Exhibit 10.71
LICENSE, SUPPLY AND R&D AGREEMENT
by and among
LANDEC CORPORATION,
LANDEC AG, INC.
and
MONSANTO COMPANY
December 1, 2006

 

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TABLE OF CONTENTS

          1.  
DEFINITIONS
  - 1 -    
 
    2.  
LICENSE GRANTS AND IP OWNERSHIP
  - 5 -    
 
       
2.1. License Grants to Monsanto
  - 5 -    
2.2. License Grants to Landec
  - 8 -    
2.3. Retained Rights and Ownership
  - 8 -    
 
    3.  
ANNUAL PAYMENTS AND BUY-OUT OPTION
  - 9 -    
 
       
3.1. Annual Payments
  - 9 -    
3.2. Buy-Out Option
  - 9 -    
3.3. Long-Term Supply
  - 9 -    
3.4. Effects of Buy-Out
  - 9 -    
3.5. Failure to Exercise the Buy-Out Option
  - 11 -    
3.6. Undertakings Relating to Buy-Out Option
  - 11 -    
 
    4.  
SUPPLY OF LICENSED PRODUCT
  - 12 -    
 
       
4.1. Supply Agreement
  - 12 -    
4.2. Monsanto’s Responsibilities
  - 13 -    
4.3. Landec’s Responsibilities
  - 13 -    
4.4. Payment
  - 14 -    
4.5. Records and Audit
  - 15 -    
4.6. Sole Remedy
  - 15 -    
4.7. Title
  - 15 -    
 
    5.  
SERVICES
  - 15 -    
 
       
5.1. Operating Services
  - 15 -    
5.2. Monsanto’s Support Services
  - 17 -    
5.3. Sales Agency
  - 17 -    
5.4. Costs of Services
  - 18 -    
5.5. Records and Audit
  - 20 -    
5.6. Workforce
  - 20 -    
 
    6.  
INTELLECTUAL PROPERTY
  - 20 -    
 
       
6.1. Filing, Prosecution and Maintenance of Patent Rights
  - 20 -

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6.2. Filing, Prosecution and Maintenance of Licensed Trademarks
  - 23 -    
6.3. Enforcement of Patent Rights
  - 23 -    
6.4. Defense of Third Party Infringement Action
  - 25 -    
6.5. Patent Term Restoration
  - 26 -    
 
    7.  
CONFIDENTIALITY
  - 27 -    
 
       
7.1. Confidential Information
  - 27 -    
7.2. Exceptions
  - 27 -    
7.3. Authorized Disclosure and Use
  - 27 -    
7.4. SEC Filings and Other Disclosures
  - 28 -    
7.5. Public Announcements
  - 28 -    
 
    8.  
REPRESENTATIONS, WARRANTIES AND COVENANTS
  - 28 -    
 
       
8.1. Representations, Warranties and Covenants of Each Party
  - 28 -    
8.2. Additional Representations, Warranties of Landec
  - 29 -    
8.3. Representation by Legal Counsel
  - 29 -    
8.4. No Inconsistent Agreements
  - 29 -    
8.5. Warranty Disclaimer
  - 30 -    
 
    9.  
TERM AND TERMINATION
  - 30 -    
 
       
9.1. Term
  - 30 -    
9.2. Termination by Monsanto
  - 30 -    
9.3. Termination for Cause
  - 30 -    
9.4. Effects of Termination
  - 31 -    
9.5. Survival of Certain Obligations
  - 31 -    
 
    10.  
INDEMNIFICATION
  - 31 -    
 
       
10.1. Indemnification by Landec
  - 31 -    
10.2. Indemnification by Monsanto
  - 32 -    
10.3. Conditions to Indemnification
  - 33 -    
10.4. Limitations of Indemnification
  - 33 -    
10.5. Sole Remedy
  - 34 -    
 
    11.  
MISCELLANEOUS TERMS
  - 34 -    
 
       
11.1. General Payment Terms
  - 34 -    
11.2. Assignment
  - 34 -

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11.3. Amendment
  - 35 -    
11.4. Waiver
  - 35 -    
11.5. Governing Law and Jurisdiction
  - 35 -    
11.6. UN Convention on Contracts for Sale of Goods
  - 35 -    
11.7. Bankruptcy
  - 35 -    
11.8. Dispute Resolution
  - 35 -    
11.9. Descriptive Headings
  - 36 -    
11.10. Notices
  - 36 -    
11.11. Entire Agreement
  - 38 -    
11.12. Force Majeure
  - 38 -    
11.13. Severability
  - 38 -    
11.14. No Implied License
  - 38 -    
11.15. Basis of Bargain
  - 38 -    
11.16. Further Actions
  - 39 -    
11.17. Independent Contractors
  - 39 -    
11.18. Counterparts
  - 39 -

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EXHIBITS

     
Exhibit A
  Licensed Patent Rights owned by Landec Corporation
 
   
Exhibit B
  Licensed Patent Rights owned by Landec Ag
 
   
Exhibit C
  Licensed Trademarks
 
   
Exhibit D
  Direct Costs as of the Effective Date
 
   
Exhibit E
  Form of Warranty and Disclaimer Language

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LICENSE, SUPPLY AND R&D AGREEMENT
     This License, Supply and R&D Agreement (this “Agreement”) is entered into
as of December 1, 2006 (the “Effective Date”), by and among LANDEC CORPORATION,
a corporation organized and existing under the laws of the state of California
(“Landec Corporation”), LANDEC AG, INC., a corporation organized and existing
under the laws of the state of Delaware and a subsidiary of Landec Corporation
(“Landec Ag,” and together with Landec Corporation, “Landec”), and MONSANTO
COMPANY, a corporation organized and existing under the laws of the state of
Delaware (together with its Affiliates referred to herein as “Monsanto”). Landec
Corporation, Landec Ag and Monsanto may each be referred to herein individually
as a “Party” and collectively as the “Parties.”
Background
     WHEREAS, Landec has developed and commercialized a broad technology and
business, including proprietary technology, patents, technical know-how, trade
secrets and other intellectual property rights, for seed coatings and
coating-related processes, and systems designed to control and enhance
germination and other seed performance characteristics, and the formulation,
application and the use of such coatings, processes and systems, either alone or
in combination with herbicides, fungicides, insecticides, nutrients and other
additives (the foregoing collectively referred to as the “Intellicoat® Seed
Coating Technology”);
     WHEREAS, Monsanto, an agricultural company, produces leading seed brands in
large-acre crops like corn, cotton and oilseeds (soybeans and canola);
     WHEREAS, Monsanto desires to obtain, and Landec desires to grant to
Monsanto, a non-exclusive license to Landec’s Intellicoat® Seed Coating
Technology; and
     NOW THEREFORE, in consideration of the mutual promises and covenants set
forth below and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:
Agreement

1.   Definitions.

  1.1.   “Affiliate” means, with respect to any person or entity, any other
person or entity which controls, is controlled by or is under common control
with such person or entity. A person or entity will be regarded as in control of
another entity if it owns or controls more than fifty percent (50%) of the
equity securities of the subject entity entitled to vote in the election of
directors (or, in the case of an entity that is not a corporation, for the
election of the corresponding managing authority).     1.2.   “Commercially
Reasonable Efforts” means those efforts, activities, measures, and resources of
a diligent Third Party active in a similar field as the Party under the
obligation to make such efforts would consider to be

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      commercially reasonable, feasible and viable to be performed, undertaken
or made in or under the specific circumstances.

  1.3.   “Confidential Information” means, with respect to each Party,
proprietary data or information that belongs in whole or in part to such Party
or information designated as Confidential Information of such Party hereunder,
in all cases that, if disclosed in writing, is marked with the words
“Confidential,” “Proprietary” or words of similar import and, if disclosed
orally or visually, is described in reasonable detail in a written notice sent
by the disclosing party to the receiving party within thirty (30) days of the
oral or visual disclosure requesting that such information be treated as
Confidential Information hereunder.     1.4.   “Control” or “Controlled” means,
with respect to any (a) item of information, including, without limitation,
Know-How, or (b) intellectual property or other right, the possession of the
right, whether directly or indirectly, and whether by ownership, license or
otherwise, to grant to the other Party access or a license, sublicense or other
right to or under such item or right without violating the terms of any
agreement or other arrangements with any Third Party existing before or after
the Effective Date.     1.5.   “Direct Costs” means the cost of all raw
materials and contract manufacturing charges (including direct labor, but
excluding the costs of Operating Services paid by Monsanto to Landec pursuant to
Section 5.4) incurred by Landec in manufacturing and supplying Polymer or
Formulation ordered by Monsanto.     1.6.   “Ex Works” has the meaning set forth
in Incoterms 2000, ICC Official Rules for the Interpretation of Trade Terms, ICC
Publication No. 560.     1.7.   “Field” means the treatment and coating of
seeds, including without limitation, the seeds of alfalfa, canola, corn, cotton
and soybean, and the use of such coated seeds.     1.8.   “Formulation” means
agricultural seed coatings using the Polymer or derivatives thereof.     1.9.  
“Governmental Authority” means any government or agency, instrumentality or
other subdivision thereof, including courts and tribunals, and the states,
provinces and other subdivisions thereof.     1.10.   “Improvement” means all
Patent Rights and other intellectual property rights on any improvement to the
Polymer or derivatives thereof, methods for applying the Polymer or derivatives
thereof to seed, or preparation and use of the Formulation, whether or not
patentable or copyrightable, which is recorded, developed, conceived of, created
or reduced to practice during the performance of the Work Plan during the Term.
Improvements will not include anything conducted outside the Work Plan even
though conducted during the Term.

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  1.11.   “Incotec License Agreement” means that Non-Exclusive License Agreement
dated February 14, 2003 by and between Landec Ag and Incotec International, BV.
    1.12.   “Joint Improvement” means any and all Improvements created or
conceived jointly by (a) Monsanto or any one or more of its Affiliates, agents,
employees, subcontractors, Third Parties acting on their behalf or sublicensees
and (b) Landec or any one or more of its Affiliates, agents, employees,
subcontractors, Third Parties acting on their behalf or licensees, provided that
either Party or both Parties may assist with or be involved in reduction to
practice, during the performance of the Work Plan during the Term.     1.13.  
“Know-How” means inventions, discoveries, data, information, processes, methods,
techniques, materials, systems, formulations, design, expertise, technology, or
research results, whether or not patentable or copyrightable.     1.14.  
“Landec Improvements” means any and all Improvements created or conceived solely
by Landec or any one or more of its Affiliates, agents, employees,
subcontractors, Third Parties acting on their behalf, or licensees, provided
that either Party or both Parties may assist with or be involved in reduction to
practice during the performance of the Work Plan during the Term. All Landec
Improvements relating exclusively to the Field will be solely owned by Landec
Ag.     1.15.   “Laws” means laws, statutes, ordinances, rules, regulations,
judgments or decrees administered, promulgated or issued by any Governmental
Authority.     1.16.   “Licensed Know-How” means all Know-How developed by or on
behalf of or acquired by, and in the possession or Control of, Landec, including
Landec Improvements, which is necessary or useful to the manufacture, use or
sale of Licensed Products, or otherwise relates to the Licensed Technology,
except for any Know-How relating to the manufacture of Polymer.     1.17.  
“Licensed Patent Rights” means (a) the Patent Rights referred to in Exhibit A
and Exhibit B, (b) any Patent Rights claiming Landec Improvements, and
(c) Patent Rights maturing from the aforementioned applications or maturing from
applications in any country of the world that claim priority to any of such
applications.     1.18.   “Licensed Product” means Polymer or Formulation that
is made using the Licensed Technology.     1.19.   “Licensed Technology” means
the Licensed Know-How, Landec Improvements, Joint Improvements and Licensed
Patent Rights.     1.20.   “Licensed Trademarks” means those marks identified on
Exhibit C,

- 3 -

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      including all registered, applied for and common law rights thereto and
the goodwill associated therewith, and any foreign equivalent or representation
thereof where Landec has the rights to such mark or acquires the rights to such
mark during the Term.

  1.21.   “Major Market Countries” means the United States, Canada, Japan,
Germany, France, United Kingdom of Great Britain and the Netherlands.     1.22.
  “Monsanto Improvements” means any and all Improvements created or conceived
solely by Monsanto or any one or more of its Affiliates, agents, employees,
subcontractors, Third Parties acting on their behalf or licensees, provided that
either Party or both Parties may assist with or be involved in reduction to
practice during the performance of the Work Plan during the Term. All Monsanto
Improvements will be solely owned by Monsanto.     1.23.   “Patent Rights” means
any and all rights under any and all (a) U.S. or foreign patents, (b) U.S. or
foreign patent applications, including without limitation, all provisional
applications, substitutions, continuations, continuations-in-part, divisional
applications, renewals, and all patents granted thereon, (c) all
patents-of-addition, reissues, reexaminations and extensions or restorations by
existing or future extension or restoration mechanisms, including, without
limitation, supplementary protection certificates or he equivalent thereof, and
(d) any other form of government-issued right substantially equivalent to any of
the foregoing.     1.24.   “Polymer” means Landec’s temperature-sensitive
polymer material.     1.25.   “Purchase Price” means 120% of Direct Costs, but
excluding the costs of Operating Services paid by Monsanto to Landec Ag pursuant
to Section 5.4, relating to the manufacture of Polymer ordered by Monsanto.    
1.26.   “Territory” means worldwide.     1.27.   “Third Party” means any person
or entity other than Landec Corporation, Landec Ag or Monsanto or their
respective Affiliates.     1.28.   Additional Definitions. Each of the following
definitions are found in the body of this Agreement as indicated:

              Section  
“AAA”
    11.8.2  
“Abandoning Party”
    6.1.4.1  
“Annual Payment”
    3.1  
“Annual Plan and Budget”
    5.1  
“Annual Supply Fee”
    4.4.1  
“Approved First Use”
    2.1.3.5  
“Buy-Out Fee”
    3.2  

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                Section  
“Buy-Out Closing”
    3.6  
“Buy-Out Option”
    3.2  
“Controlling Party”
    6.3.3  
“Formulation and Manufacturing Services”
    5.1.3  
“Formulation License”
    2.1.2  
“General Administrative Services”
    5.1.4  
“Held Back Claims”
    10.1.2  
“Infringement Suit”
    6.4  
“Infringer”
    6.3.1  
“Landec Indemnified Party”
    10.2  
“Liability”
    10.1.1  
“Monsanto Indemnified Party”
    10.1.1  
“Operating Service(s)”
    5  
“Performance Claims”
     10.1.1(b)  
“Reduction Amount”
    4.4.3.2  
“Representatives”
    11.8.1  
“Research and Development Services”
    5.1.2.1  
“Responsible Party”
    6.1.4.1  
“Sales and Marketing Services”
    5.3.2  
“Specifications”
    4.3.2  
“Stock Purchase Agreement”
    3.2  
“Sued Party”
    6.4  
“Supply Term”
    4.1.1  
“Support Services”
    5.2  
“Term”
    9.1  
“Termination Fee”
    9.2.1  
“Total Relevant Sales”
    5.3.3.2  
“Trademark Documentation”
    2.1.3.1  
“Work Plan”
    5.1.2.1  

2.   License Grants and IP Ownership.

  2.1.   License Grants to Monsanto. Except for the licenses granted by Landec
Ag under the Incotec License Agreement:

  2.1.1.   Patent and Know-How License. Subject to the terms and conditions of
this Agreement, Landec hereby grants to Monsanto a co-exclusive license under
the Licensed Technology to use, develop, market, distribute, sell, offer for
sale, import and export Licensed Products for use in the Field during the Term
in the Territory.     2.1.2.   Formulation License. Subject to the terms and
conditions of this Agreement, Landec hereby grants to Monsanto a co-exclusive
license under the Licensed Technology to make and have made Formulation for use
in the Field during the Term in the Territory (the “Formulation

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      License”). Consistent with Section 4.1.2, Monsanto covenants to Landec
that it will not exercise its rights under the Formulation License before the
first anniversary of the Effective Date.

  2.1.3.   Trademark License. Subject to the terms and conditions of this
Agreement, Landec hereby grants to Monsanto a co-exclusive license to the
Licensed Trademarks for use solely in connection with the marketing, promotion,
distribution and sale of Licensed Products in the Field during the Term in the
Territory.

  2.1.3.1.   Trademark Use. Monsanto may use the Licensed Trademarks in or on
all packaging, labels, promotional materials, marketing literature, seed tags
and other materials in any medium directly or indirectly relating to the
Licensed Products (“Trademark Documentation”). When using each of the Licensed
Trademarks, Monsanto agrees to use a footnote in substantially the following
form: [Licensed Trademark] is a [registered] trademark of [Landec] once on each
piece of Trademark Documentation. Monsanto will not be required to utilize the
Licensed Trademarks in connection with the Licensed Products and may, at its
option, use other trademarks on the Licensed Products.     2.1.3.2.   Marking.
Any use of a Licensed Trademark will be marked with an “®” if and when Landec
has obtained registrations thereof in the Territory or portions thereof in which
Licensed Products will be promoted, and will be marked with a “™” for trademarks
and “SM” for service marks prior to such registration.     2.1.3.3.  
Restrictions. Monsanto agrees that it will not use any Licensed Trademark:
(a) as a corporate name, business name, domain name or trade name, (b) in a
manner that would reasonably be expected to impair materially the validity,
reputation, or distinctiveness of any of the Licensed Trademarks, or (c) in a
manner that would reasonably be expected to impair materially Landec’s
reputation. Monsanto also agrees that it will not challenge or diminish any of
Landec’s rights in the Licensed Marks during the Term of this Agreement or apply
to register in its name any of the Licensed Trademarks.     2.1.3.4.   Quality
Control. Monsanto agrees that the Licensed Products bearing any Licensed
Trademarks (which may, as deemed appropriate by Monsanto, be co-branded with
Monsanto trademarks) will be sold and distributed in accordance with all
applicable Laws and regulations, including those Laws and regulations pertaining
to the proper use and designation of the Licensed Trademarks. Monsanto also
agrees to (a) display the

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      proper form of trademark notice associated with the Licensed Trademarks
and (b) include, on any Licensed Product which bears a Licensed Trademark, a
statement identifying Landec as the owner of such Licensed Trademark. Monsanto
acknowledges and agrees that Landec is the sole and exclusive owner of all
Licensed Trademarks. All goodwill associated with the Licensed Trademarks
arising from any and all use of the Licensed Trademarks will inure to the sole
benefit of Landec.

  2.1.3.5.   Samples. Monsanto will provide to Landec for inspection all
Trademark Documentation for the first Licensed Product that incorporates a
Licensed Trademark or which will be marketed or distributed using a Licensed
Trademark a reasonable time prior to the initial sale or distribution of such
Licensed Product. Such Trademark Documentation will be sent to: Dr. Steven
Bitler, Landec Corporation, Vice President, Corporate Technology, 3603 Haven
Avenue, Menlo Park, CA 94025. Landec will have the right to make reasonable
changes to the way the Licensed Trademark is used or appears in such Trademark
Documentation, including, without limitation, changes in the color and font of
the mark (the “Approved First Use”). Any required changes will be provided by
Landec to Monsanto within twenty (20) business days of submission of the
Trademark Documentation by Monsanto to Landec. Monsanto will thereafter provide
Trademark Documentation for Licensed Products to Landec for Landec’s inspection
and approval of the use of the Licensed Trademark only if Monsanto makes
material changes to the Approved First Use. At Landec’s request, Monsanto will
reasonably assist Landec in monitoring the use of the Licensed Trademarks by
conducting an annual review with Landec of Monsanto’s use of the same. Monsanto
will, at all times, comply with any trademark usage guidelines that may be
provided by Landec, provided that, following the Approved First Use, Landec may
not require any changes to any Trademark Documentation which has been prepared
or produced by Monsanto and which is consistent with the Approved First Use. In
the event of infringement of any of the Licensed Trademarks by any third party,
Monsanto will cooperate and assist Landec in the enforcement of Landec’s rights
therein.     2.1.3.6.   Non-Compliance. In the event that Monsanto fails to
comply with the provisions of this Section 2.1.3, Landec may give written notice
specifying the failure to comply. Unless Monsanto remedies its failure to comply
within twenty (20) business days after receipt of such notice, Landec may
terminate Monsanto’s rights solely under this Section 2.1.3 immediately upon
written notice to Monsanto and Monsanto will cease to use any Licensed

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      Trademark in connection with the Licensed Products, provided however, that
Monsanto will have ninety (90) days to sell off any existing inventory of
Licensed Products bearing the Licensed Trademarks. Termination under this
Section 2.1.3 will not terminate the licenses under Sections 2.1.1 and 2.1.2.

  2.1.4.   Sublicensing. Monsanto may sublicense all or any portion of its
rights and obligations under this Agreement only with the prior written approval
of Landec, which approval will not be unreasonably withheld. Notwithstanding the
foregoing, Monsanto will be free to grant sublicenses to all or any portion of
its rights under this Agreement without Landec’s prior written consent to
authorize its customers to use Formulation made by or on behalf of Monsanto.

  2.2.   License Grants to Landec.

  2.2.1.   In the Field. Subject to the terms and conditions of this Agreement,
Monsanto hereby grants to Landec a non-exclusive, royalty-free license to
exploit the Monsanto Improvements within the Field in the Territory solely to
make and use (but not sell) Licensed Product, provided that Landec may sell
Licensed Product that exploits the Monsanto Improvements at the direction of
Monsanto pursuant to Section 5.3.1(b).     2.2.2.   Outside the Field. Subject
to the terms and conditions of this Agreement, Monsanto hereby grants to Landec
a non-exclusive license for all rights to use, develop, make, have made, market,
distribute, sell, offer for sale, import, export and otherwise exploit the
Monsanto Improvements outside the Field in the Territory. Landec will pay a
reasonable royalty, as mutually agreed, to Monsanto on net sales of products for
use solely outside the Field, which are covered by the Monsanto Improvements.

  2.3.   Retained Rights and Ownership.

  2.3.1.   Licensed Technology and Licensed Trademarks. Except for the licenses
expressly granted under Section 2.1, Landec retains all right, title and
interest in and to the Licensed Technology and Licensed Trademarks and, subject
to Section 5.3.1, is free to use the Licensed Technology and Licensed Trademarks
in the Field in the Territory. In addition to the foregoing, Landec is free to
transfer, license, use and otherwise exploit the Licensed Technology and
Licensed Trademarks outside the Field in the Territory.     2.3.2.   Monsanto
Improvements. Except for the licenses expressly granted under Section 2.2,
Monsanto retains all right, title and interest in and to the Monsanto
Improvements and is free to transfer, license and otherwise exploit the Monsanto
Improvements in the Territory.

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    2.3.3.   Joint Improvements. Subject to Sections 6.1.4 and 6.1.5, the
Parties are joint owners of any Joint Improvements and will have the right to
make, have made, use, develop, market, distribute, sell, offer for sale, import
and export products covered by the Joint Improvements for use in all fields in
the Territory without any compensation to the other Party. No right or license
is conveyed by this Section 2.3.3 to any Patent Right other than those Patent
Rights included within the Joint Improvements.

  2.3.4.   Disclosure. By the end of each calendar quarter during the Term,
Landec will disclose any material Landec Improvements promptly in writing to
Monsanto and Monsanto will disclose any material Monsanto Improvements promptly
in writing to Landec.

3.   Annual Payments and Buy-Out Option.

  3.1.   Annual Payments. On January 31 of each year from 2007 through 2011,
Monsanto will pay to Landec Ag two million five hundred thousand dollars
($2,500,000) (each, an “Annual Payment”). For the sake of clarity, at the end of
the Term, Monsanto will have paid to Landec Ag the total amount of twelve
million, five hundred thousand dollars ($12,500,000).     3.2.   Buy-Out Option.
At any time during the period starting on the Effective Date and ending on the
fifth anniversary of the Effective Date, Monsanto has the option to purchase
one-hundred percent (100%) of the equity of Landec Ag (the “Buy-Out Option”) by
paying eight million dollars ($8,000,000) (the “Buy-Out Fee”) to Landec
Corporation. Monsanto may exercise the Buy-Out Option by providing written
notice to both Landec Ag and Landec Corporation of its desire to exercise the
Buy-Out Option. Upon Landec Corporation’s receipt of Monsanto’s notice, Landec
Corporation and Monsanto will negotiate and enter into a Stock Purchase
Agreement for the sale of Landec Ag to Monsanto on terms consistent with the
provisions of this Agreement (the “Stock Purchase Agreement”).     3.3.  
Long-Term Supply. To assist with Monsanto’s decision to exercise its Buy-Out
Option, after the second anniversary of the Effective Date, the Parties will use
good faith efforts to negotiate and agree upon the margin over Purchase Price
that Monsanto will pay Landec to manufacture and supply Polymer to Monsanto
pursuant to the supply agreement that the Parties will negotiate and enter into
pursuant to Section 3.4.3 below if Monsanto exercises its Buy-Out Option.    
3.4.   Effects of Buy-Out. If Monsanto elects to exercise its Buy-Out Option,
then the following will occur upon the closing of the Stock Purchase Agreement
for the sale of Landec Ag to Monsanto:

  3.4.1.   Acceleration of Payments. Monsanto will pay to Landec Corporation any
unpaid Annual Payments or Annual Supply Fees that would have otherwise been paid
to Landec Ag during the Term of this Agreement.

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  3.4.2.   IP Ownership and Licenses.

  3.4.2.1.   Monsanto will own (a) those Licensed Patent Rights that are owned
by Landec Ag, including, without limitation, the Patent Rights listed on
Exhibit B and (b) any Licensed Know-How and Licensed Trademarks owned by Landec
Ag. Any license from Landec Ag to Monsanto pursuant to Section 2.1 will
terminate.     3.4.2.2.   To the extent any Licensed Patent Rights including,
without limitation, the Patent Rights listed on Exhibit A, or other items of
Licensed Technology are owned by Landec Corporation and not Landec Ag, Landec
Corporation will grant to Monsanto a perpetual, irrevocable, royalty-free,
exclusive license under such Licensed Patent Rights and other items of Licensed
Technology to use, develop, make, have made, market, distribute, sell, offer for
sale, import and export Licensed Products for use in the Field in the Territory
with the right to sublicense all or any portion of such Licensed Patent Rights
for use in the Field in the Territory.     3.4.2.3.   To the extent any Licensed
Trademarks are owned by Landec Corporation and not Landec Ag, Landec Corporation
will grant to Monsanto a perpetual, irrevocable, royalty-free, exclusive,
non-transferable license under such Licensed Trademarks for use solely in
connection with the marketing, promotion, distribution and sale of Licensed
Products in the Field in the Territory with the right to sublicense all or any
portion of such Licensed Trademarks for use in the Field in the Territory.

  3.4.3.   Supply of Polymer. The Parties’ obligations under Section 4 will
terminate. Landec Corporation and Monsanto will negotiate and enter into a new
supply agreement pursuant to which Monsanto will order and purchase from Landec
its total requirement of Polymer and Landec will manufacture and sell to
Monsanto an amount of Polymer equal to such total requirement during such term,
provided that Landec (a) has the capability to meet Monsanto’s demand, (b) can
manufacture Polymer in accordance with Specifications and (c) can provide
Polymer to Monsanto at a price and on other terms that are competitive to the
prices and other terms offered by other bona fide suppliers. Subject to any
agreements reached during negotiations pursuant to Section 3.3 above, when
negotiating the new supply agreement, Landec Corporation and Monsanto will agree
upon a price for the Polymer, as well as a supply term. In addition, this supply
agreement will provide that Landec will give priority to Monsanto over any other
customers in allocating its Polymer production capability.

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    3.4.4.   Termination of Other Provisions. This Agreement will terminate in
its entirety and Landec Corporation and Monsanto will have no further
obligations under this Agreement, provided, however, that the following
provisions of this Agreement will survive after the closing of the Stock
Purchase Agreement for the sale of Landec Ag to Monsanto: Section 2.2 (License
Grants to Landec), Section 3.4 (Effects of Buy-Out), Section 6 (Intellectual
Property), Section 7 (Confidentiality), Section 8 (Representations, Warranties
and Covenants), and Section 11 (Miscellaneous Terms).

  3.5.   Failure to Exercise the Buy-Out Option. If Monsanto does not elect to
exercise its Buy-Out Option within the time period described in Section 3.2 and
does not otherwise terminate the Agreement, then upon expiration of the Term,
Monsanto will be deemed to have terminated this Agreement pursuant to Section
9.2 and will pay to Landec Ag the Termination Fee (described in Section 9.2.1)
on the last day of the Term.     3.6.   Undertakings Relating to Buy-Out Option.
In order to preserve the value to Monsanto of the Buy-Out Option, Landec agrees
as follows for the period of time after the Effective Date until (a) immediately
prior to the closing of the Stock Purchase Agreement (the “Buy-Out Closing”) or
(b) Monsanto decides not to exercise its Buy-Out Option:

  3.6.1.   As of the date of the Buy-Out Closing, all of the Licensed Patent
Rights listed on Exhibit B and Licensed Trademarks owned by Landec Ag will be
owned free and clear of any liens or encumbrances, and will be registered in the
name of Landec Ag.     3.6.2.   As of the date of the Buy-Out Closing, with the
exception of the Incotec License Agreement, no third party will hold any
licenses or sublicenses to any of the Licensed Patent Rights or Licensed
Trademarks for use in the Field.     3.6.3.   Landec Ag will not transfer any of
its material assets, except for transfers in the ordinary course of business
which will not adversely affect the ability of Landec Ag to continue its
operations; provided that, prior to the date of the Buy-Out Closing, Landec Ag
may transfer all of its remaining cash to Landec Corporation, including the
Annual Payments and Annual Supply Fees.     3.6.4.   As of the date of the
Buy-Out Closing, Landec Ag will be free of any indebtedness, and its working
capital (excluding cash) will be at a level consistent with similar seasonal
periods in its prior fiscal years.     3.6.5.   Landec Ag will continue to
conduct its business in the ordinary course, except for changes made pursuant to
this Agreement, and will maintain its property in substantially the condition
currently existing, normal wear and tear excepted.     3.6.6.   Landec Ag will
preserve its corporate existence and good standing.

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  3.6.7.   Landec Ag will not change the overall character of its business,
operations, activities or practices except as provided in this Agreement.    
3.6.8.   As of the date of the Buy-Out Closing, Landec Ag will release any liens
existing on any of its assets which would adversely affect the value of Landec
Ag to Monsanto in any material respect.     3.6.9.   Except as provided in
accordance with the Stock Purchase Agreement, Landec will not permit Landec Ag
to issue any additional equity securities of any class, or any securities
convertible into or exchangeable into any of its equity securities, and will not
transfer any of the equity securities of Landec Ag to any other person (other
than a transfer to an Affiliate of Landec which is expressly subject to the
Buy-Out Option and subject to the other conditions set forth in this
Section 3.6).     3.6.10.   Landec Ag will not enter into any agreements, or
take any other actions, which would prevent Monsanto from exercising the Buy-Out
Option or materially and adversely affect the value to Monsanto of Landec Ag
upon exercise of the Buy-Out Option.

4.   Supply of Licensed Product.

  4.1.   Supply Agreement.

  4.1.1.   Polymer. Beginning on the Effective Date, until the end of the Term
or such earlier time as (a) the sale of Landec Ag to Monsanto in accordance with
Section 3.2 or (b) the early termination of this Agreement in accordance with
Sections 9.2 or 9.3 (the “Supply Term”), Landec will manufacture and supply
Polymer to Monsanto. During the Supply Term, Monsanto will order and purchase
from Landec under the terms and conditions stated in this Section 4 its total
requirement of Polymer and Landec will, under the terms and conditions stated in
this Section 4, manufacture and sell to Monsanto an amount of Polymer equal to
such total requirement.     4.1.2.   Formulation. For a period of one year from
the Effective Date, Monsanto will order and purchase from Landec under the terms
and conditions stated in this Section 4 its total requirement of Formulation and
Landec will, under the terms and conditions stated in this Section 4,
manufacture and sell to Monsanto an amount of Formulation equal to such total
requirement and be responsible for the coating of seeds. At any time after the
first anniversary of the Effective Date and during the Term, Monsanto has the
option to (a) continue to order Formulation from Landec or (b) take over all
manufacturing and production of Formulation and coating of seeds. The Parties
agree that upon Monsanto’s request and at Monsanto’s sole expense, Landec will
assist Monsanto in the transfer of manufacturing and production of Formulation
and coating of seeds from Landec to

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      Monsanto in order to allow Monsanto to commence commercial production of
Formulation at any time specified by Monsanto on or after such first
anniversary. If so requested by Monsanto, Landec will sell to Monsanto any
equipment required by Monsanto for such manufacturing and production which is no
longer required by Landec, at a purchase price equal to the fair market value
thereof.

  4.2.   Monsanto’s Responsibilities.

  4.2.1.   Forecasts. By the end of each calendar quarter during the Supply
Term, Monsanto will provide a non-binding six (6) month rolling forecast of its
expected requirements for Licensed Product. Within thirty (30) business days
following receipt of each such forecast, Landec will advise Monsanto in writing
whether it has the capability to provide such estimated requirements or, if not,
the amount of Licensed Products it has the capability to provide. Landec will,
in determining its capability to provide Monsanto’s forecasted requirements,
give priority to Monsanto over any other Landec customers. If Landec does not
provide such written advice to Monsanto within such thirty (30) business day
period, Landec will be deemed to have confirmed that it has the required
capability to provide Monsanto’s forecasted amounts.     4.2.2.   Purchase
Orders. From time to time, Monsanto will issue purchase orders for Licensed
Product. These purchase orders will be binding upon Monsanto at the time of
issue, and will also be binding upon Landec to the extent the amount of Licensed
Product requested in the purchase orders does not exceed Landec’s capability as
referred to in Section 4.2.1 above. Monsanto will provide at least sixty
(60) days lead time for Licensed Product orders up to a quantity of 20,000
pounds and a lead time of at least ninety (90) days for larger Licensed Product
orders. Landec will consult with Monsanto if additional suppliers are required
to meet Monsanto’s requirements.

  4.3.   Landec’s Responsibilities.

  4.3.1.   Raw Materials. Landec will be responsible for (a) obtaining all raw
materials, ingredients and components required to manufacture and supply
Licensed Product to Monsanto; and (b) supplying all other facilities, equipment,
materials, shipping supplies and personnel necessary to manufacture and supply
Licensed Product, provided, however, that Monsanto will pay for such costs
incurred by Landec through payment of the Purchase Price for Licensed Product
that it orders from Landec in accordance with Section 4.4.2.     4.3.2.  
Specifications. Landec Ag will supply Licensed Product to Monsanto as so ordered
and in accordance with the specifications that are mutually agreed to by Landec
Ag and Monsanto during the Term (the “Specifications”). The Specifications may
be modified or updated during the Supply Term as mutually agreed in writing by
the Parties.

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  4.3.3.   Use of Third Parties. Landec is entitled to use one or more Third
Parties to perform all or any part of the manufacturing of Licensed Product,
including, but not limited to, the sourcing of raw materials, components and
other items used in manufacturing Licensed Product. Landec will be responsible
for ensuring that the performance by such Third Parties complies with the
applicable provisions of this Agreement.

  4.4.   Payment.

  4.4.1.   Annual Supply Fee. On January 31 of each year from 2007 through 2011,
Monsanto will pay to Landec Ag one hundred thousand dollars ($100,000) (the
“Annual Supply Fee”). For the sake of clarity, at the end of the Supply Term (or
earlier as provided by Section 3.4.1), Monsanto will have paid to Landec Ag the
total amount of five hundred thousand dollars ($500,000) in Annual Supply Fees.
In addition, if this Agreement is terminated early in accordance with
Section 9.2 (or Section 9.3, if Landec terminates for cause), Monsanto will also
owe the total amount of five hundred thousand dollars ($500,000) in Annual
Supply Fees.     4.4.2.   Purchase Price. During the Supply Term, Monsanto will
purchase Licensed Product from Landec Ag for the Purchase Price. Payment for
amounts invoiced by Landec Ag will be due and payable by Monsanto to Landec Ag
within thirty (30) days after the date of each such invoice.     4.4.3.  
Adjustment in Purchase Price.

  4.4.3.1.   Increase in Direct Costs. Landec will use Commercially Reasonable
Efforts to avoid increases to its Direct Cost, and will consult with Monsanto in
good faith, in advance, to discuss any anticipated material increases in Direct
Costs and alternatives for avoiding or minimizing such increases. Subject to the
foregoing, to the extent that Landec’s Direct Costs do increase during the
Supply Term, such increase will be passed through to Monsanto by a corresponding
increase in the Purchase Price.     4.4.3.2.   Decrease in Direct Costs. Landec
will use Commercially Reasonable Efforts, in consultation with Monsanto, to
reduce its Direct Costs. To the extent that Landec’s Direct Costs are reduced
during the Supply Term from the Direct Costs existing on the Effective Date as
set forth on Exhibit D (the “Reduction Amount”), such Reduction Amount will be
allocated 70% to Monsanto and 30% to Landec. For example, if the Direct Costs of
the Polymer were to decrease from $4.00 to $2.00, the Direct Costs used in the
calculation of Purchase Price would be reduced from $4.00 to $2.60

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  4.5.   Records and Audit. Landec will maintain complete and accurate records
which are relevant to the determination of the Purchase Price that Monsanto pays
for Polymer under this Agreement. Such records will be open during reasonable
business hours for a period of three (3) years from the creation of individual
records for examination at Monsanto’s expense and not more often than once per
year by an independent certified public accountant selected by Monsanto.
Landec’s records and accounting information will be Confidential Information for
purposes of Section 7 of this Agreement.     4.6.   Sole Remedy. Provided that
Landec has used Commercially Reasonable Efforts to manufacture and supply
Licensed Product in accordance with the Specifications, Landec’s sole liability
and Monsanto’s sole remedy for any failure to manufacture and supply Licensed
Product pursuant to Section 4 hereof will be that Landec will manufacture and
supply replacement Licensed Product in accordance with the Specifications
satisfactory to remedy such failure.     4.7.   Title. All right, title and
interest in and to Licensed Product in the possession or control of Landec will
at all times remain the sole property of Landec until delivery to Monsanto under
this Agreement, Ex Works Landec facility, or such other facility that Landec
designates from time to time.

5.   Services. During the Term of this Agreement, Landec will provide to
Monsanto Research and Development Services, Formulation and Manufacturing
Services and General Administrative Services as described in Sections 5.1.2,
5.1.3 and 5.1.4 below (each, an “Operating Service”) and Monsanto will provide
to Landec certain Support Services and Sales and Marketing Services as described
respectively in Sections 5.2 and 5.3.

  5.1.   Operating Services.

  5.1.1.   Annual Plan and Budget. Landec and Monsanto have agreed upon a
financial plan and budget for Landec Ag for the first year of the Term, which
reflects the budgeted costs of the Operating Services necessary to run the
business as contemplated by the Parties. In connection with the annual review
meetings referred to in Section 5.4.1.1, the Parties will review the prior
year’s operations, and prepare and approve an updated financial plan and budget
for the following year (the “Annual Plan and Budget”). The Annual Plan and
Budget will also reflect capital expenditures contemplated to be made by Landec
Ag.     5.1.2.   Research & Development Services.

  5.1.2.1.   Work Plan. Landec will perform research, development, formulation,
biological testing and technical support services in connection with the
Licensed Technology within the Field

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      (“Research and Development Services”) in accordance with a mutually
approved research and development work plan, which will be modified, amended and
otherwise updated during the Term as mutually agreed by the Parties (the “Work
Plan”). The Parties will create and mutually agree upon an initial Work Plan
within sixty (60) days after the Effective Date. The initial Work Plan will
describe the Research and Development Services to be performed by Landec and
will reflect without limitation the following key areas: (a) development of
Polymer and Formulation, (b) manufacturing of Licensed Products, including raw
materials, coating processes and logistics, (c) seed testing needs (both for
research and development and in support of production), (d) process engineering
development and manufacturing support and (e) sales and marketing efforts. The
Parties may update, amend, modify, extend or replace any Work Plan upon mutual
agreement. If the Parties cannot mutually agree upon the initial Work Plan, any
subsequent update, amendment, modification or extension of the initial Work Plan
or new Work Plan, the Representatives will use good faith efforts pursuant to
Section 11.8.1 to reach agreement.

  5.1.2.2.   Review Meetings. At least once per calendar quarter when Landec is
performing Research and Development Services pursuant to a Work Plan, at
mutually agreeable times and locations, representatives of the Parties’ research
and development teams and business development staff will meet either in person,
by videoconference or by telephone to discuss the progress and results or
outcomes of the Research and Development Services performed pursuant to the Work
Plan and any necessary modifications, amendments or updates to the Work Plan.

  5.1.3.   Formulation and Manufacturing Services. In addition to Landec’s
responsibility to supply Licensed Product under the terms of Section 4 above,
Landec will provide the following services to Monsanto (“Formulation and
Manufacturing Services”): (a) Polymer and Formulation manufacturing support,
(b) seed coating and treatment support, (c) manufacturing scale-up for Polymer,
Formulation and seed coating, (d) testing and analysis associated with
manufacturing Polymer, Formulation and coatings, (e) purchasing of raw
materials, and (f) packaging and engineering support. The cost of Formulation
and Manufacturing Services will include non-labor costs such as supplies,
travel, communications, logistics cost of inventory and storage, and
depreciation on equipment as more fully described in Section 5.4.1.4, as
approved in the Annual Plan and Budget. At least once per year during the Term,
Landec agrees to meet and work with representatives from Monsanto’s
manufacturing group to discuss in good faith ways to lower the costs of the
Formulation and Manufacturing Services.

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  5.1.4.   General Administrative Services. Landec will provide the following
services to Monsanto (“General Administrative Services”) to support Landec Ag’s
activities: (a) administrative, (b) accounting, including payroll, (c)
information technology services and (d) prosecution and maintenance services for
the Licensed Patent Rights and Licensed Trademarks.

  5.2.   Monsanto’s Support Services. Monsanto will provide services to Landec
Ag that are necessary to support Landec Ag’s operations and the production
requested by Monsanto hereunder (“Support Services”), provided that Monsanto
will have the right, after consultation with Landec, to determine the
appropriate level of staffing and resources to be allocated to such services.
Subject to the foregoing, such Support Services will include, without
limitation, the following:

  5.2.1.   field evaluation of current and new Licensed Products across several
geographies;     5.2.2.   logistics support, including sourcing of raw
materials, inventory control of work-in-progress and finished goods, and
shipping and distribution services;     5.2.3.   environmental and regulatory
support of Landec Ag’s lab, plant, polymer formulation and product activities;
and     5.2.4.   analytical and engineering support.

  5.3.   Sales Agency.

  5.3.1.   Appointment. As of the Effective Date, Landec Ag designates and
appoints Monsanto to act as its exclusive sales and marketing agent for the
limited purpose of selling Licensed Products to Third Parties for use in the
Field in the Territory; provided that Landec Ag will retain the right to sell
Licensed Products directly under the Incotec License Agreement and to any Third
Parties if (a) a customer requests a direct sale from Landec, (b) Monsanto
requests that Landec make such direct sale, or (c) Monsanto elects, after
consultation with Landec, not to develop and commercialize the Licensed
Technology for a particular application in the Field. During the Term, Landec Ag
will not appoint any Third Party other than Monsanto to act as its sales agent
in respect of Licensed Products for use in the Field.     5.3.2.   Monsanto
Responsibilities. Monsanto will be responsible for the sales program and for
generating a marketing program for Licensed Products, including promotions,
promotional activities, press releases and incentive programs (“Sales and
Marketing Services”).

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  5.3.3.   Payment for Direct Sales.

  5.3.3.1.   If Landec makes any direct sale of Licensed Products to Third
Parties pursuant to Section 5.3.1 above, Landec will provide written notice of
such direct sale to Monsanto within thirty (30) of such sale. On a quarterly
basis, Landec Ag will pay to Monsanto thirty-five percent (35%) of the gross
profit received from any direct sales to Third Party customers. For the sake of
clarity, Landec will be responsible for the costs of the Polymer used in
Licensed Products sold directly under Section 5.3.1 above.     5.3.3.2.   On or
before August 31 of every year of the Term, the Parties will determine the total
combined sales of Licensed Products in the Field by both Monsanto and Landec in
the previous year (the “Total Relevant Sales”). To the extent that Landec’s
direct sales of Licensed Products to Third Parties pursuant to Sections 5.3.1(a)
and 5.3.1(c) above exceed twenty-five percent (25%) of the Total Relevant Sales,
the Parties will negotiate in good faith how to fairly apportion between the
Parties the costs of Operating Services necessary to run the business in the
following year. For the avoidance of doubt, direct sales of Licensed Products to
Third Parties pursuant to Section 5.3.1(b) above (i.e., direct sales made upon
Monsanto’s request) will not be included in the calculation of Total Relevant
Sales.

  5.3.4.   Preexisting Agreements. Notwithstanding Section 5.3.3 above, Landec
Ag will not owe any percentage of the gross profit received from direct sales of
Licensed Product to Incotec International, B.V. under the Incotec License
Agreement. The Incotec License Agreement will not be renewed, extended or
otherwise amended without the advance written consent of Monsanto.     5.3.5.  
Non-Solicitation. Monsanto agrees that during the Term of this Agreement, it
will not, directly or indirectly, hire or attempt to hire any employee of Landec
Corporation, Landec Ag or any of their respective Affiliates or encourage any
such employee to terminate his or her relationship with Landec Corporation,
Landec Ag or any of their respective Affiliates, without the prior written
consent of Landec Corporation, provided that Monsanto may make employment offers
to Landec Ag’s sales and marketing employees.

  5.4.   Costs of Services.

  5.4.1.   Operating Services. Monsanto is responsible for paying for all costs
of the Operating Services provided by Landec Ag under this Agreement and
detailed in the Annual Plan and Budget, subject to the following:

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  5.4.1.1.   On an annual basis, representatives of Landec will meet with senior
management representatives of the manufacturing and commercial divisions of
Monsanto to discuss the Annual Plan and Budget, and to consider how the
Operating Services can be conducted in the most efficient and least costly
manner. Such meetings will be scheduled a sufficient time prior to the
commencement of each production season, which begins on June 1 of every year, to
allow for implementation of any agreed changes to the Annual Plan and Budget.  
  5.4.1.2.   Monsanto will be responsible for payment of the first $10,000 of
the annual cost of prosecuting and maintaining the Licensed Patent Rights and
Licensed Trademarks, which will be included in the costs of the Operating
Services. Any excess amount will not be included in the costs of the Operating
Services and will be paid by Landec.     5.4.1.3.   Monsanto will not bear any
costs of manufacture or production of Licensed Products for any Third Parties,
or for the purchase of raw materials, or production of Licensed Products, in
excess of amounts reasonably required to fulfill orders submitted by Monsanto
pursuant to Section 4.2.2.     5.4.1.4.   Landec Ag will be responsible for any
capital costs of replacing existing equipment and other existing assets required
by Landec Ag for production of the Licensed Products and otherwise performing
its obligations hereunder, and no capital expenditures related to such equipment
or assets will be included in the costs of the Operating Services, provided that
Landec Ag may account for the depreciation on such equipment and assets in the
costs of Operating Services in accordance with past practices and United States
generally accepted accounting principles. Any non-routine or special capital
expenditures required as a result of any changes in the Specifications or in the
manner of producing the Licensed Products, which are requested by Monsanto, will
be paid for by Monsanto and recorded on Monsanto’s books. Any equipment or other
assets purchased by such non-routine or special capital expenditures will be
owned by Monsanto. For the avoidance of doubt, upon termination of this
Agreement Monsanto will be entitled to remove such equipment or other assets
from Landec’s facility and will be responsible for the costs of removing and
shipping any such capital equipment or assets that are installed in Landec’s
facility.     5.4.1.5.   If Landec reasonably incurs costs in performing its
obligations hereunder that are not contemplated by the Annual Plan and Budget,
the Parties will discuss such unplanned costs of the

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      Operating Services in the calendar quarter after such costs are incurred
by Landec. If Landec used Commercially Reasonable Efforts in incurring such
unplanned costs when providing Operating Services, Monsanto will not
unreasonably withhold its agreement to pay for such unplanned costs.

  5.4.2.   Invoicing and Payment. Landec Ag will invoice Monsanto quarterly for
the costs of Operating Services and payments for such invoiced amounts will be
due and payable by Monsanto to Landec Ag within thirty (30) days after the date
of each such invoice.     5.4.3.   Other Services. Monsanto is also responsible
for the costs it incurs in providing Support Services or Sales and Marketing
Services.

  5.5.   Records and Audit. Landec will maintain complete and accurate records
which are relevant to the determination of the cost of the Operating Services
provided by Landec to Monsanto under this Agreement. Such records will be open
during reasonable business hours for a period of three (3) years from the
creation of individual records for examination at Monsanto’s expense and not
more often than once per year by an independent certified public accountant
selected by Monsanto. Landec’s records and accounting information will be
Confidential Information for purposes of Section 7 of this Agreement.     5.6.  
Workforce. It is the current intention of the Parties that until the first
anniversary of the Effective Date, there will be no reduction in Landec Ag’s
employee workforce.

6.   Intellectual Property.

  6.1.   Filing, Prosecution and Maintenance of Patent Rights.

  6.1.1.   Licensed Patent Rights. Landec, through counsel of its choosing, will
have primary responsibility for and control over obtaining, prosecuting
(including any interferences, reissue proceedings and re-examinations), and
maintaining throughout the world the Licensed Patent Rights in the Major Market
Countries. In this regard, Landec will (a) file and prosecute patent
applications to secure Patent Rights for the Licensed Patent Rights in the Major
Market Countries, and (b) upon issuance, maintain such patents in full force in
the Major Market Countries.     6.1.2.   Monsanto Improvements. Monsanto,
through counsel of its choosing, will have primary responsibility for and
control over obtaining, prosecuting (including any interferences, reissue
proceedings and re-examinations), and maintaining throughout the world Patent
Rights in Monsanto Improvements. In this regard, Monsanto will (a) file and
prosecute patent applications to secure Patent Rights for the Monsanto
Improvements in such countries in the Territory as determined by Monsanto in its
sole discretion and (b) upon issuance, maintain such

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      patents in full force in such countries. Monsanto will pay for the costs
and expenses of prosecuting and maintaining Patent Rights in the Monsanto
Improvements.

  6.1.3.   Joint Improvements. Landec, through counsel reasonably acceptable to
both Parties, will have primary responsibility for obtaining, prosecuting
(including any interferences, reissue proceedings and re-examinations), and
maintaining throughout the world any Patent Rights in Joint Improvements. In
this regard, Landec will (a) file and prosecute patent applications to secure
Patent Rights for the Joint Improvements in such countries in the Territory as
mutually determined by Landec and Monsanto, (b) upon issuance, maintain such
patents in full force in such countries and (c) keep Monsanto fully informed of
all matters relating to prosecution of Patent Rights in Joint Improvements.
Subject to Section 6.1.4 and 6.1.5 below, Landec and Monsanto will share equally
the external expenses associated with the prosecution and maintenance of Patent
Rights in the Joint Improvements.     6.1.4.   Election not to Continue
Prosecution; Abandonment.

  6.1.4.1.   Step-In Rights. If a Party with primary responsibility for
prosecuting and maintaining certain Patent Rights (i.e., Landec Ag for Licensed
Patent Rights and Patent Rights in Joint Improvements and Monsanto for Patent
Rights in Monsanto Improvements) (the “Responsible Party”) elects (a) not to
file and prosecute such Patent Rights in any Major Market Country or any other
country of the Territory, as applicable or (b) not to continue the prosecution
(including any interferences, oppositions, reissue proceedings and
re-examinations) or maintenance of a Patent Right in a particular country in the
Territory (the “Disinterested Party”), then the Disinterested Party will so
notify the other Party promptly in writing of its intention in good time to
enable the other Party to meet any deadlines by which an action must be taken to
establish or preserve any such rights in such patent in such country. The
Disinterested Party will permit the other Party, should the other Party choose
to do so, at the other sole Party’s expense, to file for, or continue to
prosecute, maintain or enforce, or otherwise pursue such Patent Rights in such
country and the Disinterested Party will reasonably cooperate with the other
Party in regard thereto.     6.1.4.2.   Ownership. (a) If the Disinterested
Party is Landec, and Monsanto steps-in as the Responsible Party for prosecuting
and maintaining the Licensed Patent Rights or Patent Rights in Joint
Improvements, Landec agrees to assign to Monsanto all of its rights, title and
interest in and to such Patent Rights. (b) If the

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      Disinterested Party is Monsanto, and Landec steps-in as the Responsible
Party for prosecuting and maintaining the Patent Rights in the Monsanto
Improvements, Monsanto agrees to assign to Landec all of its rights, title and
interest in and to such Patent Rights. (c) Both Parties agree to execute and
deliver such instruments and do such acts and things, including the filing of
such assignments, agreements, documents and instruments, as may be necessary to
carry out the assignments in clauses (a) and (b) above.

  6.1.5.   Patent Coverage in the Territory.

  6.1.5.1.   Broadening Coverage. If Monsanto wants to expand patent coverage of
the Licensed Patent Rights or Patent Rights in either Landec Improvements or
Joint Improvements, or Landec wants to expand patent coverage of the Patent
Rights in the Monsanto Improvements with respect to other countries in the
Territory, the Parties will reasonably discuss taking such action. If the
Responsible Party refuses to expand the patent coverage in the Territory as
desired by the other Party, the Responsible Party will be considered an
Disinterested Party with respect to such country and the terms of Section 6.1.4
will apply.     6.1.5.2.   Narrowing Coverage. Monsanto or Landec has the right
to refuse to share the costs and expenses of the prosecution and maintenance of
the Patent Rights in Joint Improvements. In the event that either Party is not
interested in assuming the costs and expenses of the prosecution and maintenance
of the Patent Rights in Joint Improvements, such Party will assign to the other
Party all of its rights, title and interest in and to the Patent Rights in Joint
Improvements for which it does not share such costs in accordance with
Section 6.1.3.

  6.1.6.   Communication. The Responsible Party will provide the other Party
with copies of all official correspondence (including, but not limited to,
applications, office actions, responses, etc.) relating to prosecution and
maintenance of the any Patent Rights under this Agreement. The other Party may
provide comments with respect to actions to be taken by the Responsible Party.
The Responsible Party will give good faith consideration to the other Party’s
comments, but it will be within the Responsible Party’s reasonable discretion
whether to incorporate such comments into any prosecution response relating to
such Patent Rights. In order to facilitate each Party’s rights to comment, the
Responsible Party will provide copies of all such official correspondence and
any proposed responses by such Responsible Party at least thirty (30) business
days prior to any filing or response deadlines and the other Party will provide
any comments promptly and in sufficient time to allow Responsible Party to meet
applicable filing requirements. In no event will a Responsible Party be required
to delay any submission, filing or response.

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  6.1.7.   Cooperation; Information Disclosure. Each Party will, and will cause
its Affiliates to, cooperate fully in the preparation, filing, prosecution and
maintenance of Patent Rights, including without limitation, (a) promptly
disclosing and making available to the other Party all material information it
Controls after it first develops, learns or first appreciates the significance
of such information that is reasonably necessary for such other Party to perform
its obligations under this Section 6, and (b) executing all papers and
instruments so as to enable the other Party to perform its obligations under
this Section 6. Each Party will provide to the other Party prompt notice as to
all matters which come to its attention and which may affect the preparation,
filing, prosecution or maintenance of any Patent Rights.

  6.2.   Filing, Prosecution and Maintenance of Licensed Trademarks. Landec,
through counsel of its choosing, will have primary responsibility for and
control over obtaining, prosecuting and maintaining throughout the world the
Licensed Trademarks. In the event that Monsanto wants to market Licensed
Products in a country in the Territory in which Landec does not own a Licensed
Trademark, the Parties will reasonably discuss filing for a Licensed Trademark
in such country. If, after discussions, Landec does not file for a trademark in
such country, Monsanto, at its sole expense, will have the right to do so on
behalf of Landec. Any trademark obtained by Monsanto pursuant to this
Section 6.2 will be owned by Landec, but considered a Licensed Trademark
pursuant to which Monsanto has a license under Section 2.1.3.     6.3.  
Enforcement of Patent Rights.

  6.3.1.   Notification. Each Party will promptly report in writing to the other
Party during the Term any known infringement or suspected infringement of any of
the Licensed Patent Rights, Patent Rights in Landec Improvements, Monsanto
Improvements or Joint Improvements, or Licensed Trademarks by a Third Party (an
“Infringer”), and will provide the other Party with all available evidence
supporting said infringement or suspected infringement, including without
limitation, the identity of the Infringer and the alleged infringement
complained of.     6.3.2.   Enforcement Within the Field. The Responsible Party
(i.e., Landec Ag for Licensed Patent Rights, Patent Rights in Landec
Improvements and Joint Improvements and Licensed Trademarks and Monsanto for
Patent Rights in Monsanto Improvements) will have the first right, but not the
obligation, to take any reasonable measures it deems appropriate to stop such
infringing activities by an Infringer in any part of the Territory, including
initiating or prosecuting an infringement or other appropriate suit or action
against such Infringer. In the event the Responsible Party elects not to take
action pursuant to this Section 6.3.2, the Responsible

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      Party will so notify the other Party promptly in writing of its intention
in good time to enable the other Party to meet any deadlines by which an action
must be taken to establish or preserve any enforcement rights and such other
Party will have the right to take any such reasonable measures to stop such
infringing activities by such Infringer. The Responsible Party will fully
cooperate with the other Party in the event that the Responsible Party decides
not to bring an infringement action. Such cooperation will include being a named
party in any action brought by the other Party

  6.3.3.   Procedures. Each Party will give the other Party sufficient advance
notice of its intent to file any suit pursuant to Sections 6.3.2 and the reasons
therefore and each Party will provide the other Party with an opportunity to
make suggestions and comments regarding such filings, provided, however, that
the commenting Party will provide any such comments promptly and sufficiently in
advance of any filing dates to allow for consideration by the Party filing the
suit (the “Controlling Party”), and further provided that it will be within the
Controlling Party’s reasonable discretion whether to incorporate such
suggestions or comments. The Parties will keep each other reasonably and timely
informed of the status and progress of the litigation, including without
limitation, furnishing copies of communications, pleadings, and other documents
and keeping each Party informed of settlement efforts, and will obtain
suggestions and strategy from the other Party, including during pre-trial
motions and discovery, provided, however, that it will be within the Controlling
Party’s reasonable discretion whether to incorporate such suggestions or
comments, but further provided that the Controlling Party will not enter into
any settlement without the prior written consent of the other Party (which
consent will not unreasonably be withheld) if such settlement includes a finding
or agreement that any Patent Right is invalid or unenforceable. The Controlling
Party will have the sole and exclusive right to select counsel for any such suit
and action and will pay all expenses of the suit, including, but not limited to,
attorneys’ fees and court costs. Upon reasonable request by the Controlling
Party, the other Party will give the Controlling Party all reasonable
information and assistance in connection with such suit for infringement,
including allowing the Controlling Party access to its files and documents and
to its personnel who may have possession of relevant information and, if
necessary, for the Controlling Party to prosecute any legal action, joining in
the legal action as a party.     6.3.4.   Recovery. Any amounts recovered by
either Party pursuant to Section 6.3.2, whether by settlement or judgment, will
be used to reimburse the Parties for their reasonable costs and expenses
(including attorneys fees) incurred in making such recovery (which amounts will
be allocated pro rata if insufficient to cover the totality of such expenses),
with any remainder being paid to the Controlling Party. The Controlling Party
pursuing any action under Section 6.3.2 will bear all payments awarded against
or agreed to be paid by such Party pursuant to such action, including any costs
or expenses incurred that exceed the amounts recovered by such Party.

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  6.3.5.   Declaratory Judgments. Each Party will provide the other Party with
immediate written notice of any declaratory judgment action or other claim or
action brought by a Third Party in the Territory that alleges the invalidity,
unenforceability or noninfringement of any Licensed Patent Right or any Patent
Right in Landec Improvements, Monsanto Improvements or Joint Improvements. The
Responsible Party will have the first right, but not the obligation, at its own
expense, to defend the Patent Rights in any such declaratory judgment action.
The Responsible Party will notify the other Party within fifteen (15) business
days of receiving written notice of such declaratory judgment action as to
whether it intends to defend such declaratory judgment action (or if appropriate
such lesser period as is necessary so as to give the other Party a reasonable
period in which to respond to such declaratory judgment action). If, after the
expiration of such period, the Responsible Party has not notified the other
Party of its intent to defend such declaratory judgment action, then the other
Party will have the right, but not the obligation, to defend such declaratory
judgment action, provided that the Responsible Party will fully cooperate with
the other Party in the event that the Responsible Party decides not to defend
such declaratory judgment action. Furthermore, the Responsible Party will bear
all the expenses of such litigation. Neither Party will consent to the entry of
any judgment or enter into any settlement with respect to such declaratory
judgment action without the prior written consent of the other Party (which
consent will not unreasonably be withheld) if such judgment or settlement
includes a finding or agreement that any Patent Right is invalid or
unenforceable, or would enjoin or grant other equitable relief against the other
Party. Each Party will cooperate (including by executing any documents required
to enable the other Party to participate in such litigation) with the other
Party in the defense of any declaratory judgment action brought by a Third Party
relating to the Patent Rights in accordance with this Section 6.3.5 and will
have the right to consult with the other Party and to participate in and be
represented by independent counsel in such litigation at its own expense.

  6.4.   Defense of Third Party Infringement Action.

  6.4.1.   Notice. In the event of any actual or threatened suit against a Party
or the Affiliates or sublicensees of a Party (the “Sued Party”) alleging that
commercialization of the Licensed Products in the Territory infringes or will
infringe such Third Party’s Patent Rights (an “Infringement Suit”), the Sued
Party will promptly give written notice of such Infringement Suit to the other
Party.

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    6.4.2.   Landec’s Right to Defend. Landec will have the first right, but not
the obligation, through counsel reasonably acceptable to Monsanto, to assume
direction and control of the defense of claims arising from the practice of
technology covered by the Licensed Patent Rights or Patent Rights in Landec
Improvements and Joint Improvements, including the right to settle such claims,
provided that (i) Landec will obtain the prior written consent of Monsanto to
settle such claims, and (ii) to the extent Monsanto is a named party to the
Infringement Suit, Monsanto may, upon written notice to Landec, assume at
Monsanto’s cost its own defense of any claims against Monsanto in such suit, in
which event Landec will have no authority to act on Monsanto’s behalf with
respect to the defense of such claims.

  6.4.3.   Monsanto’s Right to Defend. Monsanto will have the first right, but
not the obligation, through counsel reasonably acceptable to Landec, to assume
direction and control of the defense of claims arising from the practice of
Monsanto Improvements, including the right to settle such claims, provided that
(i) Monsanto will obtain the prior written consent of Landec (which consent will
not unreasonably be withheld) if such settlement includes a finding or agreement
that any Patent Right in a Monsanto Improvement is invalid or unenforceable or
otherwise adversely affects Landec, and (ii) to the extent Landec is a named
party to the Infringement Suit, Landec may, upon written notice to Monsanto,
assume at Landec’s cost its own defense of any claims against Landec in such
suit, in which event Monsanto will have no authority to act on Landec’s behalf
with respect to the defense of such claims.     6.4.4.   Cooperation and
Communication. Upon the other Party’s request and at the other Party’s expense,
each Party will offer reasonable assistance in connection with the defense of an
Infringement Suit. Each Party will keep the other Party reasonably and timely
informed of the status and progress of the litigation and will provide the other
Party with the opportunity to make suggestions and comments regarding such
defense, provided, however, that the other Party will provide any such comments
sufficiently in advance of any filing dates to allow for consideration by Party
responsible for defending the Infringement Suit, and further provided that it
will be within such responsible Party’s reasonable discretion whether to
incorporate such suggestions or comments. If a Party notifies the other Party in
writing that it does not wish to assume direction and control of defending an
Infringement Suit pursuant to either Section 6.4.2 or 6.4.3, the other Party
will have the right, but not the obligation to, at its sole cost and expense, to
defend against such claims, provided, however, that such Party will obtain the
written consent of the other Party prior to ceasing to defend, settling or
otherwise compromising such claims.

  6.5.   Patent Term Restoration. The Parties hereto will cooperate with each
other in obtaining patent term restoration in the Territory where applicable to
the Licensed Patent Rights related to any Licensed Product, including under 35

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      U.S.C. § 156. If elections with respect to obtaining such patent term
restoration are to be made, Landec will make such election and Monsanto will
abide by such election.

7.   Confidentiality.

  7.1.   Confidential Information. Each Party will treat as confidential all
Confidential Information of the other Party, will not use such Confidential
Information except as set forth in this Agreement, and will use its best efforts
not to disclose such Confidential Information to any Third Party. Without
limiting the foregoing, each of the Parties will use at least the same degree of
care which it uses to prevent the disclosure of its own Confidential Information
of like importance to prevent the disclosure of Confidential Information
disclosed to it by the other Party under this Agreement. Each Party will
disclose Confidential Information of the other Party only to its directors,
officers, employees, consultants and advisors who have a need to know such
information in order for such Party to carry out the activities and transactions
contemplated by this Agreement. Each Party will promptly notify the other Party
of any actual or suspected misuse or unauthorized disclosure of the other
Party’s Confidential Information.     7.2.   Exceptions. Notwithstanding the
above, neither Party will have liability to the other with regard to any
Confidential Information of the other which the receiving Party can prove:

  7.2.1.   was generally available to the public or otherwise part of the public
domain at the time of its disclosure to the receiving Party;     7.2.2.   became
generally available to the public or otherwise part of the public domain after
its disclosure or development, as the case may be, other than through any act or
omission of the receiving Party;     7.2.3.   was known by the receiving Party,
without restriction, at the time of disclosure by the disclosing party and the
receiving party has documentary evidence to that effect;     7.2.4.   was
disclosed to the receiving Party, without restriction, by a Third Party who had
no obligation to the disclosing Party not to disclose such information to
others; or     7.2.5.   was independently discovered or developed by or on
behalf of the receiving Party without the use of any Confidential Information
belonging to the disclosing Party and the receiving Party has documentary
evidence to that effect.

  7.3.   Authorized Disclosure and Use.

  7.3.1.   Disclosure. Notwithstanding the foregoing provisions of Section 7.1,
each Party may disclose Confidential Information belonging to the other Party to
the extent such disclosure is reasonably necessary to:

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  7.3.1.1.   file or prosecute patent applications as contemplated by this
Agreement;     7.3.1.2.   prosecute or defend litigation; and     7.3.1.3.  
comply with applicable Laws and regulations.

  7.3.2.   Advanced Notice. In the event a Party will deem it reasonably
necessary to disclose Confidential Information belonging to the other Party
pursuant to Section 7.3.1 above, the disclosing Party will to the extent
possible give reasonable advance notice of such disclosure to the other Party
and take reasonable measures to ensure confidential treatment of such
information.     7.3.3.   Use. Notwithstanding the foregoing provisions of
Section 7.1, each Party will have the right to use the other Party’s
Confidential Information in carrying out its responsibilities or exercising its
rights under this Agreement, or as otherwise expressly authorized by this
Agreement.

  7.4.   SEC Filings and Other Disclosures. Either Party may disclose the terms
of this Agreement (a) to the extent required, in the reasonable opinion of such
Party’s legal counsel, to comply with applicable Laws, including, without
limitation, the rules and regulations promulgated by the United States
Securities and Exchange Commission and (b) in connection with a prospective
acquisition, merger, financing or license for such Party, to prospective
acquirers or merger candidates or to existing or potential investors or
licensees, provided that prior to such disclosure each such candidate or
investor will be agree in writing to be bound by obligations of confidentiality
and non-use at least equivalent in scope to those set forth in this Section 7.
If a Party discloses this Agreement or any of the terms hereof in accordance
with Section 7.4(a), such Party agrees, at its own expense, to seek confidential
treatment of portions of this Agreement or such terms, as may be reasonably
requested by the other Party.     7.5.   Public Announcements. The Parties agree
that either Party may make a public announcement regarding this Agreement or
concerning the subject of this Agreement, provided that the other Party has a
chance to review and comment prior to the release of such public announcement.

8.   Representations, Warranties and Covenants.

  8.1.   Representations, Warranties and Covenants of Each Party. Each of the
Parties represents, warrants, and covenants to the other Parties as follows:

  8.1.1.   It is a corporation or entity duly organized and validly existing
under the laws of the state or other jurisdiction of its incorporation or
formation.

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  8.1.2.   The execution, delivery and performance of this Agreement by such
Party has been duly authorized by all requisite corporate action and does not
require any shareholder action or approval.     8.1.3.   It has the power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder.     8.1.4.   The execution, delivery and performance by such Party of
this Agreement and its compliance with the terms and provisions hereof does not
and will not conflict with or result in a breach of any of the terms and
provisions of or constitute a default under (i) the provisions of its charter or
operative documents or bylaws; (ii) any order, writ, injunction or decree of any
court or governmental authority entered against it or by which any of its
property is bound; or (iii) any applicable law, rule, regulation or permit.    
8.1.5.   It will at all times comply with all material laws and regulations
applicable to its activities under this Agreement.

  8.2.   Additional Representations, Warranties of Landec. In addition to the
representations, warranties and covenants made by Landec elsewhere in this
Agreement, Landec hereby represents, warrants, and covenants to Monsanto that:

  8.2.1.   Landec solely owns all right, title and interest in the Licensed
Technology or otherwise has the right to grant the licenses granted hereunder
and that Exhibits A and B are, to the best of Landec’s knowledge, complete and
accurate as of the Effective Date.     8.2.2.   As of the Effective Date, the
Licensed Patent Rights are existing and, to the best of Landec’s knowledge, are
not invalid or unenforceable, in whole or in part.     8.2.3.   To the best of
Landec’s knowledge, the practice of the Licensed Technology and the
commercialization of any Licensed Product in the Field do not and will not
infringe any issued patents or other intellectual property rights owned or
possessed by any Third Party, and Landec has not received any charge, complaint,
demand or notice alleging such infringement.

  8.3.   Representation by Legal Counsel. Each Party hereto represents that it
has been represented by legal counsel in connection with this Agreement and
acknowledges that it has participated in the drafting hereof. In interpreting
and applying the terms and provisions of this Agreement, the Parties agree that
no presumption will exist or be implied against the Party which drafted such
terms and provisions.     8.4.   No Inconsistent Agreements. No Party has in
effect and after the Effective Date no Party will enter into any oral or written
agreement or arrangement that is or would be inconsistent with its obligations
under this Agreement.

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  8.5.   Warranty Disclaimer. THE FOREGOING WARRANTIES OF LANDEC ARE IN LIEU OF
ANY OTHER WARRANTIES, AND THE LICENSED TECHNOLOGY, POLYMER AND FORMULATION ARE
PROVIDED TO MONSANTO “AS IS” AND WITHOUT ANY WARRANTY OF ANY KIND, EXPRESS OR
IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR ANY IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE,
ALL OF WHICH ARE HEREBY SPECIFICALLY EXCLUDED AND DISCLAIMED.

9.   Term and Termination.

  9.1.   Term. If not earlier terminated as provided in this Section 9, the term
of this Agreement (the “Term”) will be the five (5) year period commencing on
the Effective Date.     9.2.   Termination by Monsanto. Monsanto may terminate
this Agreement at any time during the Term, provided that Monsanto complies with
the following conditions:

  9.2.1.   Termination Fee. At the time of termination, Monsanto will pay four
million dollars ($4,000,000) (the “Termination Fee”) to Landec Ag; and    
9.2.2.   Annual Payments and Annual Supply Fees. Notwithstanding termination of
this Agreement, Monsanto will continue to owe any remaining Annual Payments and
Annual Supply Fees in accordance with the payment schedules set forth in
Sections 3.1 and 4.4.1, respectively, provided, however, that Monsanto, at its
election, may accelerate the payment schedules and pay to Landec Ag the total
remaining Annual Payments and Annual Supply Fees upon the date of termination of
this Agreement, and will accelerate such payment schedules upon exercise of the
Buy-Out Option in accordance with Section 3.4.1.

  9.3.   Termination for Cause. Either Party may terminate this Agreement at any
time during the Term by giving written notice to the other Party in the event
that the other Party commits a material breach of its obligations under this
Agreement and such breach remains uncured for sixty (60) days, measured from the
date written notice by certified carrier or equivalent of such breach is given
to the breaching Party, provided, however, that if such breach is not
susceptible of cure within the stated period and the breaching Party uses
diligent, good faith efforts to cure such breach, the stated period will be
extended by an additional sixty (60) days. If the alleged breach relates to
nonpayment of any amount due under this Agreement, the sixty (60) day cure
period will be tolled pending resolution of any bona fide dispute between the
Parties as to whether such payment is due. If Landec terminates this

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      Agreement under this Section 9.3 due to Monsanto’s uncured material
breach, then on the date of termination, Monsanto will owe the Termination Fee
and any remaining Annual Payments or Annual Supply Fees that would have been
paid by Monsanto had this Agreement not been terminated by Landec under this
Section 9.3. If Monsanto terminates this Agreement under this Section 9.3 due to
Landec’s uncured material breach, then Monsanto will not be required to pay any
Termination Fee or any remaining Annual Payments or Annual Supply Fees. Any
dispute over what constitutes an uncured material breach by a Party will be
resolved pursuant to the dispute resolution mechanisms under Section 11.8.

  9.4.   Effects of Termination.

  9.4.1.   Upon termination of this Agreement under Section 9.2 or 9.3, all
rights and licenses granted by Landec to Monsanto hereunder will automatically
terminate.     9.4.2.   Except as expressly provided herein, the termination of
this Agreement will not relieve the Parties of any obligation accruing prior to
termination. Any and all Confidential Information and materials provided
pursuant to this Agreement will be promptly returned to the disclosing party or
destroyed at the written request of the disclosing party.     9.4.3.   Upon
termination of this Agreement for any reason, all sublicenses granted by
Monsanto will terminate, although both Monsanto and its sublicensees may, after
termination, sell Licensed Product in inventory at the time of termination.

  9.5.   Survival of Certain Obligations. The following provisions of this
Agreement will survive the termination of the Agreement: Section 2.2 (License
Grants to Landec), Section 6 (Intellectual Property), Section 7
(Confidentiality), Section 8 (Representations, Warranties and Covenants,
Section 9.4 (Effects of Termination), Section 9.5 and Section 11 (Miscellaneous
Terms). Any expiration or early termination of this Agreement will be without
prejudice to the rights of either Party against the other accrued or accruing
under this Agreement before termination.

10.   Indemnification.

  10.1.   Indemnification by Landec.

  10.1.1.   Subject to Section 10.3 below, until the end of the Term or such
earlier time as (a) the sale of Landec Ag to Monsanto in accordance with
Section 3.2 or (b) the early termination of this Agreement in accordance with
Sections 9.2 or 9.3, Landec will indemnify, defend and hold harmless Monsanto
and its directors, officers, employees and agents (each, a “Monsanto Indemnified
Party”) from and against any and all liability, loss, damage, expense (including
reasonable attorneys’ fees and expenses)

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      and cost (collectively, a “Liability”) that a Monsanto Indemnified Party
may be required to pay to one or more Third Parties resulting from or arising
out of:

      (a) any claims of any nature by Third Parties to the extent arising out of
the actual or alleged infringement or violation of any Third Party right by
exploitation of the Licensed Technology in the manner contemplated by this
Agreement; or         (b) any claims (or series of related claims) by Third
Parties relating to or arising out of any alleged failure of, or deficiency in
the Formulation performance (“Performance Claims”), subject to the limitations
of Section 10.1.2 below; provided that Landec will only be responsible for
indemnification under this Section 10.1.1(b) if (i) such Performance Claims
relate to Licensed Product sold by Monsanto during the first year of the Term
and (ii) when Monsanto sold Licensed Product to the Third Party making the
Performance Claim, Monsanto used the same contractual limitation of liability
and warranty disclaimer language as used by Landec when Landec sold Licensed
Product prior to the Effective Date, the form of which appears on Exhibit E.    
    (c) the material breach by Landec of any of its representations, warranties
or covenants set forth herein, except, in each case, to the extent caused by the
gross negligence or willful misconduct of Monsanto or any Monsanto Indemnified
Party.     10.1.2.   Notwithstanding Section 10.1.1, Landec’s obligations under
Section 10.1 will not apply to any Liability to the extent it arises out of:    
    (a) specifications provided by Monsanto that are prepared without
collaboration with Landec;         (b) modifications of any Licensed Technology
at the request of Monsanto, which are not covered by Landec Improvements, or
that materially alter the form or functionality thereof;         (c) any claims
of any nature by Third Parties to the extent arising out of the actual or
alleged infringement or violation of any Third Party right by Monsanto’s
exploitation of the Monsanto Improvements; or         (d) combinations of any of
the Licensed Technology by Monsanto with any product not provided by Landec,
provided that such combination materially alters the form or function of the
Licensed Technology or that such Liability arises out of or relates to the use
of such non-Landec product (clauses (a), (b), (c), and (d) are herein
collectively referred to as “Held Back Claims”).

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  10.2.   Indemnification by Monsanto. Subject to Section 10.3 below, until the
end of the Term or such earlier time as (a) the sale of Landec Ag to Monsanto in
accordance with Section 3.2 or (b) the early termination of this Agreement in
accordance with Sections 9.2 or 9.3, Monsanto will indemnify, defend and hold
harmless Landec and their respective directors, officers, employees and agents
(each, a “Landec Indemnified Party”) from and against all Liabilities that a
Landec Indemnified Party may be required to pay to one or more Third Parties
resulting from or arising out of:

(a) any Held Back Claim; or
(b) any claims of any nature by Third Parties to the extent arising out of any
Licensed Product sold by Monsanto, except to the extent that Monsanto is
entitled to indemnification from Landec under Section 10.1 above.
(c) the material breach by Monsanto of any of its representations, warranties or
covenants set forth herein, except, in each case, to the extent caused by the
gross negligence or willful misconduct of Landec or any Landec Indemnified
Party.

  10.3.   Conditions to Indemnification. In any claim for defense or
indemnification hereunder, the indemnified party must (a) give the indemnifying
party prompt written notice of the applicable claim; (b) reasonably cooperate
with the indemnifying party at the indemnifying party’s request and expense, in
the defense or settlement of the claim; and (c) give the indemnifying party the
right to control the defense or settlement of the claim, except that the
indemnifying party will not enter into any settlement that adversely affects the
indemnified party’s rights or obligations without the indemnified party’s proper
express written consent, which will not be unreasonably withheld or delayed. The
indemnified party may participate in the defense or settlement of any such claim
at its own expense with counsel of its choosing. Notwithstanding the foregoing,
any failure of the indemnified party to comply with the provisions of this
Section 10.3 will not relieve the indemnifying party of any defense or indemnity
obligations hereunder except to the extent that the indemnifying party is
prejudiced by such failure.     10.4.   Limitations of Indemnification.

  10.4.1.   Limitation of Obligations and Liability. Notwithstanding anything to
the contrary, neither Landec nor Monsanto will be obligated to indemnify the
other Party pursuant to Sections 10.1 or 10.2 above unless and until the total
amount of losses incurred by the other Party exceeds two hundred and fifty
thousand dollars ($250,000) (the “Threshold”) in the aggregate, at which time
the indemnifying party will be responsible for all losses and not just those
losses in excess of the Threshold. In no event will either Landec or Monsanto be
liable under this Agreement for any amounts aggregating in excess of five
million dollars ($5,000,000) (the “Cap”),

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      provided, however, that (a) the Cap will not apply to any payments owed by
Monsanto to Landec pursuant to this Agreement and (b) neither the Threshold nor
the Cap will apply to Landec’s indemnification obligations under
Section 10.1.1(b) to the extent there are Performance Claims during the first
year of the Term.

  10.4.2.   Incidental and Consequential Damages. NO PARTY WILL BE LIABLE UNDER
ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY
FOR ANY PUNITIVE, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR OTHER INDIRECT DAMAGES
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ITS SUBJECT MATTER,
EXCEPT IN CONNECTION WITH A BREACH OF SECTION 7 ABOVE OR FOR LIABILITY ARISING
OUT OF A PARTY EXCEEDING THE SCOPE OF ANY LICENSE GRANTED TO SUCH PARTY
HEREUNDER.

  10.5.   Sole Remedy. The indemnification obligations under this Section 10
will be the indemnifying Party’s sole obligation and the indemnified Party’s
sole remedy with respect to any breach of Section 8 or other event giving rise
to indemnification hereunder.

11.   Miscellaneous Terms.

  11.1.   General Payment Terms.

  11.1.1.   Currency. All amounts payable and calculations hereunder will be in
United States dollars.     11.1.2.   Wire Transfer. All payments by Monsanto to
under this Agreement will be by wire transfer of immediately available funds in
U.S. dollars to the bank account(s) designated in writing by Landec.     11.1.3.
  Late Payments. If any payment due under this Agreement, including, without
limitation, Annual Payments under Section 3.1, Annual Supply Fees under
Section 4.4.1, invoiced amounts for the supply of Polymer under Section 4.4.2,
or invoiced amounts for Operating Services under Section 5.4.1, is overdue by
more than thirty (30) days, Monsanto will pay interest on such overdue amount at
an annual percentage rate equal to the Prime Rate (as published in the “Money
Rates” table of The Wall Street Journal on the due date) plus five percent (5%).

  11.2.   Assignment. Neither this Agreement nor any interest hereunder will be
assignable by either Party without the prior written consent of the other Party,
which consent will not be unreasonably withheld or delayed. Notwithstanding the
foregoing, a Party may make such an assignment without the other Party’s consent
to Affiliates or to a successor to substantially all of the business of such
Party to which this Agreement relates, whether pursuant to a merger, sale

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      of stock, sale of assets or other transaction. This Agreement will be
binding upon the successors and permitted assigns of the Parties and the name of
a Party appearing herein will be deemed to include the names of such Party’s
successors and permitted assigns to the extent necessary to carry out the intent
of this Agreement. Any assignment not in accordance with this Section 11.2 will
be null and void.

  11.3.   Amendment. No amendment, modification or supplement of any provision
of this Agreement will be valid or effective unless made in writing and signed
by a duly authorized officer of each Party.     11.4.   Waiver. No provision of
the Agreement will be waived by any act, omission or knowledge of a Party or its
agents or employees except by an instrument in writing expressly waiving such
provision and signed by a duly authorized officer of the waiving Party.    
11.5.   Governing Law and Jurisdiction. This Agreement, the rights of the
Parties and all claims arising under or in connection herewith, will be governed
by and interpreted in accordance with the domestic substantive laws of the State
of New York, without regard to any choice or conflict of law principles that
would cause the application of the laws of any other jurisdiction, and will be
subject to the exclusive jurisdiction of the State and Federal Courts located in
New York, New York.     11.6.   UN Convention on Contracts for Sale of Goods.
The parties expressly agree that the United Nations Convention on Contracts for
the International Sale of Goods will not apply to this Agreement.     11.7.  
Bankruptcy. The Parties agree that the licenses granted hereunder are subject to
Section 365(n) of the U.S. Bankruptcy Code.     11.8.   Dispute Resolution. Any
disputes, other than disputes regarding the construction, validity or
enforcement of patents (which disputes will be resolved by legal proceedings to
be held subject to the requirements of Section 11.5 (Governing Law and
Jurisdiction)), arising between the Parties relating to, arising out of or in
any way connected with this Agreement or any term or condition hereof, or the
performance by either Party of its obligations hereunder, whether before or
after termination of this Agreement, will be resolved as follows:

  11.8.1.   Senior Management. Within sixty (60) days after the request of any
Party that reasonably believes the Parties have been unable to resolve a matter,
the chief executive officer of Landec Corporation and the Executive Vice
President – North America Commercial of Monsanto (or their designees) (the
“Representatives”), will meet in person at a mutually acceptable time and
location or by means of telephone or video conference to attempt to resolve the
matter or negotiate a settlement.

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  11.8.2.   Arbitration. If the Representatives are not able to resolve the
dispute within thirty (30) days of their first meeting or within such extended
period as they agree upon, either Party may submit the matter to binding
arbitration in accordance with this Section 11.8.2. Except as specified below,
the arbitration will be conducted in accordance with the rules of, and under the
auspices of, the American Arbitration Association (the “AAA”). The arbitration
will be conducted by a single arbitrator with relevant technical expertise who
is jointly selected by the Parties or, if the Parties cannot mutually agree, is
selected by the AAA administrator and is not employed by and does not have a
material financial relationship with, a Party or any of its Affiliates or
sublicensees. The location of the arbitration will be in New York, New York.
This Agreement will remain in effect pending completion of the proceedings
brought under this Section 11.8.2. Within ten (10) business days after the
arbitrator is selected, each Party will submit to the arbitrator that Party’s
proposed resolution of the dispute and justification therefor. All arbitration
proceedings must be completed within thirty (30) days after the arbitration is
convened. The Parties hereby agree that the arbitrator has authority to issue
rulings and orders regarding all procedural and evidentiary matters that the
arbitrator deems reasonable and necessary with or without petition therefor by
the Parties as well as the final ruling and judgment. Rulings will be issued by
written order summarizing the arbitration proceedings. Any judgment or award by
the arbitrator in any dispute will have the same force and effect as the final
judgment of a court of competent jurisdiction. Nothing in this arbitration
clause will prevent either Party from seeking a pre-award attachment of assets
or preliminary relief to enforce its rights in intellectual property or
confidentiality obligations under this Agreement, or to enjoin any event that
might cause irreparable injury, in a court of competent jurisdiction prior to an
award on the merits by the arbitrator.

  11.9.   Descriptive Headings. The descriptive headings of this Agreement are
for convenience only and will be of no force or effect in construing or
interpreting any of the provisions of this Agreement.     11.10.   Notices. Any
consent, notice or report required or permitted to be given or made under this
Agreement by one of the Parties hereto to the other will be in writing and
delivered by hand or sent by nationally recognized overnight delivery service,
prepaid registered or certified air mail, or by facsimile confirmed by prepaid,
registered or certified mail letter, and will be deemed to have been properly
served to the addressee upon receipt of such written communication, in any event
to the following addresses:

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     If to Landec Corporation, to:
3603 Haven Avenue
Menlo Park, CA 94025
Attention: Chief Financial Officer
Phone: (650) 306-1650
Fax: (650) 368-9818
     If to Landec Ag, to:
Natarajan Balachander, Ph.D.
Vice President, Research and Manufacturing
201 N. Michigan
Oxford, Indiana 47971
Phone: (765) 385-1000 ext. 101
Fax: (765) 385-0598
     With a copy to:
Ropes & Gray LLP
One Embarcadero Center Suite 2200
San Francisco, CA 94111-3627
Boston, MA 02110
Attn: Geoff Leonard, Esq.
Phone: 415-315-6300
Fax: 415-315-6350
     If to Monsanto, to:
Monsanto Company
800 N. Lindbergh Boulevard
St. Louis, Missouri 63167
Telephone: (314) 694-1000
Telecopier: (314) 694-6399
Attn: Vice President — Manufacturing
     With copy to:
Monsanto Company
800 N. Lindbergh Boulevard
St. Louis, Missouri 63167
Telephone: (314) 694-1000
Telecopier: (314) 694-6399
Attn: General Counsel’s Office
     With an additional copy to:
Bryan Cave LLP
One Metropolitan Square
211 N. Broadway, Suite 3600
St. Louis, Missouri 63102
Telephone: (314) 259-2455
Telecopier: (314) 259-2020
Attn: Denis P. McCusker

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  11.11.   Entire Agreement. This Agreement, together with all exhibits hereto,
constitutes and contains the complete, final and exclusive understanding and
agreement of the Parties and cancels and supersedes any and all prior
negotiations, correspondence, understandings and agreements, whether oral or
written, between the Parties respecting the subject matter hereof and thereof.  
  11.12.   Force Majeure. Except for obligations to make payments under this
Agreement, neither Party will be liable to the other for delay or failure in the
performance of the obligations on its part contained in this Agreement if and to
the extent that such failure or delay is caused by acts of God, war, terrorism
(actual or threatened), strikes, revolutions, lack or failure of transportation
facilities, Laws or other causes that are beyond the reasonable control of such
Party. A Party will notify the other Party promptly in the event any force
majeure event arises, giving an indication of the likely extent and duration
thereof, and will use all Commercially Reasonable Efforts to resume performance
of its obligations as soon as practicable, provided, however, that neither Party
will be required to settle any labor dispute or disturbance. In the event that a
Party’s performance is suspended for more than six (6) months because of a Force
Majeure Event, the Parties hereto will consult with each other to determine
whether this Agreement should be modified. In no event will this Section 11.12
serve to extend the Term of this Agreement.     11.13.   Severability. If any
clause or portion thereof in this Agreement is for any reason held to be
invalid, illegal or unenforceable, the same will not affect any other portion of
this Agreement, as it is the intent of the Parties that this Agreement will be
construed in such fashion as to maintain its existence, validity and
enforceability to the greatest extent possible. In any such event, this
Agreement will be construed as if such clause of portion thereof had never been
contained in this Agreement, and there will be deemed substituted therefore such
provision as will most nearly carry out the intent of the Parties as expressed
in this Agreement to the fullest extent permitted by applicable law.     11.14.
  No Implied License. Each Party recognizes that except for the licenses
expressly set forth in this Agreement, nothing in this Agreement will be
construed as granting a license, whether by implication, operation of law or
otherwise.     11.15.   Basis of Bargain. Each Party recognizes and agrees that
the warranty disclaimers and liability and remedy limitations in this Agreement
are material bargained for bases of this Agreement and that they have been taken
into account and reflected in determining the consideration to be given by each
Party under this Agreement and in the decision by each Party to enter into this
Agreement.

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  11.16.   Further Actions. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of the
Agreement.     11.17.   Independent Contractors. Both Parties are independent
contractors under this Agreement. With the exception of sales and marketing
agency relationship created under Section 5.3, nothing herein contained will be
deemed to create an employment, agency, joint venture or partnership
relationship between the Parties hereto or any of their agents or employees, or
any other legal arrangement that would impose liability upon one Party for the
act or failure to act of the other Party. With the exception of sales and
marketing agency relationship created under Section 5.3, neither Party will have
any express or implied power to enter into any contracts or commitments or to
incur any liabilities in the name of, or on behalf of, the other Party, or to
bind the other Party in any respect whatsoever.     11.18.   Counterparts. This
Agreement may be executed in any number of counterparts (including by facsimile
or electronic transmission), each of which need not contain the signature of
more than one Party, but all such counterparts taken together will constitute
one and the same agreement.

[Signature page follows.]

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     IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized representatives as of the date first set forth above.

                     
 
                    Landec Corporation       Monsanto Company    
 
                   
By:
  /s/ Gary T. Steele       By:   /s/ Michael DeMarco    
 
                   
 
  (Signature)           (Signature)    
 
                   
Name:
  Gary T. Steele       Name:   Michael DeMarco     
Title:
  President and Chief Executive Officer       Title:   Authorized Person    
 
                    Landec Ag, Inc.                
 
                   
By:
  /s/ Thomas Crowley                
 
                   
 
  (Signature)                
 
                   
Name:
  Thomas Crowley                
Title:
  President and Chief Executive Officer