Document:

<PAGE>

                                                                   EXHIBIT 10.56

(PCTEL(TM) LOGO)
SIMPLIFYING MOBILITY

August 22, 2006

Steven Deppe
1250 Persimmon Dr.
St. Charles, Illinois 60174

Subject: Severance Benefits

Dear Steve:

The January, 2004 Employment Agreement that PCTEL ("Company") and you
("Employee)" signed as of January 2, 2004 provides that any alterations or
modifications to the terms of your employment can only be made in writing signed
by both parties. The January, 2004 Employment Agreement provided for certain
severance benefits that expired in January, 2006. I am pleased to extend to you
the below severance benefits which were approved by PCTEL, Inc.'s Board of
Directors earlier this year, and which will become effective upon your written
acceptance of this letter.

SEVERANCE BENEFITS

(a) Termination by Company Without Cause and Apart From Change of Control. If,
either prior to the occurrence of a Change of Control or after the twelve (12)
month period following a Change of Control, Employee's employment is terminated
(A) involuntarily by the Company for reasons other than Cause, death or
Disability, or (B) by Employee pursuant to a Voluntary Termination for Good
Reason, then Employee shall be entitled to receive the following benefits from
the Company:

     (i) Salary Continuation. Employee shall continue to receive Employee's then
current Base Salary for a period of twelve (12) months following Employee's
termination of employment by the Company for reasons other than Cause. All such
severance payments shall be paid in accordance with the Company's normal payroll
practices. Such continuation of Employee's Base Salary shall be in lieu of any
and all other benefits which Employee is entitled to receive on the date of
Employee's termination of employment pursuant to any Company severance and
benefit plans and practices or pursuant to other agreements with the Company.
Employee shall not be entitled to pro-rated payment of an annual bonus.

     (ii) Benefits. Employee shall receive one hundred percent (100%) of
Company-paid health, dental and vision insurance benefits at the same level of
coverage as was provided to Employee immediately prior to Employee's termination
of employment by the Company for reasons other than Cause ("Company-Paid
Coverage"). If such coverage included Employee's dependents immediately prior to
Employee's termination, such dependents shall also be covered at the Company's
expense. Provided that Employee elects COBRA within the required period,
Company-Paid Coverage shall continue until the earlier of (A) twelve (12) months
following the date of Employee's termination by the Company for reasons other
than Cause (the "Termination Date"), and (B) the date upon which Employee or
Employee's dependents become covered under another employer's group health,
dental and vision insurance benefit plans. For purposes of Title X of the
Consolidated Budget Reconciliation Act of 1985 ("COBRA"), the date of the
qualifying event for Employee and his or her dependents shall be the Termination
Date.

     (iii) Partial Accelerated Vesting. All equity awards from the Company then
held by Employee shall partially accelerate, or if Employee is then holding
unvested shares, Company's right to repurchase the then-unvested shares under
each such equity award shall partially lapse, with respect to the number of
shares under each such award that would have become vested or been released from
such repurchase right under each respective equity award if Employee's

   8725 West Higgins Road Suite 400 Chicago, IL 60631 / Tel: +1-773-243-3000 /
                      Fax: +1-773-243-3050 / www.pctel.com
                               PCTEL Inc. (C) 2006

<PAGE>

(PCTEL(TM) LOGO)
SIMPLIFYING MOBILITY

employment with the Company had continued for an additional twelve (12) months
following Employee's effective termination date for reasons other than Cause.

(b) Termination Following a Change of Control. If Employee's employment is
terminated within twelve (12) months following a Change of Control, the
severance and other benefits to which Employee is entitled, if any, shall be
governed by the Management Retention Agreement (which includes the definition of
Change of Control).

(c) Other Termination. If Employee's employment is terminated by the Company for
Cause, or by Employee for any reason, including death or Disability but other
than pursuant to a Voluntary Termination for Good Reason, then Employee shall
not be entitled to receive the severance and other benefits discussed above, but
may be eligible for those benefits (if any) as may then be required by law
established under the Company's severance and benefit plans and policies
existing at the time of such termination.

Section 409A Compliance. If the Company reasonably determines that Section 409A
of the Internal Revenue Code will result in the imposition of additional tax to
an earlier payment of the severance and other benefits provided in this letter
agreement, this letter agreement will be deemed amended to the extent necessary
to avoid the imposition of any such additional tax or income recognition prior
to actual payment to Employee under Section 409A and any temporary, proposed or
final Treasury Regulations and guidance promulgated thereunder, and the parties
agree to cooperate with each other and to take reasonably necessary steps in
this regard. The remaining severance benefits will be payable as provided above.

Definition of Terms:

The following terms referred to in this letter agreement shall have the
following meanings:

Base Salary. "Base Salary" shall mean an amount equal to the Employee's Company
annual salaried compensation.

Cause. "Cause" shall mean (i) an act of personal dishonesty taken by the
Employee in connection with his responsibilities as an Employee and intended to
result in substantial personal enrichment of the Employee, (ii) Employee being
convicted of a felony, (iii) a willful act by the Employee which constitutes
gross misconduct and which is injurious to the Company, (iv) following delivery
to the Employee of a written demand for performance from the Company which
describes the basis for the Company's reasonable belief that the Employee has
not substantially performed his duties, continued violations by the Employee of
the Employee's obligations to the Company which are demonstrably willful and
deliberate on the Employee's part.

Change of Control. "Change of Control" is as defined in the Management Retention
Agreement entered into between Company and Employee.

Disability. "Disability" shall mean that the Employee has been unable to perform
his Company duties as the result of his incapacity due to physical or mental
illness, and such inability, at least 26 weeks after its commencement, is
determined to be total and permanent by a physician selected by the Company or
its insurers and acceptable to the Employee or the Employee's legal
representative (such Agreement as to acceptability not to be unreasonably
withheld). Termination resulting from Disability may only be effected after at
least 30 days' written notice by the Company of its intention to terminate the
Employee's employment. In the event that the Employee resumes the performance of
substantially all of his duties hereunder before the termination of his
employment becomes effective, the notice of intent to terminate shall
automatically be deemed to have been revoked.

   8725 West Higgins Road Suite 400 Chicago, IL 60631 / Tel: +1-773-243-3000 /
                      Fax: +1-773-243-3050 / www.pctel.com
                               PCTEL Inc. (C) 2006

<PAGE>

(PCTEL(TM) LOGO)
SIMPLIFYING MOBILITY

Voluntary Termination for Good Reason. "Voluntary Termination for Good Reason"
shall mean the Employee voluntarily resigns after the occurrence of any of the
following: (i) a reduction by the Company in the Base Salary of the Employee as
in effect immediately prior to such reduction (other than a reduction that
generally applies to Company officers and/or managers); (ii) a material
reduction by the Company in the aggregate level of Employee benefits, including
bonuses, to which the Employee was entitled immediately prior to such reduction
with the result that the Employee's aggregate benefits package is materially
reduced (other than a reduction that generally applies to Company officers
and/or managers); (iii) the relocation of the Employee to a facility or a
location more than thirty-five (35) miles from the Employee's then present
location, without the Employee's express written consent; or (iv) any act or set
of facts or circumstances which would, under Illinois case law or statute
constitute a constructive termination of the Employee. For the avoidance of
doubt, the voluntary resignation by Employee after the occurrence of either of
the following shall not constitute grounds for a "Voluntary Termination for Good
Reason": (1) a material reduction of the Employee's duties, title, authority or
responsibilities, relative to the Employee's duties, title, authority or
responsibilities as in effect immediately prior to such reduction, in the
instance where, as a result of the Company being acquired and made part of a
larger entity, a the Senior Vice-President of a business unit of the Company,
for example, remains as such following a Change of Control, or, with good
business reasons, such as a restructure of the Company and/or its subsidiaries,
and/or a restructure of functions and/or reporting relationships; (2) a material
reduction, without good business reasons, of the facilities and perquisites
(including office space and location) available to the Employee immediately
prior to such reduction (other than a reduction that generally applies to
Company officers and/or managers).

Except as provided above, all remaining provisions of the entire employment
agreement between us shall continue in full force and effect.

Please indicate your acceptance to the above and foregoing by signing and
returning to me the enclosed copy of this letter. Thank you.

Very truly yours,

-------------------------------------
Martin H. Singer

Accept and Agree to the above and
foregoing this 22nd of August, 2006.

/s/ Steve Deppe
-------------------------------------
Steven Deppe

   8725 West Higgins Road Suite 400 Chicago, IL 60631 / Tel: +1-773-243-3000 /
                      Fax: +1-773-243-3050 / www.pctel.com
                               PCTEL Inc. (C) 2006exv10w1

 

Exhibit 10.1

 

 

LIFECORE BIOMEDICAL, INC.

1996 STOCK PLAN, AS AMENDED

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	SECTION 1.
	 	GENERAL PURPOSE OF PLAN; DEFINITIONS	 	 	1	 
	SECTION 2.
	 	ADMINISTRATION	 	 	3	 
	SECTION 3.
	 	STOCK SUBJECT TO PLAN	 	 	4	 
	SECTION 4.
	 	ELIGIBILITY	 	 	4	 
	SECTION 5.
	 	STOCK OPTIONS	 	 	5	 
	SECTION 6.
	 	STOCK APPRECIATION RIGHTS	 	 	8	 
	SECTION 7.
	 	RESTRICTED STOCK	 	 	9	 
	SECTION 8.
	 	DEFERRED STOCK AWARDS	 	 	11	 
	SECTION 9.
	 	TRANSFER, LEAVE OF ABSENCE, ETC.	 	 	12	 
	SECTION 10.
	 	AMENDMENTS AND TERMINATION	 	 	12	 
	SECTION 11.
	 	UNFUNDED STATUS OF PLAN	 	 	13	 
	SECTION 12.
	 	GENERAL PROVISIONS	 	 	13	 

i 

 

LIFECORE BIOMEDICAL, INC.

1996 STOCK PLAN

     SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS.

     The name of this plan is the Lifecore Biomedical, Inc. 1996 Stock Plan (the “Plan”). The
purpose of the Plan is to enable Lifecore Biomedical, Inc. (the “Company”) to retain and attract
executives and other key employees, non-employee directors and consultants who contribute to the
Company’s success by their ability, ingenuity and industry, and to enable such individuals to
participate in the long-term success and growth of the Company by giving them a proprietary
interest in the Company.

     For purposes of the Plan, the following terms shall be defined as set forth below:

     a. “BOARD” means the Board of Directors of the Company as it may be comprised from time to
time.

     b. “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.

     c. “CODE” means the Internal Revenue Code of 1986, as amended from time to time, or any
successor statute.

     d. “COMMITTEE” means the Committee referred to in Section 2 of the Plan. If at any time no
Committee shall be in office, then the functions of the Committee specified in the Plan shall be
exercised by the Board, unless the Plan specifically states otherwise.

     e. “CONSULTANT” means any person, including an advisor, engaged by the Company or a Parent of
the Subsidiary of the Company to render services and who is compensated for such services and who
is not an employee of the Company or any Parent Corporation or Subsidiary of the Company. A
Non-Employee Director may serve as a Consultant.

     f. “COMPANY” means Lifecore Biomedical, Inc., a corporation organized under the laws of the
State of Minnesota (or any successor corporation).

     g. “DEFERRED STOCK” means an award made pursuant to Section 8 below of the right to receive
stock at the end of a specified deferral period.

     h. “DISABILITY” means permanent and total disability as determined by the Committee.

     i. “EARLY RETIREMENT” means retirement, with consent of the Committee at the time of
retirement, from active employment with the Company and any Subsidiary or Parent Corporation of the
Company.

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     j. “FAIR MARKET VALUE” of Stock on any given date shall be determined by the Committee as
follows: (a) if the Stock is listed for trading on one of more national securities exchanges, or
is traded on the NASDAQ Stock Market, the last reported sales price on the principal such exchange
or the NASDAQ Stock Market on the date in question, or if such Stock shall not have been traded on
such principal exchange on such date, the last reported sales price on such principal exchange or
the NASDAQ Stock Market on the first day prior thereto on which such Stock was so traded; or (b) if
the Stock is not listed for trading on a national securities exchange or the NASDAQ Stock Market,
but is traded in the over-the-counter market, including the NASDAQ Small Cap Market, the closing
bid price for such Stock on the date in question, or if there is no such bid price for such Stock
on such date, the closing bid price on the first day prior thereto on which such price existed; or
(c) if neither (a) or (b) is applicable, by any means fair and reasonable by the Committee, which
determination shall be final and binding on all parties.

     k. “INCENTIVE STOCK OPTION” means any Stock Option intended to be and designated as an
“Incentive Stock Option” within the meaning of Section 422 of the Code.

     l. “NON-EMPLOYEE DIRECTOR” means a “Non-Employee Director” within the meaning of Rule
16b-3(b)(3) under the Securities Exchange Act of 1934.

     m. “NON-QUALIFIED STOCK OPTION” means any Stock Option that is not an Incentive Stock Option,
and is intended to be and is designated as a “Non-Qualified Stock Option.”

     n. “NORMAL RETIREMENT” means retirement from active employment with the Company and any
Subsidiary or Parent Corporation of the Company on or after age 65.

     o. “OUTSIDE DIRECTOR” means a Director who: (a) is not a current employee of the Company or
any member of an affiliated group which includes the Company; (b) is not a former employee of the
Company who receives compensation for prior services (other than benefits under a tax-qualified
retirement plan) during the taxable year; (c) has not been an officer of the Company; (d) does not
receive remuneration from the Company, either directly or indirectly, in any capacity other than as
a director, except as otherwise permitted under Code Section 162(m) and regulations thereunder.
For this purpose, remuneration includes any payment in exchange for good or services. This
definition shall be further governed by the provisions of Code Section 162(m) and regulations
promulgated thereunder.

     p. “PARENT CORPORATION” means any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company if each of the corporations (other than the Company) owns
stock possessing 50% or more of the total combined voting power of all classes of stock in one of
the other corporations in the chain.

     q. “RESTRICTED STOCK” means an award of shares of Stock that are subject to restrictions under
Section 7 below.

     r. “RETIREMENT” means Normal Retirement or Early Retirement.

     s. “STOCK” means the Common Stock of the Company.

2

 

     t. “STOCK APPRECIATION RIGHT” means the right pursuant to an award granted under Section 6
below to surrender to the Company all or a portion of a Stock Option in exchange for an amount
equal to the difference between (i) Fair Market Value, as of the date such Stock Option or such
portion thereof is surrendered, of the shares of Stock covered by such Stock Option or such portion
thereof, and (ii) the aggregate exercise price of such Stock Option or such portion thereof.

     u. “STOCK OPTION” means any option to purchase shares of Stock granted pursuant to Section 5
below.

     v. “SUBSIDIARY” means any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if each of the corporations (other than the last
corporation in the unbroken chain) owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in the chain.

     SECTION 2. ADMINISTRATION.

     The Plan shall be administered by the Board of Directors or by a Committee appointed by the
Board of Directors of the Company consisting of at least two Directors, all of whom shall be
Outside Directors and Non-Employee Directors, who shall serve at the pleasure of the Board.

     The Committee shall have the power and authority to grant to eligible employees or
Consultants, pursuant to the terms of the Plan: (i) Stock Options, (ii) Stock Appreciation Rights,
(iii) Restricted Stock, or (iv) Deferred Stock awards.

     In particular, the Committee shall have the authority:

     (i) to select the officers and other key employees of the Company and its Subsidiaries and
other eligible persons to whom Stock Options, Stock Appreciation Rights, Restricted Stock and
Deferred Stock awards may from time to time be granted hereunder;

     (ii) to determine whether and to what extent Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock and Deferred Stock awards, or a combination of
the foregoing, are to be granted hereunder;

     (iii) to determine the number of shares to be covered by each such award granted hereunder;

     (iv) to determine the terms and conditions, not inconsistent with the terms of the Plan, of
any award granted hereunder (including, but not limited to, any restriction on any Stock Option or
other award and/or the shares of Stock relating thereto), which authority shall be exclusively
vested in the Committee (and not the Board) for purposes of establishing performance criteria used
with Restricted Stock and Deferred Stock awards; provided, however, that in the event of a merger
or asset sale, the applicable provisions of Sections 5(c) and 7(c) of the Plan shall govern the
acceleration of the vesting of any Stock Option or awards;

3

 

     (v) to determine whether, to what extent and under what circumstances Stock and other amounts
payable with respect to an award under this Plan shall be deferred either automatically or at the
election of the participant.

     The Committee shall have the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall, from time to time, deem advisable; to
interpret the terms and provisions of the Plan and any award issued under the Plan (and any
agreements relating thereto); and to otherwise supervise the administration of the Plan. The
Committee may delegate to executive officers of the Company the authority to exercise the powers
specified in (i), (ii), (iii), (iv) and (v) above with respect to persons who are not either the
chief executive officer of the Company or the four highest paid officers of the Company other than
the chief executive officer.

     All decisions made by the Committee pursuant to the provisions of the Plan shall be final and
binding on all persons, including the Company and Plan participants.

     SECTION 3. STOCK SUBJECT TO PLAN.

     The total number of shares of Stock reserved and available for distribution under the Plan
shall be 3,000,000. Such shares may consist, in whole or in part, of authorized and unissued
shares.

     Subject to paragraph (b)(iv) of Section 6 below, if any shares that have been optioned cease
to be subject to Stock Options, or if any shares subject to any Restricted Stock or Deferred Stock
award granted hereunder are forfeited or such award otherwise terminates without a payment being
made to the participant, such shares shall again be available for distribution in connection with
future awards under the Plan.

     In the event of any merger, reorganization, consolidation, recapitalization, stock dividend,
other change in corporate structure affecting the Stock, or spin-off or other distribution of
assets to shareholders, such substitution or adjustment shall be made in the aggregate number of
shares reserved for issuance under the Plan, in the number and option price of shares subject to
outstanding options granted under the Plan, and in the number of shares subject to Restricted Stock
or Deferred Stock awards granted under the Plan as may be determined to be appropriate by the
Committee, in its sole discretion, provided that the number of shares subject to any award shall
always be a whole number. Such adjusted option price shall also be used to determine the amount
payable by the Company upon the exercise of any Stock Appreciation Right associated with any
Option.

     SECTION 4. ELIGIBILITY.

     Officers, other key employees of the Company and Subsidiaries, members of the Board of
Directors, and Consultants who are responsible for or contribute to the management, growth and
profitability of the business of the Company and its Subsidiaries are eligible to be granted Stock
Options, Stock Appreciation Rights, Restricted Stock or Deferred Stock awards under the Plan. The
optionees and participants under the Plan shall be selected from time to time by the Committee, in
its sole discretion, from among those eligible, and the Committee shall determine, in its sole
discretion, the number of shares covered by each award.

4

 

     Notwithstanding the foregoing, no person shall receive grants of Stock Options and Stock
Appreciation Rights under this Plan which exceed 600,000 shares during any fiscal year of the
Company.

     SECTION 5. STOCK OPTIONS.

     Any Stock Option granted under the Plan shall be in such form as the Committee may from time
to time approve.

     The Stock Options granted under the Plan may be of two types: (i) Incentive Stock Options and
(ii) Non-Qualified Stock Options. No Incentive Stock Options shall be granted under the Plan after
September 19, 2006.

     The Committee shall have the authority to grant any optionee Incentive Stock Options,
Non-Qualified Stock Options, or both types of options (in each case with or without Stock
Appreciation Rights). To the extent that any option does not qualify as an Incentive Stock Option,
it shall constitute a separate Non-Qualified Stock Option.

     Anything in the Plan to the contrary notwithstanding, no term of this Plan relating to
Incentive Stock Options shall be interpreted, amended or altered, nor shall any discretion or
authority granted under the Plan be so exercised, so as to disqualify either the Plan or any
Incentive Stock Option under Section 422 of the Code. The preceding sentence shall not preclude
any modification or amendment to an outstanding Incentive Stock Option, whether or not such
modification or amendment results in disqualification of such Stock Option as an Incentive Stock
Option, provided the optionee consents in writing to the modification or amendment.

     Options granted under the Plan shall be subject to the following terms and conditions and
shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as
the Committee shall deem desirable.

     (a) OPTION PRICE. The option price per share of Stock purchasable under a Stock Option shall
be determined by the Committee at the time of grant. In no event shall the option price per share
of Stock purchasable under an Incentive Stock Option be less than 100% of Fair Market Value on the
date the option is granted. If an employee owns or is deemed to own (by reason of the attribution
rules applicable under Section 424(d) of the Code) more than 10% of the combined voting power of
all classes of stock of the Company or any Parent Corporation or Subsidiary and an Incentive Stock
Option is granted to such employee, the option price shall be no less than 110% of the Fair Market
Value of the Stock on the date the option is granted.

     (b) OPTION TERM. The term of each Stock Option shall be fixed by the Committee, but no
Incentive Stock Option shall be exercisable more than ten years after the date the option is
granted. If an employee owns or is deemed to own (by reason of the attribution rules of Section
424(d) of the Code) more than 10% of the combined voting power of all classes of stock of the
Company or any Parent Corporation or Subsidiary and an Incentive Stock Option is granted to such
employee, the term of such option shall be no more than five years from the date of grant.

5

 

     (c) EXERCISABILITY. Stock Options shall be exercisable at such time or times as determined by
the Committee at or after grant, subject to the restrictions stated in Section 5(b) above. If the
Committee provides, in its discretion, that any option is exercisable only in installments, the
Committee may waive such installment exercise provisions at any time. Notwithstanding anything
contained in the Plan to the contrary, the Committee may, in its discretion, extend or vary the
term of any Stock Option or any installment thereof, whether or not the optionee is then employed
by the Company, if such action is deemed to be in the best interests of the Company; provided,
however, that in the event of a merger or sale of assets, the provisions of this Section 5(c) shall
govern vesting acceleration. Notwithstanding the foregoing, unless the Stock Option provides
otherwise, any Stock Option granted under this Plan shall be 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 Stock of the
Company.

     The grant of an option pursuant to the Plan shall not limit in any way the right or power of
the Company to make adjustments, reclassifications, reorganizations or changes of its capital or
business structure or to merge, exchange or consolidate or to dissolve, liquidate, sell or transfer
all or any part of its business or assets.

     (d) METHOD OF EXERCISE. Stock Options may be exercised in whole or in part at any time during
the option period by giving written notice of exercise to the Company specifying the number of
shares to be purchased. Such notice shall be accompanied by payment in full of the purchase price,
either by check, or by any other form of legal consideration deemed sufficient by the Committee and
consistent with the Plan’s purpose and applicable law, including promissory notes or a properly
executed exercise notice together with irrevocable instructions to a broker acceptable to the
Company to promptly deliver to the Company the amount of sale or loan proceeds to pay the exercise
price. As determined by the Committee at the time of grant or exercise, in its sole discretion,
payment in full or in part may also be made in the form of Stock 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) or, in the case of the exercise of a Non-Qualified Stock Option,
Restricted Stock or Deferred Stock subject to an award hereunder (based, in each case, on the Fair
Market Value of the Stock on the date the option is exercised, as determined by the Committee),
provided, however, that, in the case of an Incentive Stock Option, the right to make a payment in
the form of already owned shares may be authorized only at the time the option is granted, and
provided further that in the event payment is made in the form of shares of Restricted Stock or a
Deferred Stock award, the optionee will receive a portion of the option shares in the form of, and
in an amount equal to, the Restricted Stock or Deferred Stock award tendered as payment by the
optionee. If the terms of an option so permit, an optionee may elect to pay all or part of the
option exercise price by having the Company withhold from the shares of Stock that would otherwise
be issued upon exercise that number of shares of Stock having a Fair Market Value equal to the
aggregate option exercise price for the shares with respect to which such election is made. No
shares of Stock shall be issued until full payment therefor has been made. An optionee shall
generally have the rights to

6

 

dividends and other rights of a shareholder with respect to shares subject to the option when
the optionee has given written notice of exercise, has paid in full for such shares, and, if
requested, has given the representation described in paragraph (a) of Section 12.

     (e) NON-TRANSFERABILITY OF OPTIONS. No Stock Option shall be transferable by the optionee
otherwise than by will or by the laws of descent and distribution, and all Stock Options shall be
exercisable, during the optionee’s lifetime, only by the optionee.

     (f) TERMINATION BY DEATH. If an optionee’s employment by the Company and any Subsidiary or
Parent Corporation terminates by reason of death, any Incentive Stock Option may thereafter be
immediately exercised, to the extent then exercisable, by the legal representative of the estate or
by the legatee of the optionee under the will of the optionee, for a period of twelve months from
the date of such death or until the expiration of the stated term of the option, whichever period
is shorter. In the event of termination of employment by reason of death, if any Stock Option is
exercised after the expiration of the exercise periods that apply for purposes of Section 422 of
the Code, the option will thereafter be treated as a Non-Qualified Stock Option.

     (g) TERMINATION BY REASON OF DISABILITY. If an optionee’s employment by the Company and any
Subsidiary or Parent Corporation terminates by reason of Disability, any Incentive Stock Option
held by such optionee may thereafter be exercised, to the extent it was exercisable at the time of
termination due to Disability, but may not be exercised after twelve months from the date of such
termination of employment or the expiration of the stated term of the option, whichever period is
the shorter. In the event of termination of employment by reason of Disability, if any Stock
Option is exercised after the expiration of the exercise periods that apply for purposes of Section
422 of the Code, the option will thereafter be treated as a Non-Qualified Stock Option.

     (h) TERMINATION BY REASON OF RETIREMENT. If an optionee’s employment by the Company and any
Subsidiary or Parent Corporation terminates by reason of Retirement and the terms of the Stock
Option so provide, any Incentive Stock Option held by such optionee may thereafter be exercised to
the extent it was exercisable at the time of such Retirement, but may not be exercised after twelve
months from the date of such termination of employment or the expiration of the stated term of the
option, whichever period is the shorter. In the event of termination of employment by reason of
Retirement, if any Stock Option is exercised after the expiration of the exercise periods that
apply for purposes of Section 422 of the Code, the option will thereafter be treated as a
Non-Qualified Stock Option.

     (i) OTHER TERMINATION. If an optionee’s continuous status as an employee or Consultant
terminates (other than upon the optionee’s death, Disability or Retirement), any Incentive Stock
Option held by such optionee may thereafter be exercised to the extent it was exercisable at the
time of such termination, but may not be exercised after 90 days after such termination, or the
expiration of the stated term of the option, whichever period is the shorter. In the event of
termination of employment by reason other than death, Disability or Retirement and if pursuant to
its terms any Stock Option is exercised after the expiration of the exercise periods that apply for
purposes of Section 422 of the Code, the option will thereafter be treated as a Non-
Qualified Stock Option. In the event an Optionee’s employment with the Company is terminated
for Cause, all unexercised Options granted to such Optionee shall immediately terminate.

7

 

     (j) ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. The aggregate Fair Market Value (determined as
of the time the Stock Option is granted) of the Common Stock with respect to which an Incentive
Stock Option under this Plan or any other plan of the Company and any Subsidiary or Parent
Corporation is exercisable for the first time by an optionee during any calendar year shall not
exceed $100,000.

     (k) DIRECTORS WHO ARE NOT EMPLOYEES. Each person who (i) is not an employee of the Company,
any Parent Corporation or any Subsidiary and (ii) is elected or re-elected as a Director by the
Board or the shareholders on or subsequent to November 17, 2005, shall automatically be granted an
Option to purchase 10,000 shares of Stock as of the date of such election, or 7,500 shares of Stock
as of the date of such re-election, at an option price per share equal to 100% of the Fair Market
Value of a share of Stock on the date of such election or re-election; provided that any such
person who received an option grant pursuant to this Section 5(k) prior to November 17, 2005 shall
not be eligible to receive an additional grant under this section until the third calendar year
following the calendar year in which the most recent prior grant under this Section to such person
was made. All such Options shall be designated as Non-Qualified Stock Options and shall be subject
to the same terms and provisions as are then in effect with respect to the grant of Non-Qualified
Stock Options to officers and key employees of the Company, except that (1) the term of each such
Option shall be equal to ten years, which term shall not expire upon the termination of service as
a Director and (2) the Option shall become exercisable as to one half of the shares eight months
after the date the Option is granted and as to the balance 20 months after the date the Option is
granted. Upon termination of such Director’s service as a Director of the Company, any unvested
Option held by such Director shall not become exercisable. Subject to the foregoing, all provisions
of this Plan not inconsistent with the foregoing shall apply to Options granted pursuant to this
Section 5(k).

     SECTION 6. STOCK APPRECIATION RIGHTS.

     (a) GRANT AND EXERCISE. Stock Appreciation Rights may be granted in conjunction with all or
part of any Stock Option granted under the Plan. In the case of a Non-Qualified Stock Option, such
rights may be granted either at or after the time of the grant of such Option. In the case of an
Incentive Stock Option, such rights may be granted only at the time of the grant of the option.

     A Stock Appreciation Right or applicable portion thereof granted with respect to a given Stock
Option shall terminate and no longer be exercisable upon the termination or exercise of the related
Stock Option, except that a Stock Appreciation Right granted with respect to less than the full
number of shares covered by a related Stock Option shall not be reduced until the exercise or
termination of the related Stock Option exceeds the number of shares not covered by the Stock
Appreciation Right.

     A Stock Appreciation Right may be exercised by an optionee, in accordance with paragraph (b)
of this Section 6, by surrendering the applicable portion of the related Stock Option. Upon such
exercise and surrender, the optionee shall be entitled to receive an amount
determined in the manner prescribed in paragraph (b) of this Section 6. Stock Options which
have been so surrendered, in whole or in part, shall no longer be exercisable to the extent the
related Stock Appreciation Rights have been exercised.

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     (b) TERMS AND CONDITIONS. Stock Appreciation Rights shall be subject to such terms and
conditions, not inconsistent with the provisions of the Plan, as shall be determined from time to
time by the Committee, including the following:

(i) Stock Appreciation Rights shall be exercisable only at such time or times and to the
extent that the Stock Options to which they relate shall be exercisable in accordance with
the provisions of Section 5 and this Section 6 of the Plan.

(ii) Upon the exercise of a Stock Appreciation Right, an optionee shall be entitled to
receive up to, but not more than, an amount in cash or shares of Stock equal in value to the
excess of the Fair Market Value of one share of Stock over the option price per share
specified in the related option multiplied by the number of shares in respect of which the
Stock Appreciation Right shall have been exercised, with the Committee having the right to
determine the form of payment.

(iii) Stock Appreciation Rights shall be transferable only when and to the extent that the
underlying Stock Option would be transferable under Section 5 of the Plan.

(iv) Upon the exercise of a Stock Appreciation Right, the Stock Option or part thereof to
which such Stock Appreciation Right is related shall be deemed to have been exercised for
the purpose of the limitation set forth in Sections 3 and 4 of the Plan on the total number
of shares of Stock to be issued under the Plan and the maximum number of shares to be
awarded to any one person in a fiscal year, but only to the extent of the number of shares
issued or issuable under the Stock Appreciation Right at the time of exercise based on the
value of the Stock Appreciation Right at such time.

(v) A Stock Appreciation Right granted in connection with an Incentive Stock Option may be
exercised only if and when the market price of the Stock subject to the Incentive Stock
Option exceeds the exercise price of such Option.

     SECTION 7. RESTRICTED STOCK.

     (a) ADMINISTRATION. Shares of Restricted Stock may be issued either alone or in addition to
other awards granted under the Plan. The Committee shall determine the officers, key employees and
Consultants of the Company and Subsidiaries to whom, and the time or times at which, grants of
Restricted Stock will be made, the number of shares to be awarded, the time or times within which
such awards may be subject to forfeiture, and all other conditions of the awards. The Committee
may also condition the grant of Restricted Stock upon the attainment of specified performance
goals. The provisions of Restricted Stock awards need not be the same with respect to each
recipient.

     (b) AWARDS AND CERTIFICATES. The prospective recipient of an award of shares of Restricted
Stock shall not have any rights with respect to such award, unless and until such recipient has
executed an agreement evidencing the award and has delivered a fully
executed copy thereof to the Company, and has otherwise complied with the then applicable
terms and conditions.

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(i) Each participant shall be issued a stock certificate in respect of shares of Restricted
Stock awarded under the Plan. Such certificate shall be registered in the name of the
participant, and shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such award, substantially in the following form:

“The transferability of this certificate and the shares of stock represented hereby
are subject to the terms and conditions (including forfeiture) of the Lifecore
Biomedical, Inc. 1996 Stock Plan and an Agreement entered into between the
registered owner and Lifecore Biomedical, Inc. Copies of such Plan and Agreement are
on file in the offices of Lifecore Biomedical, Inc., 3515 Lyman Boulevard, Chaska,
MN 55318.”

(ii) The Committee shall require that the stock certificates evidencing such shares be held
in custody by the Company until the restrictions thereon shall have lapsed, and that, as a
condition of any Restricted Stock award, the participant shall have delivered a stock power,
endorsed in blank, relating to the Stock covered by such award.

     (c) RESTRICTIONS AND CONDITIONS. The shares of Restricted Stock awarded pursuant to the Plan
shall be subject to the following restrictions and conditions:

(i) Subject to the provisions of this Plan and the award agreement, during a period set by
the Committee commencing with the date of such award (the “Restriction Period”), the
participant shall not be permitted to sell, transfer, pledge or assign shares of Restricted
Stock awarded under the Plan. Within these limits, the Committee may provide for the lapse
of such restrictions in installments where deemed appropriate.

(ii) Except as provided in paragraph (c)(i) of this Section 7, the participant shall have,
with respect to the shares of Restricted Stock, all of the rights of a shareholder of the
Company, including the right to vote the shares and the right to receive any cash dividends.
The Committee, in its sole discretion, may permit or require the payment of cash dividends
to be deferred and, if the Committee so determines, reinvested in additional shares of
Restricted Stock (to the extent shares are available under Section 3 and subject to
paragraph (f) of Section 12). Certificates for shares of unrestricted Stock shall be
delivered to the grantee promptly after, and only after, the period of forfeiture shall have
expired without forfeiture in respect of such shares of Restricted Stock.

(iii) Subject to the provisions of the award agreement and paragraph (c)(iv) of this Section
7, upon termination of employment for any reason during the Restriction Period, all shares
still subject to restriction shall be forfeited by the participant.

(iv) In the event of special hardship circumstances of a participant whose employment is
terminated (other than for Cause), including death, Disability or Retirement, or in the
event of an unforeseeable emergency of a participant still in service, the Committee may, in
its sole discretion, when it finds that a waiver would be in the best interest of the
Company, waive in whole or in part any or all remaining restrictions with respect to such
participant’s shares of Restricted Stock.

10

 

(v) Notwithstanding the foregoing, all restrictions with respect to any participant’s shares
of Restricted Stock shall lapse, on the date determined by the Committee, prior to, but in
no event more than 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 Stock of the Company.

     SECTION 8. DEFERRED STOCK AWARDS.

     (a) ADMINISTRATION. Deferred Stock may be awarded either alone or in addition to other awards
granted under the Plan. The Committee shall determine the officers, key employees and Consultants
of the Company and Subsidiaries to whom and the time or times at which Deferred Stock shall be
awarded, the number of Shares of Deferred Stock to be awarded to any participant or group of
participants, the duration of the period (the “Deferral Period”) during which, and the conditions
under which, receipt of the Stock will be deferred, and the terms and conditions of the award in
addition to those contained in paragraph (b) of this Section 8. The Committee may also condition
the grant of Deferred Stock upon the attainment of specified performance goals. The provisions of
Deferred Stock awards need not be the same with respect to each recipient.

     (b) TERMS AND CONDITIONS.

(i) Subject to the provisions of this Plan and the award agreement, Deferred Stock awards
may not be sold, assigned, transferred, pledged or otherwise encumbered during the Deferral
Period. At the expiration of the Deferral Period (or Elective Deferral Period, where
applicable), share certificates shall be delivered to the participant, or his legal
representative, in a number equal to the shares covered by the Deferred Stock award.

(ii) Amounts equal to any dividends declared during the Deferral Period with respect to the
number of shares covered by a Deferred Stock award will be paid to the participant currently
or deferred and deemed to be reinvested in additional Deferred Stock or otherwise
reinvested, all as determined at the time of the award by the Committee, in its sole
discretion.

(iii) Subject to the provisions of the award agreement and paragraph (b)(iv) of this Section
8, upon termination of employment for any reason during the Deferral Period for a given
award, the Deferred Stock in question shall be forfeited by the participant.

(iv) In the event of special hardship circumstances of a participant whose employment is
terminated (other than for Cause) including death, Disability or Retirement, or in the event
of an unforeseeable emergency of a participant still in service, the Committee may, in its
sole discretion, when it finds that a waiver would be in the best interest of the
Company, waive in whole or in part any or all of the remaining deferral limitations imposed
hereunder with respect to any or all of the participant’s Deferred Stock.

11

 

(v) A participant may elect to further defer receipt of the award for a specified period or
until a specified event (the “Elective Deferral Period”), subject in each case to the
Committee’s approval and to such terms as are determined by the Committee, all in its sole
discretion. Subject to any exceptions adopted by the Committee, such election must
generally be made prior to completion of one half of the Deferral Period for a Deferred
Stock award (or for an installment of such an award).

(vi) Each award shall be confirmed by, and subject to the terms of, a Deferred Stock
agreement executed by the Company and the participant.

     SECTION 9. TRANSFER, LEAVE OF ABSENCE, ETC.

     For purposes of the Plan, the following events shall not be deemed a termination of
employment:

     (a) a transfer of an employee from the Company to a Parent Corporation or Subsidiary, or from
a Parent Corporation or Subsidiary to the Company, or from one Subsidiary to another;

     (b) a leave of absence, approved in writing by the Committee, for military service or
sickness, or for any other purpose approved by the Company if the period of such leave does not
exceed ninety (90) days (or such longer period as the Committee may approve, in its sole
discretion); and

     (c) a leave of absence in excess of ninety (90) days, approved in writing by the Committee,
but only if the employee’s right to reemployment is guaranteed either by a statute or by contract,
and provided that, in the case of any leave of absence, the employee returns to work within 30 days
after the end of such leave.

     SECTION 10. AMENDMENTS AND TERMINATION.

     The Board may amend, alter, or discontinue the Plan, but no amendment, alteration, or
discontinuation shall be made (i) which would impair the rights of an optionee or participant under
a Stock Option, Restricted Stock or other Stock-based award theretofore granted, without the
optionee’s or participant’s consent, or (ii) which without the approval of the stockholders of the
Company would cause the Plan to no longer comply with Rule 16b-3 under the Securities Exchange Act
of 1934, Section 422 of the Code or any other regulatory requirements.

     The Committee may amend the terms of any award or option theretofore granted, prospectively or
retroactively to the extent such amendment is consistent with the terms of this Plan, but no such
amendment shall impair the rights of any holder without his or her consent except to the extent
authorized under the Plan. The Committee may also substitute new Stock Options for previously
granted options, including previously granted options having higher option prices.

12

 

     SECTION 11. UNFUNDED STATUS OF PLAN.

     The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation.
With respect to any payments not yet made to a participant or optionee by the Company, nothing
contained herein shall give any such participant or optionee any rights that are greater than those
of a general creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under the Plan to deliver
Stock or payments in lieu of or with respect to awards hereunder, provided, however, that the
existence of such trusts or other arrangements is consistent with the unfunded status of the Plan.

     SECTION 12. GENERAL PROVISIONS.

     (a) The Committee may require each person purchasing shares pursuant to a Stock Option under
the Plan to represent to and agree with the Company in writing that the optionee is acquiring the
shares without a view to distribution thereof. The certificates for such shares may include any
legend which the Committee deems appropriate to reflect any restrictions on transfer.

     All certificates for shares of Stock delivered under the Plan pursuant to any Restricted
Stock, Deferred Stock or other Stock-based awards shall be subject to such stock-transfer orders
and other restrictions as the Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon which the Stock is
then listed, and any applicable Federal or state securities laws, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate reference to such
restrictions.

     (b) Subject to paragraph (d) below, recipients of Restricted Stock, Deferred Stock and other
Stock-based awards under the Plan (other than Stock Options) are not required to make any payment
or provide consideration other than the rendering of services.

     (c) Nothing contained in this Plan shall prevent the Board of Directors from adopting other or
additional compensation arrangements, subject to stockholder approval if such approval is required;
and such arrangements may be either generally applicable or applicable only in specific cases. The
adoption of the Plan shall not confer upon any employee of the Company or any Subsidiary any right
to continued employment with the Company or a Subsidiary, as the case may be, nor shall it
interfere in any way with the right of the Company or a Subsidiary to terminate the employment of
any of its employees at any time.

     (d) Each participant shall, no later than the date as of which any part of the value of an
award first becomes includible as compensation in the gross income of the participant for Federal
income tax purposes, pay to the Company, or make arrangements satisfactory to the Committee
regarding payment of, any Federal, state, or local taxes of any kind required by law to be withheld
with respect to the award. The obligations of the Company under the Plan shall be conditional on
such payment or arrangements and the Company and Subsidiaries shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment of any kind otherwise due to the
participant. With respect to any award under the Plan, if the terms of such

13

 

award so permit, a participant may elect by written notice to the Company to satisfy part or
all of the withholding tax requirements associated with the award by (i) authorizing the Company to
retain from the number of shares of Stock that would otherwise be deliverable to the participant,
or (ii) delivering to the Company from shares of Stock already owned by the participant, that
number of shares having an aggregate Fair Market Value equal to part or all of the tax payable by
the participant under this Section 12(d). Any such election shall be in accordance with, and
subject to, applicable tax and securities laws, regulations and rulings.

     (e) At the time of grant, the Committee may provide in connection with any grant made under
this Plan that the shares of Stock received as a result of such grant shall be subject to a
repurchase right in favor of the Company, pursuant to which the participant shall be required to
offer to the Company upon termination of employment for any reason any shares that the participant
acquired under the Plan, with the price being the then Fair Market Value of the Stock or, in the
case of a termination for Cause, an amount equal to the cash consideration paid for the Stock,
subject to such other terms and conditions as the Committee may specify at the time of grant. The
Committee may, at the time of the grant of an award under the Plan, provide the Company with the
right to repurchase, or require the forfeiture of, shares of Stock acquired pursuant to the Plan by
any participant who, at any time within two years after termination of employment with the Company,
directly or indirectly competes with, or is employed by a competitor of, the Company.

     (f) The reinvestment of dividends in additional Restricted Stock (or in Deferred Stock or
other types of Plan awards) at the time of any dividend payment shall only be permissible if the
Committee (or the Company’s chief financial officer) certifies in writing that under Section 3
sufficient shares are available for such reinvestment (taking into account then outstanding Stock
Options and other Plan awards).

     (g) The Plan is expressly made subject to the approval by shareholders of the Company. If the
Plan is not so approved by the shareholders on or before one year after this Plan’s adoption by the
Board of Directors, this Plan shall not come into effect. The offering of the shares hereunder
shall be also subject to the effecting by the Company of any registration or qualification of the
shares under any federal or state law or the obtaining of the consent or approval of any
governmental regulatory body which the Company shall determine, in its sole discretion, is
necessary or desirable as a condition to or in connection with, the offering or the issue or
purchase of the shares covered thereby. The Company shall make every reasonable effort to effect
such registration or qualification or to obtain such consent or approval.

14

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