Document:

exv10w2

 

EXHIBIT 10.2

LIFECORE BIOMEDICAL, INC.

NON-QUALIFIED STOCK OPTION AGREEMENT

(FOR DIRECTORS)

AMENDMENT NO. 1

     THIS AMENDMENT NO. 1 (the “Amendment”) to the OPTION AGREEMENT (the “Agreement”) dated as of
June 15, 2006 between the parties hereto, is made as of November 20, 2006 between LIFECORE
BIOMEDICAL, INC., a Minnesota corporation (the “Company”), and Martin J. Emerson, a director of the
Company (the “Optionee”).

     WHEREAS, on June 15, 2006 the Company granted the Optionee an option under the Company’s 1996
Stock Plan (the “Plan”) to purchase 10,000 shares of its Common Stock (the “Common Stock”) pursuant
to the Agreement; and

     WHEREAS, on November 16, 2006, the Board of Directors amended the Plan to provide that the
initial grant of options to new directors would be reduced from 10,000 options to 7,500 options and
that such amount would then be prorated to reflect the number of months remaining in the year
during which such new director was appointed to the Board; and

     WHEREAS, in light of these amendments to the Plan, the Optionee desires to amend the Agreement
to reduce and prorate the option granted under the Agreement so that it reflects these amendments
to the Plan as if they had been adopted prior to the execution of the Agreement; and

     WHEREAS, the Optionee is executing this Amendment voluntarily and forfeiting 6,250 of the
options granted under the Agreement without compensation.

     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. Section 1 of the Agreement is hereby deleted in its entirety and replaced with the
following:

     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 3,750 shares of the Common Stock of the
Company on the terms and conditions herein set forth.

 

 

     2. Section 4 of the Agreement is hereby deleted in its entirety and replaced with the
following:

     4. Exercise of Option. The Option may be exercised as follows:

     (a) On and after January 15, 2007, the Option may be exercised as to
1,875 shares.

     (b) On and after January 15, 2008, the Option may be exercised as to
1,875 shares.

     3. Except as specifically set forth in Sections 1 and 2 of this Amendment, the Agreement shall
remain unchanged and shall continue in full force and effect.

     4. This Amendment may be signed in counterparts and the signatures delivered by facsimile,
each of which shall be an original with the same effect as if the signatures thereto were upon the
same instrument.

     IN WITNESS WHEREOF, the Company and the Optionee have executed this Amendment as of the day
and year first above written.

	 	 	 	 	 	 	 
	 	 	 	 	LIFECORE BIOMEDICAL, INC.
	 
	 	 	 	 	 	 
	/s/ Martin J. Emerson

	 	 	 	By
	 	/s/ Dennis J. Allingham
	 

	 	 	 	 	 	 
	Optionee: Martin J. Emerson

	 	 	 	 	 	Dennis J. Allingham, President & CEO<PAGE>

OPTIONAL GUARANTEED MINIMUM WITHDRAWAL BENEFIT MAXIMUM ANNIVERSARY VALUE RIDER

Notwithstanding any provision in the Contract or Certificate ("Contract") to the
contrary, this Rider becomes a part of the Contract to which it is attached.
Should any provision in this Rider conflict with the Contract, the provisions of
this Rider will prevail.

Subject to the terms and conditions set forth herein, this optional Rider
provides a Guaranteed Minimum Withdrawal Benefit ("GMWB") that guarantees an
amount available for Withdrawal not to exceed a maximum annual dollar amount to
be distributed over a specified number of years or over Your lifetime, even if
the Contract Value has been reduced to zero due to unfavorable investment
performance.

EFFECTIVE DATE:  DATE

                                   DEFINITIONS

For purposes of this Rider, the following definitions apply. Terms not defined
in this Rider shall have the same meaning given to them in the Contract.

ANNIVERSARY VALUE
The Contract Value minus any Ineligible Purchase Payments as measured one year
from the Effective Date and on subsequent Contract anniversaries.

BENEFIT BASE
A component of the calculation of the GMWB, which is used to determine the total
amount of guaranteed Withdrawals, the Minimum Withdrawal Period, the GMWB
Charge, and the Maximum Annual Withdrawal Amount.

BENEFIT BASE EVALUATION PERIOD
The period of time over which Anniversary Values are considered in determining
the Benefit Base.

BENEFIT YEAR
Each consecutive one year period starting on the Effective Date.

EFFECTIVE DATE
The date shown above when this Rider becomes effective. If this Rider is elected
at Contract issue, the Effective Date is the date Your Contract is issued. If
this Rider is elected after Your Contract has been issued, the Effective Date is
the date the Rider is elected.

ELIGIBLE PURCHASE PAYMENTS
The Purchase Payments or portion thereof that are included in the calculation of
the Benefit Base.

EXCESS WITHDRAWAL
The portion of any Withdrawal that makes the total of all Withdrawals in a
Benefit Year exceed the Maximum Annual Withdrawal Amount in that Benefit Year.

INELIGIBLE PURCHASE PAYMENTS
Purchase Payments that are not included in the calculation of the Benefit Base.

LIFETIME WITHDRAWAL PERIOD
The period of time, if conditions are met, over which You may take Withdrawals
for the length of Your Life.

MAXIMUM ANNUAL WITHDRAWAL AMOUNT ("MAWA")
The maximum amount available to be withdrawn each Benefit Year under the GMWB.

MAXIMUM ANNUAL WITHDRAWAL PERCENTAGE ("MAWP")
The maximum percentage used to determine the maximum amount available to be
withdrawn each Benefit Year under the GMWB.

                                       1

<PAGE>

MINIMUM WITHDRAWAL PERIOD ("MWP")
The minimum period of time over which You may take Withdrawals under the GMWB if
Withdrawals are not taken under the Lifetime Withdrawal Period.

SPOUSAL BENEFICIARY
Your spouse, if designated as Your primary Beneficiary on the date of Your
death, who elects to continue the Contract as the new Owner or Participant
("Owner") upon Your death.

WITHDRAWAL
The amount of any full or partial surrender of Contract Value and any fees or
charges attributable to the surrendered amount.

YOU, YOUR
The Owner.  In the case of Joint Owners, the older of the two Joint Owners.

   GUARANTEED MINIMUM WITHDRAWAL BENEFIT MAXIMUM ANNIVERSARY VALUE PROVISIONS

This Rider provides a GMWB subject to the terms and conditions described herein.

GMWB CHARGE
The GMWB charge is an annualized charge deducted from the portion of Your
Contract Value allocated to the Variable Portfolio(s) or Subaccount(s) on a
quarterly basis beginning one quarter following the Effective Date and ending on
the termination of this Rider.

The amount of the GMWB charge will equal:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
  BENEFIT YEAR             ANNUAL CHARGE PERCENTAGE           AS A PERCENTAGE OF
--------------------------------------------------------------------------------
<S>                        <C>                                <C>
All Contract Years                  [0.50%]                      Benefit Base
--------------------------------------------------------------------------------
</TABLE>

BENEFIT BASE EVALUATION PERIOD
A Benefit Base Evaluation Period begins on the Effective Date and extends to the
7th Benefit Year anniversary.

CALCULATION OF THE COMPONENTS OF THE GMWB
The GMWB is available for Withdrawal at any time while this Rider is in effect
and prior to any termination of the GMWB. The amount of Withdrawals and time
period over which You can take Withdrawals under the GMWB may change over time
as a result of Withdrawal activity or Benefit Base increase. Withdrawals made
under this Rider are treated like any other Withdrawal under the Contract for
purposes of calculating Contract Value, Withdrawal Charges, and any other
benefits under the Contract. Withdrawals in excess of the Penalty Free
Withdrawal amount will be assessed a Withdrawal Charge, if applicable.

To determine the GMWB, We calculate each of the following components: Benefit
Base and MAWA. The calculations for each component are detailed below.

BENEFIT BASE
The initial Benefit Base, if the GMWB is elected on the Contract Date, is
Eligible Purchase Payment multiplied by the percentage as specified in the table
below. The initial Benefit Base, if the GMWB is elected after the Contract Date,
is equal to the Contract Value on the Effective Date.

The table below defines the Eligible Purchase Payments that increase the Benefit
Base, as determined by the time elapsed between the Effective Date and the day
on which Purchase Payments are received by Us and deposited into Your Contract.
Payment Enhancements, if applicable, are not considered Eligible Purchase
Payments.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
TIME ELAPSED SINCE EFFECTIVE DATE        PERCENTAGE INCLUDED IN THE BENEFIT BASE
                                                       CALCULATION
--------------------------------------------------------------------------------
<S>                                      <C>
            0-2 Years                                     [100%]
--------------------------------------------------------------------------------
</TABLE>

On any Benefit Year anniversary occurring during the Benefit Base Evaluation
Period, the Benefit Base is automatically increased to the Anniversary Value
when the Anniversary Value is greater than (a) and (b), where:

        (a) is the current Benefit Base; and

                                      2

<PAGE>

        (b) is all previous Anniversary Values during any Benefit Base
            Evaluation Period.

The Benefit Base is not used in the calculation of Contract Value or any other
benefits under the Contract. We reserve the right to limit the Eligible Purchase
Payments to a maximum of $1,000,000.

MAXIMUM ANNUAL WITHDRAWAL AMOUNT ("MAWA")
The MAWA is an amount calculated as a percentage of the Benefit Base. The
applicable Maximum Annual Withdrawal Percentage ("MAWP") used to calculate the
MAWA is determined by when the first Withdrawal is made by You, as specified in
the tables below.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
TIME OF FIRST        MAXIMUM ANNUAL       MAXIMUM ANNUAL         MINIMUM        MAXIMUM ANNUAL
  WITHDRAWAL           WITHDRAWAL           WITHDRAWAL         WITHDRAWAL       WITHDRAWAL AS A
                    PERCENTAGE WHEN      PERCENTAGE WHEN     PERIOD BEFORE      PERCENTAGE OF:
                    EXTENSION IS NOT       EXTENSION IS       ANY EXTENSION
                         ELECTED              ELECTED
------------------------------------------------------------------------------------------------
<S>                 <C>                  <C>                 <C>                <C>
Before 7th Benefit          5%                   5%              20 years         Benefit Base
Year anniversary
------------------------------------------------------------------------------------------------
 On or after 7th            7%                   7%              14 years         Benefit Base
  Benefit Year
   anniversary
------------------------------------------------------------------------------------------------
   On or after              5%*                  5%*            Duration of       Benefit Base
Your 65th birthday                                               Your life
------------------------------------------------------------------------------------------------
</TABLE>

*Excess Withdrawals at any time and ownership changes impacting You will cancel
the Lifetime Withdrawal Period. All future Withdrawals provided by this Rider
will then be subject to the Minimum Withdrawal Period based on when the first
Withdrawal is taken and adjusted based on Withdrawal history and investment
performance (see item 3 under IMPACT OF WITHDRAWALS section). If Withdrawals are
taken prior to Your 65th birthday, the Lifetime Withdrawal is not available.

If you are taking required minimum distributions ("RMD") from the Contract, and
the portion of the RMD amount based on Contract Value, only, is greater than the
Maximum Annual Withdrawal Amount, that portion of the RMD withdrawal will not be
treated as an excess withdrawal. Any portion of an RMD withdrawal that is based
on amounts greater than the Contract Value alone will be considered an Excess
Withdrawal. This will result in the cancellation of the Lifetime Withdrawal
Period and further may reduce your remaining Minimum Withdrawal Period.

The MAWA can be withdrawn throughout each Benefit Year. If You do not withdraw
the entire MAWA in a Benefit Year, You will maintain Your Minimum Withdrawal
Period, but the MAWA will not increase. Excess Withdrawals in any Benefit Year
may reduce Your future MAWA. See IMPACT OF WITHDRAWALS section below.

If the Benefit Base is increased to the Anniversary Value, the MAWA will be
recalculated on that Benefit Year anniversary, by multiplying the new Benefit
Base by the applicable MAWP.

IMPACT OF WITHDRAWALS
Withdrawals reduce the amount available for Withdrawal under the GMWB. Total
Withdrawals in any Benefit Year equal to or less than the MAWA reduce the
Benefit Base by the amount of the Withdrawal. Once Withdrawals in a Benefit Year
exceed the MAWA, all subsequent Withdrawals in that Benefit Year are Excess
Withdrawals. Excess Withdrawals may reduce the Benefit Base based on the
relative size of the Withdrawal in relation to the Contract Value at the time of
the Excess Withdrawal. This means that when the Contract Value is less than the
Benefit Base, Excess Withdrawals will result in a reduction of the Benefit Base
which is greater than the amount of the Excess Withdrawal. We further explain
this impact and the effect on each component of the GMWB through the
calculations below:

WITHDRAWALS IMPACT CONTRACT VALUE AND THE COMPONENTS OF THE GMWB CALCULATION AS
FOLLOWS:

        1. CONTRACT VALUE: Any Withdrawal reduces the Contract Value by the
           amount of the Withdrawal.

        2. BENEFIT BASE: Withdrawals up to the MAWA, before any Excess
           Withdrawal, reduce the Benefit Base by the dollar amount of the
           Withdrawal.

           Any Excess Withdrawal further reduces the Benefit Base to the lesser
           of (a) or (b), where:

                (a) is the Benefit Base immediately prior to the Excess
                    Withdrawal minus the amount of the Excess Withdrawal, or;

                                       3

<PAGE>

                (b) is the Benefit Base immediately prior to the Excess
                    Withdrawal reduced in the same proportion by which the
                    Contract Value is reduced by the Excess Withdrawal.

        3. MINIMUM WITHDRAWAL PERIOD: If the total of all Withdrawals in a
        Benefit Year are less than or equal to the MAWA, the new MWP equals the
        Benefit Base after the Withdrawal divided by the current MAWA. When the
        Benefit Base is adjusted to a higher Anniversary Value, a new MWP is
        determined by dividing the new Benefit Base by the new MAWA.

        If there is an Excess Withdrawal in a Benefit Year, the new MWP equals
        the MWP calculated at the end of the prior Benefit Year reduced by one
        year. An Excess Withdrawal in a Benefit Year will cancel the Lifetime
        Withdrawal, Period and the new MWP will be determined by dividing the
        new Benefit Base by the new MAWA.

        4. MAXIMUM ANNUAL WITHDRAWAL AMOUNT: If there are no Excess Withdrawals
        in a Benefit Year, the MAWA does not change for the next Benefit Year,
        unless the Benefit Base is increased as described above under "Benefit
        Base."

        If there are any Excess Withdrawals in a Benefit Year, the MAWA will be
        recalculated on the next Benefit Year anniversary. The new MAWA will
        equal the new Benefit Base on that Benefit Year anniversary after the
        Withdrawal divided by the new Minimum Withdrawal Period on that Benefit
        Year anniversary. The new MAWA may be lower than Your previously
        calculated MAWA.

IF YOUR CONTRACT VALUE IS REDUCED TO ZERO
If Your Contract Value is reduced to zero and the Benefit Base is greater than
zero, subsequent Purchase Payments will no longer be accepted and a Death
Benefit will not be payable. You can receive the remaining value of the GMWB
under one of the following options:

        a. A lump sum equal to the discounted present value of any remaining
           guaranteed payments under the GMWB; or,

        b. Periodic payments during each Benefit Year that in total are equal to
           the MAWA until the MWP (or LWP, if eligible) has been reduced to
           zero. If You do not select a specific frequency for these payments,
           We will pay the current MAWA in quarterly payments; or,

        c. Any payment option that is mutually agreeable.

EXTENSION OF THE BENEFIT BASE EVALUATION PERIOD ("EXTENSION")
We may offer You at least two Extensions of the Benefit Base Evaluation Period
at the end of the current Benefit Base Evaluation Period. If You elect such
Extension, you will receive a new Rider with the charges and provisions in
effect at that time.

TERMINATION OF THE GMWB
Once elected, this GMWB Rider and its corresponding charge may be terminated by
the Owner. If the Owner's request to terminate the GMWB is received:

        1. prior to the 7th Benefit Year anniversary, the termination is
           effective on the 7th Benefit Year anniversary;

        2. in any Benefit Year after the 7th Benefit Year anniversary, the
           termination is effective on the Benefit Year anniversary following
           Our receipt of the election to terminate the GMWB.

This Rider and the related charge will terminate automatically if:

        1. The Minimum Withdrawal Period has been reduced to zero, or for the
            Lifetime Withdrawal Period, You die; or,

        2. A Spousal Beneficiary elects to continue the Contract without this
           Rider; or,

        3. A Death Benefit is paid (as described under the Death Provisions or
           Death Benefit section of Your Contract); or,

        4. The Contract is fully withdrawn or surrendered; or,

        5. The Contract is annuitized.

We reserve the right to terminate this GMWB Rider if Withdrawals in excess of
the MAWA in any Benefit Year reduce the Benefit Base by 50% or more.

If terminated, the GWMB may not be re-elected.

                                       4

<PAGE>

SPOUSAL CONTINUATION
Upon election to continue the Contract and this Rider, Your Spousal Beneficiary
will be subject to the terms and conditions of this Rider. Upon Your death, the
Lifetime Withdrawal Period ends and is not available to Your Spousal
Beneficiary. The Effective Date will not change as the result of Spousal
Continuation. A continuation contribution paid under the Spousal Continuation
provision of the Contract is not considered an Eligible Purchase Payment, but is
included in the calculation of Anniversary Values if the spouse continues the
Benefit Base Evaluation Period.

Signed for the Company to be effective on the Effective Date.

                     FIRST SUNAMERICA LIFE INSURANCE COMPANY

                                 /s/ JAY S. WINTROB
                     ---------------------------------------
                                     Jay S. Wintrob
                                        President

                                      5

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