Exhibit
10.3

    


    Continuing
Guaranty

    


    TO:   
Wells
Fargo Bank, National
Association

    


    Section
1.      Guaranty;
Definitions.  In consideration of the credit and other
financial accommodations heretofore, now or hereafter extended or made to Lifecore
Biomedical, LLC, a Minnesota limited liability company (the “Borrower”), by Wells
Fargo Bank, National Association (“Bank”) pursuant to the terms
and conditions of (i) that certain Credit Agreement, dated as of the date
hereof, between the Borrower and Bank (as amended, modified, restated and/or
supplemented from time to time, the “Credit Agreement”),
(ii) that certain Reimbursement Agreement dated on or after the date hereof
between the Borrower and the Bank (as amended, modified, restated and/or
supplemented from time to time, the “Reimbursement Agreement;”
and together with the Credit Agreement, the “Agreements”) and for other
valuable consideration, the undersigned Landec
Corporation (“Guarantor”), jointly and
severally unconditionally guarantees and promises to pay to Bank, or order, on
demand in lawful money of the United States of America and in immediately
available funds, any and all Obligations (as such term is defined in each of the
Agreements) of the Borrower to Bank.  All capitalized terms used but
not otherwise defined herein shall have the meanings ascribed to them in the
Agreements.

     

    Section
2.      Successive
Transactions; Revocation; Obligation Under Other
Guaranties.  This is a continuing guaranty and all rights,
powers and remedies hereunder shall apply to all past, present and future
Obligations, including those arising under successive transactions which shall
either continue the Obligations, increase or decrease them, or from time to time
create new Obligations after all or any prior Obligations have been satisfied,
and notwithstanding the dissolution, liquidation or bankruptcy of the Borrower
or Guarantor or any other event or proceeding affecting the Borrower or
Guarantor.  This Guaranty shall not apply to any new Obligations
created after actual receipt by Bank of written notice of its revocation as to
such new Obligations; provided however, that Loans or other Obligations arising
after revocation under commitments existing prior to receipt by Bank of such
revocation, and extensions, renewals or modifications, of any kind, of
Obligations incurred by the Borrower or committed by Bank prior to receipt by
Bank of such revocation, shall not be considered new Obligations.  Any
such notice must be sent to Bank by registered U.S. mail, postage prepaid,
addressed to its office at 400 Hamilton Avenue, Palo Alto, California 94302, or
at such other address as Bank shall from time to time designate.  Any
payment by Guarantor shall not reduce Guarantor’s maximum obligation hereunder
unless written notice to that effect is actually received by Bank at or prior to
the time of such payment.  The obligations of Guarantor hereunder
shall be in addition to any obligations of Guarantor under any other guaranties
of any liabilities or obligations of the Borrower or any other persons
heretofore or hereafter given to Bank unless said other guaranties are expressly
modified or revoked in writing; and this Guaranty shall not, unless expressly
herein provided, affect or invalidate any such other
guaranties.


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

     

    Section
3.      Obligations
Joint And Several; Separate Actions; Waiver Of Statute Of Limitations;
Reinstatement Of Liability.  The obligations hereunder are
joint and several and independent of the Obligations of the Borrower, and a
separate action or actions may be brought and prosecuted against Guarantor
whether action is brought against the Borrower or any other person, or whether
the Borrower or any other person is joined in any such action or
actions.  Guarantor acknowledges that this Guaranty is absolute and
unconditional, there are no conditions precedent to the effectiveness of this
Guaranty, and this Guaranty is in full force and effect and is binding on
Guarantor as of the date written below, regardless of whether Bank obtains
collateral or any guaranties from others or takes any other action contemplated
by the Agreements.  Guarantor waives the benefit of any statute of
limitations affecting Guarantor’s liability hereunder or the enforcement
thereof, and Guarantor agrees that any payment of any Obligations or other act
which shall toll any statute of limitations applicable thereto shall similarly
operate to toll such statute of limitations applicable to Guarantor’s liability
hereunder.  The liability of Guarantor hereunder shall be reinstated
and revived and the rights of Bank shall continue if and to the extent for any
reason any amount at any time paid on account of any Obligations guaranteed
hereby is rescinded or must otherwise be restored by Bank, whether as a result
of any proceedings in bankruptcy or reorganization or otherwise, all as though
such amount had not been paid.  The determination as to whether any
amount so paid must be rescinded or restored shall be made by Bank in its sole
discretion; provided however, that if Bank chooses to contest any such matter at
the request of Guarantor, Guarantor agrees to indemnify and hold Bank harmless
from and against all costs and expenses, including reasonable attorneys’ fees,
expended or incurred by Bank in connection therewith, including without
limitation, in any litigation with respect thereto.

     

    Section
4.      Authorizations
To Bank.  Guarantor authorizes Bank either before or after
revocation hereof, without notice to or demand on Guarantor, and without
affecting Guarantor’s liability hereunder, from time to time to:  (a)
alter, compromise, renew, extend, accelerate or otherwise change the time for
payment of, or otherwise change the terms of the Obligations or any portion
thereof, including increase or decrease of the rate of interest thereon; (b)
take and hold security for the payment of this Guaranty or the Obligations or
any portion thereof, and exchange, enforce, waive, subordinate or release any
such security; (c) apply such security and direct the order or manner of sale
thereof, including without limitation, a non-judicial sale permitted by the
terms of the controlling security agreement, mortgage or deed of trust, as Bank
in its discretion may determine; (d) release or substitute any one or more of
the endorsers or any other guarantors of the Obligations, or any portion
thereof, or any other party thereto; and (e) apply payments received by Bank
from the Borrowers to any Obligations of the Borrowers to Bank, in such order as
Bank shall determine in its sole discretion, whether or not such Obligations are
covered by this Guaranty, and Guarantor hereby waives any provision of law
regarding application of payments which specifies otherwise.  Bank may
without notice assign this Guaranty in whole or in part.


    
      
         


      

      
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    Section
5.      Representations
And Warranties.  Guarantor represents and warrants to Bank
that: (a) this Guaranty is executed at the Borrower’s request; (b) Guarantor
shall not, without Bank’s prior written consent, sell, lease, assign, encumber,
hypothecate, transfer or otherwise dispose of all or a substantial or material
part of Guarantor’s assets other than in the ordinary course of Guarantor’s
business; provided, however, Guarantor may sell (i) its interest in Landec
Ag, Inc. or Cal Ex Trading Company or (ii) intellectual property assets not
related to the Borrower, notwithstanding this clause (b); (c) Bank has made no
representation to Guarantor as to the creditworthiness of the Borrower; and (d)
Guarantor has established adequate means of obtaining from the Borrower on a
continuing basis financial and other information pertaining to the Borrower’s
financial condition.  Guarantor agrees to keep adequately informed
from such means of any facts, events or circumstances which might in any way
affect Guarantor’s risks hereunder, and Guarantor further agrees that Bank shall
have no obligation to disclose to Guarantor any information or material about
either Borrower which is acquired by Bank in any manner.

     

    Section
6.       Guarantor’s
Waivers.

     

    (a)        Guarantor
waives any right to require Bank to: (i) proceed against the Borrower or
any other person; (ii) marshal assets or proceed against or exhaust any
security held from the Borrower or any other person; (iii) give notice of
the terms, time and place of any public or private sale or other disposition of
personal property security held from the Borrower or any other person; (iv) take
any action or pursue any other remedy in Bank’s power; or (v) make any
presentment or demand for performance, or give any notice of nonperformance,
protest, notice of protest or notice of dishonor hereunder or in connection with
any obligations or evidences of indebtedness held by Bank as security for or
which constitute in whole or in part the Obligations guaranteed hereunder, or in
connection with the creation of new or additional Obligations.

     

    (b)       
Guarantor waives any defense to its obligations hereunder based upon or arising
by reason of: (i) any disability or other defense of the Borrower or any other
person; (ii) the cessation or limitation from any cause whatsoever, other than
payment in full, of the Obligations of the Borrower or any other person; (iii)
any lack of authority of any officer, director, partner, agent or any other
person acting or purporting to act on behalf of the Borrower, or any defect in
the formation of the Borrower; (iv) the application by the Borrower of the
proceeds of any Obligations for purposes other than the purposes represented by
the Borrower to, or intended or understood by, Bank or Guarantor; (v) any act or
omission by Bank which directly or indirectly results in or aids the discharge
of the Borrower or any portion of the Obligations by operation of law or
otherwise, or which in any way impairs or suspends any rights or remedies of
Bank against the Borrower; (vi) any impairment of the value of any interest in
any security for the Obligations or any portion thereof, including without
limitation, the failure to obtain or maintain perfection or recordation of any
interest in any such security, the release of any such security without
substitution, and/or the failure to preserve the value of, or to comply with
applicable law in disposing of, any such security; (vii) any modification of the
Obligations, in any form whatsoever, including any modification made after
revocation hereof to any Obligations incurred prior to such revocation, and
including without limitation the renewal, extension, acceleration or other
change in time for payment of, or other change in the terms of, the Obligations
or any portion thereof, including increase or decrease of the rate of interest
thereon; or (viii) any requirement that Bank give any notice of acceptance of
this Guaranty.  Until all Obligations shall have been paid in full and
the Commitment by the Bank to extend credit to the Borrower expires or
terminates, Guarantor shall have no right of subrogation, and Guarantor waives
any right to enforce any remedy which Bank now has or may hereafter have against
the Borrower or any other person, and waives any benefit of, or any right to
participate in, any security now or hereafter held by Bank.  Guarantor
further waives all rights and defenses Guarantor may have arising out of (A) any
election of remedies by Bank, even though that election of remedies, such as a
non-judicial foreclosure with respect to any security for any portion of the
Obligations, destroys Guarantor’s rights of subrogation or Guarantor’s rights to
proceed against the Borrower for reimbursement, or (B) any loss of rights
Guarantor may suffer by reason of any rights, powers or remedies of either
Borrower in connection with any anti-deficiency laws or any other laws limiting,
qualifying or discharging the Borrower’s Obligations, whether by operation of
Sections 726, 580a or 580d of the California Code of Civil Procedure as from
time to time amended, or otherwise, including any rights Guarantor may have to a
Section 580a fair market value hearing to determine the size of a deficiency
following any foreclosure sale or other disposition of any real property
security for any portion of the Obligations.


    
      
         


      

      
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    Section
7.       Financial
Information.  Guarantor will deliver, or cause to be delivered,
the Bank each of the following, which shall be in form and detail acceptable to
the Bank:

     

    (i)       
As soon as available, and in any event within 90 days after the end of each
fiscal year of Guarantor (or 120 days in the case of filing Guarantor’s Form
10-K with the Securities and Exchange Commission), Guarantor will deliver, or
cause to be delivered, to Bank, Guarantor’s audited financial statements with
the unqualified opinion of independent certified public accountants selected by
Guarantor and reasonably acceptable to Bank, which annual financial statements
shall include Guarantor’s balance sheet as at the end of such fiscal year and
the related statements of Guarantor’s income, reconciliation of retained
earnings and cash flows for the fiscal year then ended, prepared on a
consolidated basis to include any Affiliates, all in reasonable detail and
prepared in accordance with GAAP, together with (A) copies of all
management letters prepared by such accountants; and (B) a certificate of
the chief financial officer of Guarantor stating that such financial statements
have been prepared in accordance with GAAP, fairly represent Guarantor’s
financial position and the results of its operations, and whether or not such
officer has knowledge of the occurrence of any Default or Event of Default as a
result of the Guarantor’s failure to comply with the financial covenants
applicable to it set forth in Section 6.3(b) of the Credit Agreement and,
if so, stating in reasonable detail the facts with respect thereto.

     

    (ii)      
As soon as available, and in any event within 45 days after the end of each
fiscal quarter of Guarantor, Guarantor will deliver, or cause to be delivered,
to Bank, Guarantor’s internally-prepared consolidating financial statements,
which financial statements shall include Guarantor’s balance sheet as at the end
of such fiscal quarter and the related statements of Guarantor’s income,
reconciliation of retained earnings and cash flows for the fiscal quarter then
ended, prepared on a consolidated basis to include any Affiliates, all in
reasonable detail and prepared in accordance with GAAP.


    
      
         


      

      
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    (iii)     
Concurrently with the delivery of the financial statements set forth in clause
(ii) above, Guarantor will deliver a certificate of the chief financial officer
of Guarantor, substantially in the form of Exhibit B-2 to the Credit
Agreement stating all relevant facts in reasonable detail to evidence, and the
computations as to, whether or not Guarantor is compliance with the Financial
Covenants set forth in Section 6.3(b) of the Credit Agreement.

     

    Section
8.       Contribution to
Borrower.  Notwithstanding anything contained herein to the
contrary, (i) in the event that the Borrower is not in compliance with the
Financial Covenants set forth in Section 6.3(a) of the Credit Agreement at any
time the same are to be determined, Guarantor irrevocable agrees to, within 50
days after the last day of the relevant fiscal quarter of the Borrower, invest
cash into the Borrower in the form of equity in an amount not less than the
amount necessary to bring the Borrower into compliance with such section and
(ii) in the event that the Borrower is not permitted to make the Contingent
Purchase Price Payments under Section 6.30(b) of the Credit Agreement, Parent
shall make such Contingent Purchase Price Payments directly to Seller in
accordance with its guaranty delivered to Seller in accordance with the Stock
Purchase Agreement.

     

    Section
9.       Remedies; No
Waiver.  All rights, powers and remedies of Bank hereunder are
cumulative.  No delay, failure or discontinuance of Bank in exercising
any right, power or remedy hereunder shall affect or operate as a waiver of such
right, power or remedy; nor shall any single or partial exercise of any such
right, power or remedy preclude, waive or otherwise affect any other or further
exercise thereof or the exercise of any other right, power or
remedy.  Any waiver, permit, consent or approval of any kind by Bank
of any breach of this Guaranty, or any such waiver of any provisions or
conditions hereof, must be in writing and shall be effective only to the extent
set forth in writing.

     

    Section
10.     Costs, Expenses And Attorneys’
Fees.  Guarantor shall pay to Bank within fifteen (15) days
after written demand the full amount of all payments, advances, charges, costs
and expenses, including reasonable attorneys’ fees (to include outside counsel
fees and all allocated costs of Bank’s in-house counsel), expended or incurred
by Bank in connection with the enforcement of any of Bank’s rights, powers or
remedies and/or the collection of any amounts which become due to Bank under
this Guaranty, and the prosecution or defense of any action in any way related
to this Guaranty, whether incurred at the trial or appellate level, in an
arbitration proceeding or otherwise, and including any of the foregoing incurred
in connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank or any other
person) relating to Guarantor or any other person or entity.  All of
the foregoing shall be paid by Guarantor with interest from the date of written
demand until paid in full at a rate per annum equal to the Default Rate then
applicable under the Note.

     

    Section
11.     Successors; Assignment.  This
Guaranty shall be binding upon and inure to the benefit of permitted successors
and assigns of the parties; provided however, that Guarantor may not assign or
transfer any of its interests or rights hereunder without Bank’s prior written
consent; provided further that Bank may not assign, transfer, negotiate or grant
participations in any of its rights under this Guaranty except in connection
with an assignment, transfer, negotiation or participation of its rights
permitted under the Agreements.


    
      
         


      

      
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    Section
12.     Amendment.  This Guaranty may
be amended or modified only in writing signed by Bank and
Guarantor.

     

    Section
13.     Application Of Singular And
Plural.  In all cases where there is but a single Borrower,
then all words used herein in the plural shall be deemed to have been used in
the singular where the context and construction so require; and when there is
more than one Borrower named herein, or when this Guaranty is executed by more
than one Guarantor, the word “Borrower” and the word “Guarantor” respectively
shall mean all or any one or more of them as the context requires.

     

    Section
14.     Understanding With Respect To Waivers;
Severability Of Provisions.  Guarantor warrants and agrees that
each of the waivers set forth herein is made with Guarantor’s full knowledge of
its significance and consequences, and that under the circumstances, the waivers
are reasonable and not contrary to public policy or law.  If any
waiver or other provision of this Guaranty shall be held to be prohibited by or
invalid under applicable public policy or law, such waiver or other provision
shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such waiver or other provision or any
remaining provisions of this Guaranty.

     

    Section
15.     Governing Law.  This Guaranty
shall be governed by and construed in accordance with the laws of the State of
California.

     

    Section
16.     Notices.  All notices,
requests and demands required under this Guaranty shall be delivered in the
manner set forth in the Credit Agreement.

     

    [Signature
Page Follows]


    
      
         


      

      
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    In
Witness Whereof, the undersigned Guarantor has executed this Guaranty as
of April 30, 2010.

       

    
      
        	
                Landec
      Corporation

              
	 
      	 
      
	
                By:  

              	
                /s/ Gregory S. Skinner

              
	 
      	
                Gregory
      S. Skinner

              
	 
      	
                Chief
      Financial Officer

              


      

    


    
      
         


      

      
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