and retain highly
qualified personnel and also provide meaningful incentives for
measurably superior performance. They also believe that
compensation should be directly and materially linked to operating
performance and the extent to which cash for growth is generated by
operations instead of debt. As a result, the Company places special
emphasis on long and short-term performance goals as measured by
improvements in net earnings and operating cash flow. During 1995,
net income increased to $4,091,117 from $2,950,554 the previous year
and cash provided by operations was $7,126,648 in 1995 compared to
cash used in operations of $904,689 in 1994. The Company's
performance goals were set in part by an evaluation of its level of
operational complexity and competitive environment. Special awards
are contemplated to compensate for the achievement of superior goals
in specific departments, such as research and development,
production and sales.
During 1995, executive compensation included, in addition to a base
salary, a cash bonus based on the achievement of 31% earnings per
share growth compared to targeted growth of 20% as set forth at the
beginning of the year. Based on available data, the Committees
believe the base salaries and cash bonuses of its executives were
set below the levels of comparable companies as measured by market
capitalization.
During 1995, Mr. George F. Schroeder, the Company's CEO, received a
base salary of $199,992 and a bonus of $25,000 as determined by the
Compensation Committee and approved by the Board of Directors. As a
co-founder of the Company, Mr. George F. Schroeder provides the
entrepreneurial drive, strategic focus and long-term experience
necessary to effectively lead a complex manufacturing company with a
worldwide presence. Although, as noted above, executive
compensation was primarily contingent on a specific earnings per
share growth objective, Mr. Schroeder's performance was also
measured based on a subjective evaluation of his success at building
a strong management team and aggressively pursuing new areas for
growth.
The 1995 fiscal year was a good year for the Company, as reflected
by the growth in earnings per share and a 14% increase in the year-
end stock price after adjusting for a three-for-two stock split
effective July 1995. These factors will be taken into consideration
in determining future stock bonus and short-term cash awards.
Internal Revenue Code Section 162(m), enacted in 1993, precludes a
public corporation from taking a deduction in 1994 or subsequent
years for compensation in excess of $1 million for its chief
executive officer or any of its four other highest-paid officers.
Certain performance-based compensation, however, is specifically
exempt from the deduction limit. Since the vesting of options under
the 1992 Plan and the 1987 Plan is not subject to the attainment of
performance objectives, it is possible that awards to named
executive officers under either of these Plans, when taken in
conjunction with their annual compensation, could become subject to
the limitations of Section 162(m). However, based upon the current
and anticipated levels of executive compensation and outstanding and
anticipated stock options under the 1992 Plan and 1987 Plan, it is
not anticipated that any executive compensation will in the
foreseeable future become subject to the limitations imposed by
Section 162(m). Therefore, the Committee has determined not to make
any changes to the Company's executive compensation programs at
this time, but will continue to review and assess the impact of this
tax legislation on future executive compensation and determine what
action, if any, may be appropriate.
Compensation and Stock Option Committees
Walter J. Biegler, Chairman
Robert A. Shuey, III
Michael E. Smith
Compensation of Directors
Directors who are also employees of the Company receive no
compensation for serving as a director. Directors who are not
employees of the Company receive an annual fee of $8,000.
Compensation Committee Interlocks and Insider Participation
Mr. Michael E. Smith is a member of the Company's Compensation and
Stock Option Committees. Mr. Smith is a principal shareholder and
Vice President of the insurance brokerage firm of Bailey-Gosling
Associates, Inc. In 1995, the Company paid approximately $313,000
in premiums for various insurance policies placed by or through
Bailey-Gosling Associates, Inc.
Summary Compensation Table
The following table sets forth the compensation paid or to be paid
by the Company to the Chairman of the Board, the Chief Executive
Officer, and the named executive officers for services rendered in
all capacities for the years ended December 31, 1995, 1994 and 1993.
<TABLE>
<CAPTION>
Long
Term
Compensation
Annual Compensation Awards
-------------------------- ----------
Other Securities
Annual Underlying All Other
Salary Bonus Compensation Options Compensation
(1) (2) (3)
Name/Title Year ($) ($) ($) (#) ($)
- -------------- ---- ----- ------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
Alfred A. Schroeder 1995 199,992 46,462 4,500 - 60,311
Chairman of the 1994 101,296 65,000 3,679 - 52,005
Board 1993 101,296 35,000 2,689 34,050 16,680
George F. Schroeder 1995 199,992 25,000 4,500 - 32,436
President & CEO 1994 101,296 65,000 3,679 - 33,197
1993 101,296 35,000 2,689 34,050 13,386
Samuel Durham 1995 111,821 4,795 3,500 - 1,267
Vice President 1994 91,254 26,886 2,898 - 2,179
Engineering 1993 88,463 20,000 2,140 6,810 1,964
Michael U. Raymondi 1995 95,014 15,630 - 1,757 249
Vice President 1994 40,198 7,626 - 4,500 2,649
Operations (4)
Robert W. Abbott 1995 99,278 8,332 3,000 - 2,260
Vice President 1994 89,728 13,514 2,532 4,500 2,393
International Sales 1993 88,504 8,000 1,904 - 2,350
James R. Sprinkle 1995 93,000 6,818 3,000 - 807
Vice President 1994 86,190 16,504 2,519 - 1,533
Domestic Sales 1993 83,574 10,000 49,756 6,750 1,391
</TABLE>
(1) These amounts reflect Company contributions to its profit
sharing plan for the benefit of the named officers for the years
indicated. In addition, in 1993, the amount included taxable income
of $47,909 from the exercise of non-statutory stock options by Mr.
James R. Sprinkle.
(2) Adjusted for July 1995 three-for-two stock split.
(3) These amounts include insurance premiums paid for the benefit
of the named officers and certain other taxable fringe benefits.
(4) Michael U. Raymondi joined the Company August 1, 1994.
Options Grants During the 1995 Fiscal Year
The following table discloses, for Mr. John P. Herbots, Vice
President Finance & Administration and Chief Financial Officer, and
Mr. Michael U. Raymondi, Vice President Operations, information on
Common Stock options of the Company ("Options") granted during the
1995 fiscal year. There are no other named executive officers who
received options during 1995.
<TABLE>
<CAPTION>
Individual Grants Option Value
----------------------------------------------------------
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
for Option Term
--------------------------
Number of
Securities
Options Underlying Exercise
Granted Options Price Expiration 0% 5% 10%
Name/Title (#)(1) Granted ($/Sh) Date ($) (2) (2)
- ---------------- ------ ------- ------- ---------- ---- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
John P. Herbots 5,520 5,520 $11.09 3/8/2000 0 $16,913 $36,373
Vice President 1,756 1,756 $14.13 8/8/2000 0 $ 6,859 $15,157
Finance &
Administration
and Chief
Financial Officer
Michael U.Raymondi 1,757 1,757 $14.13 8/8/2000 0 $ 6,859 $15,157
Vice President
Operations
</TABLE>
(1) The 5,520 options granted to Mr. John P. Herbots are 40%
vested, the 1,756 options granted to him and the 1,757
options granted to Mr. Michael U. Raymondi are 20% vested, and
all are exercisable to the extent vested. The options are not
transferable, other than by will or the laws of decent and
distribution or pursuant to a qualified domestic relations
order.
(2) The information in these columns illustrates the value that
might be realized upon exercise of the options granted during
fiscal year 1995 assuming the specified compound rates of
appreciation of the Company's Common Stock over the term of
the options. The potential realizable value columns of the
foregoing table do not take into account certain provisions of
the options providing for termination of the option following
termination of employment or nontransferability.
Options Exercised During the 1995 Fiscal Year and Fiscal Year End
Option Values
The following table discloses, for the Chairman of the Board, the
Chief Executive Officer, and the named executive officers
information concerning options exercised during the fiscal year
ended December 31, 1995, and the number and value of the options
held at the end of fiscal year 1995 based upon the closing price
of $14.00 per share of Common Stock on December 31, 1995.
<TABLE>
<CAPTION>
Number of Value of
Securities Unexercised
Underlying In-the Money
Unexercised Options
Shares Options at FY-End at FY-End
Acquired Value Exercisable/ Exercisable/
Name/Title on Exercise Realized Unexercisable Unexercisable
- -------------------- ----------- -------- ----------------- -------------
<S> <C> <C> <C> <C>
Alfred A. Schroeder 0 0 76,740/ $769,921/
Chairman of the 6,810 $55,365
Board
George F. Schroeder 0 0 76,740/ $769,921/
President & CEO 6,810 $55,365
John P. Herbots 0 0 2,559/ $6,380/
Vice President 4,717 $9,455
Finance &
Administraton
and Chief
Financial
Officer
Samuel Durham 0 0 15,348/ $156,926/
Vice President 1,362 $11,809
Engineering
Michael U. Raymondi 0 0 2,151/ $5,048/
Vice President 4,106 $7,458
Operations
Robert W. Abbott 0 0 1,800/ $5,094/
Vice President 2,700 $7,641
International
Sales
James R. Sprinkle 4,050 $42,201 1,350/ $11,705/
Vice President 1,350 $11,705
Domestic Sales
</TABLE>
Long-Term Incentive Plans and Pension Plan
The Company has no Long-Term Incentive Plans or a Pension Plan
and has therefore omitted these tables from the Proxy Statement.
Company Performance
The performance graph shows a comparison of cumulative total
returns for the Company, the Dow Jones Industrial Average and the
Dow Jones Electrical Components and Equipment ("ECE") Index for
the five-year period ended December 31, 1995, and represents the
data provided below.
The total cumulative return on investment (change in the year end
stock price plus reinvested dividends) for each year for the
Company, the Dow Jones Industrial Average and the Dow Jones
Electrical Components and Equipment ("ECE") Index is based on the
stock price or composite index on December 31 of each year
presented. The comparison assumes that $100 was invested in the
Company's Common Stock and in each of the other two indices.
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Lancer 100 106 179 342 445 509
Corporation
Dow Jones 100 124 133 156 164 224
Industrial
Dow Jones 100 126 126 137 143 187
Peer Group
</TABLE>
Profit Sharing Plan
In 1991 the Company restated the non-contributory profit sharing
plan it originally adopted in 1985 to comply with changes in the
law. The amount of annual contributions is at the discretion of
the Board of Directors but may not exceed an amount equal to
fifteen percent of the compensation paid or accrued during the
year to all participating employees. Substantially all United
States employees are eligible to participate. The Company's
consolidated statements of income for the years ended December
31, 1995, 1994, and 1993 include provisions of $359,000, $270,000
and $185,000 respectively, attributable to the plan.
Certain Transactions
Michael E. Smith, a principal shareholder and Vice President of
the insurance brokerage firm of Bailey-Gosling Associates, Inc.,
has been the Company's insurance broker since 1981. The Company
paid approximately $313,000 in premiums for various insurance
policies placed by or through Bailey-Gosling Associates, Inc. in
1995 for which Mr. Smith's services were used in connection
therewith.
Lancer Properties is a Texas general partnership that owns the
land and building at 235 West Turbo in San Antonio, Texas where
the Company's administrative facilities and a portion of its
production operations are located. Lancer Properties leased the
premises to the Company for a term of 21 years beginning June 1,
1977 at a rental of $6,600 per month. The Company also leases
adjoining operating facilities at 257R West Turbo, from Lancer
Properties on a month-to-month basis for $800 per month. The
Company pays all maintenance expenses, property taxes,
assessments and insurance premiums on these facilities. In
conjunction with a debt refinancing in 1992, the Company advanced
$220,000 to this partnership. Repayment of this advance will be
made through a reduction of lease payments otherwise due between
the Company and the partnership and includes an interest charge
at a rate of 9.25%. Included in other assets and prepaid
expenses in the Company's consolidated balance sheet at December
31, 1995 is $61,000 remaining due from the partnership for this
advance. Improvements to these properties paid by the Company
are recorded as an offset against the lease payments. Alfred A.
Schroeder, George F. Schroeder and Jean M. Braley, all of whom
were directors of the Company during 1995, own 13.33%, 13.33% and
15%, respectively, of Lancer Properties. The Estate of William
V. Braley, for which Mrs. Braley serves as sole independent
executrix, also holds a 15% interest in the partnership.
As of December 31, 1995, Alfred A. Schroeder and George F.
Schroeder were indebted to the Company for approximately $240,000
for cash advances received from the company prior to, and during
1995. The obligation to repay this indebtedness is evidenced by
promissory notes due on or before December 31, 1999, and payable
to the company in four equal annual installments, beginning on or
before December 31, 1996, together with interest at the rate of
6% per annum.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's executive officers and directors, and persons who
own more than ten percent of the Company's Common Stock, to file
reports of ownership and changes in ownership with the Securities
and Exchange Commission and American Stock Exchange. Based
solely on reports and other information submitted by executive
officers and directors, the Company believes that during the year
ended December 31, 1995 each of its executive officers, directors
and persons who own more than ten percent of the Company's Common
Stock filed all reports required by Section 16(a), except for two
late filings by Mrs. Jean M. Braley pursuant to stock
transactions involving a total of 3,800 shares, and one late
filing each for Mr. Michael U. Raymondi, Mr. Samuel Durham and
Mr. James R. Sprinkle pursuant to stock transactions involving a
total of 9,827 shares.
SHAREHOLDER PROPOSALS
Shareholders may submit proposals on matters appropriate for
shareholder action at subsequent annual meetings of the Company
consistent with Rule 14a-8 promulgated under the Securities
Exchange Act of 1934, as amended. For such proposals to be
considered for inclusion in the Proxy Statement and Proxy
relating to the 1997 Annual Meeting of Shareholders, such
proposals must be received by the Company no later than December
26, 1996. Such proposals should be directed to Lancer
Corporation, 235 W. Turbo, San Antonio, Texas 78216, Attn:
Shareholder Relations.
OTHER BUSINESS
The Board of Directors knows of no matter other than those
described herein that will be presented for consideration at the
Meeting. However, should any other matters properly come before
the Meeting or any adjournment thereof, it is the intention of
the persons named in the accompanying Proxy to vote in accordance
with their best judgment in the interest of the Company.
MISCELLANEOUS
The expenses of preparing, printing and mailing this notice of
meeting and proxy material and all other expenses of soliciting
proxies will be borne by the Company. Georgeson & Company Inc.,
New York, New York, will distribute proxy soliciting material to
brokers, banks, and institutional holders and will request such
parties to forward soliciting material to the beneficial owners
of the Common Stock held of record by such persons. The Company
will pay Georgeson & Company Inc. a minimum fee of $600, not to
exceed $1,500, covering its services and will reimburse Georgeson
& Company Inc. for payments made to brokers and other nominees
for their expenses in forwarding soliciting material.
The Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1995 accompanies this Proxy statement. The
Annual Report is not deemed to be part of this Proxy Statement.
By order of the Board of Directors
/s/ John P. Herbots
John P. Herbots
Secretary
San Antonio, Texas
April 22, 1996
LANCER CORPORATION
1996 ANNUAL MEETING OF SHAREHOLDERS - MAY 23, 1996
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned shareholder of LANCER CORPORATION, a Texas
corporation, hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement, each dated April 22,
1996 and hereby appoints George F. Schroeder and Alfred A.
Schroeder or either of them, proxies and attorneys-in-fact, with
full power to each of substitution, on behalf and in the name of
the undersigned, to represent the undersigned at the 1996 Annual
Meeting of Shareholders of Lancer Corporation to be held May 23,
1996 at 9:30 a.m., local time, at Sheraton-Fiesta San Antonio
Hotel, 37 NE Loop 410, San Antonio, Texas, and at any adjournment
or adjournments thereof, and to vote all shares of common stock
which the undersigned would be entitled to vote if then and there
personally present, on the matters set forth on the reverse side
hereof and in their discretion, upon such other matter or matters
which may properly come before the meeting or any adjournment or
adjournments thereof.
This Proxy will be voted as directed or, if no contrary
direction is indicated, will be voted FOR the election of all
listed directors, FOR the ratification of the appointment of KPMG
Peat Marwick as independent auditors, FOR approval of the
Company's 1996 Stock Incentive Plan, and as said proxies deem
advisable on such other matters as may come before the meeting.
(Continued, and to be signed and dated,
on the reverse side.)
LANCER CORPORATION
PO BOX 11214
NEW YORK, NY 10203-0214
1. ELECTION OF DIRECTORS
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY to vote
/ / EXCEPTIONS
for all nominees listed below
Nominees: Alfred A. Schroeder; George F. Schroeder; Walter
J. Biegler; Jean M. Braley; Robert A. Shuey, III; Michael E.
Smith; John P. Herbots
(INSTRUCTIONS: To withhold authority to vote for any
individual nominee, mark the "Exceptions" box and strike a
line through that nominee's name.)
2. PROPOSAL TO APPROVE THE APPOINTMENT OF KPMG PEAT MARWICK LLP
AS THE INDEPENDENT AUDITORS OF THE COMPANY FOR THE YEAR ENDING
DECEMBER 31, 1996
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO APPROVE THE 1996 STOCK INCENTIVE PLAN
/ / FOR / / AGAINST / / ABSTAIN
Address Change and/or Comments Mark Here / /
(This Proxy should be marked, dated and signed by the
shareholder(s) exactly as his or her name appears hereon, and
returned promptly in the enclosed envelope. Persons signing in a
fiduciary capacity should so indicate, if shares are held by
joint tenants both should sign.)
Dated --------------, 1996
- -------------------------------
Signature
- -------------------------------
Signature
Votes MUST be indicated (x) in Black or Blue ink.
Sign, Date and Return the Proxy Card Promptly Using the Enclosed
Envelope
A-11
Exhibit A
LANCER CORPORATION
STOCK INCENTIVE PLAN
Effective Date: March 1, 1996
TABLE OF CONTENTS
SECTION 1 - PURPOSE OF PLAN
SECTION 2 - DEFINITIONS
SECTION 3 - PARTICIPATION
SECTION 4 - SHARES SUBJECT TO PLAN
(a) Maximum Shares
(b) Adjustment of Shares and Price
SECTION 5 - GENERAL TERMS AND CONDITIONS OF OPTIONS AND
RIGHTS
(a) General Terms
(b) Exercise Price
SECTION 6 - EXERCISE OF OPTIONS AND RIGHTS
(a) General Exercise Rights
(b) Notice of Exercise
(c) Exercise After Termination of Employment
(d) Payment of Option Exercise Price
(e) Payment with Loan
(f) Rights as a Shareholder
(g) Effect of Dissolution, Merger, Etc.
SECTION 7 - SPECIAL PROVISION FOR ISO'S
SECTION 8 - RESTRICTIONS ON TRANSFERS; GOVERNMENT
REGULATIONS
(a) Awards Not Transferable
(b) Government Regulations
SECTION 9 - TAX WITHHOLDING
SECTION 10 - ADMINISTRATION OF PLAN
(a) The Committee
(b) Committee Action
(c) Committee Authority
(d) Indemnification
SECTION 11 - EFFECTIVE DATE
SECTION 12 - AMENDMENT AND TERMINATION
(a) The Plan
(i) Amendment
(ii) Termination
(b) Awards
SECTION 13 - MISCELLANEOUS
(a) Employment
(b) Multiple Awards
(c) Written Notice
(d) Applicable Law; Severability
LANCER CORPORATION
STOCK INCENTIVE PLAN
SECTION 1 - PURPOSE OF PLAN
This Stock Incentive Plan is intended to promote the long-
term interests of the Company and its shareholders by
providing officers and other key employees of the Company
and its Affiliates and other key individuals (including non-
employees) with an additional incentive to promote the
financial success of the Company and its Affiliates.
SECTION 2 - DEFINITIONS
Unless otherwise required by the context, the following
terms when used in the Plan shall have the meanings set
forth in this Section 2:
(a) "Affiliate": Any "parent corporation" or "subsidiary
corporation" of the Company, as such terms are defined
in Sections 424(e) and (f), respectively, of the Code.
(b) "Agreement": A stock option agreement evidencing an
Award in such form as adopted by the Committee pursuant
to the Plan.
(c) "Award": An award of an Option under the Plan.
(d) "Board of Directors": The Board of Directors of the
Company.
(e) "Code": The Internal Revenue Code of 1986, as amended
from time to time.
(f) "Committee": The Compensation Committee of the Board
of Directors or such other committee appointed by the
Board of Directors which meets the requirements
set forth in Section 10(a) hereof.
(g) "Company": Lancer Corporation, a Texas corporation.
(h) "Effective Date": The date on which the Plan shall
become effective as set forth in Section 11 hereof.
(i) "Exchange Act": The Securities Exchange Act of 1934,
as amended, together with all regulations and rules
issued thereunder.
(j) "Exercise Price": The price per Share at which the
Shares subject to such Option may be purchased upon
exercise of such Option.
(k) "Fair Market Value": As applied to a specific date,
the mean between the highest and lowest quoted selling
price of a Share on the American Stock Exchange on such
date, or if there are no reported sales on such date,
on the last preceding date on which sales were
reported. The Fair Market Value determined by the
Committee in good faith in such manner shall be final,
binding and conclusive on all parties.
(l) "ISO": An Option intended to qualify as an "incentive
stock option," as defined in Section 422 of the Code or
any statutory provision that may replace such Section.
(m) "NQSO": An Option not intended to be an ISO and
designated a nonqualified stock option by the
Committee.
(n) "Option": Any ISO or NQSO granted under the Plan.
(o) "Participant": An individual who has been granted an
Award under the Plan.
(p) "Plan": This Lancer Corporation Stock Incentive Plan,
as the same may be amended from time to time.
(q) "Related": An Option which is granted in connection
with, and to the extent exercisable, in whole or in
part, in lieu of another Option.
(r) "Shares": Shares of the Company's authorized but
unissued or reacquired $.01 par value common stock, or
such other class or kind of shares or other securities
as may be applicable pursuant to the provisions of
Section 4(b) hereof.
(p) "Subsidiary": Any "subsidiary corporation" of the
Company, as such term is defined in Section 424(f) of
the Code.
SECTION 3 - PARTICIPATION
Except as modified below, the class of person eligible to
receive Awards under the Plan shall be those officers and
other key employees of the Company or its Affiliates and
those non-employees of the Company or its Affiliates, as
designated by the Committee from time to time, but in no
case shall any members of the Committee be eligible to
receive any Award under the Plan. Although designated non-
employees are eligible to participate in the Plan, non-
employees are not eligible to receive an ISO under this
Plan.
SECTION 4 - SHARES SUBJECT TO PLAN
(a) Maximum Shares. Subject to adjustment by the operation
of Section 4(b) hereof, the maximum number of shares
with respect to which Awards may be made under the Plan
is 150,000. The Shares with respect to which Awards
may be made under the Plan may be either authorized and
unissued shares or issued shares heretofore or
hereafter reacquired and held as treasury shares.
Shares which are subject to Related Options shall be
counted only once in determining whether the maximum
number of Shares with respect to which Awards may be
granted under the Plan has been exceeded. An Award
shall not be considered to have been made under the
Plan with respect to any Option to the extent that it
terminates without being exercised, and new Awards may
be granted under the Plan with respect to the number of
Shares as to which such termination has occurred.
(b) Adjustment of Shares and Price. In the event that the
Shares are changed into or exchanged for a different
kind or number of shares of Stock or securities of the
Company as the result of any stock dividend, stock
split, combination of shares, exchange of shares,
merger, consolidation, reorganization, recapitalization
or other change in capital structure, then the number
of Shares subject to this Plan and to Awards granted
hereunder and the purchase price, repurchase price or
Exercise Price for such Shares shall be equitably
adjusted by the Committee to prevent the dilution or
enlargement of Awards, and any new stock or securities
into which the Shares are changed or for which they are
exchanged shall be substituted for the Shares subject
to this Plan and to Awards granted hereunder; provided,
however, that fractional shares may be deleted from any
such adjustment or substitution.
SECTION 5 - GENERAL TERMS AND CONDITIONS OF OPTIONS
(a) General Terms. The Committee shall have full and
complete authority and discretion, except as expressly
limited by the Plan, to grant Options and to provide
the terms and conditions (which need not be identical
among Participants) thereof. In particular, the
Committee shall prescribe the following terms and
conditions:
(i) the Exercise Price of any Option, determined in
accordance with Section 5(b) hereof;
(ii) the number of Shares subject to, and the
expiration date of, any Option; provided, however,
that no Option shall have a term in excess of 10
years from the date of grant of the Option;
(iii) the manner, time and rate (cumulative or
otherwise) of exercise of such Option; and
(iv) the restrictions, if any, to be placed upon such
Option or upon Shares which may be issued upon
exercise of such Option. The Committee may, as a
condition of granting any Option, require that a
Participant agree not to thereafter exercise one
or more Options previously granted to such
Participant.
(b) Exercise Price. The Exercise Price shall be determined
by the Committee and shall not be less than the Fair
Market Value per Share on the date of grant.
Notwithstanding the foregoing, in no event shall the
Exercise Price be less than the par value per Share.
SECTION 6 - EXERCISE OF OPTIONS
(a) General Exercise Rights. An Option granted under the
Plan shall be exercisable during the lifetime of the
Participant to whom such Option was granted only by
such Participant, and with respect to an Option granted
to an employee of the Company or its Affiliates except
as provided in Section 6(c) hereof, no such Option may
be exercised unless at the time such participant
exercises such Option, such Participant is an employee
of, and has continuously since the grant thereof been
an employee of, the Company or an Affiliate. Transfer
of employment between Affiliates or between an
Affiliate and the Company shall not be considered an
interruption or termination of employment for any
purpose of this Plan. Neither shall a leave of absence
at the request, or with the approval, of the Company or
an Affiliate be deemed an interruption or termination
of employment, so long as the period of such leave does
not exceed 90 days, or, if longer, so long as the
Participant's right to re-employment with the Company
or an Affiliate is guaranteed by contract. An Option
also shall contain such conditions upon exercise
(including, without limitations, conditions limiting
the time of exercise to specified periods) as may be
required to satisfy applicable regulatory requirements,
including, without limitations, Rule 16b-3 (or any
successor rule) promulgated by the Securities and
Exchange Commission.
(b) Notice of Exercise. An Option may not be exercised
with respect to less than 25 Shares, unless the
exercise relates to all Shares covered by the Option at
the date of exercise. An Option shall be exercised by
delivery of a written notice to the Company. Such
notice shall state the election to exercise the Option
and the number of whole Shares in respect of which it
is being exercised, and shall be signed by the person
or persons so exercising the Option. Such notice shall
either: (a) be accompanied by payment of the full
Exercise Price and all applicable withholding taxes, in
which event the Company shall deliver any
certificate(s) representing Shares which the
Participant is entitled to receive as a result of the
exercise as soon as practicable after the notice has
been received; or (b) fix a date (not less than 5 nor
more than 15 business days from the date such notice
has been received by the Company) for the payment of
the full Exercise Price and all applicable withholding
taxes, against delivery by the Company of any
certificate(s) representing Shares which the
Participant is entitled to receive as a result of the
exercise. Payment of such Exercise Price and
withholding taxes shall be made as provided in Sections
6(d) and 9, respectively. In the event the Option
shall be exercised pursuant to Section 6(c)(i) hereof,
by any person or persons other than the Participant,
such notice shall be accompanied by appropriate proof
of the right of such person or persons to exercise the
Option.
(c) Exercise After Termination of Employment. With respect
to an Option granted to an employee of the Company or
its Affiliates, except as otherwise determined by the
Committee at the date of grant of the Option or Award
and as is provided in the applicable Agreement
evidencing the Option, upon termination of a
Participant's employment with the Company or any of its
Affiliates, such Participant (or in the case of death,
the person(s) to whom the Option is transferred by will
or the laws of descent and distribution) may exercise
such Option during the following periods of time (but
in no event after the normal expiration date of such
Option):
(i) in the case of termination as a result of death,
disability or retirement of the Participant, the
Option shall remain exercisable (as to the number
of shares exercisable on the termination date) for
one year after the date of termination; for this
purpose, "disability" shall mean such physical or
mental condition affecting the Participant as
determined by the Committee in its sole
discretion, and "retirement" shall mean voluntary
retirement from the Company or any Affiliate;
(ii) in the case of termination for cause, the Option
shall immediately terminate and shall no longer be
exercisable; and
(iii) in the case of termination for any reason
other than those set forth in subparagraphs (i)
and (ii) above, with respect to the shares
exercisable on the date of termination, the Option
shall remain exercisable for 90 days after the
date of termination.
To the extent the Option is not exercised within the
foregoing periods of time, the Option shall automatically
terminate at the end of the applicable period of time.
Notwithstanding the foregoing provisions, failure to
exercise an ISO within the periods of time prescribed under
Section 421 and 422 of the Code shall cause an ISO to cease
to be treated as an "incentive stock option" for purposes of
Section 421 of the Code.
(d) Payment of Option Exercise Price. Upon the exercise of
an Option, payment of the Exercise Price shall be made
either (i) in cash (by certified check, personal check,
bank draft or money order), (ii) with the consent of
the Committee and subject to Section 6(e) hereof, by
delivering the Participant's duly-executed promissory
note and related documents, (iii) with the consent of
the Committee, by delivering Shares owned by the
Participant for more than six (6) months valued at Fair
Market Value, or (iv) by a combination of the foregoing
forms of payment.
(e) Payment With Loan. The Committee may in its sole
discretion assist any Participant in the exercise of
one or more Options granted to such Participant under
the Plan by authorizing the extension of a loan to such
Participant from the Company. Except as otherwise
provided in this Section 6(e), the terms of any loan
(including the interest rate and terms of repayment)
shall be established by the Committee in its sole
discretion. The maximum amount of any loan shall not
exceed 80% of the Exercise Price payable for the Shares
being purchased. Any such loan by the Company shall be
with full recourse against the Participant to whom the
loan is granted, shall be secured in whole or in part
by the Shares so purchased, and shall bear interest at
a rate not less than the minimum interest rate required
at the time of purchase of the Shares in order to avoid
having imputed interest or original issue discount
under Section 483 or 1272 of the Code. In addition,
any such loan by the Company to an employee shall
become immediately due and payable in full, at the
option of the Company, upon termination of the
Participant's employment with the Company or its
Affiliates for any reason or upon a sale of any Shares
acquired with such loan to the extent of the cash and
fair market value of any property received by the
Participant in such sale. The Committee may make
arrangements for the application of payroll deductions
from compensation payable to the Participant to amounts
owing to the Company under any such loan. Until any
loan by the Company under this Section 6(e) is fully
paid in cash, the Shares shall be pledged to the
Company as security for such loan and the Company shall
retain physical possession of the stock certificates
evidencing the Shares so purchased together with a duly
executed stock power for such Shares. No loan shall be
made hereunder unless counsel for the Company shall be
satisfied that the loan and the issuance of Shares
funded thereby will be in compliance with all
applicable Federal, state and local laws.
(f) Rights as a Shareholder. A Participant shall have no
rights as a shareholder with respect to any Shares
issuable on exercise of any Option until the date of
the issuance of a stock certificate to the Participant
for such Shares. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other
rights for which the record date is prior to the date
such stock certificate is issued, except as provided in
Section 4(b) hereof.
(g) Effect of Dissolution, Merger, Etc. Upon the
dissolution or liquidation of the Company, or upon a
reorganization, merger, or consolidation of the Company
with one or more corporations as a result of which the
Company is not the surviving corporation, or upon a
sale of substantially all the property of the Company
to another corporation, this Plan shall terminate, and
any outstanding Options shall terminate, unless
provision be made in connection with such transaction
for the assumption of such Options and Awards, or the
substitution for such Options and Awards of new
incentive awards covering the stock of a successor
employer corporation, or a parent or subsidiary
thereof, with appropriate adjustments as to number and
kind of Shares and prices.
SECTION 7 - SPECIAL PROVISIONS FOR ISO'S
Any provision of the Plan to the contrary notwithstanding,
the following special provisions shall apply to all ISOs
granted under the Plan:
(a) the Option must be expressly designated as an ISO by
the Committee and the ISO Agreement;
(b) no ISO shall be granted more than ten years from the
Effective Date of the Plan and no ISO shall be
exercisable more than ten years from the date such ISO
is granted;
(c) the Exercise Price of any ISO shall not be less than
the Fair Market Value per Share on the date such ISO is
granted;
(d) no ISO shall be granted to any individual who, at the
time such ISO is granted, owns stock possessing more
than 10% of the total combined voting power of all
classes of stock of the Company or any Affiliate unless
the Exercise Price of such ISO is at least 110% of the
Fair Market Value per Share at the date of grant and
such ISO is not exercisable after the expiration of
five years from the date such ISO is granted;
(e) the aggregate Fair market Value (determined as of the
time any ISO is granted) of any Company stock with
respect to which any ISOs granted to a Participant are
exercisable for the first time by such Participant
during any calendar year (under this Plan and all other
stock option plans of the Company and any of its
Affiliates and any predecessor of any such corporation)
shall not exceed $100,000 as required under Section
422(d)(7) of the Code. (To the extent the $100,000
limit is exceeded, the $100,000 in options, measured as
described above, granted earliest in time will be
treated as ISOs);
(f) no ISO shall be granted to an individual who is not an
employee of the Company or its Affiliates at the time
such ISO is granted; and
(g) any other terms and conditions as may be required in
order that the ISO qualifies as an "incentive stock
option" under Section 422 of the Code or successor
provision.
SECTION 8 - RESTRICTIONS ON TRANSFERS; GOVERNMENT
REGULATIONS
(a) Awards Not Transferable. No Option nor any right or
interest of a Participant under the Plan in any instrument
evidencing any Option under the Plan may be assigned,
encumbered, or transferred, except, in the event of the
death of a Participant, by will or the laws of descent and
distribution.
(b) Government Regulations. This Plan, the granting of
Awards under this Plan and the issuance or transfer of
Shares (and/or the payment of money) pursuant thereto are
subject to all applicable Federal and state laws, rules and
regulations and to such approvals by any regulatory or
governmental agency (including without limitation "no
action" positions of the Securities and Exchange Commission)
which may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Without
limiting the generality of the foregoing, no Awards may be
granted under this Plan, and no Shares shall be issued by
the Company, nor cash payments made by the Company, pursuant
to or in connection with any such Award, unless and until,
in each such case, all legal requirements applicable to the
issuance or payment have, in the opinion of counsel to the
Company, been complied with. In connection with any stock
issuance or transfer, the person acquiring the Shares shall,
if requested by the Company, give assurances satisfactory to
counsel to the Company in respect of such matters as the
Company may deem desirable to assure compliance with all
applicable legal requirements. The Company shall not be
required to deliver any Shares under the Plan prior to (i)
the admission of such Shares to listing or for quotation on
any stock exchange or automated quotation system on which
Shares may then be listed or quoted, and (ii) the completion
and effectiveness of such registration or other
qualification of such Shares under any state or Federal law,
rule or regulation, as the Committee shall determine to be
necessary or advisable.
SECTION 9 - TAX WITHHOLDING
The Company shall have the right to withhold from amounts
due Participants, or to collect from Participants directly,
the amount which the Company deems necessary to satisfy any
taxes required by law to be withheld at any time by reason
of participation in the Plan, and the obligations of the
Company under the Plan shall be conditional on payment of
such taxes. The Participant may, prior to the due date of
any taxes, pay such amounts to the Company in cash, or with
the consent of the Committee, in Shares (which shall be
valued at their Fair Market Value on the date of payment).
There is no obligation under this Plan that any Participant
be advised of the existence of the tax or the amount
required to be withheld. Without limiting the generality of
the foregoing, in any case where it determines that a tax is
or will be required to be withheld in connection with the
issuance or transfer or vesting of Shares under this Plan,
the Company may, pursuant to such rules as the Committee may
establish, reduce the number of such Shares so issued or
transferred by such number of Shares as the Company may deem
appropriate in its sole discretion to accomplish such
withholding or make such other arrangements as it deems
satisfactory. Notwithstanding any other provision of this
Plan, the Committee may impose such conditions on the
payment of any withholding obligation as may be required to
satisfy applicable regulatory requirements, including,
without limitation, Rule 16b-3 (or successor provision)
promulgated by the Securities and Exchange Commission.
SECTION 10 - ADMINISTRATION OF PLAN
(a) The Committee. The Plan shall be administered by the
Committee, which shall be comprised of two or more
members of the Board of Directors, each of whom shall
be a "disinterested person" as defined in Rule 16b-3
(or successor provision) promulgated by the Securities
and Exchange Commission.
(b) Committee Action. A majority of the members of the
Committee at the time in office shall constitute a
quorum for the transaction of business, and any
determination or action may be taken at a meeting by a
majority vote or may be taken without a meeting by a
written resolution signed by all members of the
Committee. All decisions and determinations of the
Committee shall be final, conclusive and binding upon
all Participants and upon all other persons claiming
any rights under the Plan with respect to any Options.
Members of the Board of Directors and members of the
Committee acting under the Plan shall be fully
protected in relying in good faith upon the advice of
counsel and shall incur no liability except for willful
misconduct in the performance of their duties.
(c) Committee Authority. In amplification of the
Committee's powers and duties, but not by way of
limitation, the Committee shall have full authority and
power to:
(i) Construe and interpret the provisions of the Plan
and make rules and regulations for the
administration of the Plan not inconsistent with
the Plan;
(ii) Decide all questions of eligibility for Plan
participation and for the grant of Awards;
(iii) Adopt forms of Agreements and other documents
consistent with the Plan;
(iv) Engage agents to perform legal, accounting and
other such professional services as it may deem
proper for administering the Plan; and
(v) Take such other actions as may be reasonably
required or appropriate to administer the Plan or
to carry out the Committee activities contemplated
by other sections of this Plan.
(d) Indemnification. In addition to such other rights of
indemnification as they may have as directors or as
members of the Committee, the Board of Directors and
the members of the Committee shall be indemnified by
the Company against the reasonable expenses, including
court costs and reasonable attorneys' fees, actually
incurred in connection with the defense of any action,
suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by
reason of any action taken or failure to act under or
in connection with the Plan or any Award granted
hereunder, and against all amounts paid by them in
settlement thereof or paid by them in satisfaction of a
judgment in any such action, suit or proceeding, except
where such indemnification is expressly prohibited by
applicable law.
SECTION 11 - EFFECTIVE DATE
The effective date of this Plan shall be March 1, 1996 (the
date such Plan was approved by the Board of Directors),
subject to receipt of shareholder approval of this Plan
within one year of that date. All Awards pursuant to this
Plan prior to receipt of shareholder approval shall be
effective when made but shall be subject to the terms of
this Plan only upon receipt of such shareholder approval.
If such approval is not received within the one-year period
specified above, all Awards made on or after March 1, 1996
shall be forfeited.
SECTION 12 - AMENDMENT AND TERMINATION
(a) The Plan.
(i) Amendment. The Board of Directors may amend the
Plan from time to time in its sole discretion;
provided, however, that no such amendment shall,
without the approval of the shareholders of the
Company if such approval is required by the laws
of the State of Texas or Section 422 of the Code
or Rule 16b-3 under the Exchange Act: (a) change
the class of persons eligible to receive Awards or
otherwise materially modify the requirements as to
eligibility for participation in the Plan; (b)
increase the aggregate number of Shares with
respect to which Awards may be made under the
Plan; (c) materially increase the benefits
accruing to Participants under the Plan; or (d)
remove the administration of the Plan from the
Committee or render any member of the Committee
eligible to receive an Award under the Plan while
serving thereon. Any purported amendment in
violation of these restrictions shall be void and
of no effect. Furthermore, no amendment shall
impair the rights of any Participants under any
Award theretofore made under the Plan, without the
Participant's consent.
(ii) Termination. The Board of Directors may suspend
or terminate the Plan at any time. Upon
termination of the Plan, no additional Awards
shall be granted under the Plan; provided,
however, that the terms of the Plan shall continue
in full force and effect with respect to
outstanding and unexercised Options granted under
the Plan and Shares issued under the Plan.
(b) Awards. Subject to the terms and conditions and the
limitations of the Plan, the Committee may in the
exercise of its sole discretion modify, extend or renew
the terms of outstanding Awards (to the extent not
theretofore exercised) and authorize the granting of
new Awards in substitution therefor (to the extent not
theretofore exercised). Without limiting the
generality of the foregoing, the Committee may in its
discretion at any time accelerate the time at which any
Option is exercisable, subject to compliance with the
requirements of Rule 16b-3 (or successor provision)
promulgated by the Securities and Exchange Commission.
Notwithstanding the foregoing, however, no modification
of an Award shall, without the consent of the
Participant, impair any rights or obligations under any
Awards theretofore granted under the Plan.
SECTION 13 - MISCELLANEOUS
(a) Employment. Neither the establishment of the Plan nor
any amendments thereto, nor the granting of any Award
under the Plan, shall be construed as in any way
modifying or affecting, or evidencing any intention or
understanding with respect to, the terms of the
employment of any Participant with the Company or any
of its Affiliates. No person shall have a right to be
granted Awards or, having been selected as a
Participant for one Award, to be so selected again.
(b) Multiple Awards. Subject to the terms and restrictions
set forth in the Plan, a Participant may hold more than
one Award.
(c) Written Notice. As used herein, any notices required
hereunder shall be in writing and shall be given on the
forms, if any, provided or specified by the Committee.
Written notice shall be effective upon actual receipt
by the person to whom such notice is to be given;
provided, however, that in the case of notices to
Participants and their heirs, legatees and legal
representatives, notice shall be effective upon
delivery if delivered personally or three business days
after mailing, registered first class postage prepaid
to the last known address of the person to whom notice
is given. Written notice shall be given to the
Committee and the Company at the following address or
such other address as may be specified from time to
time:
Lancer Corporation
235 West Turbo
San Antonio, Texas 78216
Attn.: Secretary
(d) Applicable Law; Severability. The Plan shall be
governed by and construed in all respect in accordance
with the laws of the State of Texas. If any provision
of the Plan shall be held by a court of competent
jurisdiction to be invalid or unenforceable, the
remaining provisions hereof shall continue to be fully
effective.
