Exhibit 10.1

 

Landec Corporation

1,935,504 Shares of Common Stock

SUBSCRIPTION AGREEMENT

March 26, 2002

TO EACH OF THE PURCHASERS NAMED ON THE SIGNATURE PAGES HEREOF

Ladies and Gentlemen:

Landec Corporation, a California corporation (the “Company”), hereby confirms
its agreement with you (the “Purchasers”), as set forth below.

1.             The Shares.  Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to each Purchaser the number
of shares of its Common Stock, par value $0.001 per share (the “Common Stock”),
set forth on the signature page of such Purchaser hereto (collectively, the
“Shares”).

The Shares will be offered and sold to the Purchasers without such offers and
sales being registered under the Securities Act of 1933, as amended (together
with the rules and regulations of the Securities and Exchange Commission (the
“Commission”) promulgated thereunder, the “Securities Act”), in reliance on
exemptions therefrom.

In connection with the sale of the Shares, the Company has made available its
periodic reports filed with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 since January 1, 2001.  These reports and
filings are collectively referred to as the “Disclosure Documents”.  All
references in this Agreement to financial statements and schedules and other
information which is “contained,” “included” or “stated” in the Disclosure
Documents (or other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information which
is incorporated by reference in the Disclosure Documents.

The Purchasers and their direct and indirect transferees of the Shares will be
entitled to the benefits of the Registration Rights Agreement to be dated as of
March 26, 2002 among the parties hereto (the “Registration Rights Agreement”)
pursuant to which the Company has agreed, among other things, to file a shelf
registration statement (the “Shelf Registration Statement”) pursuant to Rule 415
under the Securities Act of 1933 relating to the resale of the Shares (as
defined herein) by holders thereof.

The Registration Rights Agreement, the Engagement Letter dated March 4, 2002
with Roth Capital Partners, LLC, and this Agreement are herein collectively
referred to as the “Basic Documents”.

 

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2.             Representations and Warranties of the Company.  The Company
represents and warrants to and agrees with each Purchaser that:

(a)           The Disclosure Documents as of their respective dates did not, and
any amendment or supplement thereto as of its date did not, contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.  The Disclosure Documents, at the time they were filed
with the Commission, complied in all material respects with the requirements of
the Securities Act of 1933 and/or the Securities Acts of 1934, as the case may
be (together with the rules and regulations of the Commission promulgated
thereunder, the “Securities Acts”), as applicable.

(b)           Each of the Company and its subsidiaries (the “Subsidiaries”) has
been duly incorporated and each of the Company and the Subsidiaries is validly
existing in good standing as a corporation under the laws of its jurisdiction of
incorporation, with the requisite corporate power and authority to own its
properties and conduct its business as now conducted as described in the
Disclosure Documents and is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions where the ownership or
leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified would not,
individually or in the aggregate, have a material adverse effect on the
business, condition (financial or other), properties, prospects or results of
operations of the Company and the Subsidiaries, taken as a whole (any such
event, a “Material Adverse Effect”); as of the Closing Date, the Company will
have the authorized, issued and outstanding capitalization set forth in the
Disclosure Documents (subject to the issuance of shares pursuant to this
Agreement or pursuant to options outstanding under the Company’s stock option
plans or outstanding warrants or other rights to acquire shares described in the
Disclosure Documents); all of the outstanding shares of capital stock of the
Company and the Subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable and were not issued in violation of any preemptive
or similar rights and are owned free and clear of all liens, encumbrances,
equities, and restrictions on transferability (other than those imposed by the
Securities Act and the state securities or “Blue Sky” laws) or voting; except as
set forth in the Disclosure Documents, all of the outstanding shares of capital
stock of the Subsidiaries are owned, directly or indirectly, by the Company; the
shares of capital stock of the Company and the Subsidiaries that are reserved
for issuance pursuant to stock option plans or other equity incentive plans is
as set forth in the Disclosure Documents; and except as may be outstanding under
stock option plans or other equity incentive plans that are described in the
Disclosure Documents, there are no outstanding options, warrants or other rights
to purchase shares of capital stock of the Company or the Subsidiaries.

(c)           The Company has the requisite corporate power and authority to
execute, deliver and perform its obligations under the Basic Documents.  Each of
the Basic Documents has been duly and validly authorized by the Company and,
when executed and delivered by the Company, will constitute a valid and legally
binding agreement of the Company, enforceable against the Company in accordance
with its terms except as (i) the enforcement thereof may be limited by
(A) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to or

 

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affecting creditors’ rights generally or (B) general principles of equity and
the discretion of the court before which any proceeding therefore may be brought
(regardless of whether such enforcement is considered in a proceeding at law or
in equity) (collectively, the “Enforceability Exceptions”), and (ii) any rights
to indemnity, or contribution under the Registration Rights Agreement may be
limited by federal and state securities laws and public policy considerations.

(d)           The Shares have been duly authorized and, when issued upon payment
thereof in accordance with this Agreement, will have been validly issued, fully
paid and nonassessable.  The capital stock of the Company, including the Common
Stock, conforms to the description thereof contained in the Disclosure
Documents.  The stockholders of the Company have no preemptive or similar rights
with respect to the Common Stock.

(e)           No consent, approval, authorization, license, qualification,
exemption or order of any court or governmental agency or body or third party is
required for the performance of the Basic Documents by the Company or for the
consummation by the Company of any of the transactions contemplated thereby, or
the application of the proceeds of the issuance of the Shares as described in
the Disclosure Documents, except for such consents, approvals, authorizations,
licenses, qualifications, exemptions or orders (i) as have been obtained on or
prior to the Closing Date, (ii) as are not required to be obtained on or prior
to the Closing Date that will be obtained when required, or (iii) the failure to
obtain which would not, individually or in the aggregate, have a Material
Adverse Effect; all such consents, approvals, authorizations, licenses,
qualifications, exemptions and orders set forth in the Disclosure Documents
which are required to be obtained by the Closing Date will be in full force and
effect as of the Closing Date and not the subject of any pending or, to the best
knowledge of the Company, threatened attack by appeal or direct proceeding or
otherwise.

(f)            None of the Company or the Subsidiaries is (i) in violation of
its certificate of incorporation or bylaws (or similar organizational document),
(ii) in breach or violation of any statute, judgment, decree, order, rule or
regulation applicable to it or any of its properties or assets, which breach or
violation would, individually or in the aggregate, have a Material Adverse
Effect, or (iii) in default (nor has any event occurred which with notice or
passage of time, or both, would constitute a default) in the performance or
observance of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan agreement, note, lease,
license, franchise agreement, permit, certificate or agreement or instrument to
which it is a party or to which it is subject, which default would, individually
or in the aggregate, have a Material Adverse Effect.

(g)           The execution, delivery and performance by the Company of the
Basic Documents and the consummation by the Company of the transactions
contemplated thereby and the fulfillment of the terms thereof will not
(a) violate, conflict with or constitute or result in a breach of or a default
under (or an event that, with notice or lapse of time, or both, would constitute
a breach of or a default under) any of (i) the terms or provisions of any
contract, indenture, mortgage, deed of trust, loan agreement, note, lease,
license, franchise agreement, permit, certificate or agreement or instrument to
which any of the Company or the Subsidiaries is a party or to which any of their
respective properties or

 

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assets are subject, (ii) the certificate of incorporation or bylaws of any of
the Company or the Subsidiaries (or similar organizational document) or
(iii) any statute, judgment, decree, order, rule or regulation of any court or
governmental agency or other body applicable to the Company or the Subsidiaries
or any of their respective properties or assets or (b) result in the imposition
of any lien upon or with respect to any of the properties or assets now owned or
hereafter acquired by the Company or any of the Subsidiaries, which violation,
conflict, breach, default or lien would, individually or in the aggregate, have
a Material Adverse Effect.

(h)           The audited consolidated financial statements included in the
Disclosure Documents present fairly the consolidated financial position, results
of operations, cash flows and changes in stockholders’ equity of the entities,
at the dates and for the periods to which they relate and have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis; the interim unaudited consolidated financial statements included in the
Disclosure Documents present fairly the consolidated financial position, results
of operations and cash flows of the entities, at the dates and for the periods
to which they relate, subject to year-end audit adjustments, and have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis with the audited consolidated financial statements included
therein; the selected financial and statistical data included in the Disclosure
Documents present fairly the information shown therein and have been prepared
and compiled on a basis consistent with the audited financial statements
included therein, except as otherwise stated therein; and Ernst & Young LLP,
which has examined certain of such financial statements as set forth in its
report included in the Disclosure Documents, is an independent public accounting
firm as required by the Securities Act for an offering registered thereunder.

(i)            Except as described in the Disclosure Documents, there is not
pending or, to the best knowledge of the Company, threatened any action, suit,
proceeding, inquiry or investigation, governmental or otherwise, to which any of
the Company or the Subsidiaries is a party, or to which their respective
properties or assets are subject, before or brought by any court, arbitrator or
governmental agency or body, that, if determined adversely to the Company or any
such Subsidiary, would, individually or in the aggregate, have a Material
Adverse Effect or that seeks to restrain, enjoin, prevent the consummation of or
otherwise challenge the issuance or sale of the Shares to be sold hereunder or
the application of the proceeds therefrom or the other transactions described in
the Disclosure Documents.

(j)            None of the Company or the Subsidiaries has, or, after giving
effect to the issuance and sale of the Shares, will have, any liability for any
prohibited transaction (as defined in Section 406 of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”), or Section 4975 of the
Internal Revenue Code of 1986, as amended (the “Code”)), accumulated funding
deficiency (as defined in Section 302 of ERISA) or any complete or partial
withdrawal from a multiemployer plan (as defined in Section 4001(a)(3) of
ERISA), with respect to any plan (as defined in Section 3(3) of ERISA) as to
which the Company or any of the Subsidiaries has or could have any direct or
indirect, actual or contingent liability.  With respect to such plans, the
Company and the Subsidiaries

 

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are, and, after giving effect to the issuance and sale of the Shares, will be,
in compliance in all material respects with all provisions of the Code and
ERISA.

(k)           The Company and the Subsidiaries own or possess adequate licenses
or other rights to use all patents, trademarks, service marks, trade names,
copyrights and know-how that are necessary to conduct their businesses as
described in the Disclosure Documents.  None of the Company or the Subsidiaries
has received any notice of infringement of or conflict with (or knows of any
such infringement of or conflict with) asserted rights of others with respect to
any patents, trademarks, service marks, trade names, copyrights or know-how
that, if such assertion of infringement or conflict were sustained, would,
individually or in the aggregate, have a Material Adverse Effect.

(l)            Each of the Company and the Subsidiaries possesses all licenses,
permits, certificates, consents, orders, approvals and other authorizations
from, and has made all declarations and filings with, all federal, state, local
and other governmental authorities, all self-regulatory organizations and all
courts and other tribunals presently required or necessary to own or lease, as
the case may be, and to operate its respective properties and to carry on its
respective businesses as now or proposed to be conducted as set forth in the
Disclosure Documents (“Permits”), except where the failure to obtain such
Permits would not, individually or in the aggregate, have a Material Adverse
Effect; each of the Company and the Subsidiaries has fulfilled and performed all
of its obligations with respect to such Permits and no event has occurred which
allows, or after notice or lapse of time would allow, revocation or termination
thereof or results in any other impairment of the rights of the holder of any
such Permit, except where such revocation, termination or impairment would not,
individually or in the aggregate, have a Material Adverse Effect; and none of
the Company or the Subsidiaries has received any notice of any proceeding
relating to revocation or modification of any such Permit, except as described
in the Disclosure Documents and except where such revocation or modification
would not, individually or in the aggregate, have a Material Adverse Effect.

(m)          Subsequent to the respective dates as of which information is given
in the Disclosure Documents and except as described therein, (i) the Company and
the Subsidiaries have not incurred any material liabilities or obligations,
direct or contingent, or entered into any material transactions not in the
ordinary course of business, (ii) the Company and the Subsidiaries have not
purchased any of their respective outstanding capital stock, or declared, paid
or otherwise made any dividend or distribution of any kind on any of their
respective capital stock or otherwise (other than, (A) with respect to the
Company, the payment of dividends on its Series B Preferred Stock and (B) with
respect to any of such Subsidiaries, the purchase of, or a dividend or
distribution on, capital stock owned by the Company), (iii) there has not been
any material change in the capital stock or any increase in the long-term
indebtedness of the Company or any of the Subsidiaries, (iv) there has not
occurred any event or condition, individually or in the aggregate, that has a
Material Adverse Effect and (v) the Company and the Subsidiaries have not
sustained any material loss or interference with respect to their respective
businesses or properties from fire, flood, hurricane, earthquake, accident or
other calamity, whether or not covered by insurance, or from any labor dispute
or any legal or governmental proceeding.

 

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(n)           There are no legal or governmental proceedings nor are there any
contracts or other documents required by the Securities Act to be described in a
prospectus that are not described in the Disclosure Documents.  Except as
described in the Disclosure Documents, none of the Company or the Subsidiaries
is in default under any of the contracts described in the Disclosure Documents,
has received a notice or claim of any such default or has knowledge of any
breach of such contracts by the other party or parties thereto, except such
defaults or breaches as would not, individually or in the aggregate, have a
Material Adverse Effect.

(o)           Each of the Company and the Subsidiaries has good and marketable
title to all real property described in the Disclosure Documents as being owned
by it and good and marketable title to the leasehold estate in the real property
described therein as being leased by it, free and clear of all liens, charges,
encumbrances or restrictions, except, in each case, as described in the
Disclosure Documents or such as would not, individually or in the aggregate,
have a Material Adverse Effect.  All leases, contracts and agreements, including
those referred to in the Disclosure Documents, to which the Company or any of
the Subsidiaries is a party or by which any of them is bound are, to the
knowledge of the Company, valid and enforceable against the other party or
parties thereto, except where the invalidity or unenforceability would not,
individually or in the aggregate, have a Material Adverse Effect.

(p)           Each of the Company and the Subsidiaries has filed all necessary
federal, state and foreign income and franchise tax returns, except where the
failure to so file such returns would not, individually or in the aggregate,
have a Material Adverse Effect, and has paid all taxes shown as due thereon; and
other than tax deficiencies which the Company or any Subsidiary is contesting in
good faith and for which adequate reserves have been provided in accordance with
generally accepted accounting principles, there is no tax deficiency that has
been asserted against the Company or any Subsidiary that would, individually or
in the aggregate, have a Material Adverse Effect.

(q)           For purposes of this Agreement, the following terms shall have the
following meanings:  “Environmental Law” means any federal, state, local or
municipal statute, law, rule, regulation, ordinance, code, policy or rule of
common law and any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent decree or judgment binding on any
of the Company or the Subsidiaries, relating to pollution or protection of the
environment, natural resources or health or safety including, without
limitation, any relating to the release or threatened release of any pollutant,
contaminated substance, material, waste, chemical or contaminant subject to
regulation thereunder.  Except as disclosed in the Disclosure Documents and
except as would not, individually or in the aggregate, have a Material Adverse
Effect, (A) each of the Company and the Subsidiaries is in compliance with all,
and is not subject to liability (including, without limitation, fines or
penalties) under any, applicable Environmental Laws, (B) each of the Company and
the Subsidiaries has made all filings and provided all notices required under
any applicable Environmental Law, and has all permits, authorizations and
approvals required under any applicable Environmental Laws and is in compliance
with their requirements, (C) there is no civil, criminal or administrative
action, suit, demand, claim, hearing, notice of violation,

 

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investigation, proceeding, notice or demand letter or request for information
pending or, to the best knowledge of the Company, threatened against the Company
or any of the Subsidiaries under any Environmental Law, (D) no lien, charge,
encumbrance or restriction has been recorded under any Environmental Law with
respect to any assets, facility or property owned, operated, leased or
controlled by the Company or any of the Subsidiaries, (E) neither the Company
nor any of the Subsidiaries is subject to any order, decree or agreement
requiring, or is otherwise obligated or required to perform any response or
corrective action relating to any hazardous material, (F) neither the Company
nor any of the Subsidiaries has received notice that it has been identified as a
potentially responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (“CERCLA”), or any comparable
state law, (G) no property or facility of the Company or any of the Subsidiaries
is (i) listed or proposed for listing on the National Priorities List under
CERCLA or (ii) listed in the Comprehensive Environmental Response, Compensation
and Liability Information System List promulgated pursuant to CERCLA, or on any
comparable list maintained by any state or local governmental authority and
(H) there are no past or present actions, events, operations or activities which
could reasonably be expected to prevent or interfere with compliance by the
Company or any Subsidiary with any applicable Environmental Law or to result in
liability (including, without limitation, fines or penalties) under any
applicable Environmental Law.

(r)            None of the Company or the Subsidiaries is, or immediately after
the Closing Date will be, required to register as an “investment company” or a
company “controlled by” an “investment company” within the meaning of the
Investment Company Act of 1940, as amended (the “Investment Company Act”).

(s)           None of the Company or the Subsidiaries or any of such entities’
directors, officers, employees, agents or controlling persons has taken,
directly or indirectly, any action designed, or that might reasonably be
expected, to cause or result, under the Securities Acts or otherwise, in, or
that has constituted, stabilization or manipulation of the price of the Shares.

(t)            None of the Company, the Subsidiaries or any of their respective
Affiliates (as defined in Rule 501(b) of Regulation D under the Securities Act)
has directly, or through any agent, (i) sold, offered for sale, solicited offers
to buy or otherwise negotiated in respect of any “security” (as defined in the
Securities Act) which is or could be integrated with the sale of the Shares in a
manner that would require the registration under the Securities Act of the
Shares or (ii) engaged in any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities Act)
in connection with the offering of the Shares or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act. 
Assuming the accuracy of the representations and warranties of the Purchasers in
Section 6 hereof, it is not necessary in connection with the offer, sale and
delivery of the Shares to the Purchasers in the manner contemplated by this
Agreement to register any of the Shares under the Securities Act.

(u)           Except as set forth in the Disclosure Documents, there is no
strike, labor dispute, slowdown or work stoppage with the employees of the
Company or any

 

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of the Subsidiaries which is pending or, to the best knowledge of the Company or
any of the Subsidiaries, threatened.

(v)           Each of the Company and the Subsidiaries carries insurance
(including self-insurance) in such amounts and covering such risks as in its
reasonable determination is adequate for the conduct of its business and the
value of its properties.

(w)          Each of the Company and the Subsidiaries (i) makes and keeps
accurate books and records and (ii) maintains internal accounting controls which
provide reasonable assurance that (A) transactions are executed in accordance
with management’s authorization, (B) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain accountability
for its assets, (C) access to its assets is permitted only in accordance with
management’s authorization and (D) the reported accountability for its assets is
compared with existing assets at reasonable intervals.

(x)            No holder of securities of the Company or any Subsidiary will be
entitled to have such securities registered under the Shelf Registration
Statement.

(y)           Except the fee payable to Roth Capital Partners, LLC (“Roth”), the
Company does not know of any claims for services, either in the nature of a
finder’s fee or financial advisory fee, with respect to the offering of the
Shares and the transactions contemplated by the Disclosure Documents.

(z)            The Common Stock is listed on the Nasdaq National Market.  The
Company currently is not in violation of, and the consummation of the
transactions contemplated by the Basic Documents, will not violate, any rule of
the National Association of Securities Dealers, except that the Company may
issue the Shares prior to expiration of the full 15 day notice period set forth
in Section 4310(c)(17) of the NASD Manual.

(aa)         The Company is eligible to use Form S-3 for the resale of the
Shares by Purchasers or their transferees.  Any certificate signed by any
officer of the Company or any Subsidiary and delivered pursuant to this
Agreement shall be deemed a joint and several representation and warranty by the
Company to each Purchaser as to the matters covered thereby.

3.             Purchase, Sale and Delivery of the Shares.  On the basis of the
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth and subject to approval of
this transaction by the Company’s Board of Directors, the Company agrees to
issue and sell to the Purchasers, and each Purchaser acting severally and not
jointly agrees to purchase from the Company, the number of Shares set forth on
such Purchaser’s signature page hereto, at $3.10 per share.

One or more certificates in definitive form for the Shares that the Purchasers
have agreed to purchase hereunder, and in such denomination or denominations and
registered in such name or names as each Purchaser requests upon notice to the
Company at least 48 hours prior to the Closing Date (as defined) shall be
delivered by or on behalf of the Company, against payment by or on behalf of the
Purchasers, of the purchase price therefor

 

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by wire transfer of immediately available funds to the account of the Company
previously designated by it in writing.  Such delivery of and payment for the
Shares shall be made at the offices of Orrick, Herrington & Sutcliffe LLP, 1020
Marsh Road, Menlo Park, CA  94025 (“Orrick”), on March 28, 2002, or at such date
as the Purchasers and the Company may agree upon, such time and date of delivery
against payment being herein referred to as the “Closing Date.”  The Company
will make such certificate or certificates for the Shares available for checking
and packaging by the Purchasers at the offices of Orrick at least 24 hours prior
to the Closing Date.

4.             Certain Covenants.  The Company covenants and agrees with each
Purchaser that:

(a)           None of the Company or any of its Affiliates will sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any
“security” (as defined in the Securities Act) which could be integrated with the
sale of the Shares in a manner which would require the registration under the
Securities Act of the Shares.

(b)           The Company will apply the net proceeds from the sale of the
Shares for working capital and general corporate purposes, including the
repayment of bank borrowings.

(c)           Except in connection with the filing of the Shelf Registration
Statement, the Company will not, and will not permit any of the Subsidiaries to,
engage in any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Securities Act) in connection with the
offering of the Shares or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act.

(d)           The Company will not become, at any time prior to the expiration
of three years after the Closing Date, an open-end investment company, unit
investment trust, closed-end investment company or face-amount certificate
company that is or is required to be registered under Section 8 of the
Investment Company Act.

(e)           The Company will file the additional listing application for the
Shares with the Nasdaq National Market prior to the Closing Date and will use
its best efforts to have the Shares listed on the Nasdaq National Market on or
prior to the effective date of the Shelf Registration Statement.

(f)            The Company will use its best efforts to do and perform all
things required to be done and performed by it under this Agreement and the
other Basic Documents prior to or after the Closing Date and to satisfy all
conditions precedent on its part to the obligations of the Purchasers to
purchase and accept delivery of the Shares.

5.             Conditions of the Purchasers’ Obligations.  The obligation of
each Purchaser to purchase and pay for the Shares is subject to the following
conditions unless waived in writing by the relevant Purchaser:

 

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(a)           The representations and warranties of the Company contained in
this Agreement shall be true and correct in all material respects (other than
representations and warranties with a Material Adverse Effect qualifier, which
shall be true and correct as written) on and as of the Closing Date; the Company
shall have complied in all material respects with all agreements and satisfied
all conditions on its part to be performed or satisfied hereunder at or prior to
the Closing Date.

(b)           None of the issuance and sale of the Shares pursuant to this
Agreement or any of the transactions contemplated by any of the other Basic
Documents shall be enjoined (temporarily or permanently) and no restraining
order or other injunctive order shall have been issued in respect thereof; and
there shall not have been any legal action, order, decree or other
administrative proceeding instituted or, to the Company’s knowledge, threatened
against the Company or against any Purchaser relating to the issuance of the
Shares or any Purchaser’s activities in connection therewith or any other
transactions contemplated by this Agreement or the Disclosure Documents or the
other Basic Documents.

(c)           The Purchasers shall have received certificates, dated the Closing
Date and signed by the chief executive officer and the chief financial officer
of the Company, to the effect of paragraphs 5(a) and (b).

(d)           On or before the Closing Date, the Purchasers shall have received
the Registration Rights Agreement executed by the Company and such agreement
shall be in full force and effect at all times from and after the Closing Date,
subject to the Enforceability Exceptions.

(e)           On or before the Closing Date, the Nasdaq National Market shall
have provided verbal confirmation that no approvals are needed from such
organization in order to consummate the sale of the Shares as contemplated
herein.

(f)            The Purchasers shall have received an opinion of Orrick,
Herrington & Sutcliffe, LLP, counsel to the Company, with respect to the
authorization of the Shares and other customary matters in the form attached
hereto as Exhibit A.

6.             Representations and Warranties of the Purchasers.

(a)           Each Purchaser, severally and not jointly and as to itself only,
represents and warrants to the Company that the Shares to be acquired by it
hereunder are being acquired for its own account for investment (and/or on
behalf of managed accounts who are purchasing solely for their own accounts for
investment) and with no intention of distributing or reselling such Shares or
any part thereof or interest therein in any transaction which would be in
violation of the securities laws of the United States of America or any State,
without prejudice, however, to a Purchaser’s right, subject to the provisions of
this Agreement and the Registration Rights Agreement, at all times to sell or
otherwise dispose of all or any part of such Shares under an effective
registration statement under the Securities Act and in compliance with
applicable state securities laws or under an exemption from such registration,
and subject, nevertheless, to the disposition of a Purchaser’s property being at
all

 

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times within its control.  By executing this Agreement, each Purchaser further
represents that such Purchaser does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participation to any Person with respect to any of the Shares.

(b)           Each Purchaser understands that the Shares have not been
registered under the Securities Act and may not be offered, resold, pledged or
otherwise transferred except (a) pursuant to an exemption from registration
under the Securities Act (and, if requested by the Company, based upon an
opinion of counsel acceptable to the Company) or pursuant to an effective
registration statement under the Securities Act and (b) in accordance with all
applicable securities laws of the states of the United States and other
jurisdictions.

EACH PURCHASER AGREES TO THE IMPRINTING, SO LONG AS APPROPRIATE, OF THE
FOLLOWING LEGEND ON THE SHARES:

 

The shares of common stock evidenced by this certificate have not been
registered under the U.S. Securities Act of 1933, as amended, and may not be
offered, sold, pledged or otherwise transferred (“transferred”) in the absence
of such registration or an applicable exemption therefrom. In the absence of
such registration, such shares may not be transferred unless, if the Company
requests, the Company has received a written opinion from counsel in form and
substance satisfactory to the Company stating that such transfer is being made
in compliance with all applicable federal and state securities laws.

The legend set forth above may be removed if and when the Shares are disposed of
pursuant to an effective registration statement under the Securities Act or in
the opinion of counsel to the Company experienced in the area of United States
Federal securities laws such legends are no longer required under applicable
requirements of the Securities Act.  The Shares shall also bear any other
legends required by applicable Federal or state securities laws, which legends
may be removed when in the opinion of counsel to the Company experienced in the
applicable securities laws, the same are no longer required under the applicable
requirements of such securities laws.  The Company agrees that it will provide
each Purchaser, upon request, with a substitute Share certificate, not bearing
such legend at such time as such legend is no longer applicable.  Each Purchaser
agrees that, in connection with any transfer of Shares by it pursuant to an
effective registration statement under the Securities Act, such Purchaser will
comply with all prospectus delivery requirements of the Securities Act.  The
Company makes no representation, warranty or agreement as to the availability of
any exemption from registration under the Securities Act with respect to any
resale of Shares.

(c)           Each Purchaser is an institutional investor that is an accredited
investor within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act.

 

11

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(d)           Each Purchaser, severally and not jointly and as to itself only,
represents and warrants to the Company that it has such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the prospective investment in the
Shares, such Purchaser having been represented by counsel, and has so evaluated
the merits and risks of such investment and is able to bear the economic risk of
such investment and, at the present time, is able to afford a complete loss of
such investment.

(e)           Each Purchaser, severally and not jointly and as to itself only,
represents and warrants to the Company that (i) the purchase of the Shares to be
purchased by it has been duly and properly authorized and this Agreement has
been duly executed and delivered by it or on its behalf and constitutes the
valid and legally binding obligation of such Purchaser, enforceable against the
Purchaser in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors’ rights generally and to
general principals of equity; (ii) the purchase of the Shares to be purchased by
it does not conflict with or violate its charter, by-laws or any law, regulation
or court order applicable to it; and (iii) the purchase of Shares to be
purchased by it does not impose any penalty or other onerous condition on such
Purchaser under or pursuant to any applicable law or governmental regulation.

(f)            Each Purchaser, severally and not jointly and as to itself only,
represents and warrants to the Company that neither it nor any of its directors,
officers, employees, agents, or controlling persons has taken, directly or
indirectly, any actions designed, or might reasonably be expected to cause or
result, under the Securities Acts or otherwise, in, or that has constituted,
stabilization, or manipulation of the price of the shares.

(g)           Each Purchaser acknowledges receipt of the Disclosure Documents
and further acknowledges that it has been afforded (i) the opportunity to ask
such questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Shares and the merits and risks of investing in the Shares; (ii)
access to information about the Company and the Company’s financial condition,
results of operations, business, properties, management and prospects sufficient
to enable it to evaluate its investment in the Shares; and (iii) the opportunity
to obtain such additional information which the Company possesses or can acquire
without unreasonable effort or expense that is necessary to verify the accuracy
and completeness of the information contained in the Disclosure Documents.

(h)           Each Purchaser understands and acknowledges that (i) the Shares
are offered and sold without registration under the Securities Act in a private
placement that is exempt from the registration provisions of the Securities Act
and (ii) the availability of such exemption depends in part on, and that the
Company, its counsel and Roth will rely upon, the accuracy and truthfulness of
the foregoing representations and such Purchaser hereby consents to such
reliance.

 

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7.             Survival Clause.  The respective representations, warranties,
agreements and covenants of the Company and the Purchasers set forth in this
Agreement shall remain in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company, any of its officers or
directors, or any Purchaser and (ii) delivery of, payment for or disposition of
the Shares, and shall be binding upon and shall inure to the benefit of any
successors, assigns, heirs or personal representatives of the Company and the
Purchasers.

8.             Termination.

(a)           This Agreement may be terminated in the sole discretion of the
Company by notice to each Purchaser severally and not jointly if at the Closing
Date:

(i)            the representations and warranties made by such Purchaser in
Section 6 are not true and correct in all material respects; or

(ii)           as to the Company, the sale of the Shares hereunder (i) is
prohibited or enjoined by any applicable law or governmental regulation or (ii)
subjects the Company to any penalty, or in its reasonable judgment, other
onerous condition under or pursuant to any applicable law or government
regulation that would materially reduce the benefits to the Company of the sale
of the Shares to such Purchaser, so long as such regulation, law or onerous
condition was not in effect in such form at the date of this Agreement.

(b)           This Agreement may be terminated in the sole discretion of any
Purchaser by notice to the Company given in the event that the Company shall
have failed, refused or been unable to satisfy all conditions on its part to be
performed or satisfied hereunder on or prior to the Closing Date or if after the
execution and delivery of this Agreement and prior to the Closing Date:

(i)            trading in securities of the Company on the NASDAQ National
Market shall have been suspended;

(ii)           a banking moratorium shall have been declared by New York or
United States authorities; or

(iii)          there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an outbreak or
escalation of any other insurrection or armed conflict involving the United
States or any other national or international calamity or emergency, or (C) any
material change in the financial markets of the United States that, in the case
of (A), (B) or (C) above, in the sole judgment of any Purchaser, makes it
impracticable or inadvisable to proceed with the delivery of the Shares as
contemplated by the Disclosure Documents, as amended as of the date hereof.

9.             Notices.  All communications hereunder shall be in writing and,
(i) if sent to a Purchaser, shall be hand delivered, mailed by first-class mail,
couriered by next-day air courier or telecopied and confirmed in writing to
their address on their signature page

 

13

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hereof and (ii) if sent to the Company, shall be hand delivered, mailed by
first-class mail, couriered by next-day air courier or telecopied and confirmed
in writing to Landec Corporation, 3603 Haven Avenue, Menlo Park, CA 94025,
Attention:  Greg Skinner, and with a copy to Geoffrey P. Leonard, Orrick,
Herrington & Sutcliffe LLP, 1020 March Road, Menlo Park, CA 94025.

All such notices and communications shall be deemed to have been duly given: 
when delivered by hand, if personally delivered; five business days after being
deposited in the mail, postage prepaid, if mailed; one business day after being
timely delivered to a next-day air courier guaranteeing overnight delivery; and
when receipt is acknowledged by the addressee, if telecopied.

10.           Successors.  This Agreement shall inure to the benefit of and be
binding upon each Purchaser and the Company and their respective successors and
legal representatives, and nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any other person any legal or equitable
right, remedy or claim under or in respect of this Agreement, or any provisions
herein contained; this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person.  No purchaser of Shares from any Purchaser
will be deemed a successor because of such purchase.

11.           No Waiver; Modifications in Writing.  No failure or delay on the
part of the Company or any Purchaser in exercising any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.  The
remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to the Company or any Purchaser at law or in
equity or otherwise.  No waiver of or consent to any departure by the Company or
any Purchaser from any provision of this Agreement shall be effective unless
signed in writing by the party entitled to the benefit thereof, provided that
notice of any such waiver shall be given to each party hereto as set forth
below.  Except as otherwise provided herein, no amendment, modification or
termination of any provision of this Agreement shall be effective unless signed
in writing by or on behalf of each of the Company and the relevant Purchaser. 
Any amendment, supplement or modification of or to any provision of this
Agreement, any waiver of any provision of this Agreement, and any consent to any
departure by the Company or any Purchaser from the terms of any provision of
this Agreement shall be effective only in the specific instance and for the
specific purpose for which made or given.  Except where notice is specifically
required by this Agreement, no notice to or demand on the Company in any case
shall entitle the Company to any other or further notice or demand in similar or
other circumstances.

12.           Entire Agreement.  This Agreement constitutes the entire agreement
among the parties hereto and supersedes all prior agreements, understandings and
arrangements, oral or written, among the parties hereto with respect to the
subject matter hereof.

 

14

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13.           APPLICABLE LAW.  THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT
GIVING EFFECT TO PROVISIONS RELATING TO CONFLICTS OF LAW TO THE EXTENT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

14.           Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

15

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If the foregoing correctly sets forth our understanding, please indicate your
acceptance thereof in the space provided below for that purpose, whereupon this
Agreement shall constitute a binding agreement among the Company and the
Purchasers.

 

Very truly yours,

 

 

 

LANDEC CORPORATION

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

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SUBSCRIPTION AGREEMENT SIGNATURE PAGE

 

Accepted and Agreed

 

 

 

 

Number of Shares Purchased:

 

 

 

Total Investment: $

 

Name of Purchaser (Print)

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

Date:

 

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

Telephone:

 

 

Facsimile:

 

 

 

 

 

Please register Shares as follows:

 

 

 

Name:

 

 

 

 

 

 

 

 

 

 

 

Tax I.D. Number of Person in whose name the Shares are to be registered:

 

 

 

 

 

 

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Exhibit A

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(a)   The Company has been duly incorporated, is validly existing, is in good
standing under the laws of the State of California, and has the corporate power
and authority to own its property and to conduct its business as now conducted
as described in the Disclosure Documents.

(b)   Each of Apio, Inc. and Landec Ag, Inc. (the “Subsidiaries”), is validly
existing, is in good standing under the laws of the State of Delaware, and has
the corporate power and authority to own its property and to conduct its
business as now conducted as described in the Disclosure Documents.

(c)   The authorized capital stock of the Company consists of 50,000,000 shares
of common stock, $0.001 par value per share, and 2,000,000 shares of preferred
stock, $0.001 par value per share.  To our knowledge, except as set forth in the
Registration Rights Agreement, no holder of securities of the Company is
entitled to have such securities registered under the Shelf Registration
Statement.

(d)   The Shares have been duly authorized and, when issued and delivered to and
paid for by the Purchasers in accordance with the terms of the Subscription
Agreement, will be validly issued, fully paid and non-assessable, and will not
be issued in violation of any preemptive rights pursuant to any law or contained
in the Company’s articles of incorporation or bylaws or any Material Agreement. 
The term “Material Agreements” shall mean only those agreements to which the
Company is a party and which are listed as an exhibit to the Company’s most
recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q.

(e)   The Company has the requisite corporate power and authority to execute,
deliver and perform its obligations under the Transaction Documents, and each
such agreement has been duly authorized, executed and delivered by the Company.
The Subscription Agreement, the Engagement Letter and the Registration Rights
Agreement are herein collectively referred to as the “Transaction Documents.”

(f)    Each of the Transaction Documents constitutes a valid and legally binding
obligation of the Company, enforceable against the Company in accordance with
their terms.

(g)   No consent, approval, authorization, license, qualification, exemption or
order of any court or governmental agency or body on the part of the Company is
required in connection with the execution and delivery of the Transaction
Documents by the Company or for the consummation by the Company of any of the
transactions contemplated thereby, except such consents, approvals,
authorizations, licenses, qualifications, exemptions or orders as may be
required under (i) the Securities Act of 1933, as amended (the “Securities
Act”), and state securities or Blue Sky laws in connection with registration,
pursuant to the Registration Rights Agreement, of the Shares and (ii) federal or
state securities or Blue Sky laws in connection with the issuance and sale of
the Shares pursuant to the Subscription Agreement.  No consent of any

 

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third party is required pursuant to the terms of any Material Agreement for the
performance of any Transaction Document by the Company or for the consummation
by the Company of any of the transactions contemplated thereby, except for those
already obtained.

(h)   The execution, delivery and performance by the Company of the Transaction
Documents and the consummation by the Company of the transactions contemplated
thereby and the issuance of the Shares will not violate, conflict with or
constitute or result in a breach of or a default under (or an event that, with
notice or lapse of time, or both, would constitute a breach of or a default
under) any of (i) the terms or provisions of any Material Agreement, (ii) the
articles of incorporation or bylaws of the Company or (iii) to our knowledge
(assuming compliance with all applicable state securities or Blue Sky laws and
the NASD Rules), any judgment, decree, order of any court or governmental agency
or body having jurisdiction over the Company known to us or any applicable
statute, rule or regulation, which violation, conflict, breach or default would,
individually or in the aggregate, have a Material Adverse Effect.

(i)    To our knowledge, except as described in the Disclosure Documents, there
is not pending or threatened any action, suit, proceeding, inquiry or
investigation, governmental or otherwise, that (i) seeks to restrain, enjoin,
prevent the consummation of or otherwise challenge the issuance or sale of the
Shares or the application of the proceeds therefrom by the Company in the manner
described in the Subscription Agreement or (ii) if determined adversely to the
Company, is reasonably likely to have a Material Adverse Effect.

(j)    It is not necessary in connection with the offer, sale and delivery of
the Shares to the Purchasers under the Subscription Agreement to register the
Shares under the Securities Act, it being understood that no opinion is
expressed as to any subsequent resale of any of the Shares.

 

2

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Landec Corporation

645,161 Shares of Common Stock

SUBSCRIPTION AGREEMENT

March 26, 2002

TO EACH OF THE PURCHASERS NAMED ON THE SIGNATURE PAGES HEREOF

Ladies and Gentlemen:

Landec Corporation, a California corporation (the “Company”), hereby confirms
its agreement with you (the “Purchasers”), as set forth below.

1.             The Shares.  Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to each Purchaser the number
of shares of its Common Stock, par value $0.001 per share (the “Common Stock”),
set forth on the signature page of such Purchaser hereto (collectively, the
“Shares”).

The Shares will be offered and sold to the Purchasers without such offers and
sales being registered under the Securities Act of 1933, as amended (together
with the rules and regulations of the Securities and Exchange Commission (the
“Commission”) promulgated thereunder, the “Securities Act”), in reliance on
exemptions therefrom.

In connection with the sale of the Shares, the Company has made available its
periodic reports filed with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 since January 1, 2001.  These reports and
filings are collectively referred to as the “Disclosure Documents”.  All
references in this Agreement to financial statements and schedules and other
information which is “contained,” “included” or “stated” in the Disclosure
Documents (or other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information which
is incorporated by reference in the Disclosure Documents.

The Purchasers and their direct and indirect transferees of the Shares will be
entitled to the benefits of the Registration Rights Agreement to be dated as of
March 26, 2002 among the parties hereto (the “Registration Rights Agreement”)
pursuant to which the Company has agreed, among other things, to file a shelf
registration statement (the “Shelf Registration Statement”) pursuant to Rule 415
under the Securities Act of 1933 relating to the resale of the Shares (as
defined herein) by holders thereof.

The Registration Rights Agreement, the Engagement Letter dated March 4, 2002
with Roth Capital Partners, LLC, and this Agreement are herein collectively
referred to as the “Basic Documents”.

 

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2.             Representations and Warranties of the Company.  The Company
represents and warrants to and agrees with each Purchaser that:

(a)           The Disclosure Documents as of their respective dates did not, and
any amendment or supplement thereto as of its date did not, contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.  The Disclosure Documents, at the time they were filed
with the Commission, complied in all material respects with the requirements of
the Securities Act of 1933 and/or the Securities Acts of 1934, as the case may
be (together with the rules and regulations of the Commission promulgated
thereunder, the “Securities Acts”), as applicable.

(b)           Each of the Company and its subsidiaries (the “Subsidiaries”) has
been duly incorporated and each of the Company and the Subsidiaries is validly
existing in good standing as a corporation under the laws of its jurisdiction of
incorporation, with the requisite corporate power and authority to own its
properties and conduct its business as now conducted as described in the
Disclosure Documents and is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions where the ownership or
leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified would not,
individually or in the aggregate, have a material adverse effect on the
business, condition (financial or other), properties, prospects or results of
operations of the Company and the Subsidiaries, taken as a whole (any such
event, a “Material Adverse Effect”); as of the Closing Date, the Company will
have the authorized, issued and outstanding capitalization set forth in the
Disclosure Documents (subject to the issuance of shares pursuant to this
Agreement or pursuant to options outstanding under the Company’s stock option
plans or outstanding warrants or other rights to acquire shares described in the
Disclosure Documents); all of the outstanding shares of capital stock of the
Company and the Subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable and were not issued in violation of any preemptive
or similar rights and are owned free and clear of all liens, encumbrances,
equities, and restrictions on transferability (other than those imposed by the
Securities Act and the state securities or “Blue Sky” laws) or voting; except as
set forth in the Disclosure Documents, all of the outstanding shares of capital
stock of the Subsidiaries are owned, directly or indirectly, by the Company; the
shares of capital stock of the Company and the Subsidiaries that are reserved
for issuance pursuant to stock option plans or other equity incentive plans is
as set forth in the Disclosure Documents; and except as may be outstanding under
stock option plans or other equity incentive plans that are described in the
Disclosure Documents, there are no outstanding options, warrants or other rights
to purchase shares of capital stock of the Company or the Subsidiaries.

(c)           The Company has the requisite corporate power and authority to
execute, deliver and perform its obligations under the Basic Documents.  Each of
the Basic Documents has been duly and validly authorized by the Company and,
when executed and delivered by the Company, will constitute a valid and legally
binding agreement of the Company, enforceable against the Company in accordance
with its terms except as (i) the enforcement thereof may be limited by
(A) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to or

 

2

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affecting creditors’ rights generally or (B) general principles of equity and
the discretion of the court before which any proceeding therefore may be brought
(regardless of whether such enforcement is considered in a proceeding at law or
in equity) (collectively, the “Enforceability Exceptions”), and (ii) any rights
to indemnity, or contribution under the Registration Rights Agreement may be
limited by federal and state securities laws and public policy considerations.

(d)           The Shares have been duly authorized and, when issued upon payment
thereof in accordance with this Agreement, will have been validly issued, fully
paid and nonassessable.  The capital stock of the Company, including the Common
Stock, conforms to the description thereof contained in the Disclosure
Documents.  The stockholders of the Company have no preemptive or similar rights
with respect to the Common Stock.

(e)           No consent, approval, authorization, license, qualification,
exemption or order of any court or governmental agency or body or third party is
required for the performance of the Basic Documents by the Company or for the
consummation by the Company of any of the transactions contemplated thereby, or
the application of the proceeds of the issuance of the Shares as described in
the Disclosure Documents, except for such consents, approvals, authorizations,
licenses, qualifications, exemptions or orders (i) as have been obtained on or
prior to the Closing Date, (ii) as are not required to be obtained on or prior
to the Closing Date that will be obtained when required, or (iii) the failure to
obtain which would not, individually or in the aggregate, have a Material
Adverse Effect; all such consents, approvals, authorizations, licenses,
qualifications, exemptions and orders set forth in the Disclosure Documents
which are required to be obtained by the Closing Date will be in full force and
effect as of the Closing Date and not the subject of any pending or, to the best
knowledge of the Company, threatened attack by appeal or direct proceeding or
otherwise.

(f)            None of the Company or the Subsidiaries is (i) in violation of
its certificate of incorporation or bylaws (or similar organizational document),
(ii) in breach or violation of any statute, judgment, decree, order, rule or
regulation applicable to it or any of its properties or assets, which breach or
violation would, individually or in the aggregate, have a Material Adverse
Effect, or (iii) in default (nor has any event occurred which with notice or
passage of time, or both, would constitute a default) in the performance or
observance of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan agreement, note, lease,
license, franchise agreement, permit, certificate or agreement or instrument to
which it is a party or to which it is subject, which default would, individually
or in the aggregate, have a Material Adverse Effect.

(g)           The execution, delivery and performance by the Company of the
Basic Documents and the consummation by the Company of the transactions
contemplated thereby and the fulfillment of the terms thereof will not
(a) violate, conflict with or constitute or result in a breach of or a default
under (or an event that, with notice or lapse of time, or both, would constitute
a breach of or a default under) any of (i) the terms or provisions of any
contract, indenture, mortgage, deed of trust, loan agreement, note, lease,
license, franchise agreement, permit, certificate or agreement or instrument to
which any of the Company or the Subsidiaries is a party or to which any of their
respective properties or

 

3

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assets are subject, (ii) the certificate of incorporation or bylaws of any of
the Company or the Subsidiaries (or similar organizational document) or
(iii) any statute, judgment, decree, order, rule or regulation of any court or
governmental agency or other body applicable to the Company or the Subsidiaries
or any of their respective properties or assets or (b) result in the imposition
of any lien upon or with respect to any of the properties or assets now owned or
hereafter acquired by the Company or any of the Subsidiaries, which violation,
conflict, breach, default or lien would, individually or in the aggregate, have
a Material Adverse Effect.

(h)           The audited consolidated financial statements included in the
Disclosure Documents present fairly the consolidated financial position, results
of operations, cash flows and changes in stockholders’ equity of the entities,
at the dates and for the periods to which they relate and have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis; the interim unaudited consolidated financial statements included in the
Disclosure Documents present fairly the consolidated financial position, results
of operations and cash flows of the entities, at the dates and for the periods
to which they relate, subject to year-end audit adjustments, and have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis with the audited consolidated financial statements included
therein; the selected financial and statistical data included in the Disclosure
Documents present fairly the information shown therein and have been prepared
and compiled on a basis consistent with the audited financial statements
included therein, except as otherwise stated therein; and Ernst & Young LLP,
which has examined certain of such financial statements as set forth in its
report included in the Disclosure Documents, is an independent public accounting
firm as required by the Securities Act for an offering registered thereunder.

(i)            Except as described in the Disclosure Documents, there is not
pending or, to the best knowledge of the Company, threatened any action, suit,
proceeding, inquiry or investigation, governmental or otherwise, to which any of
the Company or the Subsidiaries is a party, or to which their respective
properties or assets are subject, before or brought by any court, arbitrator or
governmental agency or body, that, if determined adversely to the Company or any
such Subsidiary, would, individually or in the aggregate, have a Material
Adverse Effect or that seeks to restrain, enjoin, prevent the consummation of or
otherwise challenge the issuance or sale of the Shares to be sold hereunder or
the application of the proceeds therefrom or the other transactions described in
the Disclosure Documents.

(j)            None of the Company or the Subsidiaries has, or, after giving
effect to the issuance and sale of the Shares, will have, any liability for any
prohibited transaction (as defined in Section 406 of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”), or Section 4975 of the
Internal Revenue Code of 1986, as amended (the “Code”)), accumulated funding
deficiency (as defined in Section 302 of ERISA) or any complete or partial
withdrawal from a multiemployer plan (as defined in Section 4001(a)(3) of
ERISA), with respect to any plan (as defined in Section 3(3) of ERISA) as to
which the Company or any of the Subsidiaries has or could have any direct or
indirect, actual or contingent liability.  With respect to such plans, the
Company and the Subsidiaries

 

4

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are, and, after giving effect to the issuance and sale of the Shares, will be,
in compliance in all material respects with all provisions of the Code and
ERISA.

(k)           The Company and the Subsidiaries own or possess adequate licenses
or other rights to use all patents, trademarks, service marks, trade names,
copyrights and know-how that are necessary to conduct their businesses as
described in the Disclosure Documents.  None of the Company or the Subsidiaries
has received any notice of infringement of or conflict with (or knows of any
such infringement of or conflict with) asserted rights of others with respect to
any patents, trademarks, service marks, trade names, copyrights or know-how
that, if such assertion of infringement or conflict were sustained, would,
individually or in the aggregate, have a Material Adverse Effect.

(l)            Each of the Company and the Subsidiaries possesses all licenses,
permits, certificates, consents, orders, approvals and other authorizations
from, and has made all declarations and filings with, all federal, state, local
and other governmental authorities, all self-regulatory organizations and all
courts and other tribunals presently required or necessary to own or lease, as
the case may be, and to operate its respective properties and to carry on its
respective businesses as now or proposed to be conducted as set forth in the
Disclosure Documents (“Permits”), except where the failure to obtain such
Permits would not, individually or in the aggregate, have a Material Adverse
Effect; each of the Company and the Subsidiaries has fulfilled and performed all
of its obligations with respect to such Permits and no event has occurred which
allows, or after notice or lapse of time would allow, revocation or termination
thereof or results in any other impairment of the rights of the holder of any
such Permit, except where such revocation, termination or impairment would not,
individually or in the aggregate, have a Material Adverse Effect; and none of
the Company or the Subsidiaries has received any notice of any proceeding
relating to revocation or modification of any such Permit, except as described
in the Disclosure Documents and except where such revocation or modification
would not, individually or in the aggregate, have a Material Adverse Effect.

(m)          Subsequent to the respective dates as of which information is given
in the Disclosure Documents and except as described therein, (i) the Company and
the Subsidiaries have not incurred any material liabilities or obligations,
direct or contingent, or entered into any material transactions not in the
ordinary course of business, (ii) the Company and the Subsidiaries have not
purchased any of their respective outstanding capital stock, or declared, paid
or otherwise made any dividend or distribution of any kind on any of their
respective capital stock or otherwise (other than, (A) with respect to the
Company, the payment of dividends on its Series B Preferred Stock and (B) with
respect to any of such Subsidiaries, the purchase of, or a dividend or
distribution on, capital stock owned by the Company), (iii) there has not been
any material change in the capital stock or any increase in the long-term
indebtedness of the Company or any of the Subsidiaries, (iv) there has not
occurred any event or condition, individually or in the aggregate, that has a
Material Adverse Effect and (v) the Company and the Subsidiaries have not
sustained any material loss or interference with respect to their respective
businesses or properties from fire, flood, hurricane, earthquake, accident or
other calamity, whether or not covered by insurance, or from any labor dispute
or any legal or governmental proceeding.

 

5

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(n)           There are no legal or governmental proceedings nor are there any
contracts or other documents required by the Securities Act to be described in a
prospectus that are not described in the Disclosure Documents.  Except as
described in the Disclosure Documents, none of the Company or the Subsidiaries
is in default under any of the contracts described in the Disclosure Documents,
has received a notice or claim of any such default or has knowledge of any
breach of such contracts by the other party or parties thereto, except such
defaults or breaches as would not, individually or in the aggregate, have a
Material Adverse Effect.

(o)           Each of the Company and the Subsidiaries has good and marketable
title to all real property described in the Disclosure Documents as being owned
by it and good and marketable title to the leasehold estate in the real property
described therein as being leased by it, free and clear of all liens, charges,
encumbrances or restrictions, except, in each case, as described in the
Disclosure Documents or such as would not, individually or in the aggregate,
have a Material Adverse Effect.  All leases, contracts and agreements, including
those referred to in the Disclosure Documents, to which the Company or any of
the Subsidiaries is a party or by which any of them is bound are, to the
knowledge of the Company, valid and enforceable against the other party or
parties thereto, except where the invalidity or unenforceability would not,
individually or in the aggregate, have a Material Adverse Effect.

(p)           Each of the Company and the Subsidiaries has filed all necessary
federal, state and foreign income and franchise tax returns, except where the
failure to so file such returns would not, individually or in the aggregate,
have a Material Adverse Effect, and has paid all taxes shown as due thereon; and
other than tax deficiencies which the Company or any Subsidiary is contesting in
good faith and for which adequate reserves have been provided in accordance with
generally accepted accounting principles, there is no tax deficiency that has
been asserted against the Company or any Subsidiary that would, individually or
in the aggregate, have a Material Adverse Effect.

(q)           For purposes of this Agreement, the following terms shall have the
following meanings:  “Environmental Law” means any federal, state, local or
municipal statute, law, rule, regulation, ordinance, code, policy or rule of
common law and any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent decree or judgment binding on any
of the Company or the Subsidiaries, relating to pollution or protection of the
environment, natural resources or health or safety including, without
limitation, any relating to the release or threatened release of any pollutant,
contaminated substance, material, waste, chemical or contaminant subject to
regulation thereunder.  Except as disclosed in the Disclosure Documents and
except as would not, individually or in the aggregate, have a Material Adverse
Effect, (A) each of the Company and the Subsidiaries is in compliance with all,
and is not subject to liability (including, without limitation, fines or
penalties) under any, applicable Environmental Laws, (B) each of the Company and
the Subsidiaries has made all filings and provided all notices required under
any applicable Environmental Law, and has all permits, authorizations and
approvals required under any applicable Environmental Laws and is in compliance
with their requirements, (C) there is no civil, criminal or administrative
action, suit, demand, claim, hearing, notice of violation,

 

6

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investigation, proceeding, notice or demand letter or request for information
pending or, to the best knowledge of the Company, threatened against the Company
or any of the Subsidiaries under any Environmental Law, (D) no lien, charge,
encumbrance or restriction has been recorded under any Environmental Law with
respect to any assets, facility or property owned, operated, leased or
controlled by the Company or any of the Subsidiaries, (E) neither the Company
nor any of the Subsidiaries is subject to any order, decree or agreement
requiring, or is otherwise obligated or required to perform any response or
corrective action relating to any hazardous material, (F) neither the Company
nor any of the Subsidiaries has received notice that it has been identified as a
potentially responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (“CERCLA”), or any comparable
state law, (G) no property or facility of the Company or any of the Subsidiaries
is (i) listed or proposed for listing on the National Priorities List under
CERCLA or (ii) listed in the Comprehensive Environmental Response, Compensation
and Liability Information System List promulgated pursuant to CERCLA, or on any
comparable list maintained by any state or local governmental authority and
(H) there are no past or present actions, events, operations or activities which
could reasonably be expected to prevent or interfere with compliance by the
Company or any Subsidiary with any applicable Environmental Law or to result in
liability (including, without limitation, fines or penalties) under any
applicable Environmental Law.

(r)            None of the Company or the Subsidiaries is, or immediately after
the Closing Date will be, required to register as an “investment company” or a
company “controlled by” an “investment company” within the meaning of the
Investment Company Act of 1940, as amended (the “Investment Company Act”).

(s)           None of the Company or the Subsidiaries or any of such entities’
directors, officers, employees, agents or controlling persons has taken,
directly or indirectly, any action designed, or that might reasonably be
expected, to cause or result, under the Securities Acts or otherwise, in, or
that has constituted, stabilization or manipulation of the price of the Shares.

(t)            None of the Company, the Subsidiaries or any of their respective
Affiliates (as defined in Rule 501(b) of Regulation D under the Securities Act)
has directly, or through any agent, (i) sold, offered for sale, solicited offers
to buy or otherwise negotiated in respect of any “security” (as defined in the
Securities Act) which is or could be integrated with the sale of the Shares in a
manner that would require the registration under the Securities Act of the
Shares or (ii) engaged in any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities Act)
in connection with the offering of the Shares or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act. 
Assuming the accuracy of the representations and warranties of the Purchasers in
Section 6 hereof, it is not necessary in connection with the offer, sale and
delivery of the Shares to the Purchasers in the manner contemplated by this
Agreement to register any of the Shares under the Securities Act.

(u)           Except as set forth in the Disclosure Documents, there is no
strike, labor dispute, slowdown or work stoppage with the employees of the
Company or any

 

7

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of the Subsidiaries which is pending or, to the best knowledge of the Company or
any of the Subsidiaries, threatened.

(v)           Each of the Company and the Subsidiaries carries insurance
(including self-insurance) in such amounts and covering such risks as in its
reasonable determination is adequate for the conduct of its business and the
value of its properties.

(w)          Each of the Company and the Subsidiaries (i) makes and keeps
accurate books and records and (ii) maintains internal accounting controls which
provide reasonable assurance that (A) transactions are executed in accordance
with management’s authorization, (B) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain accountability
for its assets, (C) access to its assets is permitted only in accordance with
management’s authorization and (D) the reported accountability for its assets is
compared with existing assets at reasonable intervals.

(x)            No holder of securities of the Company or any Subsidiary will be
entitled to have such securities registered under the Shelf Registration
Statement.

(y)           Except the fee payable to Roth Capital Partners, LLC (“Roth”), the
Company does not know of any claims for services, either in the nature of a
finder’s fee or financial advisory fee, with respect to the offering of the
Shares and the transactions contemplated by the Disclosure Documents.

(z)            The Common Stock is listed on the Nasdaq National Market.  The
Company currently is not in violation of, and the consummation of the
transactions contemplated by the Basic Documents, will not violate, any rule of
the National Association of Securities Dealers, except that the Company may
issue the Shares prior to expiration of the full 15 day notice period set forth
in Section 4310(c)(17) of the NASD Manual.

(aa)         The Company is eligible to use Form S-3 for the resale of the
Shares by Purchasers or their transferees.  Any certificate signed by any
officer of the Company or any Subsidiary and delivered pursuant to this
Agreement shall be deemed a joint and several representation and warranty by the
Company to each Purchaser as to the matters covered thereby.

3.             Purchase, Sale and Delivery of the Shares.  On the basis of the
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth and subject to approval of
this transaction by the Company’s Board of Directors, the Company agrees to
issue and sell to the Purchasers, and each Purchaser acting severally and not
jointly agrees to purchase from the Company, the number of Shares set forth on
such Purchaser’s signature page hereto, at $3.10 per share.

One or more certificates in definitive form for the Shares that the Purchasers
have agreed to purchase hereunder, and in such denomination or denominations and
registered in such name or names as each Purchaser requests upon notice to the
Company at least 48 hours prior to the Closing Date (as defined) shall be
delivered by or on behalf of the Company, against payment by or on behalf of the
Purchasers, of the purchase price therefor

 

8

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by wire transfer of immediately available funds to the account of the Company
previously designated by it in writing.  Such delivery of and payment for the
Shares shall be made at the offices of Orrick, Herrington & Sutcliffe LLP, 1020
Marsh Road, Menlo Park, CA  94025 (“Orrick”), on April 5, 2002, or at such date
as the Purchasers and the Company may agree upon, such time and date of delivery
against payment being herein referred to as the “Closing Date.”  The Company
will make such certificate or certificates for the Shares available for checking
and packaging by the Purchasers at the offices of Orrick at least 24 hours prior
to the Closing Date.

4.             Certain Covenants.  The Company covenants and agrees with each
Purchaser that:

(a)           None of the Company or any of its Affiliates will sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any
“security” (as defined in the Securities Act) which could be integrated with the
sale of the Shares in a manner which would require the registration under the
Securities Act of the Shares.

(b)           The Company will apply the net proceeds from the sale of the
Shares for working capital and general corporate purposes, including the
repayment of bank borrowings.

(c)           Except in connection with the filing of the Shelf Registration
Statement, the Company will not, and will not permit any of the Subsidiaries to,
engage in any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Securities Act) in connection with the
offering of the Shares or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act.

(d)           The Company will not become, at any time prior to the expiration
of three years after the Closing Date, an open-end investment company, unit
investment trust, closed-end investment company or face-amount certificate
company that is or is required to be registered under Section 8 of the
Investment Company Act.

(e)           The Company will file the additional listing application for the
Shares with the Nasdaq National Market prior to the Closing Date and will use
its best efforts to have the Shares listed on the Nasdaq National Market on or
prior to the effective date of the Shelf Registration Statement.

(f)            The Company will use its best efforts to do and perform all
things required to be done and performed by it under this Agreement and the
other Basic Documents prior to or after the Closing Date and to satisfy all
conditions precedent on its part to the obligations of the Purchasers to
purchase and accept delivery of the Shares.

5.             Conditions of the Purchasers’ Obligations.  The obligation of
each Purchaser to purchase and pay for the Shares is subject to the following
conditions unless waived in writing by the relevant Purchaser:

 

9

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(a)           The representations and warranties of the Company contained in
this Agreement shall be true and correct in all material respects (other than
representations and warranties with a Material Adverse Effect qualifier, which
shall be true and correct as written) on and as of the Closing Date; the Company
shall have complied in all material respects with all agreements and satisfied
all conditions on its part to be performed or satisfied hereunder at or prior to
the Closing Date.

(b)           None of the issuance and sale of the Shares pursuant to this
Agreement or any of the transactions contemplated by any of the other Basic
Documents shall be enjoined (temporarily or permanently) and no restraining
order or other injunctive order shall have been issued in respect thereof; and
there shall not have been any legal action, order, decree or other
administrative proceeding instituted or, to the Company’s knowledge, threatened
against the Company or against any Purchaser relating to the issuance of the
Shares or any Purchaser’s activities in connection therewith or any other
transactions contemplated by this Agreement or the Disclosure Documents or the
other Basic Documents.

(c)           The Purchasers shall have received certificates, dated the Closing
Date and signed by the chief executive officer and the chief financial officer
of the Company, to the effect of paragraphs 5(a) and (b).

(d)           On or before the Closing Date, the Purchasers shall have received
the Registration Rights Agreement executed by the Company and such agreement
shall be in full force and effect at all times from and after the Closing Date,
subject to the Enforceability Exceptions.

(e)           On or before the Closing Date, the Nasdaq National Market shall
have provided verbal confirmation that no approvals are needed from such
organization in order to consummate the sale of the Shares as contemplated
herein.

(f)            The Purchasers shall have received an opinion of Orrick,
Herrington & Sutcliffe, LLP, counsel to the Company, with respect to the
authorization of the Shares and other customary matters in the form attached
hereto as Exhibit A.

6.             Representations and Warranties of the Purchasers.

(a)           Each Purchaser, severally and not jointly and as to itself only,
represents and warrants to the Company that the Shares to be acquired by it
hereunder are being acquired for its own account for investment (and/or on
behalf of managed accounts who are purchasing solely for their own accounts for
investment) and with no intention of distributing or reselling such Shares or
any part thereof or interest therein in any transaction which would be in
violation of the securities laws of the United States of America or any State,
without prejudice, however, to a Purchaser’s right, subject to the provisions of
this Agreement and the Registration Rights Agreement, at all times to sell or
otherwise dispose of all or any part of such Shares under an effective
registration statement under the Securities Act and in compliance with
applicable state securities laws or under an exemption from such registration,
and subject, nevertheless, to the disposition of a Purchaser’s property being at
all

 

10

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times within its control.  By executing this Agreement, each Purchaser further
represents that such Purchaser does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participation to any Person with respect to any of the Shares.

(b)           Each Purchaser understands that the Shares have not been
registered under the Securities Act and may not be offered, resold, pledged or
otherwise transferred except (a) pursuant to an exemption from registration
under the Securities Act (and, if requested by the Company, based upon an
opinion of counsel acceptable to the Company) or pursuant to an effective
registration statement under the Securities Act and (b) in accordance with all
applicable securities laws of the states of the United States and other
jurisdictions.

EACH PURCHASER AGREES TO THE IMPRINTING, SO LONG AS APPROPRIATE, OF THE
FOLLOWING LEGEND ON THE SHARES:

 

The shares of common stock evidenced by this certificate have not been
registered under the U.S. Securities Act of 1933, as amended, and may not be
offered, sold, pledged or otherwise transferred (“transferred”) in the absence
of such registration or an applicable exemption therefrom. In the absence of
such registration, such shares may not be transferred unless, if the Company
requests, the Company has received a written opinion from counsel in form and
substance satisfactory to the Company stating that such transfer is being made
in compliance with all applicable federal and state securities laws.

The legend set forth above may be removed if and when the Shares are disposed of
pursuant to an effective registration statement under the Securities Act or in
the opinion of counsel to the Company experienced in the area of United States
Federal securities laws such legends are no longer required under applicable
requirements of the Securities Act.  The Shares shall also bear any other
legends required by applicable Federal or state securities laws, which legends
may be removed when in the opinion of counsel to the Company experienced in the
applicable securities laws, the same are no longer required under the applicable
requirements of such securities laws.  The Company agrees that it will provide
each Purchaser, upon request, with a substitute Share certificate, not bearing
such legend at such time as such legend is no longer applicable.  Each Purchaser
agrees that, in connection with any transfer of Shares by it pursuant to an
effective registration statement under the Securities Act, such Purchaser will
comply with all prospectus delivery requirements of the Securities Act.  The
Company makes no representation, warranty or agreement as to the availability of
any exemption from registration under the Securities Act with respect to any
resale of Shares.

(c)           Each Purchaser is an institutional investor that is an accredited
investor within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act.

 

11

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(d)           Each Purchaser, severally and not jointly and as to itself only,
represents and warrants to the Company that it has such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the prospective investment in the
Shares, such Purchaser having been represented by counsel, and has so evaluated
the merits and risks of such investment and is able to bear the economic risk of
such investment and, at the present time, is able to afford a complete loss of
such investment.

(e)           Each Purchaser, severally and not jointly and as to itself only,
represents and warrants to the Company that (i) the purchase of the Shares to be
purchased by it has been duly and properly authorized and this Agreement has
been duly executed and delivered by it or on its behalf and constitutes the
valid and legally binding obligation of such Purchaser, enforceable against the
Purchaser in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors’ rights generally and to
general principals of equity; (ii) the purchase of the Shares to be purchased by
it does not conflict with or violate its charter, by-laws or any law, regulation
or court order applicable to it; and (iii) the purchase of Shares to be
purchased by it does not impose any penalty or other onerous condition on such
Purchaser under or pursuant to any applicable law or governmental regulation.

(f)            Each Purchaser, severally and not jointly and as to itself only,
represents and warrants to the Company that neither it nor any of its directors,
officers, employees, agents, or controlling persons has taken, directly or
indirectly, any actions designed, or might reasonably be expected to cause or
result, under the Securities Acts or otherwise, in, or that has constituted,
stabilization, or manipulation of the price of the shares.

(g)           Each Purchaser acknowledges receipt of the Disclosure Documents
and further acknowledges that it has been afforded (i) the opportunity to ask
such questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Shares and the merits and risks of investing in the Shares; (ii)
access to information about the Company and the Company’s financial condition,
results of operations, business, properties, management and prospects sufficient
to enable it to evaluate its investment in the Shares; and (iii) the opportunity
to obtain such additional information which the Company possesses or can acquire
without unreasonable effort or expense that is necessary to verify the accuracy
and completeness of the information contained in the Disclosure Documents.

(h)           Each Purchaser understands and acknowledges that (i) the Shares
are offered and sold without registration under the Securities Act in a private
placement that is exempt from the registration provisions of the Securities Act
and (ii) the availability of such exemption depends in part on, and that the
Company, its counsel and Roth will rely upon, the accuracy and truthfulness of
the foregoing representations and such Purchaser hereby consents to such
reliance.

 

12

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7.             Survival Clause.  The respective representations, warranties,
agreements and covenants of the Company and the Purchasers set forth in this
Agreement shall remain in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company, any of its officers or
directors, or any Purchaser and (ii) delivery of, payment for or disposition of
the Shares, and shall be binding upon and shall inure to the benefit of any
successors, assigns, heirs or personal representatives of the Company and the
Purchasers.

8.             Termination.

(a)           This Agreement may be terminated in the sole discretion of the
Company by notice to each Purchaser severally and not jointly if at the Closing
Date:

(i)            the representations and warranties made by such Purchaser in
Section 6 are not true and correct in all material respects; or

(ii)           as to the Company, the sale of the Shares hereunder (i) is
prohibited or enjoined by any applicable law or governmental regulation or (ii)
subjects the Company to any penalty, or in its reasonable judgment, other
onerous condition under or pursuant to any applicable law or government
regulation that would materially reduce the benefits to the Company of the sale
of the Shares to such Purchaser, so long as such regulation, law or onerous
condition was not in effect in such form at the date of this Agreement.

(b)           This Agreement may be terminated in the sole discretion of any
Purchaser by notice to the Company given in the event that the Company shall
have failed, refused or been unable to satisfy all conditions on its part to be
performed or satisfied hereunder on or prior to the Closing Date or if after the
execution and delivery of this Agreement and prior to the Closing Date:

(i)            trading in securities of the Company on the NASDAQ National
Market shall have been suspended;

(ii)           a banking moratorium shall have been declared by New York or
United States authorities; or

(iii)          there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an outbreak or
escalation of any other insurrection or armed conflict involving the United
States or any other national or international calamity or emergency, or (C) any
material change in the financial markets of the United States that, in the case
of (A), (B) or (C) above, in the sole judgment of any Purchaser, makes it
impracticable or inadvisable to proceed with the delivery of the Shares as
contemplated by the Disclosure Documents, as amended as of the date hereof.

9.             Notices.  All communications hereunder shall be in writing and,
(i) if sent to a Purchaser, shall be hand delivered, mailed by first-class mail,
couriered by next-day air courier or telecopied and confirmed in writing to
their address on their signature page

 

13

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hereof and (ii) if sent to the Company, shall be hand delivered, mailed by
first-class mail, couriered by next-day air courier or telecopied and confirmed
in writing to Landec Corporation, 3603 Haven Avenue, Menlo Park, CA 94025,
Attention:  Greg Skinner, and with a copy to Geoffrey P. Leonard, Orrick,
Herrington & Sutcliffe LLP, 1020 March Road, Menlo Park, CA 94025.

All such notices and communications shall be deemed to have been duly given: 
when delivered by hand, if personally delivered; five business days after being
deposited in the mail, postage prepaid, if mailed; one business day after being
timely delivered to a next-day air courier guaranteeing overnight delivery; and
when receipt is acknowledged by the addressee, if telecopied.

10.           Successors.  This Agreement shall inure to the benefit of and be
binding upon each Purchaser and the Company and their respective successors and
legal representatives, and nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any other person any legal or equitable
right, remedy or claim under or in respect of this Agreement, or any provisions
herein contained; this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person.  No purchaser of Shares from any Purchaser
will be deemed a successor because of such purchase.

11.           No Waiver; Modifications in Writing.  No failure or delay on the
part of the Company or any Purchaser in exercising any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.  The
remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to the Company or any Purchaser at law or in
equity or otherwise.  No waiver of or consent to any departure by the Company or
any Purchaser from any provision of this Agreement shall be effective unless
signed in writing by the party entitled to the benefit thereof, provided that
notice of any such waiver shall be given to each party hereto as set forth
below.  Except as otherwise provided herein, no amendment, modification or
termination of any provision of this Agreement shall be effective unless signed
in writing by or on behalf of each of the Company and the relevant Purchaser. 
Any amendment, supplement or modification of or to any provision of this
Agreement, any waiver of any provision of this Agreement, and any consent to any
departure by the Company or any Purchaser from the terms of any provision of
this Agreement shall be effective only in the specific instance and for the
specific purpose for which made or given.  Except where notice is specifically
required by this Agreement, no notice to or demand on the Company in any case
shall entitle the Company to any other or further notice or demand in similar or
other circumstances.

12.           Entire Agreement.  This Agreement constitutes the entire agreement
among the parties hereto and supersedes all prior agreements, understandings and
arrangements, oral or written, among the parties hereto with respect to the
subject matter hereof.

 

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13.           APPLICABLE LAW.  THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT
GIVING EFFECT TO PROVISIONS RELATING TO CONFLICTS OF LAW TO THE EXTENT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

14.           Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

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If the foregoing correctly sets forth our understanding, please indicate your
acceptance thereof in the space provided below for that purpose, whereupon this
Agreement shall constitute a binding agreement among the Company and the
Purchasers.

 

 

Very truly yours,

 

 

 

 

LANDEC CORPORATION

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

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SUBSCRIPTION AGREEMENT SIGNATURE PAGE

Accepted and Agreed

 

 

 

 

Number of Shares Purchased:

 

 

 

Total Investment: $

 

Name of Purchaser (Print)

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

Date:

 

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

Telephone:

 

 

 

 

 

Facsimile:

 

 

 

 

 

Please register Shares as follows:

 

 

 

Name:

 

 

 

 

 

 

 

 

 

 

 

Tax I.D. Number of Person in whose name the Shares are to be registered:

 

 

 

 

 

 

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Exhibit A

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(a)   The Company has been duly incorporated, is validly existing, is in good
standing under the laws of the State of California, and has the corporate power
and authority to own its property and to conduct its business as now conducted
as described in the Disclosure Documents.

(b)   Each of Apio, Inc. and Landec Ag, Inc. (the “Subsidiaries”), is validly
existing, is in good standing under the laws of the State of Delaware, and has
the corporate power and authority to own its property and to conduct its
business as now conducted as described in the Disclosure Documents.

(c)   The authorized capital stock of the Company consists of 50,000,000 shares
of common stock, $0.001 par value per share, and 2,000,000 shares of preferred
stock, $0.001 par value per share.  To our knowledge, except as set forth in the
Registration Rights Agreement, no holder of securities of the Company is
entitled to have such securities registered under the Shelf Registration
Statement.

(d)   The Shares have been duly authorized and, when issued and delivered to and
paid for by the Purchasers in accordance with the terms of the Subscription
Agreement, will be validly issued, fully paid and non-assessable, and will not
be issued in violation of any preemptive rights pursuant to any law or contained
in the Company’s articles of incorporation or bylaws or any Material Agreement. 
The term “Material Agreements” shall mean only those agreements to which the
Company is a party and which are listed as an exhibit to the Company’s most
recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q.

(e)   The Company has the requisite corporate power and authority to execute,
deliver and perform its obligations under the Transaction Documents, and each
such agreement has been duly authorized, executed and delivered by the Company.
The Subscription Agreement, the Engagement Letter and the Registration Rights
Agreement are herein collectively referred to as the “Transaction Documents.”

(f)    Each of the Transaction Documents constitutes a valid and legally binding
obligation of the Company, enforceable against the Company in accordance with
their terms.

(g)   No consent, approval, authorization, license, qualification, exemption or
order of any court or governmental agency or body on the part of the Company is
required in connection with the execution and delivery of the Transaction
Documents by the Company or for the consummation by the Company of any of the
transactions contemplated thereby, except such consents, approvals,
authorizations, licenses, qualifications, exemptions or orders as may be
required under (i) the Securities Act of 1933, as amended (the “Securities
Act”), and state securities or Blue Sky laws in connection with registration,
pursuant to the Registration Rights Agreement, of the Shares and (ii) federal or
state securities or Blue Sky laws in connection with the issuance and sale of
the Shares pursuant to the Subscription Agreement.  No consent of any

 

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third party is required pursuant to the terms of any Material Agreement for the
performance of any Transaction Document by the Company or for the consummation
by the Company of any of the transactions contemplated thereby, except for those
already obtained.

(h)   The execution, delivery and performance by the Company of the Transaction
Documents and the consummation by the Company of the transactions contemplated
thereby and the issuance of the Shares will not violate, conflict with or
constitute or result in a breach of or a default under (or an event that, with
notice or lapse of time, or both, would constitute a breach of or a default
under) any of (i) the terms or provisions of any Material Agreement, (ii) the
articles of incorporation or bylaws of the Company or (iii) to our knowledge
(assuming compliance with all applicable state securities or Blue Sky laws and
the NASD Rules), any judgment, decree, order of any court or governmental agency
or body having jurisdiction over the Company known to us or any applicable
statute, rule or regulation, which violation, conflict, breach or default would,
individually or in the aggregate, have a Material Adverse Effect.

(i)    To our knowledge, except as described in the Disclosure Documents, there
is not pending or threatened any action, suit, proceeding, inquiry or
investigation, governmental or otherwise, that (i) seeks to restrain, enjoin,
prevent the consummation of or otherwise challenge the issuance or sale of the
Shares or the application of the proceeds therefrom by the Company in the manner
described in the Subscription Agreement or (ii) if determined adversely to the
Company, is reasonably likely to have a Material Adverse Effect.

(j)    It is not necessary in connection with the offer, sale and delivery of
the Shares to the Purchasers under the Subscription Agreement to register the
Shares under the Securities Act, it being understood that no opinion is
expressed as to any subsequent resale of any of the Shares.

 

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