**Exhibit 10.45**

** **

**LANCER CORPORATION**

 

**STOCK OPTION PLAN**

**of**

# **2002**

# ** **

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# **LANCER CORPORATION**

**STOCK OPTION PLAN**

**of 2002**

 

## **SECTION 1 – PURPOSE OF PLAN**

 

ThisStock Option Plan is intended to promote the long-term interests of the Companyand its shareholders by providing officers and other key employees of theCompany and its Affiliates and other key individuals including the Board ofDirectors and other non-employees with an additional incentive to promote thefinancial success of the Company and its Affiliates.

 

**SECTION2 – DEFINITIONS**

 

Unlessotherwise required by the context, the following terms when used in the Planshall have the meanings set forth in this Section 2:

 

“Affiliate” of Lancermeans any unincorporated organization, general partnership, limited partnership,limited liability company, corporation or other entity that Lancer directly orindirectly controls or in which it has at least a fifty percent ownershipinterest.

 

“Agreement”:  A stock option agreement evidencing an Awardin such form as adopted by the Committee pursuant to the Plan, such as a noticeof grant of stock option.

 

“Award”:  An award of an Option under the Plan.

 

“Board ofDirectors”:  the Board of Directors ofthe Company.

 

“Change in Control”shall mean any of the following:

 

(1)             any consolidationor merger of the Company in which the Company is not the continuing orsurviving corporation or pursuant to which shares of the Company’s common stockwould be converted into cash, securities or other property, other than a mergerof the Company in which the holders of the Company’s common stock immediatelyprior to the merger have the same proportionate ownership of common stock ofthe surviving corporation immediately after the merger;

(2)             any sale,lease, exchange or other transfer (in one transaction or a series of relatedtransactions) of all or substantially all of the assets of the Company;

(3)             any approvalby the stockholders of the Company of any plan or proposal for the liquidationor dissolution of the Company;

(4)             thecessation of control (by virtue of their not constituting a majority ofdirectors) of the Company’s Board of Directors by the individuals (the“Continuing Directors”) who (x) at the date of this Agreement were directors or(y) become directors after the date of this Agreement and whose election ornomination for election by the Company’s stockholders, was approved by a voteof at least two-thirds of the directors then in office who were directors atthe date of this Agreement or whose election or nomination for election waspreviously so approved); or

(5)             (A) theacquisition of beneficial ownership (within the meaning of Rule 13d-3 under theSecurities Exchange Act of 1934, as amended (“Beneficial Ownership”)) of anaggregate of 15% of the voting power of the Company’s outstanding votingsecurities by any person or group (as such term is used in Rule 13d-5 undersuch Act) who Beneficially Owned less than 10% of the voting power of theCompany’s outstanding voting securities on the date hereof, (B) the

 

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acquisition ofBeneficial Ownership of an additional 5% of the voting power of the Company’soutstanding voting securities by any person or group who Beneficially Owned atleast 10% of the voting power of the Company’s outstanding voting securities onthe date hereof, or (C) the execution by the Company and a stockholder of acontract that by its terms grants such stockholder (in its, hers or hiscapacity as a stockholder) or such stockholder’s Affiliate (as defined in Rule405 promulgated under the Securities Act of 1933 (an “Affiliate”)) including,without limitation, such stockholder’s nominee to the Board of Directors (inits, hers or his capacity as an Affiliate of such stockholder), the right toveto or block decisions or actions of the Board of Directors; provided, however,that notwithstanding the foregoing, the events described in items (A), (B) or(C) above shall not constitute a Change in Control hereunder if thesecurityholder is (aa) a trustee or other fiduciary holding securities under anemployee benefit plan of the Company and acting in such capacity, (bb) acorporation owned, directly or indirectly, by the stockholders of the Companyin substantially the same proportions as their ownership of voting securities ofthe Company or (cc) in the case of an acquisition described in items (A) or (B)above (but not in the case of an acquisition described in item (C) above), anyother person whose acquisition of shares of voting securities is approved inadvance by a majority of the Continuing Directors; providedfurther,however, that none of the following shall constitute a Change inControl:  (aa) the right of the holdersof any voting securities of the Company to vote as a class on any matter or(bb) any vote required of disinterested or unaffiliated directors orstockholders including, without limitation, pursuant to Section 144 of theDelaware General Corporation Law or Rule 16b-3 promulgated pursuant to theSecurities Exchange Act of 1934.

(6)             Subject toapplicable law, in a Chapter 11 bankruptcy proceeding, the appointment of atrustee or the conversion of a case involving the Company to a case underChapter 7.

 

“Code”:  The Internal Revenue Code of 1986, asamended from time to time.

 

“Committee”:  The Compensation Committee of the Board ofDirectors or such other committee appointed by the Board of Directors.

 

“Company”:  Lancer Corporation, a Texas corporation.

 

“Effective Date”:  The date on which the Plan shall becomeeffective as set forth in Section 10 hereof.

 

“Exchange Act”:  The Securities Exchange Act of 1934, asamended, together with all regulations and rules issued thereunder.

 

“Exercise Price”:  The price per Share at which the Sharessubject to such Option may be purchased upon exercise of such Option.

 

“Fair MarketValue”:  As applied to a specific date,the closing quoted selling price of a Share on the American Stock Exchange onsuch date, or if there are no reported sales on such date, on the lastpreceding date on which sales were reported. The Fair Market Value determined by the Committee in good faith in suchmanner shall be final, binding and conclusive on all parties.

 

“Option” shall mean aright to purchase stock granted pursuant to the Plan.

 

“Participant”:  An individual who has been granted an Awardunder the Plan.

 

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“Plan”:  This Lancer Corporation Stock Option Plan of2002, as the same may be amended from time to time.

 

“Shares”:  Shares of the Company’s authorized butunissued or reacquired $.01 par value common stock, or such other class or kindof shares or other securities as may be applicable pursuant to the provisionsof Section 4(b) hereof.

 

“Subsidiary”:  Any “subsidiary corporation” of the Company,as such term is defined in Section 424(f) of the Code.

 

**SECTION3 – PARTICIPATION**

 

Exceptas modified below, the class of person eligible to receive Awards under thePlan shall be those officers and other key employees of the Company or itsAffiliates and those non-employees of the Company or its Affiliates, includingBoard members, as designated by the Committee from time to time.

 

**SECTION4 – SHARES SUBJECT TO PLAN**

 

(a)                                  MaximumShares.  Subject toadjustment by the operation of Section 4(b) hereof, the maximum number ofshares with respect to which Awards may be made under the Plan is 200,000.  The Shares with respect to which Awards maybe made under the Plan may be either authorized and unissued shares or issuedshares heretofore or hereafter reacquired and held as treasury shares.  An Award shall not be considered to havebeen made under the Plan with respect to any Option to the extent that itterminates without being exercised, and new Awards may be granted under thePlan with respect to the number of Shares as to which such termination hasoccurred.

 

(b)                                 Adjustmentof Shares and Price. In the event that the Shares are changed into or exchanged for adifferent kind or number of shares of Stock or securities of the Company as theresult of any stock dividend, stock split, combination of shares, exchange ofshares, merger, consolidation, reorganization, recapitalization or other changein capital structure, then the number of Shares subject to this Plan and toAwards granted hereunder and the purchase price, repurchase price or ExercisePrice for such Shares shall be equitably adjusted by the Committee to preventthe dilution or enlargement of Awards, and any new stock or securities intowhich the Shares are changed or for which they are exchanged shall besubstituted for the Shares subject to this Plan and to Awards grantedhereunder; provided, however, that fractional shares may be deleted from anysuch adjustment or substitution.

 

**SECTION5 – GENERAL TERMS AND CONDITIONS OF OPTIONS**

 

(a)                                  GeneralTerms.  The Committeeshall have full and complete authority and discretion, except as expresslylimited 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 prescribethe 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                                                                                                       |

 

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(iv)                              therestrictions, if any, to be placed upon such Option or upon Shares which may beissued upon exercise of such Option. The Committee may, as a condition of granting any Option, require that aParticipant agree not to thereafter exercise one or more Options previously grantedto such Participant.

 

(b)                                 ExercisePrice.  The Exercise Priceshall be determined by the Committee and shall not be less than the Fair MarketValue per Share on the date of grant.

 

**SECTION6 – EXERCISE OF OPTIONS**

 

(a)                                  GeneralExercise Rights. An Option granted under the Plan shall be exercisable during thelifetime of the Participant to whom such Option was granted only by suchParticipant, and with respect to an Option granted to an employee of theCompany or its Affiliates except as provided in Section 6(c) hereof, no suchOption may be exercised unless at the time such participant exercises suchOption, such Participant is an employee of, and has continuously since thegrant thereof been an employee of, the Company or an Affiliate.  Transfer of employment between Affiliates orbetween an Affiliate and the Company shall not be considered an interruption ortermination of employment for any purpose of this Plan.  Neither shall a leave of absence at therequest, or with the approval, of the Company or an Affiliate be deemed aninterruption or termination of employment. An Option also shall contain such conditions upon exercise (including,without limitations, conditions limiting the time of exercise to specifiedperiods) as may be required to satisfy applicable regulatory requirements,including, without limitations, Rule 16b-3 (or any successor rule) promulgatedby the Securities and Exchange Commission.

 

(b)                                 Notice ofExercise.  An Option may notbe exercised with respect to less than 25 Shares, unless the exercise relatesto all Shares covered by the Option at the date of exercise.  An Option shall be exercised by delivery ofa written notice to the Company.  Suchnotice shall state the election to exercise the Option and the number of wholeShares in respect of which it is being exercised, and shall be signed by theperson or persons so exercising the Option. Such notice shall either:  (a) beaccompanied by payment of the full Exercise Price and all applicable withholdingtaxes, in which event the Company shall deliver any certificate(s) representingShares which the Participant is entitled to receive as a result of the exerciseas soon as practicable after the notice has been received: or (b) notice of anintent to tender of Company Stock equal in fair market values to the OptionExercise Price and all applicable withholding taxes, against delivery by theCompany of any certificate(s) representing Shares which the Participant is entitled to receiveas a result of the exercise.  Payment ofsuch Exercise Price and withholding taxes shall be made as provided in Sections6(d) and 8, respectively.  In the eventthe Option shall be exercised pursuant to Section 6(c)(i) hereof, by any personor persons other than the Participant, such notice shall be accompanied byappropriate proof of the right of such person or persons to exercise theOption.

 

(c)                                  ExerciseAfter Termination of Employment or Service.  With respect to an Option granted to anemployee of the Company or its Affiliates, or to a Board member in connectionwith his or her service on the Board, except as otherwise determined by theCommittee at the date of grant of the Option or Award and as is provided in theapplicable Agreement evidencing the Option, upon termination of a Participant’semployment with the Company or any of its Affiliates or termination of Serviceon the Board, as the case may be such Participant (or in the case of death, theperson(s) to whom the Option is transferred by will or the laws of descent anddistribution) may exercise such Option during the following periods of time(but in no event after the normal expiration date of such Option):

 

(i)                                     except forBoard members, in the case of termination as a result of death of theParticipant, the Option shall remain exercisable (as to the number of shares

 

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exercisable on thetermination date) for one year after the date of termination, and in the caseof disability or retirement for ninety days after the date of termination.  For Board members, upon death or disabilitythe options shall remain exercisable for the remaining term of the grant.  For this purpose, “disability” shall meansuch physical or mental condition affecting the Participant as determined bythe Committee in its sole discretion, and “retirement” shall mean voluntaryretirement from the Company or any Affiliate;

 

(ii)                                  in the caseof termination for cause, the Option shall immediately terminate and shall nolonger be exercisable; and

 

(iii)                               in the caseof termination for any reason other than those set forth in subparagraphs (i)and (ii) above, with respect to the shares exercisable on the date oftermination, the Option shall remain exercisable for 90 days after the date oftermination, except for Board members who shall have the remaining term oftheir grant to exercise their Options.

 

Tothe extent the Option is not exercised within the foregoing periods of time,the Option shall automatically terminate at the end of the applicable period oftime.

 

(d)                                 Payment ofOption Exercise Price. Upon the exercise of an Option, payment of the Exercise Price shall bemade either (i) in cash (by certified check, personal check, bank draft ormoney order), (ii) with the consent of the Committee, by delivering Sharesowned by the Participant for more than six (6) months valued at Fair MarketValue, or (iii) by a combination of the foregoing forms of payment.

 

(e)                                  Rights as aShareholder. A Participant shall have no rights as a shareholder with respect to anyShares issuable on exercise of any Option until the date of the issuance of astock certificate to the Participant for such Shares.  No adjustment shall be made for dividends (ordinary orextraordinary, whether in cash, securities or other property) or distributionsor other rights for which the record date is prior to the date such stockcertificate is issued, except as provided in Section 4(b) hereof.

 

(f)                                    Effect ofDissolution, Merger, Etc. Upon a Change in Control, all unvested portions of then outstandingOptions shall immediately vest.

 

**SECTION7 – RESTRICTIONS ON TRANSFERS; GOVERNMENT**

**REGULATIONS**

 

(a)                                  Awards NotTransferable. No Option nor any right or interest of a Participant under the Plan inany 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)                                 GovernmentRegulations. This Plan, the granting of Awards under this Plan and the issuance ortransfer of Shares (and/or the payment of money) pursuant thereto are subject toall applicable Federal and state laws, rules and regulations and to suchapprovals by any regulatory or governmental agency (including withoutlimitation “no action” positions of the Securities and Exchange Commission)which may, in the opinion of counsel for the Company, be necessary or advisablein connection therewith.  Withoutlimiting the generality of the foregoing, no Awards may be granted under thisPlan, and no Shares shall be issued by the Company, nor cash payments made bythe Company, pursuant to or in connection with any such Award, unless anduntil, in each such case, all legal requirements applicable to the issuance orpayment have, in the opinion of counsel to the Company, been compliedwith.  In connection with any stockissuance or transfer, the person acquiring the Shares shall, if

 

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requested by theCompany, give assurances satisfactory to counsel to the Company in respect ofsuch matters as the Company may deem desirable to assure compliance with allapplicable legal requirements.  TheCompany 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 exchangeor automated quotation system on which Shares may then be listed or quoted, and(ii) the completion and effectiveness of such registration or otherqualification of such Shares under any state or Federal law, rule orregulation, as the Committee shall determine to be necessary or advisable.

 

**SECTION8 – TAX WITHHOLDING**

 

TheCompany shall have the right to withhold from amounts due Participants, or tocollect from Participants directly, the amount which the Company deemsnecessary to satisfy any taxes required by law to be withheld at any time byreason of participation in the Plan, and the obligations of the Company underthe Plan shall be conditional on payment of such taxes.  The Participant may, prior to the due dateof any taxes, pay such amounts to the Company in cash, or with the consent ofthe Committee, in Shares (which shall be valued at their Fair Market Value onthe date of payment).  There is noobligation under this Plan that any Participant be advised of the existence ofthe tax or the amount required to be withheld. Without limiting the generality of the foregoing, in any case where itdetermines that a tax is or will be required to be withheld in connection withthe 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 ofsuch Shares so issued or transferred by such number of Shares as the Companymay deem appropriate in its sole discretion to accomplish such withholding ormake such other arrangements as it deems satisfactory.  Notwithstanding any other provision of thisPlan, the Committee may impose such conditions on the payment of anywithholding obligation as may be required to satisfy applicable regulatoryrequirements, including, without limitation, Rule 16b-3 (or successorprovision) promulgated by the Securities and Exchange Commission.

 

**SECTION9 – ADMINISTRATION OF PLAN**

 

(a)                                  TheCommittee.  The Plan shall beadministered by the Committee, which shall be comprised of two or more membersof the Board of Directors, each of whom shall be a “non-employee director” asdefined in Rule 16b-3 (or successor provision) promulgated by the Securitiesand Exchange Commission.

 

(b)                                 CommitteeAction.  A majority of themembers of the Committee at the time in office shall constitute a quorum forthe transaction of business, and any determination or action may be taken at ameeting by a majority vote or may be taken without a meeting by a writtenresolution 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 personsclaiming any rights under the Plan with respect to any Options.  Members of the Board of Directors andmembers of the Committee acting under the Plan shall be fully protected inrelying in good faith upon the advice of counsel and shall incur no liabilityexcept for willful misconduct in the performance of their duties.

 

(c)                                  CommitteeAuthority.  In amplificationof the Committee’s powers and duties, but not by way of limitation, theCommittee 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;                                                                              |

 

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(iv)                              Engageagents to perform legal, accounting and other such professional services as itmay deem proper for administering the Plan; and

 

(v)                                 Take suchother actions as may be reasonably required or appropriate to administer thePlan or to carry out the Committee activities contemplated by other sections ofthis Plan.

 

(d)                                 Indemnification.  In addition to such other rights ofindemnification 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 bythe Company against the reasonable expenses, including court costs andreasonable attorneys’ fees, actually incurred in connection with the defense ofany action, suit or proceeding, or in connection with any appeal therein, towhich they or any of them may be a party by reason of any action taken orfailure to act under or in connection with the Plan or any Award grantedhereunder, and against all amounts paid by them in settlement thereof or paidby them in satisfaction of a judgment in any such action, suit or proceeding,except where such indemnification is expressly prohibited by applicable law.

 

**SECTION10 – EFFECTIVE DATE**

 

Theeffective date of this Plan shall be November 21, 2002, the date such Plan wasapproved by the Board of Directors.

 

**SECTION11 – AMENDMENT AND TERMINATION**

 

(a)                                  The Plan.

 

(i)                                     Amendment.  The Board of Directors may amend the Planfrom time to time in its sole discretion; provided, however, that no suchamendment shall, without the approval of the shareholders of the Company ifsuch approval is required by the laws of the State of Texas or Rule 16b-3 underthe Exchange Act:  (a) change the classof persons eligible to receive Awards or otherwise materially modify therequirements as to eligibility for participation in the Plan; (b) increase theaggregate number of Shares with respect to which Awards may be made under thePlan; (c) materially increase the benefits accruing to Participants under thePlan; or (d) remove the administration of the Plan from the Committee or renderany member of the Committee eligible to receive an Award under the Plan whileserving thereon.  Any purportedamendment in violation of these restrictions shall be void and of noeffect.  Furthermore, no amendment shallimpair the rights of any Participants under any Award theretofore made underthe Plan, without the Participant’s consent.

 

(ii)                                  Termination.  The Board of Directors may suspend orterminate the Plan at any time.  Upontermination 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 andeffect with respect to outstanding and unexercised Options granted under thePlan and Shares issued under the Plan.

 

(b)                                 Awards.  Subject to the terms and conditions and thelimitations of the Plan, the Board may in the exercise of its sole discretionmodify, extend or renew the terms of outstanding Awards (to the extent nottheretofore exercised) and authorize the granting of new Awards in substitutiontherefor (to the extent not theretofore exercised).  Notwithstanding the foregoing, however, no modification of anAward shall, without the consent of the Participant, impair any rights orobligations under any Awards theretofore granted under the Plan.

 

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**SECTION12 – MISCELLANEOUS**

 

(a)                                  Employment.  Neither the establishment of the Plan norany amendments thereto, nor the granting of any Award under the Plan, shall beconstrued as in any way modifying or affecting, or evidencing any intention orunderstanding with respect to, the terms of the employment of any Participantwith the Company or any of its Affiliates. No person shall have a right to be granted Awards or, having beenselected as a Participant for one Award, to be so selected again.

 

(b)                                 MultipleAwards.  Subject to theterms and restrictions set forth in the Plan, a Participant may hold more thanone Award.

 

(c)                                  WrittenNotice.  As used herein,any notices required hereunder shall be in writing and shall be given on theforms, if any, provided or specified by the Committee.  Written notice shall be effective uponactual 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, legateesand legal representatives, notice shall be effective upon delivery if deliveredpersonally or three business days after mailing, registered first class postageprepaid to the last known address of the person to whom notice is given.  Written notice shall be given to theCommittee and the Company at the following address or such other address as maybe specified from time to time:

 

Lancer Corporation

6655 Lancer Blvd.

San Antonio, Texas 78219

Attn:  Secretary

 

(d)                                 ApplicableLaw; Severability. The Plan shall be governed by and construed in all respect in accordancewith the laws of the State of Texas.  Ifany provision of the Plan shall be held by a court of competent jurisdiction tobe invalid or unenforceable, the remaining provisions hereof shall continue tobe fully effective.

 

(e)                                  Reservationof Shares of Stock. The Company, during the term of this Plan, will at all times reserve andkeep available, and will seek to obtain from any regulatory body havingjurisdiction any requisite authority necessary to issue and to sell, 200,000shares of Stock that shall be sufficient to satisfy the requirements of thisPlan.  The inability of the Company toobtain from any regulatory body having jurisdiction the authority deemednecessary of counsel for the Company for the lawful issuance and sale of itsStock hereunder shall relieve the Company of any liability in respect of thefailure to issue or sell Stock as to which the requisite authority has not beenobtained.

 

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