Exhibit 10.32
LIFECORE BIOMEDICAL, INC.
INCENTIVE STOCK OPTION AGREEMENT
     THIS OPTION AGREEMENT is made as of the _____ of ______, 20_____ between
Lifecore Biomedical, Inc., a Minnesota corporation (hereinafter called the
“Company”), and ____________ an employee of the Company or one or more of its
subsidiaries (hereinafter called the “Optionee”).
     WHEREAS, the Company desires, by affording the Optionee an opportunity to
purchase shares of its Common Stock (the “Common Stock”), as hereinafter
provided, to carry out the purpose of the 2003 Stock Incentive Plan (the “Plan”)
of the Company approved by its shareholders.
     NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereby agree as
follows:

1.   Grant of Option. The Company hereby grants to the Optionee the right and
Option (hereinafter called the “Option”) to purchase from the Company all or any
part of an aggregate amount of ____________ shares of the Common Stock of the
Company on the terms and conditions herein set forth. The Option granted
hereunder is intended to be an “incentive stock option” within the meaning of
Section 422 of the Internal Revenue Code of 1986.   2.   Purchase Price. The
purchase price of the shares of the Common Stock covered by this Option shall be
$________ per share.   3.   Term of Option. The term of the Option shall expire
on __________ (the “Expiration Date”) subject to earlier termination as
hereinafter provided.   4.   Exercise of Option. The Option may be exercised as
follows:

  (a)   On and after _________, the Option may be exercised as to _______
shares.     (b)   On and after _________, the Option may be exercised as to
_______ shares.     (c)   On and after _________, the Option may be exercised as
to _______ shares.     (d)   On and after _________, the Option may be exercised
as to _______ shares.

     In no event shall the Option be exercisable after the Expiration Date.

5.   Non-Transferability. The Option shall not be transferable otherwise than by
will or the laws of descent and distribution, and the Option may be exercised,
during the lifetime of the Optionee, only by the Optionee.

6.   Termination of Employment. In the event the employment of the Optionee
shall be terminated for any reason other than death, Disability, or Retirement
(as defined below) any unexercised Option may be exercised by the Optionee at
any time within ninety (90) days of such termination, but only to the extent the
Option was exercisable by the Optionee on the date of termination; provided,
however, that in the event of termination for Cause (as defined below), such
Option shall terminate immediately upon such termination of employment. In no
event shall any Option be exercisable after the Expiration Date specified in
Section 3 hereof. So long as the Optionee shall continue to be an employee of
the Company or one or more of it subsidiaries, the Option shall not be affected
by any change of duties or position. Nothing in this Option Agreement shall
confer upon the Optionee any right to continue in the employ of

 

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the Company or of any of its subsidiaries or interfere in any way with the right
of the Company or any such subsidiary to terminate the employment of the
Optionee at any time.

7.   Death, Disability, or Retirement of Optionee. If the Optionee shall die, or
shall suffer a Disability, or terminate employment as a result of Retirement (as
defined below) while this Option is in effect, the Option may be exercised by
the person to whom the Option is transferred by will or the applicable laws of
descent and distribution (in the case of death) or by the Optionee or his or her
legal representative (in the case of Disability) or by the Optionee (in the case
of Retirement) at any time within twelve (12) months after the Optionee’s death,
termination of employment as a result of Disability, or Retirement, but in no
event later than the Expiration Date specified in Section 3 hereof.

8.   Method of Exercising Option. Subject to the terms and conditions of the
Plan, the Option may be exercised by written notice to the Accounting Department
at the principal office of the Company. Such notice shall state the election to
exercise the Option and the number of shares in respect of which it is being
exercised, and shall be signed by the person so exercising the Option. Such
notice shall be accompanied by payment of the full purchase price of such
shares, which payment shall be made in cash or by check or bank draft payable to
the Company. In the sole discretion of the Company, the Optionee may pay the
purchase price by delivering shares of Common Stock of the Company already owned
by the optionee (which in the case of stock acquired upon exercise of an option
have been owned for more than six months on the date of surrender) with a fair
market value equal to the purchase price or by a combination of cash and such
shares, whose fair market value shall equal the purchase price. For purposes of
this paragraph, the “fair market value” of the Common Stock of the Company shall
be established in the manner set forth in the Plan.

The certificate or certificates for the shares as to which the Option shall have
been so exercised shall be registered in the name of the person so exercising
the Option, or if the Optionee so elects, in the name of the Optionee and one
other person as joint tenants, and shall be delivered as soon as practicable
after the notice shall have been received. In the event the Option shall be
exercised by any person other than the Optionee, such notice shall be
accompanied by appropriate proof of such right of such person to exercise the
Option. All shares that shall be purchased upon the exercise of the Option as
provided herein shall be fully paid and nonassessable.

9.   Option Plan. This Option is subject to certain additional terms and
conditions set forth in the Plan pursuant to which this Option has been issued.
A copy of the Plan is on file with the Chief Financial Officer of the Company
and each Option holder by acceptance hereof agrees to and accepts this Option
subject to the terms of the Plan.

10.   General. The Company shall at all times during the term of the Option
reserve and keep available such number of shares of Common Stock as will be
sufficient to satisfy the requirements of this Option Agreement, shall pay all
original issue and transfer taxes with respect to the issue and transfer of
shares pursuant hereto and all other fees and expenses necessarily incurred by
the Company in connection therewith, and will from time to time use its best
efforts to comply with all laws and regulations which, in the opinion of counsel
for the Company, shall be applicable thereto.

11.   Status. Neither the Optionee nor the Optionee’s executor, administrator,
heirs, or legatees, shall be or have any rights or privileges of a shareholder
of the Company in respect of the shares transferable upon exercise of the Option
granted hereunder, unless and until certificates representing such shares shall
be endorsed, transferred, and delivered and the transferee has caused the
Optionee’s name to be entered as the shareholder of record on the books of the
Company.

12.   Common Authority. The existence of the Option herein granted shall not
affect in any way the right or power of the Company or its shareholders to make
or authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company’s capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock of the Company, or
any sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.

 

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The Option granted herein shall become exercisable in full, without regard to
any installment exercise provisions, for a period specified by the Committee,
but not to exceed sixty (60) days, prior to the occurrence of any of the
following events: (i) dissolution or liquidation of the Company other than in
conjunction with a bankruptcy of the Company or any similar occurrence, (ii) any
merger, consolidation, acquisition, separation, reorganization, or similar
occurrence, where the Company will not be the surviving entity or (iii) the
transfer of substantially all of the assets of the Company or 75% or more of the
outstanding Common Stock of the Company.

13.   Disputes. As a condition of the granting of the Option herein granted, the
Optionee agrees, for the Optionee and the Optionee’s personal representatives,
that any dispute or disagreement which may arise under or as a result of or
pursuant to this Agreement shall be determined by the Company, in its sole
discretion, and that any interpretation by the Company of the terms of this
Agreement shall be final, binding and conclusive.   14.   Binding Effect. This
Agreement shall be binding upon the heirs, executors, administrators and
successors of the parties hereto.   15.   Definitions. For the purposes of the
Option, the following terms shall have the indicated meanings:

(a) “Cause” means a felony conviction of a participant or the failure of a
participant to contest prosecution for a felony, willful misconduct, dishonesty
or intentional violation of a statute, rule or regulation, any of which, in the
judgment of the Company, is harmful to the business or reputation of the
Company.
(b) “Disability” means disabled within the meaning of Section 22(e)(3) of the
Code as determined by the Committee.
(c) “Retirement” means retirement from active employment with the Company and
any Affiliate of the Company either (i) on or after age 65, or (ii) with consent
of the Committee at the time of retirement.
     This stock option agreement could be construed to imply that Lifecore
expects long term continued financial appreciation in its common stock price in
the public equity marketplace. As such, it constitutes a forward looking
document as defined in the Private Securities Litigation Reform Act of 1995.
Because of numerous risks and uncertainties in Lifecore’s business activity, the
Company’s actual business results may differ materially from those implied.
Prospective stock option investors are cautioned to refer to more detailed
discussions of Lifecore’s specific business risks as presented and updated from
time to time in the Company’s reports on Forms 10-Q and 10-K. In addition, even
if Lifecore’s business performance does improve, the potential option investor
is cautioned that the public stock marketplace may not reflect those
improvements in an appreciated price for Lifecore’s common stock.
     IN WITNESS WHEREOF, the Company and the Optionee have executed this
Agreement as of the day and year first above written.

            LIFECORE BIOMEDICAL, INC.
      By         Its   President & CEO
     

Optionee ________________________

Date ____________