Document:

exv10w70

 

Exhibit 10.70

 

 

Stock Purchase Agreement

by and among

American Seeds, Inc.,

Landec Corporation

and

Landec Ag, Inc.

 

Dated December 1, 2006

 

 

 

 

STOCK PURCHASE AGREEMENT

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	ARTICLE 1 DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 2 PURCHASE AND SALE OF SHARES
	 	 	8	 
	 
	 	 	 	 
	2.1 Transfer of Shares
	 	 	8	 
	2.2 Consideration
	 	 	8	 
	2.3 Closing
	 	 	8	 
	2.4 Earn-Out Payment
	 	 	9	 
	2.5 Deliveries of Seller at Closing
	 	 	10	 
	2.6 Deliveries of Buyer at Closing
	 	 	11	 
	 
	 	 	 	 
	ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER AND LANDEC
	 	 	12	 
	 
	 	 	 	 
	3.1 Corporate Existence and Power
	 	 	12	 
	3.2 Valid and Enforceable Agreement; Non-contravention
	 	 	12	 
	3.3 Capitalization and Ownership
	 	 	13	 
	3.4 Financial Statements; Credit Agreement
	 	 	13	 
	3.5 Subsequent Events
	 	 	14	 
	3.6 Undisclosed Liabilities
	 	 	15	 
	3.7 Taxes
	 	 	15	 
	3.8 Accounts Receivable
	 	 	17	 
	3.9 Inventories
	 	 	17	 
	3.10 No Breach of Law, Governing Documents, Licenses or Permits
	 	 	18	 
	3.11 Litigation
	 	 	18	 
	3.12 Owned and Leased Real Property
	 	 	18	 
	3.13 Personal Property Leases
	 	 	19	 
	3.14 Title to Assets; Necessary Property
	 	 	20	 
	3.15 Licenses and Permits
	 	 	20	 
	3.16 Environmental Matters
	 	 	20	 
	3.17 Contracts and Commitments
	 	 	21	 
	3.18 Validity of Contracts
	 	 	22	 
	3.19 Intellectual Property
	 	 	22	 
	3.20 Germplasm
	 	 	24	 
	3.21 Genetically Modified Organisms
	 	 	24	 
	3.22 Insurance
	 	 	24	 
	3.23 Employees, Officers, Directors and Consultants
	 	 	25	 
	3.24 Bank Accounts of the Company
	 	 	26	 

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	 	 	Page
	3.25 Transactions with Related Persons; Affiliates
	 	 	26	 
	3.26 Labor Matters
	 	 	26	 
	3.27 Employee Benefit Matters
	 	 	27	 
	3.28 Books and Records
	 	 	28	 
	3.29 Brokers, Finders
	 	 	28	 
	3.30 Disclosure
	 	 	28	 
	 
	 	 	 	 
	ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER
	 	 	29	 
	 
	 	 	 	 
	4.1 Corporate Existence and Power
	 	 	29	 
	4.2 Valid and Enforceable Agreement; Authorization; Non-Contravention
	 	 	29	 
	4.3 Compliance with Securities Law
	 	 	29	 
	4.4 Brokers, Finders
	 	 	29	 
	 
	 	 	 	 
	ARTICLE 5 ADDITIONAL COVENANTS OF THE PARTIES
	 	 	30	 
	 
	 	 	 	 
	5.1 Covenant Not to Compete
	 	 	30	 
	5.2 Taxes
	 	 	31	 
	5.3 Employee Matters
	 	 	32	 
	5.4 Books and Records
	 	 	33	 
	5.5 Public Announcements
	 	 	33	 
	5.6 Financial and IT Services During Transition
	 	 	34	 
	5.7 Further Assurances; Cooperation
	 	 	34	 
	5.8 Waiver
	 	 	34	 
	5.9 Termination of Insurance Policies
	 	 	34	 
	5.10 Collections of Receivables; Bank Accounts
	 	 	34	 
	 
	 	 	 	 
	ARTICLE 6 INDEMNIFICATION
	 	 	35	 
	 
	 	 	 	 
	6.1 Survival of Representations and Warranties and Covenants
	 	 	35	 
	6.2 Indemnification by Seller and Landec
	 	 	35	 
	6.3 Indemnification by Buyer
	 	 	36	 
	6.4 Notice of Claim
	 	 	36	 
	6.5 Right to Contest Claims of Third Persons
	 	 	37	 
	6.6 Limitations on Indemnity
	 	 	38	 
	6.7 Characterization of Indemnity Payments
	 	 	38	 
	6.8 Exclusive Monetary Remedy
	 	 	38	 
	 
	 	 	 	 
	ARTICLE 7 MISCELLANEOUS PROVISIONS
	 	 	39	 
	 
	 	 	 	 
	7.1 Notice
	 	 	39	 
	7.2 Entire Agreement
	 	 	40	 
	7.3 Amendment and Modification
	 	 	40	 
	7.4 Assignment; Binding Agreement
	 	 	40	 

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	 	 	Page
	7.5 Waiver of Compliance; Consents
	 	 	41	 
	7.6 Expenses
	 	 	41	 
	7.7 Counterparts
	 	 	41	 
	7.8 Severability
	 	 	41	 
	7.9 Remedies Cumulative
	 	 	41	 
	7.10 Governing Law
	 	 	41	 
	7.11 No Third Party Beneficiaries or Other Rights
	 	 	41	 
	7.12 Submission to Jurisdiction
	 	 	41	 
	7.13 Headings; Interpretation
	 	 	42	 
	7.14 Joint and Several Liability
	 	 	42	 

iii

 

STOCK PURCHASE AGREEMENT

     This STOCK PURCHASE AGREEMENT is entered into on December 1, 2006, by and among American
Seeds, Inc., a Delaware corporation (“Buyer”), Landec Corporation, a
California corporation (“Landec”), and Landec Ag, Inc. a Delaware corporation (the
“Seller”). Capitalized terms are defined in Article 1.

RECITALS

     A. The Seller is a subsidiary of Landec.

     B. Prior to the execution and delivery, and in contemplation of the consummation of this
agreement, Seller caused the row-crop seed (including corn, soybean and alfalfa) business of
Seller, including, without limitation, the businesses of Fielder’s Choice Direct, Heartland
Hybrids, and CRM (excluding, however, the Intellicoat® Seed Coatings business) and all
assets of Seller and its affiliates which have been used in such business prior to the date hereof
(collectively the “Transferred Business”) to be transferred to FCD Holding
Company, a Delaware corporation (the “Company”), by undertaking a corporate
reorganization (the “Reorganization”) whereby (i) the Company assumed the Transferred
Liabilities (as defined below), and (ii) Seller has transferred, or caused to be transferred, to
the Company all of the assets used in, required for the operation of or relating to the Transferred
Business (the “Transferred Assets”) free of any liens, security interests, or other claims,
except the Transferred Liabilities and Permitted Liens.

     C. As part of the Closing, Landec will cause a further corporate reorganization to be
completed as a result of which the Seller will become a wholly-owned subsidiary of Landec, and all
shares of the Seller now held by other parties will be converted solely into the right to receive
cash in the amount to be provided in the reorganization documents.

     D. Buyer desires to purchase from Seller, on the terms and conditions set forth herein, all of
the issued and outstanding capital stock of the Company, which consists of 100 shares of common
stock, par value $.0001 per share (the “Shares”); and

     E. Seller desires to sell the Shares to Buyer, and that the Shares be sold to Buyer, on the
following terms and conditions.

     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants, representations,
warranties and agreements hereinafter contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE 1

DEFINITIONS

The following terms shall have the meanings set forth below in this Article 1.

     1.1 “338(h)(10) Election” has the meaning set forth in Section 5.2(d).

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     1.2 “Accounts Receivable” has the meaning set forth in Section 3.8.

     1.3 “Action” has the meaning set forth in Section 3.11.

     1.4 “Actual Knowledge” means, with respect to Landec, the Seller or the Company, the
actual awareness of a particular fact by Gary Steele, Greg Skinner, Thomas Crowley, Michael
Godlove, Dennis Schlott or William Gass.

     1.5 “Affiliate” means, with respect to any Person, any other Person which is directly
or indirectly controlling, controlled by, or under common control with such Person, and, if the
Person referred to is a natural person, any member of such Person’s immediate family. The term
“control” (including, with correlative meaning, the terms “controlled by” and “under common control
with”), as used with respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by Contract or otherwise.

     1.6 “Aggregate Consideration” has the meaning set forth in Section 5.2(d).

     1.7 “Agreement” means this Stock Purchase Agreement as amended or supplemented in
accordance with its terms, including all Schedules and Exhibits hereto.

     1.8 “Arbiter” has the meaning set forth in Section 2.4(c).

     1.9 “Basket” has the meaning set forth in Section 6.6(a)(ii).

     1.10 “Business Day” means any day which is not a Saturday, Sunday or legal holiday in
the State of New York, United States of America.

     1.11 “Buyer” has the meaning set forth in the first paragraph.

     1.12 “Buyer Indemnified Persons” has the meaning set forth in Section 6.2.

     1.13 “Cap” has the meaning set forth in Section 6.6(a)(iv).

     1.14 “Closing” means the consummation of the transactions contemplated by this
Agreement, as provided for in Section 2.3.

     1.15 “Closing Date” means the date of this Agreement.

     1.16 “Closing Payment” has the meaning set forth in Section 2.2.

     1.17 “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985 and
regulations promulgated thereunder, as amended from time to time.

     1.18 “Code” means the Internal Revenue Code of 1986 and regulations promulgated
thereunder, as amended from time to time.

     1.19 “Company” has the meaning set forth in the Recitals.

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     1.20 “Company Plans” has the meaning set forth in Section 3.27(a).

     1.21 “Confidential Information” has the meaning set forth in Section 5.1(c).

     1.22 “Contract” means any contract, agreement, understanding, lease, indenture,
mortgage, deed of trust, evidence of indebtedness, binding commitment or instrument.

     1.23 “Covered Loss” has the meaning set forth in Section 6.6(a)(i).

     1.24 “Credit Agreement” has the meaning set forth in Section 3.4(b).

     1.25 “CRM System” means all components of the customer relations software applications
currently used in the Transferred Business, details of which have been provided to the Buyer by the
Seller.

     1.26 “Earn-Out Amount” has the meaning set forth in Section 2.4(b)(i).

     1.27 “Earn-Out Period” means the fiscal period commencing June 1, 2006 and ending on
May 31, 2007.

     1.28 “Effective Time” means the effective time of the Closing, which shall be 11:59
p.m. Central time on the Closing Date.

     1.29 “Environmental Claim” means any third party (including private parties,
Government agencies and employees) action, lawsuit, claim or proceeding relating to the current or
previous operations of Seller, with respect to the Transferred Business, the Company, or their
predecessors, as applicable, which alleges potential liability for (i) noise; (ii) odor; (iii)
mold; (iv) pollution or contamination of the air, surface water, groundwater or land; (v) solid,
gaseous or liquid waste generation, handling, treatment, storage, disposal or transportation; (vi)
Hazardous Materials handling, treatment, storage, disposal or transportation; (vii) exposure to
hazardous or toxic substances; (viii) non-compliance with the Toxic Substances Control Act; or (ix)
non-compliance with any other Environmental Law. An “Environmental Claim” includes, without
limitation, a proceeding to terminate a permit or license to the extent that such a proceeding
attempts to redress violations of the applicable permit, license, Law or regulation as alleged by
any federal, state or local regulatory or administrative agency, board or authority.

     1.30 “Environmental Law” means all applicable Laws relating to pollution or protection
of human health, safety, the environment, natural resources or Laws relating to releases or
threatened releases of Hazardous Materials into the indoor or outdoor environment or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage, release, transport
or handling of Hazardous Materials, including the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. §9601 et seq.), the Hazardous Materials Transportation
Act (49 U.S.C. App. §1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. §6901 et
seq.), the Clean Water Act (33 U.S.C. §1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.),
the Toxic Substances Control Act (15 U.S.C. §2601 et seq.) and the Occupational Safety and Health
Act (29U.S.C. §653 et seq.), and the regulations promulgated pursuant thereto, as amended from
time to time, and their state law equivalents and common law

3

 

theories of nuisance, trespass, waste, negligence or abnormally dangerous activity arising out
of or relating to Hazardous Materials.

     1.31 “ERISA” means the Employee Retirement Income Security Act of 1974 and regulations
promulgated thereunder, as amended from time to time.

     1.32 “Excluded Assets” means those assets set forth on Schedule 1.32.

     1.33 “Excluded Liabilities” means those Liabilities set forth on Schedule 1.33.

     1.34 “Financial Statements” has the meaning set forth in Section 3.4.

     1.35 “GAAP” means the accounting principles generally accepted in the U.S. and applied
consistently throughout the periods involved.

     1.36 “GMOs” means genetically modified organisms.

     1.37 “Germplasm” means (a) hybrids, lines and varieties that (i) are in commercial use
by Seller, with respect to the Transferred Business, or the Company, as applicable, (ii) are
licensed by Seller, with respect to the Transferred Business, or the Company, as applicable, from
third parties, (iii) are licensed by Seller, with respect to the Transferred Business, or the
Company, as applicable, to third parties, or (iv) are in the pipeline for development by Seller,
with respect to the Transferred Business, or the Company, as applicable, for commercial use as of
the date of this Agreement and one year, two years or three years from commercialization; (b)
parents used in the production of the hybrids, lines and varieties referred to in clause (a); (c)
all hybrids, lines and varieties that are in testing or evaluation at any stage of development by
Seller, with respect to the Transferred Business, or the Company, as applicable, anywhere in the
world as of the date of this Agreement, whether such hybrids, lines and varieties are owned or
licensed by Seller, with respect to the Transferred Business, or the Company, as applicable; and
(d) the breeding populations and sources used to provide the hybrids, lines and varieties referred
to in clause (c).

     1.38 “Government” means the United States of America, any other nation or state, any
U.S. State, any federal, bilateral or multilateral governmental authority, any possession,
territory, local, county, district, city or other governmental unit or subdivision, and any branch,
department, division, agency, or judicial body of any of the foregoing.

     1.39 “Hazardous Materials” means any chemicals, materials or substances which are
defined or regulated as dangerous, toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous or as a pollutant or contaminant under any
Environmental Law.

     1.40 “HIPAA” means the Health Insurance Portability and Accountability Act of 1996 and
regulations promulgated thereunder as amended from time to time.

     1.41 “Incentive Plan Agreements” has the meaning set forth in Section 2.6(a).

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     1.42 “Income Taxes” means any Tax imposed upon or measured by net income or gross
income (excluding any Tax based solely on gross receipts).

     1.43 “Indemnified Party” has the meaning set forth in Section 6.4.

     1.44 “Indemnifying Party” has the meaning set forth in Section 6.4.

     1.45 “Intellectual Property” means all intellectual property, including all:

          (a) patents, applications for patents, and rights to apply for patents in any part of the
world;

          (b) copyrights, design rights, topography rights, Internet domain names, and database rights
whether registered or unregistered;

          (c) trademark and service mark applications, registered trademarks and service marks,
registered designations of origin, registered designations of geographic origin, refilings,
renewals and reissues of the foregoing, unregistered trademarks and service marks, including common
law trademarks and service marks, rights to trade dress and company names, in each case with any
and all associated goodwill;

          (d) plant breeders’ rights, including all plant variety protection certificates, and any
applications for plant breeders’ rights in any part of the world; and

          (e) all rights in respect of any Know How.

     1.46 “Interim Balance Sheet” means the unaudited balance sheet of the Transferred
Business as of October 22, 2006, which constitutes a part of the Financial Statements.

     1.47 “IRS” means the United States Internal Revenue Service.

     1.48 “Know How” means trade secrets and Confidential Information including details of
supply arrangements, customer lists and pricing policy; sales targets, sales statistics, market
share statistics, marketing surveys and reports; unpatented technical and other information
including inventions, discoveries, processes and procedures, ideas, concepts, formulae, notebooks,
specifications, procedures for experiments and tests and results of experimentation and testing;
information comprised in software and materials; together with all common law or statutory rights
protecting the same and any similar or analogous rights to any of the foregoing whether arising or
granted under any Laws.

     1.49 “Knowledge” means, with respect to Landec, the Seller or the Company, (i) the
actual awareness of a particular fact by Gary Steele, Greg Skinner, Thomas Crowley, Michael
Godlove, Dennis Schlott or William Gass or (ii) knowledge that would have been acquired by any of
them after a commercially reasonable inquiry and investigation. The words “know,”
“knowing” and “known” shall be construed accordingly.

     1.50 “Law” means any statute, law, ordinance, decree, order, injunction, rule,
directive, or regulation of any Government or quasi-governmental authority, and includes rules and

5

 

regulations of any regulatory or self-regulatory authority compliance with which is required
by any of the foregoing.

     1.51 “Leased Real Property” has the meaning set forth in Section 3.12(b).

     1.52 “Liability” or “Liabilities” means all debts, adverse claims, liabilities
and/or obligations, direct, indirect, absolute or contingent, whether accrued, vested or otherwise
and whether or not reflected or required to be reflected on the financial statements of a Person.

     1.53 “Lien” means any lien, security interest, mortgage, indenture, deed of trust,
pledge, charge, adverse claim, easement, restriction or other encumbrance.

     1.54 “Losses” has the meaning set forth in Section 6.2.

     1.55 “Material Contracts” has the meaning set forth in Section 3.17(a).

     1.56 “May Balance Sheet” has the meaning set forth in Section 3.4(a).

     1.57 “Non-Competition Period” has the meaning set forth in Section 5.1(a).

     1.58 “Notice of Dispute” means a written notice by Seller to Buyer delivered pursuant
to Section 2.4, specifying in reasonable detail all points of disagreement with Buyer’s calculation
of the Earn-Out Amount.

     1.59 “Order” means an order, writ, injunction, or decree of any court or Government.

     1.60 “Ordinary Course” means, with respect to the Transferred Business, the ordinary
course of commercial operations customarily engaged in by the Transferred Business consistent with
the prior practices of the Transferred Business.

     1.61 “Owned Real Property” has the meaning set forth in Section 3.12(a).

     1.62 “Party” means any of Landec, Seller and Buyer, and “Parties” means all of
them.

     1.63 “PBGC” means the Pension Benefit Guaranty Corporation.

     1.64 “Pension Plan” means an employee pension benefit plan (within the meaning of
ERISA Section 3(2)).

     1.65 “Permitted Liens” means (i) the Transferred Liabilities and Liens securing such
Transferred Liabilities which are disclosed on Schedule 1.65; (ii) any Lien securing
payment of real estate taxes not delinquent; (iii) existing Liens with respect to the Owned Real
Property or Leased Real Property that are described on Schedule 3.12(a) or 3.12(b),
as applicable; and (iv) with respect to any leased personal property or Leased Real Property, (A)
the rights and interest of each lessor as owner or otherwise under each related lease described on
Schedule 3.12(b) and (B) Liens on the interest of each lessor through which the Company
directly or indirectly derives its interest as lessee under the related lease.

6

 

     1.66 “Person” means a natural person, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or Government.

     1.67 “Plan” means any agreement, arrangement, plan, or policy, qualified or
non-qualified, that involves any (a) pension, retirement, profit sharing, savings, deferred
compensation, bonus, stock option, stock purchase, phantom stock, incentive plan, including any
multiple employer plan or multiemployer plan (as defined in ERISA Section 3(37) or 4001(a)(3)) and
including any such plan covering any employee or former employee outside the United States; (b)
welfare or “fringe” benefits, including vacation, holiday, severance, disability, medical,
hospitalization, dental, life and other insurance, tuition, company car, club dues, sick leave,
maternity, paternity or family leave, health care reimbursement, dependent care assistance,
cafeteria plan or other benefits; or (c) any employment, consulting, engagement, retainer or golden
parachute agreement or arrangement, including any “employee benefit plan” as defined in ERISA
Section 3(3).

     1.68 “Pre-Closing Periods” has the meaning set forth in Section 5.2(b).

     1.69 “Purchase Price” has the meaning set forth in Section 2.2.

     1.70 “Reorganization” has the meaning set forth on the Recitals.

     1.71 “Retained Business” means, collectively, the Excluded Assets, the Excluded
Liabilities and all businesses of Seller, including, without limitation, the
Intellicoat® Seed Coating business, not included in the Transferred Business.

     1.72 “Seller Indemnified Persons” has the meaning set forth in Section 6.3.

     1.73 “Seller” has the meaning set forth in the first paragraph.

     1.74 “Shares” has the meaning set forth in the Recitals.

     1.75 “StarLink” means corn which includes a Bt gene commonly designated as the Cry9C
gene and/or the Cry9C protein, the Cry9C gene and/or any fragments of either, and/or any product
containing the Cry9C protein and/or the Cry9C gene and any fragments of either.

     1.76 “Taxes” means all taxes, charges, fees, levies, or other like assessments,
including all Government income, profits, employment, franchise, gross receipts, sales, use,
transfer, stamp, occupation, property, capital, customs, duties, ad valorem, value added and excise
taxes, PBGC premiums and any other Government charges of the same or similar nature, including any
interest, penalty or addition thereto, whether disputed or not.

     1.77 “Tax Returns” means all reports and returns relating to or required by Law to be
filed by or on behalf of Seller or Landec, with respect to the Transferred Business, or the
Company, as applicable, in connection with any Taxes, and all information returns (e.g., Form W-2,
Form 1099) and reports relating to Taxes and Taxes payable by, pursuant to or in connection with
any Plans, including any amendment or supplement thereof.

7

 

     1.78 “Territory” has the meaning set forth in Section 5.1(a).

     1.79 “Third Person” has the meaning set forth in Section 6.5.

     1.80 “Third Person Claim” has the meaning set forth in Section 6.5.

     1.81 “Transferred Assets” has the meaning set forth in the Recitals and includes,
without limitation, those assets listed on Schedule 1.81.

     1.82 “Transferred Business” has the meaning set forth in the Recitals.

     1.83 “Transferred Germplasm” has the meaning set forth in Section 3.20.

     1.84 “Transferred IP” has the meaning set forth in Section 3.19.

     1.85 “Transferred Liabilities” means (i) all amounts owed under the Credit Agreement
as of the Closing Date, (ii) other liabilities of the type and in the amounts reflected on the
Interim Balance Sheet; (iii) current liabilities incurred by the Transferred Business in the
Ordinary Course and in compliance with the terms of the this Agreement from the date of the Interim
Balance Sheet to the Closing; (iv) Seller’s or the Company’s obligations arising or attributable to
any period after the Effective Time under Contracts constituting a part of the Transferred Assets;
and (v) any other liabilities set forth on Schedule 1.85; provided, however, that
Transferred Liabilities shall in no event include any of the Excluded Liabilities.

     1.86 “Treasury Regulations” means the rules and regulations under the Code issued by
the U.S. Department of the Treasury.

ARTICLE 2

PURCHASE AND SALE OF SHARES

     2.1 Transfer of Shares. Upon the terms and subject to the conditions of this Agreement, on
the Closing Date and as of the Effective Time, Seller shall sell, assign, transfer and convey to
Buyer, and Buyer shall purchase, acquire and accept from Seller, all of Seller’s right, title and
interest in and to the Shares free and clear of all Liens.

     2.2 Consideration. The consideration that Buyer shall pay to Seller for the Shares, the
obligations of Seller under Article 5, and other rights of Buyer hereunder shall be Fifty Million
Dollars ($50,000,000.00) (the “Closing Payment”) plus the Earn-Out Amount (together with
the Closing Payment, the “Purchase Price”).

     2.3 Closing. The Closing shall take place at 3:00 p.m. on the Closing Date, effective as
of the Effective Time, at the offices of Bryan Cave LLP, One Metropolitan Square, 211 N. Broadway,
Suite
3600, St. Louis, Missouri 63102, or, if agreed by the Parties, by the exchange of faxed or scanned
signature pages, wire transfer of funds, and communications via telephone, email, fax and other
mutually acceptable means of telecommunication, with originals of signature pages to be exchanged
by express delivery for receipt the business day following the Closing Date, or in such other
manner and such place as the Parties may agree. At Closing, (a) Seller and Landec shall deliver or
cause to be delivered to Buyer the documents identified in

8

 

Section 2.5 and (b) Buyer shall deliver
to Seller (i) by wire transfer of immediately available funds in accordance with the wire transfer
instructions set forth on Schedule 2.3, the Closing Payment, and (ii) the documents
identified in Section 2.6.

     2.4 Earn-Out Payment.

          (a) The Earn-Out Amount, if any, payable as part of the Purchase Price shall be determined and
paid in accordance with the terms and provisions of this Section 2.4.

          (b) For purposes of this Section 2.4, the following terms have the meanings defined below:

          (i) “Earn-Out Amount” means the product of (A) the Earn-Out Fraction times (B)
$5,000,000.00

          (ii) “Earn-Out Fraction” means:

          (A) zero, if the Gross Margin is equal to or less than $12,900,000.00; or

          (B) a fraction having a numerator equal to the amount by which the Gross Margin
exceeds $12,900,000.00, and a denominator equal to $700,000.00, if the Gross Margin
exceeds $12,900,000.00 and is less than or equal to $13,600,000.00; or

          (C) one, if the Gross Margin exceeds $13,600,000.00.

          (iii) “Gross Margin” means (A) the revenue of the Transferred Business for the
Earn-Out Period, minus (B) the cost of goods sold of the Transferred Business for the
Earn-Out Period.

           (iv) “Earn-Out Period” means the fiscal year of the Transferred Business
commenced June 1, 2006 and ending May 31, 2007.

          (c) For purposes of calculating the Gross Margin for the Earn-Out Period, (i) the revenue and
cost of goods sold of the Transferred Business (A) shall exclude any revenue or expense, regardless
of materiality, that under GAAP is attributable to a prior period, (B) shall otherwise be accrued
in accordance with GAAP as applied in a manner consistent with the preparation of the Financial
Statements except for materiality limitations or qualifications under GAAP and (C) shall consist of
revenue and cost for the Earn-Out Period of the types shown in
the proforma calculation of Gross Margin set forth on Schedule 2.4, and (ii) net
technology fees and genetic royalties payable to Monsanto Company or its Affiliates shall be
adjusted, if necessary, to the amounts (net of seed service fees) that would be charged to Seller
under the existing applicable license agreements, identified on Schedule 2.4, between
Seller and Monsanto Company or its Affiliates, assuming that Seller continued to own the
Transferred Business, and such agreements had remained in effect, throughout the entire Earn-Out
Period.

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          (d) As an example of the calculation of the Earn-Out Amount, assuming actual Gross Margin were
to equal the proforma amount of $13,400,000 shown on Schedule 2.4, the Earn-Out Fraction
would equal 71.43% (i.e., [$13,400,000 — $12,900,000]/$700,000), and the Earn-Out Amount would
equal 71.43% times $5,000,000, or $3,571,500.

          (e) Within sixty (60) calendar days following the end of the Earn-Out Period, Buyer shall at
its expense prepare and deliver to Seller its reasonably detailed calculation of the Earn-Out
Amount. Seller shall have access to such books and records as may be reasonably necessary to
confirm Buyer’s calculations, which calculations shall be derived from the Company’s books and
records.

          (f) If Seller and Buyer do not reach written agreement on a final calculation of the Earn-Out
Amount prior to expiration of the 30-day period after Seller’s receipt of Buyer’s calculation, the
disputed items in Buyer’s calculation shall be referred to the Indianapolis office of Crowe Chizek
and Company LLC, or if such firm is unable or unwilling to act, such other reputable accounting
firm that is mutually acceptable to the Parties (the “Arbiter”), as an arbitrator to finally
determine, as soon as practicable, and in any event within 30 calendar days after such reference,
all points of disagreement with respect to the calculation of the Earn-Out Amount. For purposes of
such arbitration, Buyer and Seller shall each submit a proposed calculation of the Earn-Out Amount
and relevant support for such calculation. The Arbiter shall apply the terms of this Section 2.4
and Schedule 2.4 in making its determination. The fees and expenses of the arbitration and
the Arbiter incurred in connection with the calculation of the Earn-Out Amount shall be allocated
between Buyer and Seller by the Arbiter based on the Arbiter’s determination of the relative merit
of the positions of the Parties; provided, that such fees and expenses shall not include, so long
as Buyer or Seller, as applicable, complies with the procedures of this Section 2.4, the other
Party’s outside counsel or accounting fees. All determinations by the Arbiter shall, in the
absence of fraud or manifest error, be final, conclusive and binding with respect to the
calculation of the Earn-Out Amount and the allocation of arbitration fees and expenses.

          (g) The payment of the Earn-Out Amount shall be made to Seller in accordance with the wire
instructions set forth on Schedule 2.3 on the later of (i) July 31, 2007, or (ii) the date
that is five (5) Business Days after the resolution of any dispute between Seller and Buyer
relating to the amount of such payment; provided, that Buyer may deduct from the Earn-Out Amount
any indemnification obligations then due to the Buyer from the Seller or Landec pursuant to Section
6.2.

     2.5 Deliveries of Seller at Closing. At Closing, Seller shall deliver or cause to be
delivered to Buyer:

          (a) certificates representing all the Shares, duly endorsed to Buyer or its designated
Affiliate in blank or accompanied by duly executed stock powers in blank;

          (b) an opinion of Bose McKinney & Evans LLP, counsel to Seller, dated as of the Closing Date,
in form and substance satisfactory to Buyer;

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          (c) the written resignation of each member of the Board of Directors of the Company, with such
exceptions as may be specified by Buyer;

          (d) a certificate of good standing of the Company, dated no more than five (5) Business Days
prior to the Closing Date, from the Secretary of State of the State of Delaware;

          (e) a certificate of good standing of Landec, as of a recent date, from the Secretary of State
of California

          (f) a certificate of good standing of Seller, dated no more than five (5) Business Days prior
to the Closing Date, from the Secretary of State of Delaware;

          (g) evidence of the validly completed transfer to the Company of the Transferred Business and
the Transferred Assets, in form and substance satisfactory to Buyer;

          (h) the written release of all Liens (except Permitted Liens) relating to the Transferred
Assets executed by the holder of or parties to each such Lien, which releases shall be satisfactory
in substance to Buyer;

          (i) evidence satisfactory to the Buyer that the payment obligations of Seller under the Credit
Agreement have been assigned and transferred to, and assumed by, the Company, with the consent of
the lender;

          (j) all share transfer books, minute books and other corporate records of the Company;

          (k) properly completed IRS Form 8023 executed by Landec; and

          (l) such other customary documents, instruments or certificates as shall be reasonably
requested by Buyer and as shall be consistent with the terms of this Agreement.

     2.6 Deliveries of Buyer at Closing. At Closing, Buyer shall deliver or cause to be
delivered:

          (a) to each of Thomas Crowley, Michael Godlove, Dennis Schlott and William Gass, the
applicable incentive plan letters in a form satisfactory to Buyer to each of Thomas Crowley,
Michael Godlove, Dennis Schlott and William Gass (collectively, the “Incentive Plan
Agreements”), duly executed on behalf of Buyer;

          (b) to Seller, a certificate of good standing of Buyer, dated no more than five (5) Business
Days prior to the Closing Date, from the Secretary of State of the State of Delaware;

          (c) to Seller, such other customary documents, instruments or certificates as shall be
reasonably requested by Seller and as shall be consistent with the terms of this Agreement;

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          (d) to Landec, an undertaking, in form satisfactory to Landec, confirming that the Buyer will
cause the Company to repay in full the indebtedness outstanding under the Credit Agreement,
promptly following the Closing Date; and

          (e) to Seller, the Closing Payment by wire transfer of immediately available funds in
accordance with the wire transfer instructions set forth on Schedule 2.3.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF SELLER AND LANDEC

     Seller and Landec hereby jointly and severally make the following representations and
warranties to Buyer, each of which is true and correct on the date hereof and shall survive the
Closing and the transactions contemplated hereby to the extent set forth herein.

     3.1 Corporate Existence and Power.

          (a) Each of Landec, Seller and the Company is a corporation duly organized, validly existing
and in good standing under the Laws of the state of its state of incorporation as set forth on
Schedule 3.1(a). Seller has delivered to Buyer true, complete and correct copies of the
articles of incorporation and bylaws, as currently in effect, of the Company.

          (b) The Company has, and the Seller has had with respect to the Transferred Business, all
requisite corporate power and authority to own, lease and use their respective assets and to
transact the Transferred Business, and hold all authorizations, franchises, licenses, permits and
approvals required therefor, all of which are valid and in full force and effect. The Seller, with
respect to the Transferred Business, has been duly licensed or qualified to do business as a
foreign corporation and is in good standing in the jurisdictions listed on Schedule 3.1(b).
The Seller has not been with respect to the Transferred Business, required to be registered,
licensed or qualified to do business in any other jurisdiction; provided that the period with
respect to which the representation and warranty in this sentence is made, and with respect to
which Buyer shall be entitled to rely, shall not extend beyond the Effective Time, and Buyer shall
be responsible for making its own determination regarding the jurisdictions in which the Company is
to be registered, licensed or qualified to do business after the Effective Time.

          (c) Each of Seller and Landec has the full power, authority and capacity to execute and
deliver this Agreement, to perform its respective obligations hereunder, and to consummate the
transactions contemplated hereby.

     3.2 Valid and Enforceable Agreement; Non-contravention.

          (a) This Agreement has been duly executed and delivered by Seller and Landec and constitutes a
legal, valid and binding obligation of Seller and Landec, enforceable against each of them in
accordance with its terms, except that such enforcement may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting or relating to enforcement
of creditors’ rights generally, and (ii) general principles of equity. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of each of Seller and Landec.

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          (b) Except as set forth on Schedule 3.2(b), neither the Company nor Seller is a party
to, subject to or bound by any Contract, Law or Order which does or would (i) conflict with or be
breached or violated or accelerated or increased by the execution, delivery or performance by
Seller or Landec of this Agreement, or (ii) prevent the carrying out of the transactions
contemplated hereby. Except as set forth on Schedule 3.2(b) or as specifically indicated
on Schedule 3.17(a), no permit, consent, waiver, approval or authorization of, or
declaration to or filing or registration with, any Government authority or third party is required
in connection with the execution, delivery or performance of this Agreement by Seller or Landec or
the consummation by Seller of the transactions contemplated hereby under any agreement to which
Seller or Landec is a party. The transactions contemplated hereby will not result in the creation
of any Lien against any part of the Transferred Business.

     3.3 Capitalization and Ownership.

          (a) The authorized capital stock of the Company and the names, addresses and holdings of the
record holders thereof are set forth on Schedule 3.3(a). Seller is the sole owner of the
Shares, whether of record or beneficially, and the Shares constitute the only issued and
outstanding capital stock of the Company. Upon purchase and payment therefor and delivery to Buyer
thereof in accordance with the terms of this Agreement, the Shares shall be transferred free and
clear of all Liens at Closing. All of the Shares were duly authorized and validly issued and are
fully paid and non-assessable without restriction on the right of transfer thereof. Except for
Buyer’s rights pursuant to this Agreement, (i) there are no issued and outstanding (A) securities
of the Company other than the Shares or (B) warrants, preemptive rights, other rights, or options
with respect to any securities of the Company, and (ii) neither the Company nor Seller is subject
to any obligation to issue, acquire or retire any securities of the Company.

          (b) The Company does not have any subsidiaries or otherwise own, directly or indirectly, any
capital stock or other equity interest in any Person.

     3.4 Financial Statements; Credit Agreement.

          (a) True and complete copies of

          (i) (x) the audited consolidated balance sheets of Landec and its affiliates as of May
28, 2006, (y) the related statements of income and loss for the 12-
month period then ended, and (z) together, as to all the foregoing, with any notes or
schedules thereto (together, the “Landec Financial Statements”), and

          (ii) (x) the unaudited balance sheet of the Transferred Business as of May 28, 2006, a
copy of which is attached hereto as Schedule 3.4 (the “May Balance Sheet”), and (y)
the related statement of income and loss for the fiscal year then ended, and (z) the
unaudited balance sheet of the Transferred Business as of October 22, 2006, and the related
statement of income and loss for the five-month period then ended (collectively, the
“Transferred Business Financial Statements” and, together with the Landec Financial
Statements, the “Financial Statements”),

have been delivered to Buyer. All such Financial Statements (x) were derived from the books and
records of Landec and (y) have been prepared in conformity with GAAP and present fairly

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in all
material respects the financial position and results of operations of Landec and of the Transferred
Business, as applicable, at the dates and for the periods indicated, except that the Transferred
Business Financial Statements do not include notes and related disclosures required by GAAP or
statements of cash flows.

          (b) Amounts which will remain outstanding as of the Closing Date under the Credit Agreement
dated as of June 5, 2000, as previously amended by the First through Sixth Amendments to such
agreement, and as amended or replaced by the Business Loan Agreement dated as of August 29, 2006
(collectively, the “Credit Agreement”), between Seller and Old National Bank, represent
advances which have been applied in the Ordinary Course to payment of operating expenses of Seller
incurred during the period from May 29, 2006 to the Closing Date, except for an advance in the
amount of $1,000,000, details of which have been provided by Landec to Buyer. A prepayment of
principal under the Credit Agreement will be made by Landec, out of funds unrelated to the
operations of the Transferred Business, between the date of the Interim Balance Sheet and the
Closing Date, in the amount of $500,000, and any excess cash of Landec or Seller generated by the
Transferred Business during the period from May 29 to the Closing Date will be applied in payment
of amounts outstanding under the Credit Agreement. The principal amount outstanding under the
Credit Agreement as of the Closing Date will not exceed $10,000,000.

     3.5 Subsequent Events. Since October 22, 2006, except as set forth on Schedule 3.5
and except as contemplated in this Agreement, there has been no:

          (a) Material change or event relating to the business or condition (financial or otherwise),
operations, results of operations, assets or prospects of the Transferred Business;

          (b) change in the relationship with any supplier, customer, distributor, lessor, licensor,
licensee or other third party which is material to the Transferred Business;

          (c) declaration, setting aside, or payment of any dividend or any distribution with respect to
any securities of the Company;

          (d) transfer of any cash or material assets relating to the Transferred Business from Seller
to Landec;

          (e) increase in or commitment to increase compensation, benefits, or other remuneration to or
for the benefit of any employee, shareholder, director, officer, or agent of the Transferred
Business, or any benefits granted under any Plan with or for the benefit of any such employee,
shareholder, director, officer, or agent, other than in the Ordinary Course;

          (f) transaction entered into or carried out by the Company or Seller in connection with the
Transferred Business or any Transferred Assets or securities of the Company other than in the
Ordinary Course, or any agreement to sell or dispose of any material Transferred Assets;

          (g) loan or advance by the Seller with respect to the Transferred Business, or by the Company,
to any third party except for advances not in excess of $5,000 made in the Ordinary Course to its
employees;

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          (h) change made with respect to the Transferred Business or the Company in their respective
Tax or financial accounting or any Tax election; or

          (i) commitment or agreement by Seller or the Company to do any of the foregoing items 3.5(a)
through 3.5(h) (or Landec with respect to Section 3.5(h)).

     3.6 Undisclosed Liabilities. The Company and the Transferred Business do not have any
Liabilities whatsoever, known or unknown, asserted or unasserted, liquidated or unliquidated,
accrued, absolute, contingent, or otherwise, and there is no basis for any claim against the
Company for any such Liability, except for the Transferred Liabilities.

     3.7 Taxes. Except as set forth on Schedule 3.7:

          (a) Each of Seller and the Company has filed on a timely basis all Tax Returns required to be
filed prior to the date hereof, and such Tax Returns are true, correct and complete in all
respects. Without limiting the foregoing, none of these Tax Returns contains any position that is,
or would be, subject to penalties under Section 6662 of the Code (or any corresponding provisions
of state or local Tax Law). Each of Seller and the Company has not entered into any “listed
transactions” as defined in Section 1.6011-4(b)(2) of the Treasury Regulations, and it has properly
disclosed all reportable transactions as required by Section 1.6011-4 of the Treasury Regulations.

          (b) The Company is not currently the beneficiary of any extension of time within which to file
any Tax Return.

          (c) All Taxes due and owing by each of Seller and the Company (whether or not reflected on any
Tax Return) have been timely and fully paid and there are no grounds for the assertion or
assessment of additional Taxes against the Company or its assets.

          (d) Each of Seller and the Company has timely and properly withheld and paid all Taxes
required to have been withheld and paid in connection with any amounts paid or owing to any
employee, independent contractor, creditor, shareholder or other third party.

          (e) There are no Liens for Taxes, other than Permitted Liens, upon any Transferred Assets.

          (f) The Company is not a party to or bound by any Tax indemnity, Tax sharing or Tax allocation
agreement or arrangement.

          (g) The Company has never been an “S corporation” within the meaning of Section 1361(a)(1) of
the Code or a “qualified subchapter S subsidiary” within the meaning of Section 1361(b)(3)(B) of
the Code.

          (h) The Company is not a party to or a partner in any joint venture, partnership or other
arrangement or Contract that could be treated as a partnership for federal Income Tax purposes.

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          (i) No Government Tax audits or administrative or judicial Tax proceedings are pending or
being conducted with respect to Seller, Landec or, with respect to the Transferred Business, the
Company.

          (j) None of Landec, Seller or, with respect to the Transferred Business, the Company have
received from any Government Tax authority any (i) notice indicating an intent to open an audit or
other review; (ii) request for information related to Tax matters; or (iii) notice of deficiency or
proposed adjustment for any amount of Tax proposed, asserted, or assessed by any Tax authority
against Seller, Landec or, with respect to the Transferred Business, the Company.

          (k) None of Landec, Seller or, with respect to the Transferred Business, the Company has
waived any statutes of limitation in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.

          (l) True, correct and complete copies of all Income Tax Returns, Tax examination reports and
statements of deficiencies assessed against, or agreed to with respect to Seller, Landec and, with
respect to the Transferred Business, the Company for any of the last three years with the IRS (or
any other taxing authority) have been made available to Buyer.

          (m) The Company is not a party to any Contract, arrangement or Plan that has resulted or would
result in a payment that would not be fully deductible as a result of Section 162(m) of the Code
(determined without regard to whether the Company is a publicly held corporation within the meaning
of Section 162(m)(2) of the Code) or Section 280G of the Code (determined without regard to the
reasonableness of any such compensation) or any provision of Law similar to either such provision.

          (n) None of the Transferred Assets is property that the Company is required to treat as being
a “safe harbor lease” within the meaning of Section 168(f)(8) of the Code, as in effect prior to
amendment by the Tax Equity and Fiscal Responsibility Act of 1982.

          (o) None of the Transferred Assets has been financed with or directly or indirectly secures
any debt the interest on which is Tax-exempt under Section 103(a) of the Code. The Company is not
a borrower or guarantor of any outstanding industrial revenue bonds, and the Company is not a
tenant, principal user or related person to any principal user (within the meaning of Section
144(a) of the Code) of any property that has been financed or improved with the proceeds of any
industrial revenue bonds.

          (p) None of the Transferred Assets is “tax-exempt use property” within the meaning of Section
168(h) of the Code.

          (q) The Company will not be required to include any item of income in, or exclude any item of
deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing
Date as a result of any (i) change in method of accounting for a taxable period ending on or prior
to the Closing Date; (ii) “closing agreement” as described in Section 7121 of the Code (or any
corresponding or similar provision of state or local Income Tax Law) executed on or prior to the
Closing Date; (iii) installment sale or open transaction disposition made on or prior to the
Closing Date; or (iv) prepaid amount received on or prior to the Closing

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Date except to the extent
of the amount of deferred revenue constituting a part of the Transferred Liabilities.

          (r) The Company is, and has been since the date of its initial issuance of capital stock, a
member of the affiliated group (within the meaning of Section 1504(a) of the Code or any similar
group defined under a similar provision of state, local or foreign law) of which Landec is the
common parent and the Company will be a member of such affiliated group through and including the
Closing Date. Except for its liability for Taxes of the members of such affiliated group as and to
the extent provided in Treasury Regulation Section 1.1502-6 (or similar provision of state or local
Law), the Company does not have any liability for the Taxes of any Person under Treasury Regulation
Section 1.1502-6 (or similar provision of state or local Law) as a transferee or successor, by
Contract or otherwise.

          (s) Landec is eligible to make an election under Section 338(h)(10) of the Code (or any
comparable election under state, local or foreign tax law) with respect to the Company.

          (t) Neither the Company nor its subsidiaries, if any, have constituted a “distributing
corporation” or a “controlled corporation” within the meaning of Section 355(a)(1)(A) of the Code
in a distribution of stock intended to qualify for tax-free treatment under Section 355 of the
Code.

          (u) Neither the operation of the Business nor the ownership of the Transferred Assets creates
nexus for state Tax purposes in any jurisdiction other than Indiana; provided that the period with
respect to which the representation and warranty in this Subsection (u) is made, and with respect
to which Buyer shall be entitled to rely, shall not extend beyond the Effective
Time, and Buyer shall be responsible for making its own determination regarding such nexus for
all periods after the Effective Time.

     3.8 Accounts Receivable. Set forth on Schedule 3.8 is a true and complete list of
all accounts receivable of the Transferred Business as of October 22, 2006. As used in this
Agreement, “Accounts Receivable” means such accounts receivable and any other accounts
receivable relating to the Transferred Business arising during the period from October 23, 2006 to
the Closing Date. The open orders relating to the Transferred Business will become (i) Accounts
Receivable upon shipment prior to the Effective Time, and (ii) additional accounts receivable of
the Company upon shipment after the Effective Time. The Accounts Receivable are valid, genuine and
existing and arose from bona fide sales of products or services actually made in the Ordinary
Course. Except as set forth on Schedule 3.8, the Accounts Receivable are and will be
current and fully collectible, net of the amount of reserves shown in respect of receivables on the
Interim Balance Sheet.

     3.9 Inventories. The inventory included in the Transferred Assets as of the Closing Date
will comply with the generally applicable industry germination standards, and with the Seller’s
historic germination standards, will not be physically damaged, and will be in compliance with all
applicable Law, whether domestic or foreign, and in conformity with all applicable product
registrations and specifications.

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     3.10 No Breach of Law, Governing Documents, Licenses or Permits. Except as set forth on
Schedule 3.10, (a) neither Seller nor the Company is, in any material respect, in default
under or in breach or violation of any Law or the provisions of any permit, franchise or license
held by it with respect to the Transferred Business, or any provision of its governing documents;
(b) neither the Company nor Seller has received any notice alleging such default, breach or
violation; and (c) neither the execution of this Agreement nor the Closing does or will
constitute or result in any such default, breach or violation.

     3.11 Litigation. Except as set forth on Schedule 3.11, with respect to the
Transferred Business, (a) there is no, and for the previous five years there has not been any,
suit, claim, litigation, proceeding, Government or grand jury investigation, or other action (any
of the foregoing, an “Action”) pending or, to the Knowledge of Landec, Seller or the
Company, threatened, anticipated or contemplated against the Company or involving the Transferred
Business, the real or personal property included in the Transferred Assets, or the Company’s or
Seller’s shareholders, directors, officers, agents, or other personnel in their capacity as such;
(b) Seller and the Company are not nor have been subject to any Order other than Orders of general
applicability; and (c) neither Seller nor the Company has been subject to or, to the Knowledge of
Landec, Seller or the Company, threatened to be subject to, and there are no grounds for, any
Action or Order relating to personal injury, death, or property or economic damage arising from
products sold, licensed or
leased, or services performed, by Seller or Landec, with respect to the Transferred Business, or
the Company.

     3.12 Owned and Leased Real Property.

          (a) Set forth on Schedule 3.12(a) is a list of the real property owned by the Company
(the “Owned Real Property”), together with the legal description of each parcel of Owned
Real Property, a description of the title insurance policy or a description of other evidence of
title issued with respect thereto and a description of the type of use of each such parcel. Except
for Permitted Liens and Liens set forth on Schedule 3.12(a), none of which are substantial
in character or amount and none of which detract from the value or interfere with the use of the
property in any material way, the Company has good and marketable title to the Owned Real Property,
free and clear of all options, rights of first refusal, rights to acquire or occupy, licenses,
restrictions, leases, covenants, conditions, easements, agreements, encumbrances, claims, and other
Liens of every kind and there exists no restriction on the use or transfer of such property. No
shareholder of the Company has any interest in, or any right or obligation to acquire any interest
in, the Owned Real Property. The Company does not lease (as the lessor), sublease or permit any
third party to occupy or use any Owned Real Property.

          (b) Set forth on Schedule 3.12(b) is a description of each lease pursuant to which the
Company is the lessee of any real property (the “Leased Real Property” and, together with
the Owned Real Property, the “Real Property”). The Company has made available to Buyer a
true, correct and complete copy of each lease identified on Schedule 3.12(b). Except as
set forth on Schedule 3.12(b), all rentals due under such leases have been paid and there
exists no default by the Company or by any other party to such leases under the terms of such
leases and no event has occurred which, upon passage of time or the giving of notice, or both,
would result in any event of default by the Company or by any other party to such leases, or
prevent the Company from exercising and obtaining the benefits of any rights or options contained
therein.

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Except as set forth on Schedule 3.12(b), the Company has all right, title and
interest of the lessee under the terms of each lease pursuant to which the Company is the lessee,
free of all Liens other than Permitted Liens, and all such leases are valid and in full force and
effect. The Company does not sublease (as sublessor or sublessee) or permit any third party to
occupy or use any Leased Real Property.

          (c) There is no proposed, pending or threatened change in any code, ordinance, regulation,
standard or zoning classification which would, or may reasonably be expected to have, an adverse
effect on any Owned Real Property or, to the Actual Knowledge of Landec, Seller or the Company, any
Leased Real Property.

          (d) There is no pending or threatened condemnation proceeding against the Owned Real Property
or, to the Actual Knowledge of Landec, Seller or the Company, any Leased Real Property. No part of
any improvements on the Owned Real Property encroaches upon any property adjacent thereto or upon
any easement, nor is there any encroachment or overlap upon the Owned Real Property other than
Permitted Liens. To the Actual Knowledge of Landec, Seller or the Company, no part of any
improvements on the Leased Real Property
encroaches upon any property adjacent thereto or upon any easement, nor, to the Actual
Knowledge of Landec, Seller or the Company, is there any encroachment or overlap upon the Leased
Real Property other than Permitted Liens.

          (e) There has been no cleanup performed on the Owned Real Property which would entitle a third
party to a lien for reimbursement of its cleanup costs. To the Actual Knowledge of Landec, Seller
and the Company, there has been no cleanup performed on the Leased Real Property which would
entitle a third party to a lien for reimbursement of its cleanup costs at any time during which the
leases identified on Schedule 3.12(b) have been in effect or at any other times. No part
of the Owned Real Property or, to the Actual Knowledge of Landec, Seller or the Company, the Leased
Real Property is in a condition which would require a cleanup that could result in such a lien.

     3.13 Personal Property Leases. Set forth on Schedule 3.13 is a description of each
lease relating to leased personal property used in the Transferred Business (the “Leased
Personal Property”) having annual lease payments in excess of $25,000 and the location of such
property. Seller has made available to Buyer a true, correct and complete copy of each lease
identified on Schedule 3.13. Except as set forth on Schedule 3.13, all rentals due
under such leases have been paid and there exists no default by Seller, with respect to the
Transferred Business, by the Company or, to the Knowledge of Landec, Seller or the Company, by any
other party to such leases under the terms thereof and no event has occurred which, upon passage of
time or the giving of notice, or both, would result in any event of default by the Company or, to
the Knowledge of Landec, Seller or the Company, by any other party to such leases, or prevent the
Company from exercising and obtaining the benefits of any rights or options contained therein.
Except as set forth on Schedule 3.13, the Company has all right, title and interest of the
lessee under the terms of each lease pursuant to which Seller or Landec, with respect to the
Transferred Business, or the Company is the lessee, free of all Liens other than Permitted Liens
and all such leases are valid and in full force and effect.

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     3.14 Title to Assets; Necessary Property.

          (a) Except as set forth on Schedule 3.14(a), (i) the Company has good and marketable
title to and is the sole and exclusive owner of all right title and interest in and to all of the
real and personal property used by it to conduct the Transferred Business (limited, however, in
respect of the Leased Real Property and the Leased Personal Property to only the lessee’s interest
upon and subject to the terms and conditions of the leases disclosed on Schedule 3.13 and
Schedule 3.12(b)), including in each case all personal property reflected on the Financial
Statements or acquired after the date thereof (except any personal property subsequently sold in
the Ordinary Course), free and clear of all Liens except Permitted Liens; (ii) there exists no
condition, restriction or reservation affecting the title to or utility of the Transferred Assets
which would prevent the Company or Buyer from utilizing the Transferred Assets after the Closing to
the same full extent that Seller might continue to do so if the transactions contemplated hereby
did not take place (provided, however, to the extent the representation and
warranty in this clause
(ii) shall relate to the Leased Real Property, the same shall be made to the Knowledge of
Landec, Seller or the Company); and (iii) all of the Transferred Assets are suitable for the
purposes for which they are being used and are in good operating condition and repair, subject to
ordinary and normal wear and tear, as reasonably required for their use in the operation of the
Transferred Business as presently conducted. The foregoing representations and warranties shall
not, however, apply to the Intellectual Property, and the only representations and warranties of
Seller and Landec regarding the Intellectual Property are set forth in Section 3.19.

          (b) Except for the Excluded Assets, the Transferred Assets constitute all of the property and
property rights used in or necessary to operate the Transferred Business in the manner and to the
extent conducted by the Seller.

     3.15 Licenses and Permits. Except as set forth on Schedule 3.10 and/or
Schedule 3.17(a), Seller, with respect to the Transferred Business, and the Company are in
compliance in all material respects with all licenses, permits and other authorizations and
approvals required for the conduct of the Transferred Business and upon Closing the Company will
have all right and authority to conduct its activities pursuant to such licenses and permits. No
such license or permit has been, or, to the Knowledge of Landec, Seller or the Company, is
threatened to be, revoked, canceled, suspended or modified.

     3.16 Environmental Matters. Except as set forth on Schedule 3.16:

          (a) The operations of the Transferred Business comply with, and have been in compliance with,
all Environmental Laws. Seller, with respect to the Transferred Business, and the Company have,
and have had, all licenses, permits, authorizations, registrations and other approvals required
under any Environmental Law and required for the operation of the Transferred Business, and Seller
and the Company are, and have been, in compliance with all terms and conditions thereof. Neither
Seller nor the Company, nor any of the properties or operations of the Transferred Business, is
subject to any written order from or agreement with any Government authority, nor subject to any
proceeding, respecting any Environmental Law, Environmental Claim or Hazardous Material. Neither
Seller nor the Company nor Landec has received any communication in any form from a Government
agency or other third party alleging that the Company, the Transferred Business, or Seller with
respect to the Transferred Business,

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is, or was, not in compliance with any Environmental Law. To
the Knowledge of Landec, Seller or the Company, there are no circumstances that may prevent or
interfere with compliance by Buyer or the Company with any Environmental Laws or anticipated
changes in Environmental Laws applicable to the operations of the Transferred Business after
Closing. There are no Hazardous Materials or other conditions or circumstances existing with
respect to any property, arising from operations or relating to any Hazardous Material or waste
disposal or release, of the Transferred Business that would reasonably be expected to result,
either individually or in the aggregate, in a material Environmental Claim. Seller and, with
respect to the Transferred Business, the Company do not have any underground storage tanks that
are, nor previously had any underground storage tanks that were, not properly registered or
permitted under applicable
Environmental Laws or that at any time have released, leaked, disposed of or otherwise
discharged Hazardous Materials. There are no asbestos containing materials or PCBs on the Owned
Real Property or, to the Knowledge of Landec, Seller or the Company, the Leased Real Property.
Seller has made available to Buyer true and accurate copies of all safety and environmental reports
and investigations of the current and previous operations of the Transferred Business.

          (b) The Company has not assumed the liability of any other Person, nor has the Company agreed
to indemnify any other Person, for claims arising out of the release of Hazardous Materials into
the environment or any other claims under Environmental Laws.

          (c) None of the Owned Real Property or, to the Actual Knowledge of Landec, Seller or the
Company, the Leased Real Property is located on, adjacent to or adjoining any area that is or may
be considered a wetland under the federal Clean Water Act (33 U.S.C. § 1251 et seq.) or any other
Environmental Law.

     3.17 Contracts and Commitments.

          (a) Schedule 3.17(a) lists all of the following Contracts, whether written or oral, to
which the Company is a party or which relate to the Transferred Business (“Material
Contracts”):

          (i) Any Contract providing for the sale of products or the provision of services by
Seller (with respect to the Transferred Business) or the Company in excess of $50,000;

          (ii) Any Contract providing for an expenditure by Seller (with respect to the
Transferred Business) or the Company in excess of $50,000;

          (iii) any license agreement pursuant to which Seller or the Company, as licensee or
licensor, licenses any Transferred Germplasm, any traits included in any Transferred
Germplasm, or any other Intellectual Property;

          (iv) Any purchase commitment in excess of the normal requirements of the Transferred
Business or at a price in excess of the current reasonable market price at the time of such
commitment;

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           (v) Any power of attorney granted by Seller, with respect to the Transferred Business,
or the Company to any Person;

           (vi) Any loan agreement, indenture, promissory note, conditional sales agreement,
mortgage, security agreement, pledge, letter of credit arrangement, guarantee or other
similar type of agreement;

           (vii) Any arrangement or other agreement (not otherwise required to be listed on
Schedule 3.17(a) under any other clause of this Section 3.17(a)) which involves
(A) a sharing of profits, (B) future payments of $50,000 or more per annum to other
Persons, or (C) any joint venture, partnership or similar Contract or arrangement;

          (viii) Any sales agency, sales representation, consultant, distributorship or franchise
agreement that is not terminable by the Company without penalty within 60 days;

          (ix) Any Contract providing for the payment of any cash or other benefits upon the sale
or change of control of the Company or the sale of a substantial portion of the Company’s or
the Seller’s assets;

          (x) Any Contract prohibiting competition, prohibiting the Company from freely engaging
in any business anywhere in the world, or prohibiting the disclosure of trade secrets or
other confidential or proprietary information;

          (xi) Any Contract or commitment not made in the Ordinary Course; or

          (xii) Any other Contract or commitment which is not cancelable by the Company without
penalty on 60 days’ notice or less.

          (b) Neither Seller nor Landec, with respect to the Transferred Business, nor the Company has
received any notice of any intention to terminate, repudiate or disclaim any Material Contract.

     3.18 Validity of Contracts. Except as set forth on Schedule 3.18, (a) each of the
Material Contracts is a valid, binding and enforceable obligation of the Company and, to the
Knowledge of Landec, Seller or the Company, the other parties thereto, in accordance with its terms
and conditions; and (b) neither Seller, with respect to the Transferred Business, nor the Company
is, and, to the Knowledge of Landec, Seller or the Company, no other party to a Material Contract
is, in breach or default under any Material Contract. Seller has delivered to Buyer a true,
complete and accurate copy of each Material Contract.

     3.19 Intellectual Property. Schedule 3.19 accurately describes and lists all (i)
Intellectual Property owned by the Company (other than unregistered copyrights) and (ii) all
licensed Intellectual Property included in the Transferred Assets or material to the Transferred
Business (collectively, together with any unregistered copyrights included in the Transferred
Assets, the “Transferred IP”). Except as set forth on Schedule 3.19:

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          (a) The Company is the sole owner of the Transferred IP identified on such Schedule as owned
by it, free and clear of all Liens except Permitted Liens, and all such items are valid, subsisting
and enforceable;

          (b) To the Actual Knowledge of Landec, Seller or the Company, the Transferred IP licensed to
the Company is valid, subsisting and enforceable;

          (c) The Transferred IP encompasses all proprietary rights necessary for the operation of the
Transferred Business as currently conducted;

          (d) Seller, the Company and, to the Actual Knowledge of Landec, Seller or the Company, the
owners of the Transferred IP licensed to the Company have taken all customary and reasonable
actions to maintain and protect the Transferred IP;

          (e) There has been no claim made or, to the Knowledge of Landec, Seller or the Company,
threatened against Seller or the Company asserting the invalidity, misuse or unenforceability of
any of the Transferred IP or challenging Seller’s or the Company’s right to use or ownership of any
of the Transferred IP, and there are no valid grounds for any such claim or challenge with respect
to Transferred IP owned by the Company or, to the Actual Knowledge of Landec, Seller or the
Company, with respect to Transferred IP licensed to the Company;

          (f) No loss of any of the Transferred IP is pending or, to the Knowledge of Landec, Seller or
the Company, threatened;

          (g) The consummation of the transactions contemplated by this Agreement will not alter, impair
or extinguish the Company’s rights in and to any of the Transferred IP;

          (h) There exists no restriction on the Company’s use of the Transferred IP, or on the transfer
of any rights of the Company in and to any of the Transferred IP, and the Company has the right to
use each item of Transferred IP without obligations to third parties other than obligations arising
under the terms and provisions of the license agreements disclosed on Schedule 3.17(a)
under which any of the Transferred IP is licensed;

          (i) The conduct of the Transferred Business and operations of the Company and the ownership,
production, purchase, sale, licensing and use of the Company’s products do not, to the Knowledge of
Landec, Seller or the Company in the case of owned Transferred IP (except in respect of the CRM
System, as to which such Knowledge qualification shall not apply) or to the Actual Knowledge of
Landec, Seller or the Company in the case of Transferred IP licensed to the Company, contravene,
conflict with, violate or infringe upon any Intellectual Property of a third party or the terms of
any license with respect thereto, and no proprietary information or trade secret has been
misappropriated by Seller or the Company from any third party; and

          (j) The Transferred IP and the products of the Transferred Business are not subject to a
current claim of infringement, interference or unfair competition or other claim and, to the
Knowledge of Landec, Seller or the Company in the case of owned Transferred IP (except in respect
of the CRM System, as to which such Knowledge qualification shall not apply) or to

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the Actual
Knowledge of Landec, Seller or the Company in the case of Transferred IP licensed to the Company,
the Transferred IP is not being infringed upon or violated by any third party.

     3.20 Germplasm. Schedule 3.20 accurately describes the Germplasm included in the
Transferred Assets (the “Transferred Germplasm”). Except as set forth on Schedule
3.20:

          (a) The Company (i) is the sole legal and beneficial owner of and is entitled to use the
Transferred Germplasm and all related Intellectual Property rights or (ii) has been granted, by a
written agreement, all such rights as may be required in connection with the use by the Company of
the Transferred Germplasm;

          (b) Seller and the Company have not used in connection with the Transferred Germplasm any
Intellectual Property rights (including Know How) of any third party, other than those rights
licensed to Seller or the Company by a written agreement for use in the Transferred Germplasm; and

          (c) The acquisition and use of the Transferred Germplasm by Seller and the Company prior to
and as of the Closing Date (i) did not, to the Actual Knowledge of Landec, Seller or the Company,
infringe on the Intellectual Property rights of any third party or involve the misappropriation of
Know How of any third party; (ii) was not in breach of any confidential, fiduciary, partnership,
master-servant or agency relationship arising under Law applicable to Landec, Seller or the
Company; (iii) was not in breach of any obligation arising under any Contract to which Seller or
the Company is or has been a party; (iv) was not, to the Actual Knowledge of Landec, Seller or the
Company, in breach of any obligation arising under any Contract to which neither Seller nor the
Company is or has been a party; (v) did not involve any trespass to land or buildings used or
occupied by third parties; and (vi) was not and is not otherwise in violation of any Laws.

     3.21 Genetically Modified Organisms.

          (a) Schedule 3.21 sets forth complete details of the procedures performed by or on
behalf of Seller or the Company to minimize the possibility of unapproved GMOs existing in any
Transferred Germplasm and of assessments made by or on behalf of Seller or the Company as to the
effectiveness of such procedures and steps taken to implement such procedures. Seller and the
Company have, since the introduction of such procedures, operated in accordance with the terms of
such procedures and, other than with respect to ongoing improvements to them, has not deviated from
such procedures or failed to implement such procedures in connection with the use by Seller or the
Company of any Transferred Germplasm.

          (b) No unapproved GMOs, including any StarLink presence, exist or have existed in any of the
seed currently being sold, or which has been sold, commercially by Seller or the Company; provided
that the representation in this paragraph shall not be applicable to any seed purchased by the
Seller or the Company from the Buyer or its Affiliates.

     3.22 Insurance. Seller and the Company have at all times maintained insurance as required
by Law or under any Contract relating to the Transferred Business, including general comprehensive
liability, unemployment and workers’ compensation coverage. Schedule 3.22 accurately
describes the insurance (other than pursuant to a Plan) maintained by Seller and the

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Company with
respect to the Transferred Business. Such policies evidence insurance in such amounts and against
such risks and losses as are generally maintained with respect to comparable companies and
properties. All of such insurance policies are in full force and effect, and neither Seller nor
the Company is in default with respect to any of its obligations under any of such insurance
policies.

     3.23 Employees, Officers, Directors and Consultants.

          (a) A true, correct and complete list of each current employee of the Transferred Business and
position held is set forth on Schedule 3.23(a). A true, correct and complete schedule of
the following information for each such employee, including each employee on leave of absence or
layoff status, has been delivered to Buyer: name, job title, current compensation paid or payable,
any change in compensation not yet effective, and vacation accrued.

          (b) Schedule 3.23(b) lists: (i) all current directors of the Company, (ii) all current
officers (with office held) of the Company, and (iii) all current paid consultants to the Company.

          (c) Except as set forth on Schedule 3.23(c), the Company does not have any benefits
responsibility or other continuing or contingent obligation to any retirees or terminated employees
of the Transferred Business.

          (d) The Company is not indebted to any shareholder, director, officer, employee or agent of
the Company, except for amounts due as normal salaries, wages, employee benefits and bonuses, and
in reimbursement of ordinary expenses on a current basis to employees.

          (e) No officer, director, employee or consultant of the Company is indebted to the Company
except for advances for ordinary business expenses on a basis consistent with past practices.

          (f) All payments to agents, consultants and others performing services for or in connection
with the Transferred Business made by Seller or the Company have been in payment of bona fide fees
and commissions and not as bribes, kickbacks or as otherwise illegal payments.

          (g) Except as set forth on Schedule 3.23(g), no former or current employee or current
or former officer or director of the Company is a party to, or is otherwise bound by, any agreement
or arrangement, including any confidentiality, non-competition or proprietary rights agreement,
between such employee, officer or director and any other Person that in any way adversely affected,
affects or may affect (i) the performance of his or her duties as an employee, officer or director
of the Company, or (ii) the ability of the Company or Buyer to conduct the Transferred Business.
To the Knowledge of Landec, Seller or the Company, no director, officer or other current and active
employee of the Company intends to terminate his or her employment with the Company.

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     3.24 Bank Accounts of the Company. Set forth on Schedule 3.24 is a list of the locations and numbers of all bank accounts,
investment accounts and safe deposit boxes maintained by the Company, together with the names of
all persons who are authorized signatories or have access thereto or control thereof.

     3.25 Transactions with Related Persons; Affiliates.

          (a) The Company does not have any entity Affiliates other than Seller and its Affiliates.

          (b) The Company does not have any Liabilities, contractual or otherwise, owed to or owing
from, directly or indirectly, the Seller, or any Affiliate of the Company or of Seller.

          (c) Except for (i) an ongoing business relationship between the Retained Business and the
Company and (ii) any employment relationship with the Company, neither Seller nor, to the Knowledge
of Landec, Seller or the Company, any immediate family members of any director, officer or
individual-Affiliate of the Company, will have any on-going business relationship with or other
financial interest in the Transferred Business following the Closing, whether direct or indirect.

     3.26 Labor Matters. Except as set forth on Schedule 3.26:

          (a) The Company is not a party to or bound by any collective bargaining, union representation
or similar agreement or arrangement, and no collective bargaining agreement is currently being
negotiated nor is any organizing effort currently being made with respect to the employees of the
Company;

          (b) There is no controversy existing, pending or, to the Knowledge of Landec, Seller or the
Company, threatened with any association or union or collective bargaining representative of the
employees of the Company;

          (c) The Company is not engaging and Seller and the Company have not engaged in any unfair
labor practice and there is no charge or complaint relating to unfair labor practices pending
against Seller or the Company, nor is there any labor strike, work stoppage, slowdown, material
grievance or other labor dispute pending or, to the Knowledge of Landec, Seller or the Company,
threatened against Seller or the Company;

          (d) No right of representation exists respecting the employees of the Company; and

          (e) There is no contract of service in force between the Company and any director, officer or
employee of the Company or the Transferred Business which is not terminable by the Company without
compensation on not more than three months’ notice given at any time or which provides for
compensation specifically in connection with the transactions
contemplated by this Agreement. There are no consultancy or management services agreements in
existence between the Company and any other Person.

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     3.27 Employee Benefit Matters.

          (a) Plans. Except for the Plans set forth on Schedule 3.27(a) (the “Company
Plans”), the Company neither is nor has been a party to or otherwise has any Liability with
respect to any Plan.

          (b) Disclosure. To the extent applicable with respect to each Company Plan, true, correct and
complete copies of the most recent documents described below have been delivered or made available
to Buyer: (i) IRS determination letter and any outstanding request for a determination letter; (ii)
Form 5500 for the three most recent plan years; (iii) all plan documents and amendments and any
written policies and/or procedures used in plan administration; (iv) current summary plan
descriptions and any summaries of material modifications; and (v) administrative service
agreements, HIPAA business associate agreements, related trust agreements, annuity contracts an
other funding instruments.

          (c) Prohibited Transactions and Qualified Status. With respect to each Company Plan, no
prohibited transactions (as defined in ERISA Section 406 or Code Section 4975) and no violations of
ERISA Section 407 have occurred. Each Company Plan (and its related trust) that is intended to
qualify under Code Section 401(a) and to be tax-exempt under Code Section 501(a), if any, is so
qualified under and has been determined by the IRS to qualify thereunder for all applicable
requirements and nothing has since occurred to cause the loss of the Plan’s qualification. Each
Company Plan and related funding instrument complies with and has been administered, operated and
maintained in compliance with its terms and applicable law, and neither the Seller, Landec nor the
Company has any liability under any applicable law with respect to a Company Plan. Each such
Company Plan that is intended to qualify under Code Section 401(a) is set forth on Schedule
3.27(c).

          (d) Claims/Liability. There is no pending or, to the Knowledge of Landec, Seller, or the
Company, threatened Action involving any Company Plan and no facts exist that would give rise
thereto, other than routine claims for benefits. Neither the Company nor any of its directors,
officers, employees or any plan fiduciary has any Liability for failure to comply with ERISA,
HIPAA, COBRA or the Code. The Company has no Liability by virtue of its being a member of a
controlled group with a Person who has Liability under the Code or ERISA. All contributions and
insurance premiums, including premiums to the PBGC, due on or prior to Closing have been paid in
full with respect to each applicable Plan, and the Company has no Liability in connection with any
such contributions or premiums due on or prior to Closing or by virtue of being a member of a
controlled group with a person who has any such Liability.

          (e) Title IV Pension Plans. Neither Seller nor Landec nor the Company has made or been
required to make any contributions to, nor may have any liability with respect to, any Pension Plan
which is subject to the provisions of Title IV of ERISA. On and after the Closing Date, neither
Buyer nor the Company shall have any obligation to provide any particular
employee benefit plan as a result of any Company Plan or action taken by Landec, Seller or the
Company prior to Closing. Seller and Landec, with respect to the Transferred Business, the Company
have never contributed to nor had any Liability with respect to a multiple employer plan, and the
Company would not become subject to any Liability if any multiple employer plan were to terminate
or the Company were to withdraw from any multiple employer plan as of the

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Closing Date. Neither
Seller nor Landec nor the Company nor any Affiliate of Seller, Landec or the Company has ever made
any contributions to any multiemployer plan (as defined in ERISA Section 3(37) or 4001(a)(3)).

          (f) Severance Plans. The consummation of the transaction contemplated by this Agreement will
not (i) entitle any current or former employee of the Transferred Business to severance pay,
unemployment compensation or any other payment, (ii) accelerate the time of payment or vesting, or
increase the amount of any compensation due to any current or former employee of the Company, or
(iii) give rise to the payment of any amount that would not be deductible pursuant to Code Section
280G.

          (g) Terminated Plans. Any action taken by Seller, Landec or the Company to terminate (in part
or in whole) any employee benefit plans, as defined in ERISA Section 3(3) has been carried out in
all material respects in accordance with all provisions of applicable Law, including without
limitation all applicable provisions of ERISA and the Code. The Company has no liability with
respect to any terminated employee benefit plan as defined in ERISA Section 3(3).

          (h) Retiree Welfare. The Company has no Liability or obligation to provide life, medical or
other welfare benefits to former or retired employees, other than under Laws requiring the
continuation of medical benefits, including COBRA or any applicable state Law.

     3.28 Books and Records. True, correct and complete copies of the books of account, stock
record books, minute books, bank account records, and other corporate records of Seller (and Landec
with respect to any such Tax records), to the extent relating to the Transferred Business, and of
the Company in existence on the date hereof have been made available to Buyer and such books and
records have been maintained in accordance with good business practices. The minute books of
Seller, to the extent relating to the Transferred Business, and the Company contain accurate and
complete records of all meetings of, and corporate action taken by, the shareholders, the Board of
Directors, and committees of the Board of Directors, of each, to the extent relating to the
Transferred Business, and no meeting of any such shareholders, Board of Directors, or committee has
been held for which minutes or written consents have not been prepared and are not contained in
such minute books. At the Closing, all such books and records will be in the possession of the
Company and delivered to Buyer.

     3.29 Brokers, Finders. No finder, broker, agent or other intermediary, acting on behalf of
the Company, the Seller or Landec, is entitled to a commission, fee or other compensation in
connection with the negotiation or consummation of this Agreement or any of the transactions
contemplated hereby.

     3.30 Disclosure. No representation or warranty by Seller or Landec in this Agreement, or
any Exhibit or Schedule referred to herein or in any agreement to be delivered hereunder, and no
statement, certificate or other information furnished to Buyer by or on behalf of Seller or Landec
pursuant hereto or thereto, to the Knowledge of the Seller or Landec (or Actual Knowledge of Seller
or Landec in the case of each representation or warranty qualified by Actual Knowledge), contains
any untrue statement of a material fact or any omission of a material fact

28

 

necessary to make the
respective statements contained herein and therein, in the light of the circumstances under which
the statements were made, not misleading.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF BUYER

     Buyer hereby makes the following representations and warranties to Seller, each of which is
true and correct on the date hereof and shall survive the Closing Date and the transactions
contemplated hereby to the extent set forth herein.

     4.1 Corporate Existence and Power.

          (a) Buyer is a corporation, validly existing and in good standing under the Laws of the State
of Delaware.

          (b) Buyer has the corporate power to enter into this Agreement, to perform its obligations
hereunder, and to consummate the transactions contemplated hereby.

          (c) Buyer is not a party to, subject to or bound by any Contract, Law or Order which would (i)
be breached or violated by the execution or delivery by Buyer of this Agreement or the performance
by Buyer of the transactions contemplated by this Agreement, or (ii) prevent the carrying out of
the transactions contemplated hereby. Except as otherwise provided for herein, no waiver or
consent of any third person or Government authority is required for the execution by Buyer of this
Agreement, or the consummation by Buyer of the transactions contemplated hereby.

     4.2 Valid and Enforceable Agreement; Authorization; Non-Contravention. This Agreement has
been duly executed and delivered by Buyer and constitutes a legal, valid and binding obligation of
Buyer, enforceable against it in accordance with its terms, except that such enforcement may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting
or relating to enforcement of creditors’ rights generally, and (ii) general principles of equity.
The execution and delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary action on the part of Buyer.

     4.3 Compliance with Securities Law. Buyer is acquiring the Shares for investment and not with a view to distribution thereof, and
will not sell, offer for sale, pledge, transfer or otherwise dispose of the Shares or any interest
therein except in compliance with the Securities Act of 1933, as amended, and any other applicable
federal and state securities Laws.

     4.4 Brokers, Finders. Except as set forth on Schedule 4.4, no finder, broker,
agent or other intermediary, acting on behalf of Buyer, is entitled to a commission, fee or other
compensation in connection with the negotiation or consummation of this Agreement or any of the
transactions contemplated hereby. Buyer will be solely responsible for payment of any commission,
fee or other compensation earned by any such finder, broker, agent or other intermediary of Buyer.

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ARTICLE 5

ADDITIONAL COVENANTS OF THE PARTIES

     5.1 Covenant Not to Compete.

          (a) Non-Compete. Seller and Landec acknowledge and agree that the reputation and goodwill
associated with the Transferred Business are an integral part of the success of the Transferred
Business throughout the United States and Canada (the “Territory”). Seller and Landec
further acknowledge that if either of them deprive Buyer of the goodwill of the Transferred
Business or in any manner utilizes the reputation and goodwill of the Transferred Business in
competition with Buyer, Buyer will be deprived of the benefits it has paid for pursuant to this
Agreement. Accordingly, as an inducement for Buyer to enter into this Agreement, Seller and Landec
agree that for a period ending five (5) years after the Closing Date (the “Non-competition
Period”), except for the benefit of Buyer as contemplated by other agreement entered into in
connection herewith, Seller and Landec shall not, without Buyer’s prior written consent, directly
or indirectly, own, manage, operate, assist, join, control or participate in the ownership,
management, operation or control of, or be connected as a director, officer, employee, partner,
consultant or otherwise with, any business in the Territory that, directly or indirectly, competes
with the Transferred Business in relation to any row crops(excluding vegetables) as conducted
immediately prior to the Closing. In addition, during the Non-competition Period neither Seller
nor Landec shall have an equity interest in any such Person other than as a 5% or less shareholder
of a public corporation. In the event the agreement in this Section 5.1 shall be determined by a
court of competent jurisdiction to be unenforceable by reason of its extending for too great a
period of time or over too great a geographical area or by reason of its being too extensive in any
other respect, it shall be interpreted to extend only over the maximum period of time for which it
may be enforceable and/or over the maximum geographical area as to which it may be enforceable
and/or to the maximum extent in all other respects as to which it may be enforceable, all as
determined by such court in such action.

          (b) No Solicitation. During the Non-competition Period, neither Seller nor Landec shall,
without the prior written consent of Buyer, (i) directly or indirectly solicit any Person that is a
customer of the Transferred Business to become a customer of any other Person
for products or services the same as, or competitive with, the products and services of the
Transferred Business as of the Closing Date, or products or services in any stage of development by
the Transferred Business as of the Closing Date or (ii) directly or indirectly solicit any Person
that currently is or at any time during the Non-competition Period shall be an employee, agent or
consultant of or to the Transferred Business to leave the Transferred Business.

          (c) Confidential Information. Seller and Landec acknowledge that the Confidential Information
relating to the Transferred Business is valuable and proprietary to the Transferred Business and
agree not to, directly or indirectly, use, publish, disseminate or otherwise disclose any
Confidential Information without the prior written consent of Buyer, unless, in the opinion of its
counsel, it is legally compelled or required to make such disclosure; provided, that, in the event
it is so compelled or required to make such disclosure, it will provide the Buyer with prompt
written notice thereof, and cooperate with Buyer, so that the parties may seek a protective order,
confidentiality treatment or other appropriate remedy to prevent or limit such disclosure. If such
protective order or other remedy is not obtained, Seller or Landec shall

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furnish only that portion
of the Confidential Information or such other information that it is advised by counsel is legally
required to be disclosed. For purposes of this Agreement, the term “Confidential Information” means
Intellectual Property and other information not publicly available or generally available to the
industry, which relates to specific matters concerning the Transferred Business.

          (d) Remedies. Seller and Landec acknowledge that a breach of the covenants contained in this
Section 5.1 would be likely to cause irreparable damage to Buyer, the exact amount of which will be
difficult to ascertain, and that the remedies at law for any such breach will be inadequate.
Accordingly, Seller and Landec agree that if any Person breaches the covenants contained in this
Section 5.1, in addition to any other remedy that may be available at law or in equity, Buyer shall
be entitled to specific performance and injunctive relief, without posting bond or other security.

          (e) Retained Business. For the avoidance of doubt, the ownership, management, operation or
control by Seller or Landec of the Intellicoat® Seed Coatings business as currently conducted by
Seller shall not constitute a violation of the restrictive covenants in this Section 5.1.

     5.2 Taxes.

          (a) All transfer, documentary, sales and other such Taxes, whether imposed on Buyer, Seller,
Landec or the Company, incurred in connection with consummation of the transactions contemplated by
this Agreement, shall be borne by Landec when due, and Landec will, at its own expense, file all
necessary Tax Returns and other documentation with respect to all such Taxes and, if required by
applicable Law, Buyer will, and will cause its Affiliates to, join in the execution of any such Tax
Returns and other documentation. Landec shall remain liable for any Income Taxes imposed on
Landec, the Seller and/or the Company as a result of the transactions contemplated by this
Agreement, or the transactions carried out by Seller in contemplation of this Agreement.

          (b) Landec shall prepare or cause to be prepared, and file or cause to be filed, all Income
Tax Returns of the Company for any taxable year or period ending on or before the Closing Date
(“Pre-Closing Periods”). Such Income Tax Returns will be prepared in a manner consistent
with prior Income Tax Returns of Seller, Landec and the Company to the extent permitted by
applicable Law. Landec shall permit Buyer to review and comment on such Income Tax Returns prior
to filing. All other Tax Returns which include any Pre-Closing Period shall be prepared by Buyer.
All Taxes payable with respect to Pre-Closing Periods shall be borne by Landec and promptly
remitted to Buyer.

          (c) Buyer, Seller and Landec shall furnish or cause to be furnished to each other, upon
request, as promptly as practicable, such information (including reasonable access to books and
records, Tax Returns and Tax filings) and assistance as is reasonably necessary for the filing of
any Tax Return, the conduct of any Tax audit, and for the prosecution or defense of any claim, suit
or proceeding relating to any Tax matter. Buyer, Seller and Landec shall cooperate with each other
in the conduct of any Tax audit or other Tax proceedings and each shall execute and deliver such
powers of attorney and other documents as are necessary to carry out the intent

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of this Section
5.2. Any Tax audit or other Tax proceeding shall be deemed to be a Third Person Claim subject to
the procedures set forth in Article 6 of this Agreement.

          (d) At Closing, Buyer and Landec shall join in making an election under Section 338(h)(10) of
the Code (and any corresponding election under state and local Tax Law) with respect to the
purchase and sale of the Shares (a “338(h)(10) Election”). The Parties will timely file
such forms with the IRS and state and local Taxing authority as may be required with their
respective Tax Returns for the periods that include the Closing Date and otherwise to make
effective the 338(h)(10) Election. The Parties shall allocate the Purchase Price to the Shares.
Following Closing, Buyer shall submit an allocation of the Aggregate Consideration among the assets
of the Company on IRS Form 8883 (such allocation having been prepared in accordance with Section
1060 of the Code and Section 338 of the Code) to Seller for its approval, which approval shall not
be unreasonably withheld, conditioned or delayed. The term “Aggregate Consideration” means the sum
of the Purchase Price, the liabilities of the Company and all other items required for federal
income tax purposes to be included in the amount realized pursuant to the 338(h)(10) Election. The
Parties shall report the transactions consummated pursuant to this Agreement in a manner consistent
with such allocation on all Tax Returns. Each Party agrees that it will (i) be bound by this
allocation for the purposes of determining any Taxes, (ii) report for Tax purposes the transactions
consummated pursuant to this Agreement in a manner consistent with this allocation, (iii) timely
file a copy of the attached IRS Form 8883 with its appropriate federal and other Tax Return, and
(iv) not take a position for Tax purposes that is inconsistent with such allocation on any
applicable Tax Return or in any proceeding before any governmental authority except with the prior
written consent of the other Party. In the event that the allocation is disputed by any
Governmental authority, the Party receiving notice of such dispute will promptly notify the other
Party and the Parties will consult in good faith how to resolve such dispute in a manner consistent
with the allocation.

          (e) Prior to Closing, all intercompany balances due to or from the Company on the one hand,
and Seller, Landec or any Affiliate of either of them on the other hand, shall have been cancelled
or otherwise satisfied.

     5.3 Employee Matters.

          (a) As of the Effective Time, all employees of the Transferred Business listed on Schedule
3.23(a) shall be deemed to be employees of the Company and, as among the Company, Seller and
the Buyer, shall no longer be deemed to be employees of Seller, except for any such employees who
may elect not to accept employment with the Company.

          (b) For a period of two (2) years following the Closing Date, Buyer shall not, and shall not
permit any Affiliate to, reduce the base salary of any current employee of the Transferred Business
who remains employed by the Company during such two year period.

          (c) Prior to Closing, Seller shall cause the Company to cease to be a participating employer
under, and to terminate its sponsorship of, each Company Plan. Any such action shall be carried
out in all material respects in accordance with all provisions of applicable Law, including without
limitation all applicable provisions of ERISA and the Code. In the event of a termination of
sponsorship of any Company Plan results in a Company Plan termination,

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Seller shall file the final
annual report and submit an application to the IRS for a favorable determination letter, if
applicable. Neither Buyer nor the Company shall be responsible for any liability associated with
or arising from, directly or indirectly, any Company Plan or the Company’s withdrawal from or
termination of any Company Plan, and Seller shall retain any such liability; provided, however,
that (i) (A) Seller shall be entitled to fund its payment of liabilities under its paid-time-off
Company Plan accrued as of the Effective Time in respect of employees of the Transferred Business
with an advance drawn prior to the Effective Time under the Credit Agreement, and (B) such advance
shall constitute a Transferred Liability for which Company shall be responsible after the Effective
Time; and (ii) the Company will be responsible for the obligations arising during or attributable
to any period after the Effective Time under the employment agreements listed on Schedule
3.26.

          (d) With respect to each employee of the Transferred Business who (i) participates in Landec’s
401(k) Plan, (ii) continues to be employed by the Company immediately after Closing, and (iii)
elects to have his or her account balance in Landec’s 401(k) Plan directly rolled over to Buyer’s
401(k) Plan, Buyer agrees to cause such 401(k) Plan to accept a direct rollover of the employee’s
account balance. In no event shall Buyer’s 401(k) Plan be required to accept any outstanding loans
under Landec’s 401(k) Plan. “Buyer’s 401(k) Plan” shall mean any 401(k) plan of an affiliate of
Buyer in which such employees of the Transferred Business are eligible to participate.

          (e) Neither Buyer nor the Company shall have any liability with respect to any Plan set forth
on Schedule 3.27(a) except as and to the extent provided in clauses (i) and (ii) of the
last sentence of Section 5.3(c). Seller shall be responsible for the continuation of health plan
coverage, in accordance with the requirements of COBRA and Sections 601 through 608 of ERISA, for
any employee of Seller or the Company or qualified beneficiary under a Seller, Landec or Company
health plan (i) who, prior to the Effective Time, is receiving, or is entitled to receive, COBRA
benefits or (ii) who loses health coverage in connection with the transactions contemplated in this
Agreement.

          (f) Except as and to the extent provided in clause (i) of the last sentence of Section 5.3(c),
neither Buyer nor Company shall be responsible for any liabilities or obligations to current or
former employees of the Seller, Landec or the Transferred Business that arise during or are
attributable to any period prior to the Effective Time, including the COBRA and severance
obligations set forth on Schedules 3.23(c).

     5.4 Books and Records. From and after the Closing, Buyer shall provide Seller and its
representatives and Seller (and Landec with respect to any Tax books and records) shall provide
Buyer and its representatives with reasonable access, for any reasonable purpose, during normal
business hours, to all relevant books and records in their respective possession related to the
Transferred Business pertaining to the period prior to the Effective Time. Buyer and Seller (and
Landec with respect to any Tax books and records) shall maintain such books and records in
accordance with their respective record retention policies.

     5.5 Public Announcements. No press release or other public statement concerning the
negotiation, execution and delivery of this Agreement or the transactions contemplated hereby shall
be issued or made without the prior approval of Seller and Buyer (which approval shall not

33

 

be
unreasonably withheld), except as required by the rules of the New York Stock Exchange, NASDAQ or
applicable Law.

     5.6 Financial and IT Services During Transition. During a transition period of no
more than six (6) months after the Closing Date (the “Transition Period”), Buyer will cause
the Company to provide, from the Company’s headquarters in Monticello, Indiana, all of the
financial and accounting services and information technology support required for Seller to
continue to operate the Retained Business as it has in the past, at no cost to Seller. In
addition, during the Transition Period, Landec will provide, from Landec’s operating facilities in
Menlo Park, California, all of the general ledger requirements for the Company to operate the
Transferred Business as it has been operated in the past, at no cost to the Company. Landec and
Buyer will work together to develop financial and information technology systems for Seller and
accounting systems for the Company to be implemented after the Transition Period.

     5.7 Further Assurances; Cooperation. From and after the Closing, the Parties shall do such
acts and execute such documents and instruments as may be reasonably required to make effective the
transactions contemplated hereby. On or after the Closing Date, the Parties shall, on request,
cooperate with one another by furnishing any additional information, executing and delivering any
additional documents and instruments, including Contract assignments, and doing any and all such
other things as may be reasonably required by the Parties or their counsel to consummate or
otherwise implement the transactions contemplated by this Agreement, to put Buyer or the Company in
actual possession and operating control of all Transferred Assets, including the transfer of any
assets of Seller principally related to the seed marketing and sales business and operations of the
Company and
to permit Buyer or the Company to exercise all rights and to perform all obligations with respect
to all Transferred Assets.

     5.8 Waiver. Effective upon the Closing, Seller hereby irrevocably waives, releases and
discharges Buyer, the Company and any of their respective Affiliates from any and all liabilities
and obligations to each of them of any kind or nature whatsoever, in its capacity as a direct or
indirect shareholder, manager, member, officer or director of the Company, as applicable, in each
case whether absolute or contingent, liquidated or unliquidated, known or unknown, and whether
arising under any agreement or understanding (other than this Agreement and any of the other
agreements executed and delivered by Buyer in connection herewith) or otherwise at law or equity,
and Seller agrees that it shall not seek to recover any amounts in connection therewith or
thereunder from any of Buyer, the Company or any of their respective Affiliates; provided, that the
waivers contained in this Section 5.8 shall not apply to (i) claims against Buyer asserted pursuant
to this Agreement or (ii) any claims for which the facts or circumstances giving rise to such claim
first arise following Closing.

     5.9 Termination of Insurance Policies. Seller shall be entitled to terminate, effective as
of the Effective Time, all coverage applicable to the Transferred Business and the Company under
the insurance policies listed on Schedule 3.22.

     5.10 Collections of Receivables; Bank Accounts. The Seller will promptly remit to the
Company, under arrangements reasonably satisfactory to the Company, any payments received by the
Seller or its Affiliates following the Closing which represent payments on accounts receivable
relating to the Transferred Business. In addition, following a reasonable period

34

 

sufficient to
allow for the payment of any unpaid checks which are outstanding as of the Closing Date, the Seller
will transfer to the Company any funds then remaining in the bank accounts previously maintained by
the Company relating to the Transferred Business, and will not issue any additional checks or
otherwise make any withdrawals from such accounts following the Closing.

ARTICLE 6

INDEMNIFICATION

     6.1 Survival of Representations and Warranties and Covenants. All of the representations,
warranties, covenants and agreements made by any Party in this Agreement or in any certificates or
documents delivered hereunder shall survive the Closing; provided, however, that the period of
survival shall (i) with respect to the representations and warranties in Section 3.3
(Capitalization and Ownership – Company), continue indefinitely; (ii) with respect to the
representations and warranties in Section 3.7 (Taxes), end thirty (30) days after expiration of the
statutory limitation period applicable to the Tax; (iii) with respect to the representations and
warranties in Section 3.16 (Environmental Matters), end five (5) years following the Closing Date;
(iv) with respect to all other representations and warranties, end
eighteen (18) months after the Closing Date; and (v) with respect to covenants and agreements,
continue in accordance with their respective terms (in each case, the “Survival Period”).
No claim for breach of any representation, warranty, covenant or agreement may be brought under
this Agreement or any other document executed and delivered pursuant to or in connection with this
Agreement unless written notice describing in reasonable detail the nature and basis of such claim
is given on or prior to the expiration of the 30-day period following the last day of the
applicable Survival Period. In the event such notice of a claim is so given, the right to
indemnification with respect to such claim will survive the applicable Survival Period until the
claim is finally resolved and any obligations with respect to the claim are fully satisfied.

     6.2 Indemnification by Seller and Landec. Subject to the terms and conditions of this
Article 6, from and after Closing, Seller and Landec shall, jointly and severally, indemnify and
hold harmless Buyer and its Affiliates (including, from and after the Closing, the Company and its
Affiliates) and the employee benefit plans, shareholders, directors, officers, partners, employees,
successors, assigns, representatives and agents of each of them in their capacities as such
(collectively, the “Buyer Indemnified Persons”), from and against, and Seller and Landec
waive any claim for contribution or indemnity against the Company and its Affiliates with respect
to, any and all claims, losses, monetary damages, obligations, liabilities, fines, fees, penalties,
expenses or costs, plus reasonable attorneys’ fees and expenses, court costs and expert witness
fees and expenses, incurred in connection therewith and/or in connection with the enforcement of
this Agreement (collectively, “Losses”) incurred or to be incurred by any of them resulting
from or arising out of or in connection with:

          (a) the breach of any agreement, covenant, representation, warranty, or other obligation of
Seller or Landec made or incurred under or pursuant to this Agreement or any document delivered
pursuant hereto or in connection with the Closing;

          (b) any Liability of the Company or its Affiliates with respect to Taxes claimed or assessed
against any of them (i) for any taxable period resulting from a breach of any

35

 

of the
representations or warranties contained in Section 3.7, breach of the covenants set forth in
Section 5.2 or from this transaction (including without limitation Taxes on the taxable gain, if
any recognized by the Company as a result of the 338(h)(10) Election and the transactions
contemplated by this Agreement); and (ii) that relate to a taxable period (or portion thereof)
ending on or before the Closing Date, whether or not the Tax Returns with respect to such periods
have been filed on or before the Closing Date;

          (c) the Retained Business, the Excluded Liabilities and the Excluded Assets; and

          (d) any Losses asserted against Company or Buyer by a third party to any Contract constituting
part of the Transferred Assets to the extent based on the transfer of such Contract from Seller to
Company without obtaining a required consent or approval of such third party; provided, however,
that neither Landec nor Seller shall have any liability or obligation under this Section 6.2 or
otherwise to the Company or Buyer for any other Losses incurred by the Company or the Buyer arising
from, relating to or in connection with any such transfer
without a required consent, including, without limitation, (i) any Losses resulting from a
diminution in business or customers due to the inability to sell product containing Intellectual
Property licensed under any such Contract, (ii) any Losses resulting from a requirement to destroy,
return to the licensor or otherwise cease selling inventory now or in the future on hand or in
production containing Intellectual Property licensed under any such Contract, or (iii) any costs or
expenses incurred by the Company or the Buyer to acquire, produce, license or create a market for
replacement products or inventory.

     6.3 Indemnification by Buyer. Subject to the terms and conditions of this Article 6, Buyer
shall indemnify and hold harmless Seller and Landec its Affiliates and the employee benefit plans,
shareholders, directors, officers, partners, employees, successors, assigns, representatives and
agents of each of them in their capacities as such (the “Seller Indemnified Persons”) from
and against any and all Losses incurred or to be incurred by any of them, resulting from or arising
out of or in connection with (i) the breach of any agreement, covenant, representation, warranty,
or other obligation of Buyer made or incurred under this Agreement or any document delivered
pursuant hereto or in connection with the Closing; or (ii) the operation of the Transferred
Business after Closing, including any failure of the Company to pay, perform or discharge when due
all Transferred Liabilities.

     6.4 Notice of Claim. In the event that Buyer seeks indemnification on behalf of a Buyer
Indemnified Person, or Seller or Landec seeks indemnification on behalf of a Seller Indemnified
Person, such Party seeking indemnification (the “Indemnified Party”) shall give reasonably
prompt written notice to the indemnifying Party (the “Indemnifying Party”) specifying the
facts constituting the basis for such claim and the amount, to the extent known, of the claim
asserted; provided, that the right of a Person to be indemnified hereunder shall not be adversely
affected by a failure to give such notice (if given prior to expiration of the applicable notice
period provided herein) unless, and then only to the extent that, an Indemnifying Party is
prejudiced thereby. Subject to the terms of this Agreement, the Indemnifying Party shall pay the
amount of any valid claim not more than ten (10) days after the Indemnified Party provides notice
to the Indemnifying Party of such amount.

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     6.5 Right to Contest Claims of Third Persons.

          (a) If an Indemnified Party is entitled to indemnification hereunder because of a claim
asserted by any claimant other than an Indemnified Party (a “Third Person”), the
Indemnified Party shall give the Indemnifying Party reasonably prompt notice thereof after such
assertion is actually known to the Indemnified Party; provided, however, that the right of a Person
to be indemnified hereunder in respect of claims made by a Third Person shall not be adversely
affected by a failure to give such notice unless, and then only to the extent that, an Indemnifying
Party is prejudiced thereby. The Indemnifying Party shall have the right, upon written notice to
the Indemnified Party, and using counsel reasonably satisfactory to the
Indemnified Party, to investigate, defend, contest or settle the claim alleged by such Third
Person (a “Third Person Claim”), provided that the Indemnifying Party has unconditionally
acknowledged to the Indemnified Party in writing its obligation to indemnify the Persons to be
indemnified hereunder with respect to such Third Person Claim and, subject to Section 6.6, to
discharge any cost or expense arising out of such investigation, contest or settlement and provided
that any settlement shall include an unconditional release of such claim against the Indemnified
Party.

          (b) The Indemnified Party may thereafter participate in (but not control) the defense of any
such Third Person Claim with its own counsel at its own expense, unless separate representation is
necessary to avoid a conflict of interest, as determined by the Indemnifying Party’s legal counsel
in accordance with applicable law, in which case such representation shall be at the expense of the
Indemnifying Party.

          (c) Notwithstanding anything to the contrary contained in this Agreement, neither Seller nor
Landec shall settle a Third Person Claim with respect to Taxes for a taxable period (or portion
thereof) that ends on or before the Closing Date without the prior written consent of Buyer (not to
be unreasonably withheld) if such settlement would result in an increase in the Tax liability of
the Company or Buyer for any taxable period (or portion thereof) that ends after the Closing Date.

          (d) Unless and until the Indemnifying Party so acknowledges its obligation to indemnify, the
Indemnified Party shall have the right, at its option, to assume and control defense of the matter
and to look to the Indemnifying Party for the full amount of the reasonable costs of defense. The
failure of the Indemnifying Party to respond in writing to the aforesaid notice of the Indemnified
Party with respect to such Third Person Claim within twenty (20) days after receipt thereof shall
be deemed an irrevocable election not to defend the same. If the Indemnifying Party does not so
acknowledge its obligation to indemnify and assume the defense of any such Third Person Claim, (i)
the Indemnified Party may defend against such claim using counsel of its choice, in such manner as
it may reasonably deem appropriate, including, but not limited to, settling such claim, after
giving notice of the same to the Indemnifying Party, on such terms as the Indemnified Party may
reasonably deem appropriate, and (ii) the Indemnifying Party may participate in (but not control)
the defense of such action, with its own counsel at its own expense. The Parties shall make
available to each other all relevant information in their possession relating to any such Third
Person Claim and shall cooperate in the defense thereof.

37

 

     6.6 Limitations on Indemnity.

          (a) Notwithstanding anything contained herein to the contrary, but subject to Section 6.6(b),
the collective obligation of Seller and Landec under this Article 6 to indemnify or reimburse Buyer
Indemnified Persons for any claims for Losses (each, an “Indemnity Claim”) shall be subject to the
following limitations:

          (i) Seller and Landec shall have no obligation with respect to any Indemnity Claim (or
series of related Indemnity Claims) unless the Indemnity Claim (or
series of related Indemnity Claims) is for Losses exceeding $10,000 (each, a “Covered
Claim”).

          (ii) Seller and Landec shall have no obligation with respect to any Indemnity Claims
until the total amount of the Indemnity Claims reaches $500,000 (the “Basket”). If the
Basket is exceeded, then the Buyer Indemnified Persons shall be entitled to receive the
entire amount of the Covered Claims, including the first $500,000.

          (iii) The maximum aggregate obligation of Seller and Landec with respect to all Covered
Claims resulting from or arising from a breach of the representations or warranties under
Sections 3.4(b), 3.8 or 3.9 shall not exceed $1,500,000.

          (iv) The maximum aggregate obligation of Seller and Landec with respect to all Covered
Claims shall not exceed $20,000,000 (the “Cap”).

          (b) Notwithstanding the foregoing in subsection (a) to the contrary,

          (i) neither the Basket nor the Cap shall apply to Losses (A) resulting from or arising
from a breach under Section 5.1 (Covenant Not to Compete) or (B) which are indemnifiable
pursuant to Section 6.2(b) or 6.2(c);

          (ii) the Cap shall not apply to Losses resulting from or arising from a breach of the
representations or warranties in Section 3.3 (Capitalization and Ownership – Company); and

          (iii) no Losses referred to in this subsection (b) shall be counted for purposes of
determining whether the Cap has been met.

     6.7 Characterization of Indemnity Payments. Any indemnification payments made pursuant to
this Agreement shall be considered, to the extent permissible under Law, as adjustments to the
Purchase Price for all Tax purposes.

     6.8 Exclusive Monetary Remedy. Except in the case of a claim based on fraud, the
right to indemnification or reimbursement upon and subject to the terms, limitations and conditions
of this Agreement shall be the exclusive remedy for monetary damages of any Party and its
shareholders, members, directors, officers, employees and agents for any Losses arising under or in
connection with this Agreement, any other document executed and delivered

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pursuant to this
Agreement, or otherwise in connection with or relating to the transactions under this Agreement.

ARTICLE 7

MISCELLANEOUS PROVISIONS

     7.1 Notice.

          (a) All notices and other communications required or permitted under this Agreement shall be
in writing and shall be deemed to have been duly given (i) when delivered in person, (ii) when
received by facsimile, receipt confirmed, (iii) on the next Business Day when sent by overnight
courier, or (iv) on the second succeeding Business Day when sent by registered or certified mail
(postage prepaid, return receipt requested), to the respective Parties at the following addresses
(or at such other address for a Party as shall be specified by like notice):

If to Buyer:

American Seeds, Inc.

800 N. Lindbergh Boulevard

St. Louis, Missouri 63167

Telephone: (314) 694-1000

Telecopier: (314) 694-6399

Attn: President

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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If to Seller or Landec:

Landec Corporation

3603 Haven Ave.

Menlo Park, CA 94025

Telephone:

Telecopier:

Attn: Gary T. Steele

With additional copies to:

Bose McKinney & Evans LLP

2700 First Indiana Plaza

135 North Pennsylvania Street

Indianapolis, Indiana 46204

Telephone: (317) 684-5000

Telecopier: (317) 684-5173

Attn: Kendall C. Crook

and

Ropes & Gray LLP

One Embarcadero Center, Suite 2200

135 North Pennsylvania Street

San Francisco, California 94111

Telephone: (415) 315-6364

Telecopier: (415) 315-6350

Attn: Geoffrey P. Leonard

     7.2 Entire Agreement. This Agreement embodies the entire agreement and understanding of
the Parties hereto with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and understandings relative to such subject matter.

     7.3 Amendment and Modification. This Agreement may be amended only by a written agreement
between Buyer, Seller and Landec.

     7.4 Assignment; Binding Agreement. This Agreement and various rights and obligations
arising hereunder shall inure to the benefit of and be binding upon the Parties hereto and their
respective heirs, legal representatives, successors and permitted assigns. Neither this Agreement
nor any of the rights, interests, or obligations hereunder shall be transferred, delegated, or
assigned (by operation of law or otherwise) by the Parties hereto without the prior written consent
of the other Parties, except that (i) Buyer shall have the right to transfer and assign any or all
of its rights and obligations
hereunder to any entity which at the time of such transfer and assignment is controlled by Buyer or
by the Affiliates of Buyer (provided, however, that Buyer shall remain liable for the performance
of its obligations under this Agreement) and (ii) the Seller and Landec shall have the right to
assign their right to receive payments, but not their obligations, hereunder.

40

 

     7.5 Waiver of Compliance; Consents. Any failure of Seller or Landec, on the one hand, or
Buyer, on the other hand, to comply with any obligation herein may be waived by Buyer, on the one
hand, or Seller and Landec, on the other hand, only by a written instrument signed by the Party
granting such waiver. Any such waiver or failure to insist upon strict compliance with such
obligation shall not operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.

     7.6 Expenses. All costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the Party incurring such costs or expenses.

     7.7 Counterparts. This Agreement may be executed in multiple counterparts (including via
facsimile or an electronically scanned e-mail attachment), each of which shall be deemed an
original, but all of which taken together shall constitute one and the same instrument.

     7.8 Severability. Subject to the provisions set forth in Section 5.1 regarding judicial
modification of the covenant not to compete, if any provision of this Agreement shall be determined
to be invalid, illegal or incapable of being enforced by any court of law, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any Party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the Parties as closely as possible in
an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the
extent possible.

     7.9 Remedies Cumulative. Except as otherwise provided herein, all rights and remedies of
the Parties under this Agreement are cumulative and without prejudice to any other rights or
remedies under Law. Nothing contained herein shall be construed as limiting the Parties’ rights to
redress for fraud.

     7.10 Governing Law. This Agreement shall in all respects be construed in accordance with
and governed by the substantive Laws of the State of New York, without reference to its choice of
law rules.

     7.11 No Third Party Beneficiaries or Other Rights
        . Nothing herein shall grant to or create in any Person not a Party hereto, or any such Person’s
dependents, heirs, successors or assigns, any right to any benefits hereunder, and no such party
shall be entitled to sue any Party to this Agreement with respect thereto. The representations and
warranties contained in this Agreement are made for purposes of this Agreement only and shall not
be construed to confer any additional rights on the Parties under applicable state and federal
securities Laws.

     7.12 Submission to Jurisdiction. Each of the Parties hereto irrevocably submits to the
exclusive jurisdiction of (i) the federal courts of the United States District Court for the
Southern District of New York located in New York County, New York, or (ii) only if the
jurisdiction of such courts is unavailable, the state courts located in New York County, New York,
for the purposes of any suit, action or other proceeding arising out of this Agreement or any
transaction contemplated hereby. Each of the Parties agrees to commence any action, suit or
proceeding

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relating hereto in the federal courts of the United States District Court for the
Southern District of New York located in New York County, New York, or if the jurisdiction of such
courts is unavailable, in the state courts located in New York County, New York. Each of the
Parties further agrees that service of any process, summons, notice or document by U.S. registered
mail to such Party’s address set forth above shall be effective service of process for any action,
suit or proceeding with respect to any matters to which it has submitted to jurisdiction in this
Section 7.12. Each of the Parties waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated hereby in (i) the
federal courts of the United States District Court for the Southern District of New York located in
New York County, New York, or (ii) only if the jurisdiction of such courts is unavailable, the
state courts located in New York County, New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that any such action,
suit or proceeding brought in any such court has been brought in an inconvenient forum or to raise
any similar defense or objection.

     7.13 Headings; Interpretation. The article and section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement. Each reference in this Agreement to an Article, Section,
Schedule or Exhibit, unless otherwise indicated, shall mean an Article or a Section of this
Agreement or a Schedule or Exhibit attached to this Agreement, respectively. Unless the context of
this Agreement otherwise requires, (i) words of any gender include each other gender; (ii) words
using the singular or plural number also include the plural or singular number, respectively; (iii)
the terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this entire
Agreement; (iv) the terms “include,” “includes,” “including,” and derivative or similar words shall
be construed to be followed by the phrase “without limitation”; and (v) references herein to “days”
are to consecutive calendar days unless Business Days are specified. All accounting terms used
herein and not expressly defined herein shall have the meanings given to them under GAAP. Both
Parties have participated substantially in the negotiation and drafting of this Agreement and agree
that no ambiguity herein should be construed against the draftsman.

     7.14 Joint and Several Liability. Seller and Landec shall be jointly and severally liable for each representation, warranty,
covenant, agreement, liability or obligation of either or both of them under this Agreement or any
other document executed and delivered pursuant to or in connection with this Agreement whether or
not otherwise indicated in this Agreement or any other such document.

[Remainder of page intentionally left blank; signature page follows.]

42

 

SECTION 2.4 OF THIS AGREEMENT CONTAINS A BINDING ARBITRATION
 PROVISION WHICH MAY BE ENFORCED BY THE
PARTIES.

     IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed as of
the date first above written.

	 	 	 	 	 	 	 	 	 	 	 
	Landec:	 	 	 	Buyer:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Landec Corporation	 	 	 	American Seeds, Inc.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By: 

Name:

	 	/s/ Gary T. Steele
 

Gary T. Steele
	 	 	 	By:

Name:
	 	/s/ Michael DeMarco
 

Michael DeMarco
	 	 
	Title:

	 	Chief Executive Officer
	 	 	 	Title:
	 	Authorized Person	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Seller:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Landec Ag, Inc.	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By: 

Name:

	 	/s/ Thomas F. Crowley
 

Thomas F. Crowley
	 	 	 	 	 	 	 	 
	Title:

	 	President and Chief
Executive Officer	 	 	 	 	 	 	 	 

 

 

Index to Schedules

	 	 	 
	Schedule 1.32

	 	Excluded Assets
	 
	 	 
	Schedule 1.33

	 	Excluded Liabilities
	 
	 	 
	Schedule 1.65

	 	Certain Permitted Liens
	 
	 	 
	Schedule 1.81

	 	Certain Transferred Assets
	 
	 	 
	Schedule 1.85

	 	Additional Transferred Liabilities
	 
	 	 
	Schedule 2.3

	 	Wire Transfer Instructions
	 
	 	 
	Schedule 2.4

	 	Earn-Out – Pro Forma Gross Margin Calculation
	 
	 	 
	Schedule 3.1(a)

	 	States of Incorporation
	 
	 	 
	Schedule 3.1(b)

	 	Foreign Qualifications
	 
	 	 
	Schedule 3.2(b)

	 	No Breach of Law, Governing Document or Contract
	 
	 	 
	Schedule 3.3(a)

	 	Capitalization and Ownership
	 
	 	 
	Schedule 3.4

	 	May Balance Sheet
	 
	 	 
	Schedule 3.5

	 	Subsequent Events
	 
	 	 
	Schedule 3.7

	 	Taxes
	 
	 	 
	Schedule 3.8

	 	Accounts Receivable
	 
	 	 
	Schedule 3.10

	 	Compliance with Law, Governing Documents, Licenses and Permits
	 
	 	 
	Schedule 3.11

	 	Litigation
	 
	 	 
	Schedule 3.12(a)

	 	Owned Real Property
	 
	 	 
	Schedule 3.12(b)

	 	Leased Real Property
	 
	 	 
	Schedule 3.13

	 	Leased Personal Property
	 
	 	 
	Schedule 3.14(a)

	 	Title to Assets
	 
	 	 
	Schedule 3.16

	 	Environmental Matters
	 
	 	 
	Schedule 3.17(a)

	 	Material Contracts
	 
	 	 
	Schedule 3.18

	 	Validity of Contracts
	 
	 	 
	Schedule 3.19

	 	Transferred Intellectual Property

 

 

	 	 	 
	Schedule 3.20

	 	Germplasm
	 
	 	 
	Schedule 3.21

	 	Genetically Modified Organisms
	 
	 	 
	Schedule 3.22

	 	Insurance
	 
	 	 
	Schedule 3.23(a)

	 	Current Employees
	 
	 	 
	Schedule 3.23(b)

	 	Officers, Directors and Consultants
	 
	 	 
	Schedule 3.23(c)

	 	Obligations to Retirees or Terminated Employees
	 
	 	 
	Schedule 3.23(g)

	 	Transferred Employee Non Competition
	 
	 	 
	Schedule 3.24

	 	Bank Accounts of the Company
	 
	 	 
	Schedule 3.26

	 	Labor Matters
	 
	 	 
	Schedule 3.27(a)

	 	Employee Benefit Plans
	 
	 	 
	Schedule 3.27(c)

	 	Plans qualifying under Code §401(a)exv10w71

 

Exhibit 10.71

LICENSE, SUPPLY AND R&D AGREEMENT

by and among

LANDEC CORPORATION,

LANDEC AG, INC.

and

MONSANTO COMPANY

December 1, 2006

 

 

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 -

i

 

	 	 	 	 	 
	 	 	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 -

ii

 

	 	 	 	 	 
	 	 	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 -

iii

 

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

iv

 

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

- 1 -

 

	 	 	 	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.

- 2 -

 

	 	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 -

 

	 	 	 	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	 

- 4 -

 

	 	 	 	 	 
	 	 	 	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

- 5 -

 

	 	 	 	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 “TM” 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

- 6 -

 

	 	 	 	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

- 7 -

 

	 	 	 	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.

- 10 -

 

	 
	 	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.

- 11 -

 

	 	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

- 12 -

 

	 	 	 	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.

- 13 -

 

	 	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

- 14 -

 

	 	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

- 15 -

 

	 	 	 	(“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.

- 16 -

 

	 	 	 	 

	 	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”).

- 17 -

 

	 	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:

- 27 -

 

	 	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.

- 28 -

 

	 	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

- 34 -

 

	 	 	 	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

- 37 -

 

	 	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.

- 38 -

 

	 	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

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