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<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                 FOR THE FISCAL YEAR ENDED OCTOBER 29, 2000, OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

               For the Transition period from _____ to _________.

                         Commission file number: 0-27446

                               LANDEC CORPORATION
             (Exact name of registrant as specified in its charter)

             CALIFORNIA                                   94-3025618
   (State or other jurisdiction of                       (IRS Employer
   incorporation or organization)                    Identification Number)

                                3603 HAVEN AVENUE
                          MENLO PARK, CALIFORNIA 94025
                    (Address of principal executive offices)

             Registrant's telephone number, including area code:
                                 (650) 306-1650

           Securities registered pursuant to Section 12(b) of the Act:

Title of each class                   Name of each exchange on which registered
-------------------                   -----------------------------------------
      None                                               None

           Securities registered pursuant to Section 12(g) of the Act:
                    Common Stock, par value $0.001 per share
                                (Title of Class)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                    Yes X  No
                                       ---   ---

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

     The aggregate market value of voting stock held by non-affiliates of the
Registrant was approximately $46,050,000 as of January 5, 2001, based upon the
closing sales price on the NASDAQ National Market reported for such date. Shares
of Common Stock and Convertible Preferred Stock held by each officer and
director and by each person who owns 10% or more of the outstanding Common Stock
and Convertible Preferred Stock have been excluded from such calculation in that
such persons may be deemed to be affiliates. This determination of affiliate
status is not necessarily a conclusive determination for other purposes.

     As of January 5, 2001, there were 16,149,086 shares of Common Stock and
166,667 shares of Convertible Preferred Stock, convertible into ten shares of
Common Stock for each share of Preferred Stock, par value $0.001 per share,
outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the registrant's definitive proxy statement relating to its
2001 Annual Meeting of Shareholders, which statement will be filed not later
than 120 days after the end of the fiscal year covered by this report, are
incorporated by reference in Part III hereof.



                                      -1-
<PAGE>


                               LANDEC CORPORATION
                           ANNUAL REPORT ON FORM 10-K

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
   ITEM NO.                                                                                          PAGE
   -------                                                                                           ----
<S>             <C>                                                                                 <C>
    Part I

      1.         Business..........................................................................     3

      2.         Properties........................................................................    16

      3.         Legal Proceedings.................................................................    16

      4.         Submission of Matters to a Vote of Security Holders...............................    16

    Part II

      5.         Market for Registrant's Common Equity and Related Stockholder Matters.............    17

      6.         Selected Consolidated Financial Data..............................................    18

      7.         Management's Discussion and Analysis of Financial Condition and Results of
                 Operations........................................................................    20

      7A.        Quantitative and Qualitative Disclosures about Market Risk........................    30

      8.         Financial Statements and Supplementary Data.......................................    30

      9.         Changes in and Disagreements with Accountants on Accounting and Financial
                 Disclosure........................................................................    30

   Part III

      10.        Directors and Executive Officers of the Registrant................................    31

      11.        Executive Compensation............................................................    31

      12.        Security Ownership of Certain Beneficial Owners and Management....................    31

      13.        Certain Relationships and Related Transactions....................................    31

    Part IV

      14.        Exhibits, Financial Statement Schedules, and Reports on Form 8-K..................    32
</TABLE>


                                      -2-
<PAGE>


                                     PART I
ITEM 1.  BUSINESS

         Except for the historical information contained herein, the matters
discussed in this report are forward-looking statements that involve certain
risks and uncertainties that could cause actual results to differ materially
from those in the forward-looking statements. Potential risks and uncertainties
include, without limitation, those mentioned in this Report and, in particular,
the factors described in Item 7 under "Additional Factors That May Affect Future
Results."

GENERAL

         Landec Corporation and its subsidiaries ("Landec" or the "Company")
design, develop, manufacture and sell temperature-activated and other specialty
polymer products for a variety of food products, agricultural products,
specialty industrial and medical applications. This proprietary polymer
technology is the foundation, and a key differentiating advantage, upon which
the Company has built its business.

         Landec's Food Products Technology business, operated through its wholly
owned subsidiary Apio, combines Landec's proprietary food packaging technology
with the capabilities of a large national food supplier and value-added produce
processor. This combination was consummated in December 1999 when the Company
acquired Apio, Inc. and certain related entities (collectively "Apio").

         The Company's Agricultural Seed Technology business, operated through
its wholly owned subsidiary Landec Ag, Inc. ( "Landec Ag", formerly Intellicoat
Corporation), combines Landec's proprietary Intellicoat-Registered Trademark-
seed coating technology with its unique eDC-TM- -- e-commerce, Direct marketing
and Consultative selling -- capabilities which it obtained with its acquisition
of Fielder's Choice Direct, a direct marketer of hybrid seed corn, in September
1997.

         In addition to its two core businesses, the Company also operates a
Technology Licensing/Research and Development business which licenses products
outside of Landec's core businesses to industry leaders such as Alcon
Laboratories, Inc. ("Alcon") and Hitachi Chemical. It also engages in research
and development activities with companies such as ConvaTec, a division of
Bristol-Myers Squibb and UCB Chemicals, a subsidiary of UCB S.A. of Belgium. For
segment disclosure purposes, the Technology Licensing/Research and Development
business is included in Corporate and Other (see Note 13 to the Consolidated
Financial Statements).

         To support the polymer manufacturing needs of the core businesses,
Landec has developed and acquired lab scale and pilot plant capabilities in
Menlo Park, California and scale-up and commercial manufacturing capabilities at
its Dock Resins Corporation subsidiary ("Dock Resins") in Linden, New Jersey. In
April 1997, Landec acquired Dock Resins, a manufacturer and marketer of
specialty acrylic and other polymers. In addition, Dock Resins sells industrial
specialty products under the Doresco-Registered Trademark- trademark that are
used by more than 300 customers throughout the United States in the coatings,
printing inks, laminating and adhesives markets. For segment disclosure
purposes, Dock Resins is included in Corporate and Other (see Note 13 to the
Consolidated Financial Statements).

         The Company's core polymer products are based on its patented
proprietary Intelimer-Registered Trademark- polymers, which differ from other
polymers in that they can be customized to abruptly change their physical
characteristics when heated or cooled through a pre-set temperature switch. For
instance, Intelimer polymers can change within the range of one or two degrees
Celsius from a slick, non-adhesive state to a highly tacky, adhesive state; from
an impermeable state to a highly permeable state; or from a solid state to a
viscous state. These abrupt changes are repeatedly reversible and can be
tailored by Landec to occur at specific temperatures, thereby offering
substantial competitive advantages in the Company's target markets.

         The principal products and services offered by the Company in its two
core businesses -- Food Products Technology and Agricultural Seed Technology --
and in the Technology Licensing/Research and Development business are described
below. Financial information concerning the industry segments for which the
Company reported its operations during fiscal years 1998 through 2000 is
summarized in Note 13 to the Consolidated Financial Statements.

         The Company was incorporated in California on October 31, 1986. The
Company completed its initial public offering in 1996 and is listed on the
Nasdaq National Market under the symbol "LNDC."


                                      -3-
<PAGE>

TECHNOLOGY OVERVIEW

         Polymers are important and versatile materials found in many of the
products of modern life. Certain polymers, such as cellulose and natural rubber,
occur in nature. Man-made polymers include nylon fibers used in carpeting and
clothing, coatings used in paints and finishes, plastics such as polyethylene,
and elastomers used in automobile tires and latex gloves. Historically,
synthetic polymers have been designed and developed primarily for improved
mechanical and thermal properties, such as strength and the ability to withstand
high temperatures. Improvements in these and other properties and the ease of
manufacturing of synthetic polymers have allowed these materials to replace
wood, metal and natural fibers in many applications over the last 40 years. More
recently, scientists have focused their efforts on identifying and developing
sophisticated polymers with novel properties for a variety of commercial
applications.

         Landec's Intelimer polymers are a proprietary class of synthetic
polymeric materials that respond to temperature changes in a controllable,
predictable way. Typically, polymers gradually change in adhesion,
permeability and viscosity over broad temperature ranges. Landec's Intelimer
materials, in contrast, can be designed to exhibit abrupt changes in
permeability, adhesion and/or viscosity over temperature ranges as narrow as
1 DEG. C to 2 DEG. C. These changes can be designed to occur at relatively
low temperatures (0 DEG. C to 100 DEG. C) that are relatively easy to
maintain in industrial and commercial environments. FIGURE 1 illustrates the
effect of temperature on Intelimer materials as compared to typical polymers.

                             [TEMPERATURE GRAPHIC]

         Landec's proprietary polymer technology is based on the structure
and phase behavior of Intelimer materials. The abrupt thermal transitions of
specific Intelimer materials are achieved through the use of chemically
precise hydrocarbon side chains that are attached to a polymer backbone.
Below a pre-determined switch temperature, the polymer's side chains align
through weak hydrophobic interactions resulting in a crystalline structure.
When this side chain crystallizable polymer is heated to, or above, this
switch temperature, these interactions are disrupted and the polymer is
transformed into an amorphous, viscous state. Because this transformation
involves a physical and not a chemical change, this process is repeatedly
reversible. Landec can set the polymer switch temperature anywhere between 0
DEG. C to 100 DEG. C by varying the length of the side chains. The reversible
transitions between crystalline and amorphous states are illustrated in
FIGURE 2 below.


                                      -4-
<PAGE>

                         [CRYSTALLINE AMORPHOUS GRAPHIC]


         Side chain crystallizable polymers were first discovered by academic
researchers in the mid-1950's. These polymers were initially considered to be
merely of scientific curiosity from a polymer physics perspective, and, to the
Company's knowledge, no significant commercial applications were pursued. In the
mid-1980's, Dr. Ray Stewart, the Company's founder, became interested in the
idea of using the temperature-activated permeability properties of these
polymers to deliver various materials such as drugs and pesticides. After
forming Landec in 1986, Dr. Stewart subsequently discovered broader utility for
these polymers. After several years of basic research, commercial development
efforts began in the early 1990's, resulting in initial products in mid-1994.

         Landec's Intelimer materials are generally synthesized from long
side-chain acrylic monomers that are derived primarily from natural materials
such as soybean and corn oils, that are highly purifiable and designed to be
manufactured economically through known synthesis processes. These side-chain
raw materials are then polymerized by Landec leading to many different
side-chain crystallizable polymers whose properties vary depending upon the
initial materials and the synthesis process. Intelimer materials can be made
into many different forms, including films, coatings, microcapsules and discrete
forms.

DESCRIPTION OF CORE BUSINESS

         The Company participates in two core segments -- Food Products
Technology and Agricultural Seed Technology. In addition to these two core
segments, Landec will license technology and conduct on going research and
development through its Technology Licensing/Research & Development Business.


                               [LANDEC FLOWCHART]


                                      -5-
<PAGE>

         FOOD PRODUCTS TECHNOLOGY BUSINESS

         Landec began marketing in late 1995 its proprietary Intelimer-based
breathable membranes for use in the fresh-cut produce packaging market, the
fastest growing segment in the food market. Landec's unique technology enabled
Landec's customers to enter into and develop new businesses in this fresh-cut
produce market (also known as the "value-added" market). In December 1999,
Landec acquired Apio, Landec's largest customer in the Food Products Technology
business and who the Company believes is the nation's leading marketer and
packer of produce and specialty packaged fresh-cut vegetables. Apio provides
year-round access to produce, utilizes state-of-the-art fresh-cut produce
processing technology and distributes to all 10 of the top U.S. retail grocery
chains and major club stores and has recently begun expanding its product
offerings to the foodservice industry. Landec's proprietary Intelimer-based
packaging business has been combined with Apio into a wholly owned subsidiary
that retains the Apio, Inc. name. This vertical integration within the Food
Products Technology business places Landec in the unique position of providing
the fresh-cut and whole produce market with both technology and access to larger
and broader markets.

         INTELLIPAC-Registered Trademark- BREATHABLE MEMBRANES

         Certain types of fresh-cut produce can spoil or discolor rapidly when
packaged in conventional packaging materials and are therefore limited in their
ability to be distributed broadly to markets. The Company's Intellipac
breathable membranes extend the shelf life and quality of fresh-cut produce.

         Fresh-cut produce is pre-washed, cut and packaged in a form that is
ready to use by the consumer and is thus typically sold at premium price levels.
According to the International Fresh Cut Produce Association ("IFPA"), in 1999,
the total U.S. fresh produce market exceeded $100 billion. Of this, U.S. retail
sales of fresh-cut produce grew to an estimated $10 billion. The Company
believes that the growth of this market has been driven by consumer demand and
the willingness to pay for convenience, labor savings and uniform quality
relative to produce prepared at the point of sale. The IFPA estimates that by
2005, U.S. retail sales of fresh-cut produce could more than double.

         Although fresh-cut produce companies have had success in the salad
market, the industry has been slow to diversify into other fresh-cut vegetables
or fruits due primarily to limitations in film materials used to package the
fresh-cut produce. After harvesting, vegetables and fruits continue to respire,
consuming oxygen and releasing carbon dioxide. Too much or too little oxygen can
result in premature spoilage and decay and promote the growth of contaminants
and microorganisms that jeopardize inherent food safety. Conventional packaging
films used today, such as polyethylene and polypropylene, can be made with
modest permeability to oxygen and carbon dioxide, but often do not provide the
optimal atmosphere for the produce packaged. Shortcomings of conventional
packaging materials have not significantly hindered the growth in the fresh-cut
salad market because lettuce, unlike many vegetables and fruits, has low
respiration requirements.

         The respiration rate of fresh-cut produce varies from
vegetable-to-vegetable and from fruit-to-fruit. The challenge facing the
industry is to develop packaging for the high respiring, high value and shelf
life sensitive fresh-cut vegetable and fruit markets. The Company believes that
today's conventional packaging films face numerous challenges in adapting to
meet the diversification of pre-cut vegetables and fruits evolving in the
industry without compromising shelf life and produce quality. To mirror the
growth experienced in the fresh-cut salad market, the markets for high respiring
vegetables and fruits such as broccoli, cauliflower, bananas, berries and stone
fruit (e.g. peaches, apricots, nectarines) will require a more versatile and
sophisticated packaging solution for which the Company's Intellipac breathable
membranes were developed.

          The respiration rate of fresh-cut produce also varies with
temperature. As temperature increases, fresh-cut produce generally respires at a
higher rate, which speeds up the aging process, resulting in shortened shelf
life and increased potential for decay, spoilage, loss of texture and
dehydration. As fresh-cut produce is transported from the processing plant
through the refrigerated distribution chain to foodservice locations, retail
grocery stores and club stores, and finally to the ultimate consumer,
temperatures can fluctuate significantly. Therefore, temperature control is a
constant challenge in preserving the quality of fresh-cut produce -- a challenge
few current packaging films can fulfill. The Company believes that its
temperature-responsive Intellipac technology is well suited to the challenges of
the fresh-cut distribution process.


                                      -6-
<PAGE>

         Using its Intelimer technology, Landec has developed Intellipac
breathable membranes that it believes address many of the shortcomings of
conventional materials. A membrane is applied over a small cutout section or an
aperture of a flexible film bag. This highly permeable "window" acts as the
mechanism to provide the majority of the gas transmission requirements for the
entire package. These membranes are designed to provide three principal
benefits:

    -    HIGH PERMEABILITY. Landec's Intellipac breathable membranes are
         designed to permit transmission of oxygen and carbon dioxide at 300
         times the rate of conventional packaging films. The Company believes
         that these higher permeability levels will facilitate the packaging
         diversity required to market many types of fresh-cut produce.

    -    ABILITY TO ADJUST OXYGEN AND CARBON DIOXIDE PERMEABILITY. Conventional
         packaging films diffuse gas transfer in and out of packages at an equal
         rate or fixed ratio of 1.0. Intellipac packages can be tailored with
         carbon dioxide to oxygen transfer ratios ranging from 1.0 to 12.0 and
         selectively transmit oxygen and carbon dioxide at optimum rates to
         sustain the quality and shelf life of produce.

    -    TEMPERATURE RESPONSIVENESS. Landec has developed breathable membranes
         that can be designed to increase or decrease in permeability in
         response to environmental temperature changes. The Company has
         developed packaging that responds to higher oxygen requirements at
         elevated temperatures but is also reversible, and returns to its
         original state as temperatures decline. The temperature responsiveness
         of these membranes allows ice to be removed from the distribution
         system which results in numerous benefits. These benefits include (1) a
         substantial decrease in freight cost, (2) reduced risk of contaminated
         produce because ice is a carrier of micro organisms, (3) the
         elimination of expensive waxed cartons that cannot be recycled, and (4)
         the potential decrease in work related accidents due to melted ice.

         Landec believes that growth of the overall produce market will be
driven by the increasing demand for the convenience of fresh-cut produce. This
demand will in turn require packaging that facilitates the quality and shelf
life of produce transported to fresh-cut distributors in bulk and pallet
quantities. The Company believes that in the future its Intellipac breathable
membranes will be useful for packaging a diverse variety of fresh-cut produce
products. Potential opportunities for using Landec's technology outside of the
fresh-cut produce market exist in cut flowers and in other food products.

         Landec is working with leaders in the fresh-cut foodservice, club store
and retail grocery markets. The Company believes it will have growth
opportunities for the next several years through new customers and products in
the United States, expansion of its existing customer relationships, and through
export and shipments of specialty packaged produce.

         Landec manufactures its Intellipac breathable membrane packaging both
internally and through selected qualified contract manufacturers and markets and
sells Intellipac breathable membranes packaging directly to food distributors.

         APIO, INC.

         In December 1999, Landec completed the acquisition of Apio and
certain related entities. Landec paid $21.0 million in cash and Landec Common
Stock, before expenses, at close and $1.1 million in January 2001 with
another $4.1 million due to be paid in March 2001. An additional $11.4
million in future payments over the next four years may be paid, $5.9 million
of which is based on Apio achieving certain performance milestones in fiscal
year 2001. Apio had revenues of approximately $179 million in the
eleven-month period ended October 29, 2000.

         Based in Guadalupe, California, Apio consists of two major businesses
-- traditional whole produce harvesting, packing and marketing and specialty
packaged fresh-cut value-added processed products that are pre-cut, washed and
packaged in Landec's Intellipac packaging. The traditional produce service
business includes harvesting, packing, cooling and marketing of vegetables and
fruits on a contract basis for growers in California's Santa Maria, San Joaquin
and Imperial Valleys and in Arizona and Mexico. Apio currently has approximately
16,000 acres under contract, including access to approximately 20 percent of the
farmable land in the Santa Maria Valley. The fresh-cut value-added processing
products business, developed within the last 5 years, sources a variety of
fresh-cut vegetables to the top retail grocery chains representing over 6,900
retail stores and to over 600 club stores. During the eleven month period ended
October 29, 2000, Apio shipped more than 23 million cartons of produce to some
700 customers including leading supermarket retailers, wholesalers, foodservice
suppliers and club stores throughout the United States and internationally,
primarily in Asia.



                                      -7-
<PAGE>

         In September 2000, due to disappointing financial results, management
of Landec decided to discontinue processing fruit at its Reedley facility. The
Company has put the facility and the packing and cold storage assets up for
sale. The Company will continue to provide field support and sales and marketing
services to current contracted growers through Apio's existing staff and will
outsource all remaining services to third parties. As a result of the shutdown
of the Reedley facility, the Company recorded a $525,000 charge during the
fourth quarter of fiscal year 2000, primarily for severance and payroll related
costs. The sale is expected to result in a gain. The current net book value of
the assets is $3.0 million. The Company anticipates closing a sale during the
second fiscal quarter of 2001.

         There are five major distinguishing characteristics of Apio that
provide it a competitive advantage in the Food Products Technology market:

     -   Apio has structured its business as a full service provider of
         vegetables, fruits, and fresh-cut value-added produce. It is focused on
         developing its Eat Smart-TM- brand name for all of its fresh-cut
         value-added products. As retail grocery and club store chains
         consolidate, Apio is well positioned as a single source of a broad
         range of products.

     -   Apio is unique in that it takes on less farming risk than its
         competitors. Apio reduces its farming risk by not taking ownership of
         farmland, and instead, will contract with growers for produce and
         charge for services that include packing, cooling, shipping and
         marketing. Generally, Apio does not take title to the produce but
         receives a margin for services rendered. The year-round sourcing of
         produce is a key component to both the traditional produce business as
         well as the fresh-cut value-added processing business.

     -   Apio strategically invested in the rapidly growing fresh-cut
         value-added business. Apio's new 35,000 square foot value-added plant
         packed more than 59 million pounds in the past twelve months. Apio has
         one of the very few temperature controlled value-added processing
         plants in the U.S. Ninety percent of Apio's value-added products
         utilize Landec's proprietary Intellipac membrane technology.

     -   Apio is uniquely positioned to benefit from the growth in export sales
         to Asia and Europe over the next decade with its export business,
         CalEx. Through CalEx, Apio is currently one of the largest U.S.
         exporters of broccoli to Asia.

     -   Apio, through the use of Landec's Intellipac membrane technology, is in
         the early stages of changing selective categories of the whole produce
         business. Its introduction of iceless broccoli crowns in October 2000
         is the beginning of a conversion from the traditional packing and
         shipping of whole produce, which relied heavily on ice, to iceless
         products utilizing the Intellipac technology.

         AGRICULTURAL SEED TECHNOLOGY BUSINESS

         Landec formed its Landec Ag (formerly Intellicoat Corporation)
subsidiary in 1995. Landec Ag's strategy is to build a vertically integrated
seed technology company based on the proprietary Intellicoat-Registered
Trademark- seed coating technology and its eDC -- e-commerce, direct marketing
and consultative selling -- capabilities.

         INTELLICOAT SEED COATINGS

         Landec has developed and, through Landec Ag, is conducting field trials
of its Intellicoat seed coatings, an Intelimer-based agricultural material
designed to control seed germination timing, increase crop yields and extend the
crop planting windows. These coatings are initially being applied to corn,
soybean, and canola seeds. According to the U.S. Agricultural Statistics Board,
the total planted acreage in 1999 in North America for corn, soybean, and canola
seed exceeded 77.6 million, 77.2 million, and 1.1 million, respectively.

         Currently, farmers must predict the proper time to plant seeds. If the
seeds are planted too early, they may rot or suffer chilling injury due to the
absorption of water at cold soil temperatures. If they are planted too late, the
growing season may end prior to the crop reaching full maturity. In either case,
the resulting crop yields are sub-optimal. Moreover, the planting window can be
fairly brief, requiring the farmer to focus almost exclusively on planting
during this time. Seeds also germinate at different times due to variations in
absorption of water, thus providing for variations in the growth rate of the
crops.

         The Company's Intellicoat seed coating prevents planted seeds from
absorbing water when the ground temperature is below the coating's pre-set
temperature switch. Intellicoat seed coatings are designed to enable coated
seeds to be planted early without risk of chilling damage caused by the
absorption of water at cold soil



                                      -8-
<PAGE>

temperatures. As spring advances and soil temperatures rise to the
pre-determined switch temperature, the polymer's permeability increases and the
coated seeds absorb water and begin to germinate. The Company believes that
Intellicoat seed coatings provide the following advantages: more flexible timing
for planting, avoidance of chilling injury, more uniform germination and crop
growth, and protection against harmful fungi. As a result, the Company believes
that Intellicoat seed coatings offer the potential for significant improvements
in crop yields.

         In fiscal year 2000, the Company successfully launched its first
commercial product, Pollinator Plus-TM- coatings for inbred corn seed products.
As a result of the success realized in fiscal year 2000, the Company will be
expanding its sales of inbred corn seed coating products in fiscal year 2001 to
regional and national seed companies in the United States. This application is
targeted to approximately 640,000 acres of farmland in ten states. In addition,
based on the successful field trial results during 2000 for its Relay Crop-TM-
System for wheat and coated soybeans and its Early Plant-TM- hybrid coated corn,
the Company will be expanding its sales of each product. The Company's Relay
Crop System will allow farmers to plant and harvest two crops during the year on
the same acre of land, providing significant financial benefit for the farmer.
Early Plant hybrid corn will allow the farmer to plant 2 to 4 weeks earlier than
typically possible due to cold soil temperatures. By allowing the farmer to
plant earlier than normal Early Plant hybrid corn will enable large farmers to
utilize staff and equipment more efficiently and provide flexibility during the
critical planting period. Future crops under consideration include cotton,
canola, sugar beets and other vegetables.

         FIELDER'S CHOICE DIRECT (THE EDC COMPANY)

         In September 1997, Landec Ag completed the acquisition of Fielder's
Choice, a direct marketer of hybrid seed corn to farmers. Landec paid
approximately $3.6 million in cash and direct acquisition costs and $5.2 million
in Landec Common Stock for Fielder's Choice. Terms of the agreement include a
cash earn-out of $2.4 million based on future sales of Fielder's Choice
Direct-Registered Trademark- hybrid seed corn. As of October 29, 2000, $1.2
million of the earn-out had been earned and paid. Fielder's Choice had sales of
approximately $13.3 million and $15.2 million in the twelve months ended October
31, 1998 and 1999, respectively, and $17.2 million for the twelve months ended
October 29, 2000.

         Based in Monticello, Indiana, Fielder's Choice offers a comprehensive
line of corn hybrids to more than 16,000 producer seed customers in over forty
states through direct marketing programs. The success of Fielder's Choice comes,
in part, from its expertise in selling directly to the farmer producer,
bypassing the traditional and costly farmer-dealer system. The Company believes
that this direct channel of distribution provides a 35% cost advantage to its
farmer producers.

         In order to support its direct marketing programs, Fielder's Choice has
developed proprietary e-commerce direct marketing, and consultative selling
information technology, called "eDC", that enables state-of-the-art methods for
communicating with a broad array of farmers. This proprietary direct marketing
information technology includes a current database of over 80,000 farmers. In
August 1999, the Company launched the seed industry's first comprehensive
e-commerce website. This new website furthers the Company's ability to provide a
high level of consultation to Fielder's Choice customers, backed by a six day a
week call center capability that enables the Company to use the internet as a
natural extension of its direct marketing strategy.

         The acquisition of Fielder's Choice was strategic in providing a
cost-effective vehicle for marketing Intellicoat seed coating products. The
Company believes that the combination of a direct channel of distribution,
telephonic and electronic commerce capabilities will enable Intellicoat to more
quickly achieve meaningful market penetration.

         TECHNOLOGY LICENSING/RESEARCH & DEVELOPMENT BUSINESSES

         The Company believes its technology has commercial potential in a wide
range of industrial, consumer and medical applications beyond those identified
in its core businesses. In order to exploit these opportunities, the Company has
entered into licensing and collaborative corporate agreements for product
development and/or distribution in certain fields.

         INDUSTRIAL MATERIALS AND ADHESIVES

         Landec's industrial products development strategy is to focus on
catalysts, resins, and adhesives in the polymer materials market. During the
product development stage, the Company identifies corporate partners to support
the ongoing development and testing of these products, with the ultimate goal of
licensing the applications at the appropriate time.



                                      -9-
<PAGE>

         INTELIMER POLYMER SYSTEMS. The Company is developing catalysts,
curative, and curing agent systems based on its Intelimer technology for use in
one-package thermoset products. These systems can incorporate catalysts,
curatives and curing agents in a unique polymer envelope that prevents
interaction by these agents with the resin when the polymer envelope is in its
impermeable state. This characteristic allows all components of the thermoset
product to be pre-mixed and stored at room temperature, and provides longer
shelf life. Landec's unique polymer envelope system can be designed with a
pre-set opening temperature switch to correspond with elevated temperatures used
during standard manufacturing processes. When the thermoset system is exposed to
the pre-set switch temperature, the Intelimer polymer abruptly changes to its
permeable state, exposing the catalyst to the resin and initiating the curing
process. In addition, the Intelimer polymer can be designed to change state over
a predetermined temperature range in order to achieve a desired reaction time.

         Thermoset catalyst systems can eliminate the need for costly on-site
mixing equipment and because thermosets can be pre-mixed by the manufacturer,
will minimize sub-optimal product performance due to incorrect component mixing
ratios. Furthermore, since the thermosets will not cure until exposed to
elevated temperatures, pot life should be extended, resulting in significantly
reduced waste and labor expense. The Company believes that the ability to
control reaction time also provides advantages over existing thermoset systems
and can enhance the throughput of targeted manufacturing customers. Landec
received the R&D 100 Award from R&D Magazine for its Intelimer Polymer Systems
product line in 1997 in recognition of the unique capabilities of this
technology. Certain Intelimer Polymer Systems products are currently being sold
in the U.S. and Europe while others are in developmental stages.

         DOCK RESINS. In April 1997, Landec completed the acquisition of Dock
Resins, a privately-held manufacturer and marketer of specialty acrylic and
other polymers based in Linden, New Jersey. Landec paid approximately $13.7
million in cash, a promissory note and direct acquisition costs and $2.1 million
in Landec Common Stock to acquire Dock Resins. The acquisition of Dock Resins
provided the Company with immediate access to large-scale polymer manufacturing
as well as a built-in customer base and national distribution network.

         Dock Resins also sells products under the Doresco trademark which are
used by more than 300 customers throughout the United States and other countries
in the coatings, printing inks, laminating and adhesives markets. Dock Resins is
a supplier of proprietary polymers including acrylic, methacrylic, alkyd,
polyester, urethane and polyamide polymers to film converters engaged in hot
stamping, decorative wood grain, automotive interiors, holograms, and metal foil
applications. Dock Resins also supplies products to a number of other markets
such as graphic arts, automotive refinishing, construction, pressure-sensitive
adhesives, paper coatings, caulks, concrete curing compounds and sealers. Dock
Resins had sales of approximately $15.4 million and $14.0 million in the twelve
months ended October 31, 1998 and 1999, respectively and $12.4 for the twelve
months ended October 29, 2000.

         HITACHI CHEMICAL. The Company entered into two separate collaborations
with Hitachi Chemical ("Hitachi") in the areas of industrial adhesives and
Intelimer Polymer Systems. On October 1, 1994, the Company entered into a
non-exclusive license agreement with Hitachi in the industrial adhesives area.
The agreement provides Hitachi with a non-exclusive license to manufacture and
sell products using Landec's Intelimer materials in certain Asian countries.
Landec received up-front license fees upon signing the agreement and is entitled
to future royalties based on net sales by Hitachi of the licensed products. This
agreement on industrial adhesives has terminated. Any fees paid to the Company
are non-refundable.

         On August 10, 1995, the Company entered into the second collaboration
with Hitachi in the Intelimer Polymer Systems area. The agreement provided
Hitachi with an exclusive license to use and sell Landec's Intelimer Polymer
Systems in industrial latent curing products in certain Asian countries. Landec
is entitled to be the exclusive supplier of Intelimer Polymer Systems to Hitachi
for at least seven years after commercialization which began in February 2000.
Landec received an up-front license payment upon signing this agreement and
research and development funding over three years and is entitled to receive
future royalties based on net sales by Hitachi of the licensed products. Any
fees paid to the Company are non-refundable. This agreement has been converted
to a non-exclusive agreement except for one application field.

         NITTA CORPORATION. On March 14, 1995, the Company entered into a
license agreement with Nitta Corporation ("Nitta") in the industrial adhesives
area. The agreement provides Nitta with a co-exclusive license to manufacture
and sell products using Landec's Intelimer materials in certain Asian countries.
Landec received up-front license fees upon signing the agreement and is entitled
to future royalties based on net sales by Nitta of the licensed products. Any
fees paid to the Company are non-refundable. This agreement is terminable at
Nitta's option. Nitta and the Company entered into an additional exclusive
license arrangement in February 1996 covering Landec's medical adhesives
technology for use in Asia. The Company received up-front license fees upon
execution of the agreement and research and development payments and is entitled
to receive future royalties under this agreement. Any fees paid to the Company




                                      -10-
<PAGE>

are non-refundable. Nitta and the Company also entered into another worldwide
exclusive agreement on January 1, 1998 in the area of industrial adhesives
specific to one field of electronic polishing adhesives. The Company received
research and development payments as a part of this agreement. As of January
1999, the Company had no future obligations under any of the aforementioned
agreements with Nitta.

         UCB CHEMICALS CORPORATION. On April 10, 2000, the Company entered into
a one-year research and development agreement with UCB Chemicals Corporation
("UCB"), an operating entity of UCB S.A., a major pharmaceutical and chemical
company located in Belgium. UCB's chemical business is a major supplier of
radiation curing and powder coating resins. Under this agreement, the Company
will explore polymer systems for evaluation in several industrial product
applications. The program is exploratory in nature and, if successful, could
lead to a supply agreement for additive materials for UCB products.

         MEDICAL APPLICATIONS

         PORT-TM- OPHTHALMIC DEVICES. Landec developed the PORT (Punctal
Occluder for the Retention of Tears) ophthalmic device initially to address a
common, yet poorly diagnosed condition known as dry eye that is estimated to
affect 30 million Americans annually. The device consists of a physician-applied
applicator containing solid Intelimer material that transforms into a flowable,
viscous state when heated slightly above body temperature. After inserting the
Intelimer material into the lacrimal drainage duct, it quickly solidifies into a
form-fitting, solid plug. Occlusion of the lacrimal drainage duct allows the
patient to retain tear fluid and thereby provides relief and therapy to the dry
eye patient.

         The PORT product is currently in final stages of human clinical trials.
Landec and its partner, Alcon, a wholly-owned subsidiary of Nestle S.A., believe
that PORT plugs will have additional ophthalmic applications beyond the dry eye
market. This would include applications for people who cannot wear contact
lenses due to limited tear fluid retention and patients receiving therapeutic
drugs via eye drops that require longer retention in the eye.

         In December 1997, Landec licensed the rights to worldwide
manufacturing, marketing and distribution of its PORT ophthalmic device to
Alcon. Under the terms of the transaction, Landec received an up-front cash
payment of $500,000, a $750,000 milestone payment in November 1998, research and
development funding and will receive ongoing royalties of 11.5% on product sales
of each PORT device over an approximately 15-year period. Any fees paid to the
Company are non-refundable. In September 1999, Alcon submitted a 510K
application to the FDA seeking approval to commercially sell the PORT device.
Landec will continue to provide development support on a contract basis through
the FDA approval process and product launch. Landec also provides the Intelimer
polymer to Alcon which is used in the PORT device.

         CONVATEC. On October 11, 1999, the Company entered into a joint
development agreement with ConvaTec, a division of Bristol-Myers Squibb, under
which Landec will develop adhesive film products for selected ConvaTec medical
products. Landec is receiving support funding for this program. Upon completion
of this agreement, the companies have the option to consider a license and
supply agreement where Landec would supply materials to ConvaTec for use in
specific medical devices.

         AGRICULTURAL APPLICATIONS

         CELPRIL. On September 12, 2000, the Company entered into a joint
development agreement with CelPril, a subsidiary of Aventis CropScience, under
which Landec will develop seed coatings for fall and spring planted canola and
assist CelPril in conducting field trials. Landec is receiving support funding
for this program. Upon completion of this agreement, the companies have the
option to consider additional support funding and a license and supply agreement
where Landec would supply materials to CelPril for use in specific canola seed
coating applications.

SALES AND MARKETING

         Each of the Company's core businesses are supported by dedicated sales
and marketing resources. The Company intends to develop its internal sales
capacity as more products progress toward commercialization and as business
volume expands geographically.

         FOOD PRODUCTS TECHNOLOGY BUSINESS

         Apio has over 22 sales people, located in central California and
throughout the U.S., supporting both the traditional produce marketing business
and the specialty packaged value-added produce business.



                                      -11-
<PAGE>

         AGRICULTURAL SEED TECHNOLOGY BUSINESS

         In preparation for the launch of Early Plant-TM- hybrid corn seed and
Relay Crop-TM- wheat/soybean products, Landec Ag has identified a small internal
sales force to target a very focused group of seed customers. For future coated
seed products that are sold directly to farmers, the Company will utilize over
50 direct seed sales consultants and associates located in Monticello, Indiana.
These consultants and associates also support Fielder's Choice in its direct
marketing of corn seed. Customer contacts are made based on direct responses and
inquiries from customers.

         OTHER

         Dock Resins sales are carried out through a small direct sales group
and network of existing manufacturers' representatives and distributed through
public warehouses. Sales are supported by internal sales and technical service
resources at Dock Resins. Intelimer Polymer Systems sales are made through Dock
Resins in the U.S. and in Europe through Akzo Nobel, an international
distributor.

MANUFACTURING AND PROCESSING

         Landec intends to control the manufacturing of its own products
whenever possible, as it believes that there is considerable manufacturing
margin opportunity in its products. In addition, the Company believes that
know-how and trade secrets can be better maintained by Landec retaining
manufacturing capability in-house.


         POLYMER MANUFACTURING - DOCK RESINS CORPORATION

         Dock Resins has manufacturing facilities that are flexible and
adaptable to a wide range of processes. Its capabilities include various
polymerization processes, grafting, dispersing, blending, pilot plant scale-ups
and general synthesis. The Company has increased the capacity of these
facilities in 1998 and 1999 in order to offer new products to new and existing
customers and to supply polymer products to Landec's other businesses. Dock
Resins' policy is to be a leader in safety, health and environmental protection.
In 1998 and 1999, in order to offer new products to new and existing customers
and to supply polymer products to Landec's other businesses. Dock Resins passed
a voluntary comprehensive health and safety evaluation by the United States
Occupational Safety and Health Administration (OSHA). As a result, OSHA awarded
recognition to Dock Resins as a Merit Site in 1998 and a Star Site in 1999 in
OSHA's Voluntary Protection Program.

         FOOD PRODUCTS TECHNOLOGY BUSINESS

         The manufacturing process for the Company's Intellipac breathable
membrane products is comprised of polymer manufacturing, membrane manufacturing
and label conversion. Dock Resins manufactures virtually all of the polymers for
the Intellipac breathable membranes. Select outside contractors currently
manufacture the breathable membranes and Landec has recently transitioned most
of the label conversion manufacturing to its Menlo Park facility to meet the
increasing product demand and provide additional developmental capabilities.

         Apio processes all of its fresh-cut value-added products in a 35,000
square foot, state-of-the-art processing facility located in Guadalupe,
California. The Company is currently running two shifts per day, seven days a
week, and utilizes contract laborers from a third party contact labor supplier.
Cooling of produce is done through third parties and Apio Cooling, a separate
company of which Apio has a 60% ownership interest and is the general partner.

         AGRICULTURAL SEED TECHNOLOGY BUSINESS

         During fiscal year 2000, the Company completed construction of a pilot
manufacturing facility in Indiana to support the commercialization of its Relay
Crop System for wheat/coated soybean products and for Early Plant hybrid corn.
The new facility will utilize a new continuous coating process that has
increased seed coating capabilities by tenfold compared to the previous system
using batch coaters. Fielder's Choice purchases its hybrid seed corn from an
established producer under an exclusive purchase agreement.

         GENERAL

         Many of the raw materials used in manufacturing certain of the
Company's products are currently purchased from a single source, including
certain monomers used to synthesize Intelimer polymers and substrate materials
for the Company's breathable membrane products. In addition, virtually all of
the hybrid corn varieties sold by Fielder's Choice are purchased from a single
source. Upon manufacturing scale-up and as hybrid corn sales



                                      -12-
<PAGE>

increase, the Company may enter into alternative supply arrangements. Although
to date the Company has not experienced difficulty acquiring materials for the
manufacture of its products nor has Fielder's Choice experienced difficulty in
acquiring hybrid corn varieties, no assurance can be given that interruptions in
supplies will not occur in the future, that the Company will be able to obtain
substitute vendors, or that the Company will be able to procure comparable
materials or hybrid corn varieties at similar prices and terms within a
reasonable time. Any such interruption of supply could have a material adverse
effect on the Company's ability to manufacture and distribute its products and,
consequently, could materially and adversely affect the Company's business,
operating results and financial condition.

         Landec has historically relied on the guidance of Good Manufacturing
Practices ("GMP") in developing standardized research and manufacturing
processes and procedures. Having entered into licensing agreements for the PORT
device, the Company is no longer required to adhere to GMPs. The Company desires
to maintain an externally audited quality system and has achieved ISO 9001
registration for the Menlo Park research and development site in fiscal year
1999 and for both the Menlo Park research and development and manufacturing
sites in fiscal year 2000. Such registration is required in order for the
Company to sell product to certain potential customers, primarily in Europe.

RESEARCH AND DEVELOPMENT

         Landec is focusing its research and development resources on both
existing and new applications of its Intelimer technology. Expenditures for
research and development in fiscal year 2000 were $4.7 million, compared with
$5.8 million in fiscal year 1999 and $5.7 million in fiscal year 1998. In fiscal
year 2000, research and development expenditures funded by corporate partners
were $539,000 compared with $770,000 in fiscal year 1999 and $1.4 million in
fiscal year 1998. The Company may continue to seek funds for applied materials
research programs from U.S. government agencies as well as from commercial
entities. The Company anticipates that it will continue to have significant
research and development expenditures in order to maintain its competitive
position with a continuing flow of innovative, high-quality products and
services. As of October 29, 2000, Landec had 27 employees, including 7 with
Ph.D.'s, engaged in research and development with experience in polymer and
analytical chemistry, product application, product formulation, mechanical and
chemical engineering.

COMPETITION

         The Company operates in highly competitive and rapidly evolving fields,
and new developments are expected to continue at a rapid pace. Competition from
large food packaging and agricultural companies is expected to be intense. In
addition, the nature of the Company's collaborative arrangements and its
technology licensing business may result in its corporate partners and licensees
becoming competitors of the Company. Many of these competitors have
substantially greater financial and technical resources and production and
marketing capabilities than the Company, and many have substantially greater
experience in conducting field trials, obtaining regulatory approvals and
manufacturing and marketing commercial products. There can be no assurance that
these competitors will not succeed in developing alternative technologies and
products that are more effective, easier to use or less expensive than those
which have been or are being developed by the Company or that would render the
Company's technology and products obsolete and non-competitive.

PATENTS AND PROPRIETARY RIGHTS

         The Company's success depends in large part on its ability to obtain
patents, maintain trade secret protection and operate without infringing on the
proprietary rights of third parties. The Company has been granted sixteen U.S.
patents with expiration dates ranging from 2006 to 2018 and has filed
applications for additional U.S. patents, as well as certain corresponding
patent applications outside the United States, relating to the Company's
technology. The Company's issued patents include claims relating to
compositions, devices and use of a class of temperature sensitive polymers that
exhibit distinctive properties of permeability, adhesion and viscosity. There
can be no assurance that any of the pending patent applications will be
approved, that the Company will develop additional proprietary products that are
patentable, that any patents issued to the Company will provide the Company with
competitive advantages or will not be challenged by any third parties or that
the patents of others will not prevent the commercialization of products
incorporating the Company's technology. Furthermore, there can be no assurance
that others will not independently develop similar products, duplicate any of
the Company's products or design around the Company's patents. Any of the
foregoing results could have a material adverse effect on the Company's
business, operating results and financial condition.

         The commercial success of the Company will also depend, in part, on its
ability to avoid infringing patents issued to others. The Company has received,
and may in the future receive, from third parties, including some of its




                                      -13-
<PAGE>

competitors, notices claiming that it is infringing third party patents or other
proprietary rights. If the Company were determined to be infringing any
third-party patent, the Company could be required to pay damages, alter its
products or processes, obtain licenses or cease certain activities. In addition,
if patents are issued to others which contain claims that compete or conflict
with those of the Company and such competing or conflicting claims are
ultimately determined to be valid, the Company may be required to pay damages,
to obtain licenses to these patents, to develop or obtain alternative technology
or to cease using such technology. If the Company is required to obtain any
licenses, there can be no assurance that the Company will be able to do so on
commercially favorable terms, if at all. The Company's failure to obtain a
license to any technology that it may require to commercialize its products
could have a material adverse impact on the Company's business, operating
results and financial condition.

         Litigation, which could result in substantial costs to the Company, may
also be necessary to enforce any patents issued or licensed to the Company or to
determine the scope and validity of third-party proprietary rights. If
competitors of the Company prepare and file patent applications in the United
States that claim technology also claimed by the Company, the Company may have
to participate in interference proceedings declared by the U.S. Patent and
Trademark Office to determine priority of invention, which could result in
substantial cost to and diversion of effort by the Company, even if the eventual
outcome is favorable to the Company. Any such litigation or interference
proceeding, regardless of outcome, could be expensive and time consuming and
could subject the Company to significant liabilities to third parties, require
disputed rights to be licensed from third parties or require the Company to
cease using such technology and consequently, could have a material adverse
effect on the Company's business, operating results and financial condition.

         In addition to patent protection, the Company also relies on trade
secrets, proprietary know-how and technological advances which the Company seeks
to protect, in part, by confidentiality agreements with its collaborators,
employees and consultants. There can be no assurance that these agreements will
not be breached, that the Company will have adequate remedies for any breach, or
that the Company's trade secrets and proprietary know-how will not otherwise
become known or be independently discovered by others.

GOVERNMENT REGULATIONS

         The Company's products and operations are subject to regulation in the
United States and foreign countries.

         FOOD PRODUCTS TECHNOLOGY BUSINESS

         The Company's food packaging products are subject to regulation under
the Food, Drug and Cosmetic Act ("FDC Act"). Under the FDC Act any substance
that when used as intended may reasonably be expected to become, directly or
indirectly, a component or otherwise affect the characteristics of any food may
be regulated as a food additive unless the substance is generally recognized as
safe. Food additives may be substances added directly to food, such as
preservatives, or substances that could indirectly become a component of food,
such as waxes, adhesives and packaging materials.

         A food additive, whether direct or indirect, must be covered by a
specific food additive regulation issued by the FDA. The Company believes its
Intellipac breathable membrane products are not subject to regulation as food
additives because these products are not expected to become a component of food
under their expected conditions of use. If the FDA were to determine that the
Company's Intellipac breathable membrane products are food additives, the
Company may be required to submit a food additive petition. The food additive
petition process is lengthy, expensive and uncertain. A determination by the FDA
that a food additive petition is necessary would have a material adverse effect
on the Company's business, operating results and financial condition.

         The Company's agricultural operations are subject to a variety of
environmental laws including the Food Quality Protection Act of 1966, the Clean
Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the
Federal Insecticide, Fungicide and Rodenticide Act and the Comprehensive
Environmental Response, Compensation and Liability Act. Compliance with these
laws and related regulations is an ongoing process. Environmental concerns are,
however, inherent in most agricultural operations, including those conducted by
the Company, and there can be no assurance that the cost of compliance with
environmental laws and regulations will not be material. Moreover, it is
possible that future developments, such as increasingly strict environmental
laws and enforcement policies thereunder, and further restrictions on the use of
manufacturing chemicals could result in increased compliance costs.

         As a result of the Apio acquisition, the Company is subject to USDA
rules and regulations concerning the safety of the food products handled and
sold by Apio, and the facilities in which they are packed and processed. Failure
to comply with the applicable regulatory requirements can, among other things,
result in fines, injunctions,



                                      -14-
<PAGE>

civil penalties, suspensions or withdrawal of regulatory approvals, product
recalls, product seizures, including cessation of manufacturing and sales,
operating restrictions and criminal prosecution.

         AGRICULTURAL SEED TECHNOLOGY BUSINESS

         The Company's agricultural products are subject to regulations of the
United States Department of Agriculture ("USDA") and the EPA. The Company
believes its current Intellicoat seed coatings are not pesticides as defined in
the Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA") and are not
subject to pesticide regulation requirements. The process of meeting pesticide
registration requirements is lengthy, expensive and uncertain, and may require
additional studies by the Company. There can be no assurance that future
products will not be regulated as pesticides. In addition, the Company believes
that its Intellicoat seed coatings will not become a component of the
agricultural products which are produced from the seeds to which the coatings
are applied and therefore are not subject to regulation by the FDA as a food
additive. While the Company believes that it will be able to obtain approval
from such agencies to distribute its products, there can be no assurance that
the Company will obtain necessary approvals without substantial expense or
delay, if at all.

         POLYMER MANUFACTURE

         The Company's manufacture of polymers is subject to regulation by the
EPA under the Toxic Substances Control Act ("TSCA"). Pursuant to TSCA,
manufacturers of new chemical substances are required to provide a
Pre-Manufacturing Notice ("PMN") prior to manufacturing the new chemical
substance. After review of the PMN, the EPA may require more extensive testing
to establish the safety of the chemical, or limit or prohibit the manufacture or
use of the chemical. To date, PMNs submitted by the Company have been approved
by the EPA without any additional testing requirements or limitation on
manufacturing or use. In addition, the ongoing manufacture of Dock Resins'
existing product line is subject to state and federal environmental and safety
regulations. No assurance can be given that the EPA will grant similar approval
for future PMNs submitted by the Company.

         OTHER

         The Company and its products under development may also be subject to
other federal, state and local laws, regulations and recommendations. Although
Landec believes that it will be able to comply with all applicable regulations
regarding the manufacture and sale of its products and polymer materials, such
regulations are always subject to change and depend heavily on administrative
interpretations and the country in which the products are sold. There can be no
assurance that future changes in regulations or interpretations made by the FDA,
EPA or other regulatory bodies, with possible retroactive effect, relating to
such matters as safe working conditions, laboratory and manufacturing practices,
environmental controls, fire hazard control, and disposal of hazardous or
potentially hazardous substances will not adversely affect the Company's
business. There can also be no assurance that the Company will not be required
to incur significant costs to comply with such laws and regulations in the
future, or that such laws or regulations will not have a material adverse effect
upon the Company's ability to do business. Furthermore, the introduction of the
Company's products in foreign markets may require obtaining foreign regulatory
clearances. There can be no assurance that the Company will be able to obtain
regulatory clearances for its products in such foreign markets.

EMPLOYEES

         As of October 29, 2000, Landec had 460 full-time employees, of whom 233
were dedicated to research, development, manufacturing, quality control and
regulatory affairs and 227 were dedicated to sales, marketing and administrative
activities. Landec intends to recruit additional personnel in connection with
the development, manufacturing and marketing of its products. None of Landec's
employees is represented by a union, and Landec believes relationships with its
employees are good.


                                      -15-
<PAGE>

ITEM 2.  PROPERTIES

         The Company has offices in Menlo Park, Guadalupe and Reedley,
California, Linden, New Jersey and Monticello, Indiana. During fiscal year 2000,
Landec constructed a 4,000 square foot facility in West Lebanon, Indiana to
support the seed coating efforts of the Intellicoat seed coating business. The
Reedley facility is currently for sale with an offer pending.

These properties are described below:

<TABLE>
<CAPTION>
                                                                                            Acres
                           Business                                                          of           Lease
  Location                  Segment       Ownership                Facilities               Land        Expiration
--------------             --------       ---------      --------------------------------   -----      ------------
<S>                      <C>               <C>          <C>                                <C>         <C>
Menlo Park, CA                All            Leased      21,000 square feet of office and     --        12/31/01(1)
                                                         laboratory space

Menlo Park, CA                All          Subleased     11,000 square feet of warehouse      --         7/31/02(1)
                                                         and manufacturing space

Linden, NJ                 Industrial        Owned       22,000 square feet of office,        2.1          --
                              High                       laboratory, production,
                          Performance                    warehouse, and ancillary space
                           Materials

Monticello, IN            Agricultural       Owned       19,400 square feet of office         0.5          --
                              Seed                       space
                           Technology

West Lebanon, IN          Agricultural       Owned       4,000 square feet of warehouse       --           --
                              Seed                       and manufacturing space
                           Technology

Guadalupe, CA            Food Products       Owned       94,000 square feet of office        11.6          --
                           Technology                    space, manufacturing and cold
                                                         storage

Reedley, CA(2)           Food Products       Owned       152,600 square feet of office       19.3          --
                           Technology                    space, manufacturing and cold
                                                         storage
</TABLE>

(1)      Lease contains one two-year renewal option.
(2)      Currently for sale.


ITEM 3.  LEGAL PROCEEDINGS

         The Company is currently not a party to any material legal proceedings.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         There were no matters submitted to a vote of security holders during
the fourth quarter of the Company's fiscal year ending October 29, 2000.


                                      -16-
<PAGE>

                                     PART II


ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The Common Stock is traded on the Nasdaq National Market under the
symbol "LNDC". The following table sets forth for each period indicated the high
and low sales prices for the Common Stock as reported on the Nasdaq National
Market.

<TABLE>
<CAPTION>
FISCAL YEAR 2000
----------------
                                                                                   HIGH         LOW
                                                                                   ----         ---
<S>                                                                                <C>          <C>
         4th Quarter ending October 29, 2000.......................................$6.63        $4.13

         3rd Quarter ending July 30, 2000..........................................$6.75        $4.00

         2nd Quarter ending April 30, 2000.........................................$7.50        $5.06

         1st Quarter ending January 30, 2000.......................................$8.81        $4.56

FISCAL YEAR 1999
----------------
                                                                                   HIGH         LOW
                                                                                   ----         ---
         4th Quarter ending October 31, 1999.......................................$8.41        $2.63

         3rd Quarter ending July 31, 1999..........................................$4.06        $3.00

         2nd Quarter ending April 30, 1999.........................................$5.13        $3.38

         1st Quarter ending January 31, 1999.......................................$6.00        $4.00
</TABLE>

         There were approximately 164 holders of record of 16,149,086 shares of
outstanding Common Stock as of January 5, 2001. Since holders are listed under
their brokerage firm's names, the actual number of shareholders is higher. The
Company has not paid any dividends on the Common Stock since its inception. The
Company presently intends to retain all future earnings, if any, for its
business and does not anticipate paying cash dividends on its Common Stock in
the foreseeable future.

         In connection with the sale of Series D Preferred Stock in July 1993,
the Company issued warrants to purchase 186,349 shares of Common Stock at an
exercise price of $4.31 per share for $5,357 in cash. In a cashless exercise
during fiscal year 1998, 46,587 shares were issued in exchange for the warrants.

         In October 1998, certain directors and officers of the Company
purchased 200,425 shares of Common Stock for between $3.75 and $3.94 per share
for $776,000.

         Pursuant to a Series A Preferred Stock Purchase Agreement (the
"Purchase Agreement") dated November 19, 1999, by and among the Company and
Frederick Frank, the Company completed a financing that raised approximately
$10.0 million through a private placement of its Series A-1 Preferred Stock and
Series A-2 Preferred Stock (the "Preferred Stock"). Pursuant to the Purchase
Agreement, the Company issued 166,667 shares of Preferred Stock of the Company
at $60.00 per share (representing 1,666,670 shares of Common Stock on a
converted basis). Frederick Frank was elected as a director of the Company in
December 1999.

         In connection with the Company's acquisition of Apio, Inc. on December
2, 1999, the prior owners of Apio received 2.5 million shares of Common Stock.
As compensation for services rendered by Lehman Brothers Inc. in connection with
the closing of the Apio acquisition, the Company issued 62,500 shares of Common
Stock to Lehman Brothers, Inc. at $6.00 per share.

         The issuance of securities in this Item 5 was deemed to be exempt from
registration under the Securities Act of 1933, as amended (the "Act"), in
reliance on Section 4(2) of the Act as a transaction by an issuer not involving
any public offering. The recipients of the securities in such transaction
represented their intention to acquire the securities for investment only and
not with a view to or for sale in connection with any distribution thereof and
appropriate legends were affixed to the securities issued in such transaction.
The recipients were given adequate access to information about the Company.



                                      -17-
<PAGE>

ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

         The information set forth below is not necessarily indicative of the
results of future operations and should be read in conjunction with the
information contained in Item 7 -- Management's Discussion and Analysis of
Financial Condition and Results of Operations and the Consolidated Financial
Statements and Notes to Consolidated Financial Statements contained in Item 8 of
this report.








                                      -18-
<PAGE>

<TABLE>
<CAPTION>
                                                          YEAR ENDED
                                                          OCTOBER 29,               YEAR ENDED OCTOBER 31,
                                                          -----------    --------------------------------------------
STATEMENT OF OPERATIONS DATA:                                2000           1999         1998        1997         1996
                                                                     (in thousands, except per share data)
<S>                                                      <C>              <C>         <C>         <C>         <C>
Revenues:
   Product sales.........................................    $ 135,412    $ 33,927    $ 31,664    $  8,653    $   371
   Services revenue ......................................      71,280          --          --          --         --
   Services revenue, related party .......................       1,898          --          --          --         --
   Research, development and royalty revenues ............         586         770       1,352         863      1,096
   License fees ..........................................         374         750         500          --        600
                                                             ---------    --------    --------    --------    -------
      Total revenues .....................................     209,550      35,447      33,516       9,516      2,067

Cost of revenue:
   Cost of product sales .................................     113,113      21,476      20,308       6,215        422
   Cost of services revenue ..............................      63,075          --          --          --         --
                                                             ---------    --------    --------    --------    -------
Total cost of revenue ....................................     176,188      21,476      20,308       6,215        422

Gross profit .............................................      33,362      13,971      13,208       3,301      1,645

Operating costs and expenses:
   Research and development ..............................       4,696       5,758       5,713       4,608      3,588
   Selling, general and administrative ...................      28,879      11,192      10,835       4,664      2,367
   Exit of fruit processing business .....................         525          --          --          --         --
   Purchased in-process research and development .........          --          --          --       3,022         --
                                                             ---------    --------    --------    --------    -------
      Total operating costs and expenses .................      34,100      16,950      16,548      12,294      5,955
                                                             ---------    --------    --------    --------    -------

Operating loss ...........................................        (738)     (2,979)     (3,340)     (8,993)    (4,310)

Interest income ..........................................         877         363         737       1,726      1,546
Interest expense .........................................      (2,335)        (99)       (137)       (319)       (59)
Other income .............................................          70          --          --          --         --
                                                             ---------    --------    --------    --------    -------
Loss from continuing operations before income taxes ......      (2,126)     (2,715)     (2,740)     (7,586)    (2,823)
Provision for income taxes ...............................          42         (54)       (150)         --         --
                                                             ---------    --------    --------    --------    -------
Loss from continuing operations ..........................      (2,084)     (2,769)     (2,890)     (7,586)    (2,823)

Discontinued Operations:
   Loss from discontinued QuickCast operations ...........          --          --          --      (1,059)    (1,377)
   Gain on disposal of QuickCast operations ..............          --          --          --          70         --
                                                             ---------    --------    --------    --------    -------
Loss from discontinued operations ........................          --          --          --        (989)    (1,377)
                                                             ---------    --------    --------    --------    -------
Net loss before cumulative effect of accounting change ...      (2,084)     (2,769)     (2,890)     (8,575)    (4,200)


Cumulative effect of change in accounting for upfront
   license fee revenue ...................................      (1,914)         --          --          --         --
                                                             ---------    --------    --------    --------    -------
Net Loss .................................................   $  (3,998)   $ (2,769)   $ (2,890)   $ (8,575)   $(4,200)
                                                             =========    ========    ========    ========    =======
Basic and diluted net loss per share:
   Continuing operations .................................   $    (.13)   $   (.21)   $   (.23)   $   (.68)   $  (.37)
   Discontinued operations ...............................          --          --          --        (.09)      (.18)
   Cumulative effect of change in accounting .............        (.12)         --          --          --         --
                                                             ---------    --------    --------    --------    -------
Basic and diluted net loss per share .....................   $    (.25)   $   (.21)   $   (.23)   $   (.77)   $  (.55)
                                                             =========    ========    ========    ========    =======
Pro forma amounts assuming the accounting change is
   applied retroactively:
    Net loss .............................................   $  (2,084)   $ (3,145)   $ (3,070)   $ (8,289)   $(3,914)
                                                             =========    ========    ========    ========    =======
    Net loss per share ...................................   $    (.13)   $   (.24)   $   (.24)   $   (.74)   $  (.51)
                                                             =========    ========    ========    ========    =======

Shares used in computing basic and diluted net loss
   per share .............................................      15,796      13,273      12,773      11,144      7,699
                                                             =========    ========    ========    ========    =======
</TABLE>



                                      -19-
<PAGE>

<TABLE>
<CAPTION>
                                                      OCTOBER 29,                          OCTOBER 31,
                                                      -----------     -------------------------------------------------
                                                         2000          1999            1998        1997         1996
                                                      -----------     --------        --------    ---------    --------
BALANCE SHEET DATA:                                                             (IN THOUSANDS)

<S>                                                <C>                <C>             <C>          <C>         <C>
Cash and cash equivalents..........................   $   9,589       $  3,203        $ 10,177     $ 14,669    $ 36,510
Total assets .......................................    133,252         40,708          42,356       50,160      38,358
Debt ...............................................     29,824          2,762           2,811           32          --
Convertible preferred stock ........................      9,149             --              --           --          --
Accumulated deficit ................................    (49,526)       (45,528)        (42,756)     (39,858)    (31,278)
Total shareholders' equity.........................   $  52,178       $ 31,761        $ 33,688     $ 35,615    $ 36,640
</TABLE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

         The following discussion should be read in conjunction with the
Company's Consolidated Financial Statements contained in Item 8 of this report.
Except for the historical information contained herein, the matters discussed in
this report are forward-looking statements that involve certain risks and
uncertainties that could cause actual results to differ materially from those in
the forward-looking statements. Potential risks and uncertainties include,
without limitation, those mentioned in this report and, in particular, the
factors described below under "Additional Factors That May Affect Future
Results".

OVERVIEW

         Since its inception in October 1986, the Company has been primarily
engaged in the research and development of its Intelimer technology and related
products. The Company has launched four product lines from this core development
- QuickCast-TM- splints and casts, in April 1994, which was subsequently sold to
Bissell Healthcare Corporation in August 1997; Intellipac breathable membranes
for the fresh-cut produce packaging market, in September 1995; Intelimer Polymer
Systems for the industrial specialties market in June 1997; and Intellicoat
coated inbred corn seeds in the Fall of 1999.

         Revenues related to research contracts are recognized ratably over the
related funding periods for each contract, which is generally as research is
performed. Product sales are recognized upon shipment except for shipments sent
FOB destination in which revenue is recognized upon receipt by the customer.
Services revenue is recognized when the service is rendered.

         The Company previously recognized noncancellable, nonrefundable license
fees as revenue when received and when all significant contractual obligations
of the company relating to the fees had been met. Effective November 1, 1999,
the Company changed its method of accounting for noncancellable, nonrefundable
license fees to recognize such fees over the research and development period of
the agreement, as well as the term of any related supply agreement entered into
concurrently with the license when the risk associated with commercialization of
a product is non-substantive at the outset of the arrangement. The Company
believes the change in accounting principle is preferable based on guidance
provided in SEC Staff Accounting Bulletin No. 101 - REVENUE RECOGNITION IN
FINANCIAL STATEMENTS. The $1.9 million cumulative effect of the change in
accounting principle, calculated as of November 1, 1999, was reported as a
charge in the year ended October 29, 2000.

         On December 2, 1999, the Company acquired Apio, Inc and certain related
entities ("Apio"). Apio is a leading marketer and packer of produce and
specialty packaged fresh-cut vegetables. See "Business - Description of Core
Business: Food Products Technology Business - Apio, Inc."

         During fiscal years 1998 through 1999, the Company managed its
operations in three business segments - Food Products Technology, Agricultural
Seed Technology and Industrial High Performance Materials.

         With the acquisition of Apio, the Company will be focusing on two core
businesses - Food Products Technology and Agricultural Seed Technology. The Food
Products Technology segment combines the Company's Intellipac breathable
membrane technology with Apio's fresh-cut produce business. The Agricultural
Seed Technology segment integrates the Intellicoat seed coating technology with
Fielder's Choice's direct marketing, telephone sales and e-commerce distribution
capabilities. The Company also operates a Technology Licensing/Research and
Development business which develops products to be licensed outside of the
Company's core businesses.



                                      -20-
<PAGE>

         Dock Resins, the Company's polymer manufacturer supports the polymer
needs of these core businesses and manufactures products for the specialty
polymer industry and Intelimer Polymer Systems customers. Dock Resins is
included in the Corporate and Other segment.

         The Company has been unprofitable during each fiscal year since its
inception. From inception through October 29, 2000, the Company's accumulated
deficit was $49.5 million. The Company may incur additional losses in the
future. The amount of future net profits, if any, is highly uncertain and there
can be no assurance that the Company will be able to reach or sustain
profitability for an entire fiscal year.

RESULTS OF OPERATIONS

         FISCAL YEAR ENDED OCTOBER 29, 2000 COMPARED TO FISCAL YEAR ENDED
         OCTOBER 31, 1999

         Total revenues were $209.6 million for fiscal year 2000, compared to
$35.4 million for fiscal year 1999. Revenues from product sales and services
increased to $208.6 million in fiscal year 2000 from $33.9 million in fiscal
year 1999. The increase in product sales and service revenues was primarily due
to $177.0 million in revenues from Apio, which was acquired effective November
29, 1999 and from increased product sales from Landec Ag. Landec Ag product
sales increased to $17.2 million in fiscal year 2000 from $15.2 million during
fiscal year 1999 due to an increase in the volume of hybrid corn seed sold and
revenue from the introduction of Intellicoat seed coated products. These
increases were partially offset by a decrease in Dock Resins product sales from
$14.0 million in fiscal year 1999 to $12.4 million in fiscal year 2000. This
decrease was a result of the continued weakness in the chemical industry during
fiscal year 2000. Revenues from research and development funding and from
royalties decreased to $586,000 in fiscal year 2000 from $770,000 during fiscal
year 1999. The decrease in research, development and royalty revenues was
primarily due to the expiration of the research and development agreement with
Alcon Laboratories, Inc. ("Alcon") related to the PORT-TM- ophthalmic devices,
partially offset by new research and development contracts with ConvaTec, a
division of Bristol Myers Squibb, in the area of medical adhesives, and UCB
Chemicals Corporation in the area of industrial applications. Revenues from
licensing fees for fiscal year 2000 were attributable to the Company's adoption
of SEC Staff Accounting Bulletin No. 101 - Revenue Recognition in Financial
Statements (SAB 101). Effective November 1, 1999, the Company changed its method
of accounting for noncancellable, nonrefundable license fees to recognize such
fees over the research and development period of the agreement, as well as the
term of any related supply agreement entered into concurrently with the license
when the risk associated with commercialization of a product is non-substantive
at the outset of the arrangement. The adoption of SAB 101 resulted in a
cumulative effect adjustment that increased the reported net loss for fiscal
year 2000 by $1.9 million related to upfront license fees received from the 1995
Hitachi agreement and the 1997 Alcon agreement (see Note 1 to the Consolidated
Financial Statements). The cumulative effect adjustment was initially recorded
as deferred revenue, and $374,000 of this deferred amount was "recycled" into
revenue in fiscal year 2000. The $750,000 license fee revenues for fiscal year
1999 represent a milestone payment from Alcon related to the PORT ophthalmic
devices during the first quarter, which was recorded in accordance with the
Company's historical accounting practice.

         Cost of revenue consists of material, labor and overhead. Cost of
revenue was $176.2 million for fiscal year 2000 compared to $21.5 million for
fiscal year 1999. Gross profit from product sales and services as a percentage
of revenue from product sales and services decreased from 37% in fiscal year
1999 to 16% in fiscal year 2000. The decrease in gross profit percentage was
primarily the result of Apio's mix of products having a lower gross margin than
Landec's other businesses coupled with disappointing results in Apio's stone
fruit business during fiscal year 2000, and Apio's higher costs associated with
sourcing crops during the winter months. In addition, during fiscal year 2000,
Landec incurred startup costs associated with Apio's new value-added food
processing plant and establishing a new manufacturing facility in Menlo Park for
Intellipac breathable membrane products. Overall gross profit increased from
$14.0 million in fiscal year 1999 to $33.4 million during fiscal year 2000, an
increase of 139%. This increase is primarily due to gross profit from Apio of
$19.8 million partially offset by lower license fee gross profits in fiscal year
2000 compared to fiscal year 1999.

         Research and development expenses were $4.7 million for fiscal year
2000 compared to $5.8 million for fiscal year 1999, a decrease of 18%. Landec's
research and development expenses consist primarily of expenses involved in the
development of, process scale-up of, and efforts to protect intellectual
property content of Landec's enabling side chain crystallizable polymer
technology and research and development expenses related to Dock Resins'
products. The decrease in research and development expenses during fiscal year
2000 compared to fiscal year 1999 were primarily due to substantially reduced
PORT research and development activities and the shift in Intellicoat seed
coating to less research and development and greater production efforts.



                                      -21-
<PAGE>

         Selling, general and administrative expenses were $28.9 million for
fiscal year 2000 compared to $11.2 million for fiscal year 1999, an increase of
158%. Selling, general and administrative expenses consist primarily of sales
and marketing expenses associated with Landec's product sales and services,
business development expenses, and staff and administrative expenses. Selling,
general and administrative expenses increased during fiscal year 2000 as
compared to fiscal year 1999 primarily as a result of expenses from Apio of
$15.6 million, and increased sales and marketing expenses associated with
marketing efforts at Landec Ag. Specifically, sales and marketing expenses
increased to $13.6 million during fiscal year 2000 from $6.2 million for fiscal
year 1999. Landec expects that total selling, general and administrative
spending for existing and newly acquired products will continue to increase in
absolute dollars in future periods, although it may vary as a percentage of
total revenues.

         In September 2000, due to disappointing financial results, management
of Landec decided to discontinue processing fruit at its Reedley facility. The
Company has put the facility and the packing and cold storage assets up for
sale. The Company will continue to provide field support and sales and marketing
services to current contracted growers through Apio's existing staff and will
outsource all remaining services to third parties. As a result of the shutdown
of the Reedley facility, the Company recorded a $525,000 charge during the
fourth quarter of fiscal year 2000, primarily for severance and payroll related
costs. The sale is expected to result in a gain. The current net book value of
the assets is $3.0 million. The Company anticipates closing a sale during the
second fiscal quarter of 2001.

         Interest income for fiscal year 2000 was $877,000 compared to $363,000
for fiscal year 1999. This increase in interest income was due principally to
interest earned on Apio's notes receivable. Interest expense for fiscal year
2000 was $2.3 million, compared to $99,000 for fiscal year 1999. This increase
was primarily due to the increase in debt from the acquisition of Apio.

         FISCAL YEAR ENDED OCTOBER 31, 1999 COMPARED TO FISCAL YEAR ENDED
         OCTOBER 31, 1998

         Total revenues were $35.4 million for fiscal year 1999 compared to
$33.5 million for fiscal year 1998. Revenues from product sales increased to
$33.9 million in fiscal year 1999 from $31.7 million in fiscal year 1998
primarily due to increased product sales from Landec Ag and Intellipac
breathable membrane products which increased from $13.3 million and $2.9
million, respectively, in fiscal year 1998 to $15.2 million and $4.5 million,
respectively, during fiscal year 1999. The increase in Landec Ag revenues was
primarily due to increased per unit sales prices, and the increase in Intellipac
breathable membrane revenues was primarily due to the introduction of various
new products and increased volumes for existing products. These increases were
partially offset by a decrease in Dock Resins product sales from $15.4 million
during fiscal year 1998 to $14.0 million during fiscal year 1999. This decrease
was a result of the overall weakness in the chemical industry during fiscal year
1999. Revenues from research and development funding were $770,000 for fiscal
year 1999 compared to $1.4 million for fiscal year 1998. The decrease in
research and development revenues was primarily due to the completion of
research and development arrangements with Hitachi Chemical and Nitta
Corporation in fiscal year 1998. Revenues from license fees during fiscal year
1999 were $750,000 compared to $500,000 during fiscal year 1998. The increase in
revenues from license fees was due to a payment received from Alcon in fiscal
year 1999 upon meeting a certain milestone related to the licensing agreement
for the PORT ophthalmic devices.

         Cost of product sales was $21.5 million for fiscal year 1999 compared
to $20.3 million for fiscal year 1998. Gross profit from product sales as a
percentage of product sales increased to 37% in fiscal year 1999 from 36% in
fiscal year 1998. The increase in gross profit from product sales as a
percentage of product sales in fiscal year 1999 as compared to fiscal year 1998
was primarily the result of higher average selling prices of Landec Ag products,
partially offset by start-up costs associated with establishing a new
manufacturing facility in Menlo Park for Intellipac breathable membrane products
late in fiscal year 1999.

         Research and development expenses were $5.8 million for fiscal year
1999 compared to $5.7 million for fiscal year 1998. The increase in research and
development expenses in fiscal year 1999 compared to fiscal year 1998 was
primarily due to increased development costs for the Company's Intellicoat seed
coating products.

         Selling, general and administrative expenses were $11.2 million for
fiscal year 1999 compared to $10.8 million for fiscal year 1998, an increase of
3%. Specifically, sales and marketing expenses increased to $6.2 million for
fiscal year 1999, from $5.9 million for fiscal year 1998.

         Net interest income was $264,000 for fiscal year 1999 compared to
$600,000 for fiscal year 1998. The decrease during fiscal year 1999 as compared
to fiscal year 1998 was due principally to less cash being available for
investing.

                                      -22-
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

         As of October 29, 2000, Landec had cash and cash equivalents of $9.6
million, a net increase of $6.4 million from $3.2 million as of October 31,
1999. This increase was primarily due to: (a) net borrowings under Landec's
lines of credit of $9.6 million; (b) cash acquired in the acquisition of Apio of
$3.3 million; (c) cash from operations of $5.0 million; (d) cash from the sale
of common stock of $0.7 million; partially offset by (e) the purchase of $5.3
million of property, plant and equipment; (f) advances to growers of $3.8
million; (g) payments on long term debt of $2.3 million; and (h) acquisition
related costs of $1.0 million.

         During fiscal year 2000, Landec purchased equipment to support the
development of Intellipac and Intellicoat products, incurred building
improvement and equipment upgrade expenditures at Dock Resins and Apio to expand
capacity, and constructed a new pilot facility for Intellicoat seed coating
products in Indiana. These expenditures represented the majority of the $5.3
million of property and equipment purchased during fiscal year 2000.

         In November 1999 the Company raised $10 million upon the sale of
Preferred Stock ($9.1 million net of issuance costs). In December, 1999, in
conjunction with the acquisition of Apio, the Company secured $11.25 million of
term debt and a $12 million line of credit with Bank of America. The term debt
and line of credit agreements ("Loan Agreement") contain restrictive covenants
that require Apio to meet certain financial tests, including minimum levels of
EBITDA (as defined in the Loan Agreement), minimum fixed charge coverage ratio,
minimum current ratio, minimum adjusted net worth and maximum leverage ratios.
These requirements and ratios generally become more restrictive over time. The
Loan Agreement, through restricted payment covenants, limits the ability of Apio
to make cash payments to Landec, until the outstanding balance is reduced to an
amount specified in the loan agreement. In June 2000, Landec Ag established a
$3.0 million bank line of credit for working capital needs and a $1.0 million
equipment line of credit to be used to fund the expansion of the manufacturing
capabilities of Intellicoat seed coating products. Landec believes that these
new facilities, along with existing cash, cash equivalents and existing
borrowing capacities will be sufficient to finance its operational and capital
requirements through at least the next twelve months. Borrowings on Landec's
lines of credit are expected to vary with seasonal requirements of the Company's
businesses. The Company may, however, raise additional funds during the next
twelve months through another debt financing or an equity financing. If an
equity financing occurs it will have a dilutive effect on current shareholders.
Landec's future capital requirements, however, will depend on numerous factors,
including the progress of its research and development programs; the development
of commercial scale manufacturing capabilities; the development of marketing,
sales and distribution capabilities; the ability of Landec to establish and
maintain new collaborative and licensing arrangements; the continued
assimilation and integration of Apio into Landec; any decision to pursue
additional acquisition opportunities; adverse weather conditions that can affect
the supply and price of produce, the timing and amount, if any, of payments
received under licensing and research and development agreements; the costs
involved in preparing, filing, prosecuting, defending and enforcing intellectual
property rights; the ability to comply with regulatory requirements; the
emergence of competitive technology and market forces; the effectiveness of
product commercialization activities and arrangements; the amount of future
earn-out payments; and other factors. If Landec's currently available funds,
together with the internally generated cash flow from operations are not
sufficient to satisfy its financing needs, Landec would be required to seek
additional funding through other arrangements with collaborative partners,
additional bank borrowings and public or private sales of its securities. There
can be no assurance that additional funds, if required, will be available to
Landec on favorable terms if at all.


ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS

         Landec desires to take advantage of the "Safe Harbor" provisions of the
Private Securities Litigation Reform Act of 1995 and of Section 21E and Rule
3b-6 under the Securities Exchange Act of 1934. Specifically, Landec wishes to
alert readers that the following important factors, as well as other factors
including, without limitation, those described elsewhere in this report, could
in the future affect, and in the past have affected, Landec's actual results and
could cause Landec's results for future periods to differ materially from those
expressed in any forward-looking statements made by or on behalf of Landec.
Landec assumes no obligation to update such forward-looking statements.


                                      -23-
<PAGE>

WE HAVE A HISTORY OF LOSSES WHICH MAY CONTINUE

         Landec has incurred net losses in each fiscal year since its inception.
Landec's accumulated deficit as of October 29, 2000 totaled $49.5 million.
Landec may incur additional losses in the future. The amount of future net
profits, if any, is highly uncertain and there can be no assurance that Landec
will be able to reach or sustain profitability for an entire fiscal year.

OUR SUBSTANTIAL INDEBTEDNESS COULD LIMIT OUR FINANCIAL AND OPERATING FLEXIBILITY

         At October 29, 2000, Landec's total debt, including current maturities
and capital lease obligations, was approximately $29.8 million and the total
debt to equity ratio was approximately 57%. This level of indebtedness could
have significant consequences because a substantial portion of Landec's net cash
flow from operations must be dedicated to debt service and will not be available
for other purposes, Landec's ability to obtain additional debt financing in the
future for working capital, capital expenditures or acquisitions may be limited,
and Landec's level of indebtedness may limit its flexibility in reacting to
changes in the industry and economic conditions generally.

         In connection with the Apio acquisition, Landec may be obligated to
make future payments to the former stockholders of Apio of up to $16.55 million.
Of this amount, $1.1 million was paid in January 2001 and $4.1 is due to be paid
in March 2001.

         Landec's ability to service its indebtedness will depend on its future
performance, which will be affected by prevailing economic conditions and
financial, business and other factors, some of which are beyond Landec's
control. If Landec were unable to service its debt, it would be forced to pursue
one or more alternative strategies such as selling assets, restructuring or
refinancing its indebtedness or seeking additional equity capital, which might
not be successful and which could substantially dilute the ownership interest of
existing shareholders.

         Apio is subject to various financial and operating covenants under its
term debt and line of credit facilities, including minimum levels of EBITDA (as
defined in the Loan Agreement), minimum fixed charge coverage ratio, minimum
current ratio, minimum adjusted net worth and maximum leverage ratios. These
requirements and ratios generally become more restrictive over time. The Loan
Agreement limits the ability of Apio to make cash payments to Landec until the
outstanding balance is reduced to an amount specified in the Loan Agreement.
Landec Ag and Dock Resins are subject to certain restrictive covenants such as
the ability of Landec to receive payments on debt owed to Landec. Landec has
pledged substantially all of Apio's, Landec Ag's and Dock Resins' assets to
secure their bank debt. Landec's failure to comply with the obligations under
the loan agreement, including maintenance of financial ratios, could result in
an event of default, which, if not cured or waived, would permit acceleration of
the indebtedness due under the loan agreement.

OUR FUTURE OPERATING RESULTS ARE LIKELY TO FLUCTUATE WHICH MAY CAUSE OUR STOCK
PRICE TO DECLINE

         In the past, Landec's results of operations have fluctuated
significantly from quarter to quarter and are expected to continue in the
future. Historically, Landec's direct marketer of hybrid corn seed, Intellicoat,
has been the primary source of these fluctuations, as its revenues and profits
are concentrated over a few months during the spring planting season (generally
during Landec's second quarter). In addition, Apio can be heavily affected by
seasonal and weather factors which could impact quarterly results, such as the
lower than expected volumes and poor yields experienced in the stone fruit
business during the third quarter of fiscal year 2000. Landec's earnings in its
Food Products Technology business will be sensitive to price fluctuations in the
fresh vegetables and fruits markets. Excess supplies can cause intense price
competition. Other factors affecting Landec's food and/or agricultural
operations include the seasonality of its supplies, the ability to process
produce during critical harvest periods, the timing and effects of ripening, the
degree of perishability, the effectiveness of worldwide distribution systems,
the terms of various federal and state marketing orders, total worldwide
industry volumes, the seasonality of consumer demand, foreign currency
fluctuations, foreign importation restrictions and foreign political risks. As a
result of these and other factors, Landec expects to continue to experience
fluctuations in quarterly operating results, and there can be no assurance that
Landec will be able to reach or sustain profitability for an entire fiscal year.

WE MAY EXPERIENCE DIFFICULTIES IN INTEGRATING APIO AND OTHER NEW BUSINESS
ACQUISITIONS

         Landec's acquisition of Apio involves the integration of Apio's
operations into Landec. The integration will require the dedication of
management resources in order to achieve the anticipated operating efficiencies
of the acquisition. No assurance can be given that difficulties encountered in
integrating the operations of Apio into Landec will be overcome or that the
benefits expected from integration will be realized. The difficulties in
combining Apio and Landec's operations are exacerbated by the necessity of
coordinating geographically separate organizations, integrating



                                      -24-
<PAGE>

personnel with disparate business backgrounds and combining different corporate
cultures. The process of integrating operations could cause an interruption of,
or loss of momentum in, the activities of the combined companies' business.

         The successful integration of other new business acquisitions may
require substantial effort from Landec's management. The diversion of the
attention of management and any difficulties encountered in the transition
process could have a material adverse effect on Landec's ability to realize the
anticipated benefits of the acquisitions. The successful combination of new
businesses also requires coordination of research and development activities,
manufacturing, and sales and marketing efforts. In addition, the process of
combining organizations could cause the interruption of, or a loss of momentum
in, Landec's activities. There can be no assurance that Landec will be able to
retain key management, technical, sales and customer support personnel, or that
Landec will realize the anticipated benefits of the acquisitions.

WE MAY NOT BE ABLE TO ACHIEVE ACCEPTANCE OF OUR NEW PRODUCTS IN THE MARKETPLACE

         The success of Landec in generating significant sales of its products
will depend in part on the ability of Landec and its partners and licensees to
achieve market acceptance of Landec's new products and technology. The extent to
which, and rate at which, market acceptance and penetration are achieved by
Landec's current and future products are a function of many variables including,
but not limited to, price, safety, efficacy, reliability, conversion costs and
marketing and sales efforts, as well as general economic conditions affecting
purchasing patterns. There can be no assurance that markets for Landec's new
products will develop or that Landec's new products and technology will be
accepted and adopted. The failure of Landec's new products to achieve market
acceptance would have a material adverse effect on Landec's business, results of
operations and financial condition.

         There can be no assurance that Landec will be able to successfully
develop, commercialize, achieve market acceptance of or reduce the costs of
producing Landec's new products, or that Landec's competitors will not develop
competing technologies that are less expensive or otherwise superior to those of
Landec. There can be no assurance that Landec will be able to develop and
introduce new products and technologies in a timely manner or that new products
and technologies will gain market acceptance. Landec is in the early stage of
product commercialization of Intellipac breathable membrane, Intellicoat seed
coating and Intelimer polymer systems products and many of its potential
products are in development. Landec believes that its future growth will depend
in large part on its ability to develop and market new products in its target
markets and in new markets. In particular, Landec expects that its ability to
compete effectively with existing food products, agricultural, industrial and
medical companies will depend substantially on successfully developing,
commercializing, achieving market acceptance of and reducing the cost of
producing Landec's products. In addition, commercial applications of Landec's
temperature switch polymer technology are relatively new and evolving.

WE FACE STRONG COMPETITION IN THE MARKETPLACE

         Competitors may succeed in developing alternative technologies and
products that are more effective, easier to use or less expensive than those
which have been or are being developed by Landec or that would render Landec's
technology and products obsolete and non-competitive. Landec operates in highly
competitive and rapidly evolving fields, and new developments are expected to
continue at a rapid pace. Competition from large food products, agricultural,
industrial and medical companies is expected to be intense. In addition, the
nature of Landec's collaborative arrangements may result in its corporate
partners and licensees becoming competitors of Landec. Many of these competitors
have substantially greater financial and technical resources and production and
marketing capabilities than Landec, and may have substantially greater
experience in conducting clinical and field trials, obtaining regulatory
approvals and manufacturing and marketing commercial products.

WE HAVE LIMITED MANUFACTURING EXPERIENCE AND MAY HAVE TO DEPEND ON THIRD PARTIES
TO MANUFACTURE OUR PRODUCTS

         Landec may need to consider seeking collaborative arrangements with
other companies to manufacture some of its products. If Landec becomes dependent
upon third parties for the manufacture of its products, then Landec's profit
margins and its ability to develop and deliver those products on a timely basis
may be affected. Failures by third parties may impair Landec's ability to
deliver products on a timely basis, impair Landec's competitive position, or may
delay the submission of products for regulatory approval. In late fiscal 1999,
in an effort to reduce reliance on third party manufacturers, Landec began the
set up of a manufacturing operation at its facility in Menlo Park, California,
for the production of Intellipac breathable membrane packaging products. There
can be no assurance that Landec can successfully operate a manufacturing
operation at acceptable costs, with acceptable yields, and retain adequately
trained personnel.



                                      -25-
<PAGE>

         Although Landec believes Dock Resins will provide Landec with practical
knowledge in the scale-up of Intelimer polymer products, production in
commercial-scale quantities may involve technical challenges for Landec. Landec
anticipates that a portion of its products will be manufactured in the Linden,
New Jersey facility acquired in the purchase of Dock Resins. Landec's reliance
on this facility involves a number of potential risks, including the
unavailability of, or interruption in access to, some process technologies and
reduced control over delivery schedules, and low manufacturing yields and high
manufacturing costs. In February 2000, Dock Resins had a fire in its research
and development laboratory in Linden, New Jersey which interrupted its ability
to develop new products and samples for potential and existing customers.

OUR DEPENDENCE ON SINGLE SUPPLIERS MAY CAUSE DISRUPTION IN OUR OPERATIONS SHOULD
ANY SUPPLIER FAIL TO DELIVER MATERIALS

         No assurance can be given that Landec will not experience difficulty is
acquiring materials for the manufacture of its products or that Landec will be
able to obtain substitute vendors, or that Landec will be able to procure
comparable materials or hybrid corn varieties at similar prices and terms within
a reasonable time. Many of the raw materials used in manufacturing Landec's
products are currently purchased from a single source, including some monomers
used to synthesize Intelimer polymers and substrate materials for Landec's
breathable membrane products. In addition, virtually all of the hybrid corn
varieties sold by Fielder's Choice are purchased from a single source. Any
interruption of supply could delay product shipments and materially harm our
business.

WE MAY BE UNABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS

         Landec has received, and may in the future receive, from third parties,
including some of its competitors, notices claiming that it is infringing third
party patents or other proprietary rights. If Landec were determined to be
infringing any third-party patent, Landec could be required to pay damages,
alter its products or processes, obtain licenses or cease the infringing
activities. If Landec is required to obtain any licenses, there can be no
assurance that Landec will be able to do so on commercially favorable terms, if
at all. Litigation, which could result in substantial costs to and diversion of
effort by Landec, may also be necessary to enforce any patents issued or
licensed to Landec or to determine the scope and validity of third-party
proprietary rights. Any litigation or interference proceeding, regardless of
outcome, could be expensive and time consuming and could subject Landec to
significant liabilities to third parties, require disputed rights to be licensed
from third parties or require Landec to cease using that technology. Landec's
success depends in large part on its ability to obtain patents, maintain trade
secret protection and operate without infringing on the proprietary rights of
third parties. There can be no assurance that any pending patent applications
will be approved, that Landec will develop additional proprietary products that
are patentable, that any patents issued to Landec will provide Landec with
competitive advantages or will not be challenged by any third parties or that
the patents of others will not prevent the commercialization of products
incorporating Landec's technology. Furthermore, there can be no assurance that
others will not independently develop similar products, duplicate any of
Landec's products or design around Landec's patents.

OUR OPERATIONS ARE SUBJECT TO ENVIRONMENTAL REGULATIONS THAT DIRECTLY IMPACT OUR
BUSINESS

         Federal, state and local regulations impose various environmental
controls on the use, storage, discharge or disposal of toxic, volatile or
otherwise hazardous chemicals and gases used in some of the manufacturing
processes, including those utilized by Dock Resins. As a result of historic
off-site disposal practices, Dock Resins was involved in two actions seeking to
compel the generators of hazardous waste to remediate hazardous waste sites.
Dock Resins has been informed by its counsel that it was a DE MINIMIS generator
to these sites, and these actions have been settled without the payment of any
material amount by Landec. In addition, the New Jersey Industrial Site Recovery
Act ("ISRA") requires an investigation and remediation of any industrial
establishment, like Dock Resins, which changes ownership. This statute was
activated by Landec's acquisition of Dock Resins. Dock Resins has completed its
investigation of the site, delineated the limited areas of concern on the site,
and completed the bulk of the active remediation required under the statute. The
costs associated with this effort are being borne by the former owner of Dock
Resins, and counsel has advised Dock Resins and Landec that funds of the former
owner required by ISRA to be set aside for this effort are sufficient to pay for
the successful completion of remedial activities at the site. In most cases,
Landec believes its liability will be limited to sharing clean-up or other
remedial costs with other potentially responsible parties. Any failure by Landec
to control the use of, or to restrict adequately the discharge of, hazardous
substances under present or future regulations could subject it to substantial
liability or could cause its manufacturing operations to be suspended and
changes in environmental regulations may impose the need for additional capital
equipment or other requirements.

         Landec's agricultural operations are subject to a variety of
environmental laws including the Food Quality Protection Act of 1966, the Clean
Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the



                                      -26-
<PAGE>

Federal Insecticide, Fungicide and Rodenticide Act and the Comprehensive
Environmental Response, Compensation and Liability Act. Compliance with these
laws and related regulations is an ongoing process. Environmental concerns are,
however, inherent in most agricultural operations, including those conducted by
Landec, and there can be no assurance that the cost of compliance with
environmental laws and regulations will not be material. Moreover, it is
possible that future developments, such as increasingly strict environmental
laws and enforcement policies and further restrictions on the use of
manufacturing chemicals could result in increased compliance costs.

ADVERSE WEATHER CONDITIONS CAN CAUSE SUBSTANTIAL DECREASES IN OUR SALES AND/OR
INCREASES IN OUR COSTS

         Landec's Food Products and Agricultural Seed Technology businesses are
subject to weather conditions that affect commodity prices, crop yields, and
decisions by growers regarding crops to be planted. Crop diseases and severe
conditions, particularly weather conditions such as floods, droughts, frosts,
windstorms and hurricanes may adversely affect the supply of vegetables and
fruits used in Landec's business, which could reduce the sales volumes and/or
increase the unit production costs. In early fiscal year 2000, optimal weather
conditions resulted in an over supply of certain crops in which the Company had
an invested interest. The over supply resulted in reduced prices for these crops
which caused the Company to report a loss on its investment. Because a
significant portion of the costs are fixed and contracted in advance of each
operating year, volume declines due to production interruptions or other factors
could result in increases in unit production costs which could result in
substantial losses and weaken Landec's financial condition.

WE HAVE LIMITED SALES AND MARKETING EXPERIENCE WITH OUR INTELIMER POLYMER
PRODUCTS

         Landec has only limited experience marketing and selling its Intelimer
polymer products. While Dock Resins will provide consultation and in some cases
direct marketing support for Landec's Intelimer polymer products, establishing
sufficient marketing and sales capability will require significant resources.
Landec intends to distribute some of its products through its corporate partners
and other distributors and to sell other products through a direct sales force.
There can be no assurance that Landec will be able to recruit and retain skilled
sales management, direct salespersons or distributors, or that Landec's sales
and marketing efforts will be successful. To the extent that Landec has entered
into or will enter into distribution or other collaborative arrangements for the
sale of its products, Landec will be dependent on the efforts of third parties.

WE DEPEND ON STRATEGIC PARTNERS AND LICENSES FOR FUTURE DEVELOPMENT

         For some of its current and future products, Landec's strategy for
development, clinical and field testing, manufacture, commercialization and
marketing includes entering into various collaborations with corporate partners,
licensees and others. Landec is dependent on its corporate partners to develop,
test, manufacture and/or market some of its products. Although Landec believes
that its partners in these collaborations have an economic motivation to succeed
in performing their contractual responsibilities, the amount and timing of
resources to be devoted to these activities are not within the control of
Landec. There can be no assurance that those partners will perform their
obligations as expected or that Landec will derive any additional revenue from
the arrangements. There can be no assurance that Landec's partners will pay any
additional option or license fees to Landec or that they will develop, market or
pay any royalty fees related to products under the agreements. Moreover, some of
the collaborative agreements provide that they may be terminated at the
discretion of the corporate partner, and some of the collaborative agreements
provide for termination under other circumstances. In addition, there can be no
assurance as to the amount of royalties, if any, on future sales of QuickCast
and PORT products as Landec no longer has control over the sales of those
products since the sale of QuickCast and the license of the PORT product lines.
There can be no assurance that Landec's partners will not pursue existing or
alternative technologies in preference to Landec's technology. Furthermore,
there can be no assurance that Landec will be able to negotiate additional
collaborative arrangements in the future on acceptable terms, if at all, or that
the collaborative arrangements will be successful.

BOTH DOMESTIC AND FOREIGN GOVERNMENT REGULATIONS CAN HAVE AN ADVERSE EFFECT ON
OUR BUSINESS OPERATIONS

         Landec's products and operations are subject to governmental regulation
in the United States and foreign countries. The manufacture of Landec's products
is subject to periodic inspection by regulatory authorities. There can be no
assurance that Landec will be able to obtain necessary regulatory approvals on a
timely basis or at all. Delays in receipt of or failure to receive approvals or
loss of previously received approvals would have a material adverse effect on
Landec's business, financial condition and results of operations. Although
Landec has no reason to believe that it will not be able to comply with all
applicable regulations regarding the manufacture and sale of its products and
polymer materials, regulations are always subject to change and depend heavily
on administrative interpretations and the country in which the products are
sold. There can be no assurance that future changes in regulations or


                                      -27-
<PAGE>

interpretations relating to matters such as safe working conditions, laboratory
and manufacturing practices, environmental controls, and disposal of hazardous
or potentially hazardous substances will not adversely affect Landec's business.
There can be no assurance that Landec will not be required to incur significant
costs to comply with the laws and regulations in the future, or that the laws or
regulations will not have a material adverse effect on Landec's business,
operating results and financial condition. As a result of the Apio acquisition,
Landec is subject to USDA rules and regulations concerning the safety of the
food products handled and sold by Apio, and the facilities in which they are
packed and processed. Failure to comply with the applicable regulatory
requirements can, among other things, result in fines, injunctions, civil
penalties, suspensions or withdrawal of regulatory approvals, product recalls,
product seizures, including cessation of manufacturing and sales, operating
restrictions and criminal prosecution.

OUR INTERNATIONAL OPERATIONS AND SALES MAY EXPOSE OUR BUSINESS TO ADDITIONAL
RISKS

         During fiscal year 2000, approximately 17% of Landec's total revenues
were derived from product sales to and collaborative agreements with
international customers. Landec expects that with the acquisition of Apio and
its export business, international revenues will become an important component
of its total revenues. A number of risks are inherent in international
transactions. International sales and operations may be limited or disrupted by
the regulatory approval process, government controls, export license
requirements, political instability, price controls, trade restrictions, changes
in tariffs or difficulties in staffing and managing international operations.
Foreign regulatory agencies have or may establish product standards different
from those in the United States, and any inability to obtain foreign regulatory
approvals on a timely basis could have a material adverse effect on Landec's
international business and its financial condition and results of operations.
While Landec's foreign sales are currently priced in dollars, fluctuations in
currency exchange rates, such as those recently experienced in many Asian
countries, may reduce the demand for Landec's products by increasing the price
of Landec's products in the currency of the countries to which the products are
sold. There can be no assurance that regulatory, geopolitical and other factors
will not adversely impact Landec's operations in the future or require Landec to
modify its current business practices.

CANCELLATIONS OR DELAYS OF ORDERS BY OUR CUSTOMERS MAY ADVERSELY AFFECT OUR
BUSINESS

         During fiscal year 2000, sales to Landec's top five customers accounted
for approximately 28% of Landec's revenues, with the top customer accounting for
7% of Landec's revenues. Landec expects that for the foreseeable future a
limited number of customers may continue to account for a substantial portion of
its net revenues. Landec may experience changes in the composition of its
customer base, as Apio, Dock Resins and Intellicoat have experienced in the
past. Landec does not have long-term purchase agreements with any of its
customers. The reduction, delay or cancellation of orders from one or more major
customers for any reason or the loss of one or more of the major customers could
materially and adversely affect Landec's business, operating results and
financial condition. In addition, since some of the products manufactured in the
Linden, New Jersey facility or processed by Apio at its Guadalupe, California
facility are often sole sourced to its customers, Landec's operating results
could be adversely affected if one or more of its major customers were to
develop other sources of supply. There can be no assurance that Landec's current
customers will continue to place orders, that orders by existing customers will
not be canceled or will continue at the levels of previous periods or that
Landec will be able to obtain orders from new customers.

OUR SALE OF SOME PRODUCTS MAY INCREASE OUR EXPOSURE TO PRODUCT LIABILITY CLAIMS

         The testing, manufacturing, marketing, and sale of the products being
developed by Landec involve an inherent risk of allegations of product
liability. While no product liability claims have been made against Landec to
date, if any product liability claims were made and adverse judgments obtained,
they could have a material adverse effect on Landec's business, operating
results and financial condition. Although Landec has taken and intends to
continue to take what it believes are appropriate precautions to minimize
exposure to product liability claims, there can be no assurance that it will
avoid significant liability. Landec currently maintains medical and non-medical
product liability insurance with limits in the amount of $4.0 million per
occurrence and $5.0 million in the annual aggregate. In addition, Apio has
product liability insurance with limits in the amount of $41.0 million per
occurrence and $42.0 million in the annual aggregate. There can be no assurance
that the coverage is adequate or will continue to be available at an acceptable
cost, if at all. A product liability claim, product recall or other claim with
respect to uninsured liabilities or in excess of insured liabilities could have
a material adverse effect on Landec's business, operating results and financial
condition.

OUR STOCK PRICE MAY FLUCTUATE IN ACCORDANCE WITH MARKET CONDITIONS

         Factors such as announcements of technological innovations, the
attainment of (or failure to attain) milestones in the commercialization of
Landec's technology, new products, new patents or changes in existing patents,
the acquisition of new businesses or the sale or disposal of a part of Landec's
businesses, or development of new



                                      -28-
<PAGE>

collaborative arrangements by Landec, its competitors or other parties, as well
as government regulations, investor perception of Landec, fluctuations in
Landec's operating results and general market conditions in the industry may
cause the market price of Landec's common stock to fluctuate significantly. In
addition, the stock market in general has recently experienced extreme price and
volume fluctuations, which have particularly affected the market prices of
technology companies and which have been unrelated to the operating performance
of technology companies. These broad fluctuations may adversely affect the
market price of Landec's common stock.

THE IMPLEMENTATION OF FINANCIAL AND ACCOUNTING CHANGES MAY CAUSE AN INCREASE IN
COSTS AND DELAYS

         In order to address deficiencies in Apio's management information
systems and accounting systems, Apio has restructured its financial and
accounting department, including hiring a chief financial officer and a new
controller, and retained consultants who have worked with Apio to improve
accounting processes and procedures. Apio management believes that those changes
will improve its managing of operations, including delivering complete and
accurate financial statements to Landec's corporate offices in a more timely
manner. However, Landec can give no assurances that it will be able to effect
those changes in the management information systems and accounting systems in a
timely manner or sustain the process improvements over time.

THE EURO CURRENCY MAY CAUSE SOME DISRUPTIONS IN BUSINESS

         On January 1, 1999, some member states of the European Economic
Community fixed their respective currencies to a new currency, commonly known as
the "Euro". During the three years beginning on January 1, 1999, business in
these countries will be conducted both in the existing national currency, as
well as the Euro. Companies operating in or conducting business in these
countries will need to ensure that their financial and other software systems
are capable of processing transactions and properly handling the existing
currencies and the Euro. Based on the current level of direct European business
conducted by Landec, and also because Landec expects that any transactions in
Europe in the near future will be priced in U.S. dollars, Landec does not expect
that introduction and use of the Euro will materially affect Landec's business.
Landec will continue to evaluate the impact over time of the introduction of the
Euro. However, if Landec encounters unexpected opportunities or difficulties in
Europe, Landec's business could be adversely affected, including the inability
to bill customers and to pay suppliers for transactions denominated in the Euro
and the inability to properly record transactions denominated in the Euro in
Landec's financial statements.

                                      -29-
<PAGE>

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The following table presents information about the Company's debt
obligations and derivative financial instrument that are sensitive to changes in
interest rates. The table presents principal amounts and related weighted
average interest rates by year of expected maturity for the Company's debt
obligations. For obligations with variable interest rates, the table sets forth
interest rates that are based on current rates and principal amounts due and
does not attempt to project future interest rates. For the interest rate swap,
the table presents notional amounts and interest rates by contractual maturity
date. Notional amounts are used to calculate the contractual cash flows to be
exchanged under the contract. This table should be read in connection with Note
10 to the Consolidated Financial Statements. Comparative information has not
been provided as the majority of the financial instruments giving rise to
interest rate risk were entered into or assumed by the Company in fiscal year
2000.


<TABLE>
<CAPTION>
In (000's)                                                                       There-                   Fair
                          2001      2002        2003        2004      2005       after       Total       Value
-----------------------  --------  -------    -------    ---------  --------    --------    -------     -------
     LIABILITIES
<S>                      <C>        <C>       <C>        <C>        <C>          <C>        <C>         <C>
Lines of Credit          9,609                                                                9,609       9,609
                          9.90%                                                                9.90%
Long term debt,
including current
portion
  Fixed Rate               834      1,073       1,045      1,118      1,833       4,062       9,965       9,965
  Avg.Int. Rate           8.50%      8.50%       8.50%      8.50%      8.50%       8.50%       8.50%

  Variable Rate          2,188      2,437       2,500      2,500        625                  10,250      10,250
   Avg. Int. Rate         9.21%      9.21%       9.21%      9.21%      9.21%                   9.21%

INTEREST RATE
DERIVATIVE FINANCIAL
INSTRUMENTS RELATED
TO DEBT
Interest Rate Swap
  Pay Fixed/
     Rec.Var                        5,250                                                     5,250          25
  Avg. Pay Rate           7.02%      7.02%                                                     7.02%
  Avg. Rec. Rate          6.71%      6.71%                                                     6.71%
</TABLE>


ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

          See Item 14 of Part IV of this report.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

          Not applicable.



                                      -30-
<PAGE>

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

          This information required by this item is contained in the
          Registrant's definitive proxy statement which the Registrant will
          file with the Commission no later than February 26, 2001 (120 days
          after the Registrant's fiscal year end covered by this Report) and
          is incorporated herein by reference.

ITEM 11.  EXECUTIVE COMPENSATION

          This information required by this item is contained in the
          Registrant's definitive proxy statement which the Registrant will
          file with the Commission no later than February 26, 2001 (120 days
          after the Registrant's fiscal year end covered by this Report) and
          is incorporated herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

          This information required by this item is contained in the
          Registrant's definitive proxy statement which the Registrant will
          file with the Commission no later than February 26, 2001 (120 days
          after the Registrant's fiscal year end covered by this Report) and
          is incorporated herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          This information required by this item is contained in the
          Registrant's definitive proxy statement which the Registrant will
          file with the Commission no later than February 26, 2001 (120 days
          after the Registrant's fiscal year end covered by this Report) and
          is incorporated herein by reference.



                                      -31-
<PAGE>

                                     PART IV


ITEM 14.      EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K

(a)  1.       Consolidated Financial Statements of Landec Corporation

<TABLE>
<CAPTION>
                                                                                                 PAGE
                                                                                                 ----
<S>                                                                                               <C>
                 Report of Ernst & Young LLP, Independent Auditors............................... 33

                 Consolidated Balance Sheets at October 29, 2000 and October 31, 1999............ 34

                 Consolidated  Statement  of  Operations  for the Years Ended  October 29,
                 2000 and October 31, 1999 and 1998.............................................. 35

                 Consolidated  Statement of Changes in Shareholders'  Equity for the Years
                 Ended October 29, 2000 and October 31, 1999 and 1998............................ 36

                 Consolidated  Statement  of Cash Flows for the Years  Ended  October  29,
                 2000 and October 31, 1999 and 1998.............................................. 37

                 Notes to Consolidated Financial Statements...................................... 38

     2.          Schedule II:

                 Valuation and Qualifying  Accounts for the Years Ended October 29, 2000
                 and October 31, 1999 and 1998................................................... 56

                 All other schedules provided for in the applicable accounting
                 regulation of the Securities and Exchange Commission pertain to
                 items which do not appear in the financial statements of Landec
                 Corporation and its subsidiaries or to items which are not
                 significant or to items as to which the required disclosures
                 have been made elsewhere in the financial statements and
                 supplementary notes and such schedules have therefore been
                 omitted.

(b)              Reports on Form 8-K............................................................. 57

(c)              Index of Exhibits............................................................... 57
</TABLE>

                 The exhibits listed in the accompanying index to exhibits are
                 filed or incorporated by reference as part of this report.



                                      -32-
<PAGE>

                REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

Board of Directors and Shareholders
Landec Corporation

         We have audited the accompanying consolidated balance sheets of Landec
Corporation as of October 29, 2000 and October 31, 1999 and the related
consolidated statements of operations, changes in shareholders' equity and cash
flows for each of the three years in the period ended October 29, 2000. Our
audits also included the financial statement schedule listed in the index at
Item 14(a). These financial statements and schedule are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Landec
Corporation at October 29, 2000 and October 31, 1999 and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended October 29, 2000 in conformity with accounting principles generally
accepted in the United States. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.

         As discussed in Note 1 to the financial statements, in fiscal year 2000
the Company changed its method of accounting for revenue recognition in
accordance with guidance provided in Securities and Exchange Commission Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements."

                                                               ERNST & YOUNG LLP

San Francisco, California
December 22, 2000



                                      -33-
<PAGE>


                               LANDEC CORPORATION
                           CONSOLIDATED BALANCE SHEETS
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                        OCTOBER 29,  OCTOBER 31,
                                                                            2000       1999
                                                                        -----------  -----------
<S>                                                                     <C>          <C>
                                 ASSETS

 Current assets:
   Cash and cash equivalents ........................................   $   9,589    $  3,203
   Accounts receivable, less allowance for doubtful accounts of $627
      and $45 at October 29, 2000 and October 31, 1999 ..............      22,725       2,952
   Inventory ........................................................      14,501       7,641
   Investment in farming activities .................................       2,672          --
   Notes and advances receivable ....................................       8,519          --
   Notes receivable, related party ..................................         151         138
   Prepaid expenses and other current assets ........................       1,958       2,233
   Assets held for sale .............................................       2,963          --
                                                                        ---------    --------
       Total current assets .........................................      63,078      16,167

Property and equipment, net .........................................      24,437      11,002
Goodwill, net .......................................................      21,672       2,284
Trademarks, net......................................................      12,873       4,439
Other intangibles, net...............................................       8,841       6,783
Notes receivable ....................................................         720          --
Other assets ........................................................       1,631          33
                                                                        ---------    --------
                                                                        $ 133,252    $ 40,708
                                                                        =========    ========

                                 LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Accounts payable .................................................   $  19,374    $  1,687
   Grower payables ..................................................      13,651          --
   Related party payables ...........................................         262          --
   Accrued compensation .............................................       2,470       1,036
   Other accrued liabilities ........................................       9,522       1,327
   Deferred revenue .................................................       2,265       2,135
   Lines of credit ..................................................       9,609          --
   Current maturities of long term debt .............................       3,584         125
                                                                        ---------    --------
     Total current liabilities ......................................      60,737       6,310

Long term debt, less current maturities .............................      16,631       2,637
Other liabilities ...................................................       2,442          --
Minority  interest ..................................................       1,264          --
                                                                        ---------    --------
     Total liabilities ..............................................      81,074       8,947
Shareholders' equity:
   Preferred stock, $0.001 par value; 2,000,000 shares authorized;
      166,667 and zero shares issued and outstanding at October 29,
      2000 and October 31, 1999, respectively .......................       9,149          --

   Common stock, $0.001 par value; 50,000,000 shares authorized;
      16,117,891, 667 and 13,353,352 shares issued and outstanding at
      October 29, 2000 and October 31, 1999, respectively ...........      92,555      77,289
   Accumulated deficit ..............................................     (49,526)    (45,528)
                                                                        ---------    --------
     Total shareholders' equity .....................................      52,178      31,761
                                                                        ---------    --------
                                                                        $ 133,252    $ 40,708
                                                                        =========    ========
</TABLE>
                            SEE ACCOMPANYING NOTES



                                      -34-
<PAGE>

                               LANDEC CORPORATION
                      CONSOLIDATED STATEMENT OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                          2000                1999        1998
                                                        ---------           --------    --------
<S>                                                     <C>                 <C>         <C>
 Revenues:
   Product sales ....................................   $ 135,412           $ 33,927    $ 31,664
   Services revenue .................................      71,280                 --          --
   Services revenue, related party ..................       1,898                 --          --
   Research, development and royalty revenues .......         586                770       1,352
   License fees .....................................         374                750         500
                                                        ---------           --------    --------
      Total revenues ................................     209,550             35,447      33,516

Cost of revenue:
   Cost of product sales ............................     113,113             21,476      20,308
   Cost of services revenue .........................      63,075                 --          --
                                                        ---------           --------    --------
          Total cost of revenue ......................    176,188             21,476      20,308

Gross profit ........................................      33,362             13,971      13,208

Operating costs and expenses:
   Research and development .........................       4,696              5,758       5,713
   Selling, general and administrative ..............      28,879             11,192      10,835
     Exit of fruit processing business ..............         525                 --          --
                                                        ---------           --------    --------
       Total operating costs and expenses ............     34,100             16,950      16,548
                                                        ---------           --------    --------

   Operating loss ...................................        (738)            (2,979)     (3,340)

   Interest income ..................................         877                363         737
   Interest expense .................................      (2,335)               (99)       (137)
   Other income .....................................          70                 --          --
                                                        ---------           --------    --------
Loss before income taxes and cumulative effect of
   accounting change ................................      (2,126)            (2,715)     (2,740)
   Provision for income taxes .......................          42                (54)       (150)
                                                        ---------           --------    --------
Net loss before cumulative effect of accounting
    change ..........................................      (2,084)            (2,769)     (2,890)

Cumulative effect of change in accounting for upfront
   license fee revenue ..............................      (1,914)                --          --
                                                        ---------           --------    --------
Net loss ............................................   $  (3,998)          $ (2,769)   $ (2,890)
                                                        =========           ========    ========
Basic and diluted net loss per share:
   Before cumulative effect of change in accounting .   $    (.13)          $   (.21)   $   (.23)
   Cumulative effect of change in accounting ........        (.12)                --          --
                                                        ---------           --------    --------
Basic and diluted net loss per share ................   $    (.25)          $   (.21)   $   (.23)
                                                        =========           ========    ========
Proforma amounts assuming the accounting change
   is applied retroactively:
   Net loss .........................................   $  (2,084)          $ (3,145)   $ (3,070)
                                                        =========           ========    ========
   Net loss per share ...............................   $    (.13)          $   (.24)   $   (.24)
                                                        =========           ========    ========
Shares used in computing basic and diluted net loss
   per share ........................................      15,796             13,273      12,773
                                                        =========           ========    ========
</TABLE>



                                      -35-
<PAGE>

                               LANDEC CORPORATION
                      CONSOLIDATED STATEMENT OF CHANGES IN
                              SHAREHOLDERS' EQUITY
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                  SHAREHOLDERS' EQUITY
                                                                   ----------------------------------------------------
                                                                      PREFERRED STOCK            COMMON STOCK
                                                                   ----------------------------------------------------
                                                                     SHARES     AMOUNT      SHARES        AMOUNT
                                                                    -------     ------     ----------     -------
<S>                                                                 <C>        <C>        <C>            <C>
Balance at October 31, 1997 ...................................          --     $   --     12,687,416     $75,679

     Issuance of common stock at $0.58 to $7.00 per share .....          --         --        425,885       1,142
     Exercise of warrants .....................................          --         --         46,587          --
     Net increase in notes receivable from shareholders .......          --         --             --          --
     Amortization of deferred compensation ....................          --         --             --          --
     Change in unrealized gain on available-for-sale securities          --         --             --          --
     Net loss .................................................          --         --             --          --
                                                                    -------     ------     ----------     -------
Balance at October 31, 1998 ...................................          --     $   --     13,159,888     $76,821
                                                                    =======     ======     ==========     =======
     Issuance of common stock at $0.58 to $5.56 per share .....          --         --        193,464         468
     Net decrease in notes receivable from shareholders .......          --         --             --          --
     Amortization of deferred compensation ....................          --         --             --          --
     Change in unrealized gain on available-for-sale securities          --         --             --          --
     Net loss .................................................          --         --             --          --
                                                                    -------     ------     ----------     -------
Balance at October 31, 1999 ...................................          --     $   --     13,353,352     $77,289
                                                                    =======     ======     ==========     =======
     Issuance of preferred stock ..............................     166,667      9,149             --          --
     Issuance of common stock for acquired businesses .........          --         --      2,562,500      14,559
     Issuance of common stock at $0.58 to $7.00 per share .....          --         --        202,039         707
     Net loss .................................................          --         --             --          --
                                                                    -------     ------     ----------     -------
Balance at October 29, 2000 ...................................     166,667     $9,149     16,117,891     $92,555
                                                                    =======     ======     ==========     =======

<CAPTION>
                                                                                     SHAREHOLDERS' EQUITY
                                                                  -------------------------------------------------
                                                                      NOTES
                                                                   RECEIVABLE                                          TOTAL
                                                                      FROM          DEFERRED       ACCUMULATED     SHAREHOLDERS'
                                                                  SHAREHOLDERS    COMPENSATION       DEFICIT           EQUITY
                                                                  ------------    ------------     -----------     -------------
<S>                                                               <C>             <C>             <C>               <C>
Balance at October 31, 1997 ...................................     $  (8)          $(198)          $(39,858)          $ 35,615

     Issuance of common stock at $0.58 to $7.00 per share .....        --              --                 --              1,142
     Exercise of warrants .....................................        --              --                 --                 --
     Net increase in notes receivable from shareholders .......      (283)             --                 --               (283)
     Amortization of deferred compensation ....................        --             112                 --                112
     Change in unrealized gain on available-for-sale securities        --              --                 (8)                (8)
     Net loss .................................................        --              --             (2,890)            (2,890)
                                                                  ------------    ------------     -----------      ------------
Balance at October 31, 1998 ...................................     $(291)          $ (86)          $(42,756)          $ 33,688
                                                                  ============    ============     ===========      ============

     Issuance of common stock at $0.58 to $5.56 per share .....        --              --                 --                468
     Net decrease in notes receivable from shareholders .......       291              --                 --                291
     Amortization of deferred compensation ....................        --              86                 --                 86
     Change in unrealized gain on available-for-sale securities        --              --                 (3)                (3)
     Net loss .................................................        --              --             (2,769)            (2,769)
                                                                  ------------    ------------     -----------      ------------
Balance at October 31, 1999 ...................................     $  --           $  --           $(45,528)          $ 31,761
                                                                  ============    ============     ===========      ============

     Issuance of preferred stock ..............................        --              --                 --              9,149
     Issuance of common stock for acquired businesses .........        --              --                 --             14,559
     Issuance of common stock at $0.58 to $7.00 per share .....        --              --                 --                707
     Net loss .................................................        --              --             (3,998)            (3,998)
                                                                  ------------    ------------     -----------      ------------
Balance at October 29, 2000 ...................................     $  --           $  --           $(49,526)          $ 52,178
                                                                  ============    ============     ===========      ============
</TABLE>


                              SEE ACCOMPANYING NOTE


                                      -36-
<PAGE>


                               LANDEC CORPORATION
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                             YEAR ENDED
                                                                                --------------------------------------
                                                                                OCTOBER 29,          OCTOBER 31,
                                                                                -----------  -------------------------
                                                                                   2000         1999          1998
                                                                                -----------  -----------   -----------
<S>                                                                             <C>          <C>           <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Cash flows from operating activities:
   Net loss from continuing operations ......................................     $ (3,998)     $(2,769)     $(2,890)
   Adjustments to reconcile net loss to net cash provided by (used in)
 operating activities:
      Depreciation and amortization .........................................        6,066        2,214        2,075
      Cumulative effect of accounting change ................................        1,914           --           --
      Disposal of property and equipment ....................................          577           --           --
      Exit of fruit processing business .....................................          525           --           --
      Changes in assets and liabilities, net of effects from acquisitions and
       discontinued operations:
        Accounts receivable, net ............................................       (4,486)        (144)        (646)
        Inventory ...........................................................       (2,387)      (2,965)      (2,024)
        Investment in farming activities ....................................         (642)          --           --
        Notes receivable, related parties ...................................          (13)         362         (500)
        Prepaid expenses and other current assets ...........................        1,334         (611)          98
        Accounts payable ....................................................        3,535          288          757
        Grower payables .....................................................        6,930           --           --
        Related party payables ..............................................          262           --           --
        Accrued compensation ................................................          298           19          181
        Other accrued liabilities ...........................................       (4,290)         385         (578)
        Deferred revenue ....................................................         (617)        (364)         173
                                                                                  --------      -------      -------
 Net cash provided by (used in) operating activities ........................        5,008       (3,585)      (3,354)
                                                                                  --------      -------      -------
 Cash flows from investing activities:
   Purchases of property and equipment ......................................       (5,338)      (3,708)      (4,100)
   Decrease in other assets and liabilities .................................          278            5           74
   Increase in notes receivable and advances ................................       (3,770)          --           --
   Acquisition of businesses, net of cash acquired ..........................       (6,793)        (393)        (390)
   Purchases of available-for-sale securities ...............................           --           --       (5,033)
   Sale of available-for-sale  securities ...................................           --           --        4,805
   Maturities of available-for-sale securities ..............................           --          989        8,734
                                                                                  --------      -------      -------
 Net cash (used in) provided by investing activities ........................      (15,623)      (3,107)       4,090
                                                                                  --------      -------      -------
 Cash flows from financing activities:
   Proceeds from sale of preferred stock, net of issuance costs .............        9,149           --           --
   Proceeds from sale of common stock, net of repurchases ...................          708          468        1,142
   Decrease (increase) in  repayment of notes receivable from shareholders ..           --          291         (283)
   Borrowings on lines of credit ............................................       21,984           --           --
   Payments on lines of credit ..............................................      (12,375)          --           --
   Payments on long term debt ...............................................       (2,327)         (90)         (10)
   Proceeds from issuance of long term debt .................................           --           41        2,789
   Proceeds from sale of restricted investment ..............................           --           --        8,837
   Payment of payable related to the acquisition of Dock Resins Corporation .           --           --       (9,189)
   Increase in minority interest liability ..................................          105           --           --
   Payments to minority interest ............................................         (243)          --           --
                                                                                  --------      -------      -------
 Net cash provided by financing activities ..................................       17,001          710        3,286
                                                                                  --------      -------      -------
 Net increase (decrease) in cash and cash equivalents .......................        6,386       (5,982)       4,022
 Cash and cash equivalents at beginning of year .............................        3,203        9,185        5,163
                                                                                  --------      -------      -------
 Cash and cash equivalents at end of year ...................................     $  9,589      $ 3,203      $ 9,185
                                                                                  ========      =======      =======
 Supplemental disclosure of cash flows information:
   Cash paid during the period for interest .................................     $  1,676      $    76      $   383
                                                                                  ========      =======      =======
   Cash paid during the period for income taxes .............................     $    104      $    33      $    38
                                                                                  ========      =======      =======
 Supplemental schedule of noncash investing and financing activities:
   Common stock issued in the acquisition of businesses .....................     $ 14,559      $    --      $    --
                                                                                  ========      =======      =======
</TABLE>


                             SEE ACCOMPANYING NOTES.



                                      -37-
<PAGE>


                               LANDEC CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

         Landec Corporation and its subsidiaries ("Landec" or the "Company")
design, develop, manufacture, and sell temperature-activated and other specialty
polymer products for a variety of food product, agricultural products, specialty
industrial and medical applications. In addition, the Company markets and
distributes hybrid corn seed to farmers and produce and specialty packaged
fresh-cut vegetables to retailers and foodservice companies.

BASIS OF CONSOLIDATION

         The consolidated financial statements comprise the accounts of Landec
Corporation and its wholly owned subsidiaries, Apio, Inc. ("Apio"), Landec Ag
(formerly Intellicoat Corporation) and Dock Resins Corporation ("Dock Resins").
All material intercompany transactions and balances have been eliminated.
Effective fiscal year 2000, the Company changed its fiscal year end from October
31 to a fiscal year that includes 52 or 53 weeks ending on the last Sunday in
October.

CONCENTRATIONS OF CREDIT RISK

         Cash and cash equivalents, trade accounts receivable, grower advances
and notes receivable are financial instruments that potentially subject the
Company to concentrations of risk. Corporate policy limits, among other things,
the amount of credit exposure to any one issuer and to any one type of
investment, other than securities issued or guaranteed by the U.S. government.
The Company routinely assesses the financial strength of customers and growers
and, as a consequence, believes that trade receivables, grower advances and
notes receivable credit risk exposure is limited. Credit losses for bad debt are
provided for in the Consolidated Financial Statements through a charge to
operations. A valuation allowance is provided for known and anticipated credit
losses.

CASH AND CASH EQUIVALENTS

         The Company records all highly liquid securities with three months or
less from date of purchase to maturity as cash equivalents.

INVENTORIES

         Inventories are stated at the lower of cost (using the first-in,
first-out method) or market. As of October 29, 2000 and October 31, 1999
inventories consisted of (in thousands):

<TABLE>
<CAPTION>
                                          OCTOBER 29   OCTOBER 31,
                                             2000         1999
                                          ----------   -----------
<S>                                      <C>         <C>
         Raw materials ................     $ 7,661     $1,015
         Finished goods ...............       5,889      6,169
         Work in process ..............         951        457
                                            -------     ------
                                            $14,501     $7,641
                                            =======     ======
</TABLE>

DEFERRED ADVERTISING

         The Company defers certain costs related to direct-response advertising
of Landec Ag's hybrid corn seeds. Such costs are amortized over periods (less
than one year) that correspond to the estimated revenue stream of the
advertising activity. Advertising expenditures that are not direct-response
advertisements are expensed as incurred. The advertising expense for Landec Ag
for fiscal years 2000, 1999 and 1998 was $1.1 million, $1.3 million and $1.2
million, respectively. The amount of deferred advertising included in prepaid
expenses and other current assets at October 29, 2000 and October 31, 1999 was
$400,000 and $522,000, respectively.

                                      -38-
<PAGE>

1.       ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         RELATED PARTY TRANSACTIONS

         Apio provides harvesting, packing, cooling and distributing services
for a member of management and purchases produce from that individual. Revenues,
cost of product sales and the resulting payable are shown separately in the
accompanying financial statements as of October 29, 2000 and for the period then
ended.

         In October 1998, the Company loaned an officer of Landec Ag $500,000 in
cash in exchange for a promissory note. Interest accrues at 7.50% per annum,
compounded annually. On July 31, 1999 the balance of principal and accrued
interest were offset by the amount earned during 1999 under the earn-out
provision related to the acquisition of Fielder's Choice by the Company. The
remaining principal and accrued interest balance of $151,000 is due and payable
on July 31, 2001 and is shown separately in the accompanying financial
statements.

INVESTMENT IN FARMING ACTIVITIES

         Landec, through its Apio subsidiary, invests in certain farming
activities. The investments consist of cash advances to growers for expenses to
be incurred during the growing season, in exchange for a percentage ownership in
the crops. Net income or loss is generally recognized on these investments based
on Landec's percentage ownership of the net proceeds of the crops as fields are
harvested and settled. Additionally, certain farming agreements contain
provisions wherein Landec bears the risk of loss if the net proceeds from the
crops are not sufficient to cover the expense incurred. For fiscal year 2000 net
losses of approximately $900,000 were recognized and included in the cost of
product sales in the consolidated statement of operations.

PROPERTY AND EQUIPMENT

         Property and equipment are stated at cost. Expenditures for major
improvements are capitalized while repairs and maintenance are charged to
expense. Depreciation is expensed on a straight-line basis over the estimated
useful lives of the respective assets, generally twenty to thirty-one years for
buildings and improvements and three to ten years for furniture, computers,
machinery and equipment. Leasehold improvements are amortized over the lesser of
the economic life of the improvement or the life of the lease on a straight-line
basis.

INTANGIBLE ASSETS

         Intangible assets represent the excess of acquisition costs over the
estimated fair value of net assets acquired and consist of covenants not to
compete, customer bases, work forces in place, trademarks, developed technology
and goodwill. These assets are amortized on a straight-line basis over periods
ranging from five to twenty years based on their estimated useful lives.

GROWER PAYABLE

         Landec, through its Apio subsidiary, contracts with growers to harvest,
pack, cool and distribute their products. The grower payable is the net of the
market value of the products received from the growers and the corresponding
charges by Landec for services rendered on behalf of the growers.

DEFERRED REVENUE

         Cash received in advance of services performed (principally revenues
related to upfront license fees) or shipment of products (primarily hybrid corn
seed) are recognized as a liability and recorded as deferred revenue. At October
29, 2000 approximately $1.9 million has been recognized as a liability for
advances on future hybrid corn seed shipments, and $1.6 million as a liability
for deferred license fee revenues. Of this amount, approximately $1.2 million
will be recognized subsequent to fiscal 2001 and has been included in other
liabilities.

MINORITY INTEREST

         In connection with the acquisition of Apio, Landec acquired Apio's 60%
general partner interest in Apio Cooling, a California limited partnership. Apio
Cooling is included in the consolidated financial statements of Landec at
October 29, 2000. The minority interest balance of $1.3 million at October 29,
2000 represents the limited partners' interest in Apio Cooling.



                                      -39-
<PAGE>

1.       ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

PER SHARE INFORMATION

         In 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings Per Share" (SFAS No. 128). SFAS No. 128 replaced the calculation
of primary and fully diluted earnings per share with basic and diluted earnings
per share. Unlike primary earnings per share, basic earnings per share excludes
any dilutive effects of options, warrants and convertible securities. Diluted
earnings per share is very similar to the previously reported fully diluted
earnings per share. Due to the Company's net loss in all periods presented, net
loss per share includes only weighted average shares outstanding. All earnings
per share amounts for all periods have been presented in accordance with SFAS
No. 128 requirements.

REVENUE RECOGNITION

         Revenues related to research contracts are recognized ratably over the
related funding periods for each contract, which is generally as research is
performed. Product sales are recognized upon shipment except for shipments sent
FOB destination in which revenue is recognized upon receipt by the customer.
Services revenue is recognized when the service is rendered.

         The Company previously recognized noncancellable, nonrefundable license
fees as revenue when received and when all significant contractual obligations
of the Company relating to the fees had been met. Effective November 1, 1999,
the Company changed its method of accounting for noncancellable, nonrefundable
license fees to recognize such fees over the research and development period of
the agreement, as well as the term of any related supply agreement entered into
concurrently with the license when the risk associated with commercialization of
a product is non-substantive at the outset of the arrangement. The Company
believes the change in accounting principle is preferable based on guidance
provided in SEC Staff Accounting Bulletin No. 101 - REVENUE RECOGNITION IN
FINANCIAL STATEMENTS. The $1.9 million cumulative effect of the change in
accounting principle, calculated as of November 1, 1999, was reported as a
charge in the year ended October 29, 2000. The cumulative effect was initially
recorded as deferred revenue and is being recognized as revenue over the
research and development period or supply period commitment of the agreement.
During the year ended October 29, 2000 the impact of the change in accounting
was to increase net loss by approximately $1.5 million, or $0.10 per share,
comprised of the $1.9 million cumulative effect of the change as described above
($0.12 per share), net of $374,000 of the related deferred revenue which was
recognized as "recycled" revenue during 2000 ($0.02 per share). The remainder of
the related deferred revenue will be recognized as revenue per fiscal year as
follows: $374,000 in 2001, $302,000 in 2002, $88,000 in 2003 - 2011, and $73,000
in 2012. The pro forma amounts presented in the consolidated statement of
operations were calculated assuming the accounting change was made retroactive
to prior periods.

         Amounts received in advance are recorded as deferred revenue until the
related revenue is recognized.

RESEARCH AND DEVELOPMENT EXPENSES

         Costs related to both research contracts and Company-funded research is
included in research and development expenses. Costs to fulfill research
contracts generally approximate the corresponding revenue.

ACCOUNTING FOR STOCK-BASED COMPENSATION

         The Company accounts for its stock option plans and its employee stock
purchase plans in accordance with the provisions of the Accounting Principles
Board Opinion No. 25 (APB 25) "Accounting for Stock Issued to Employees."

USE OF ESTIMATES

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

IMPAIRMENT OF LONG LIVED ASSETS

The Company has adopted SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of". The Company
records impairment losses on long-lived assets used in operations or



                                      -40-
<PAGE>


1.       ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

expected to be disposed when events and circumstances indicate that the assets
are less than the carrying amounts of those assets. No such event and
circumstances have occurred.

FAIR VALUES OF FINANCIAL INSTRUMENTS

         The Company's financial instruments, subject to the fair value
disclosure requirements of Financial Accounting Standards Board Statement No.
107, "Disclosures about Fair Value of Financial Statements," consist of cash,
cash equivalents, notes and advances receivable, debt, capital lease
obligations, and an interest rate swap agreement (see Note 10). The recorded
value of the financial instruments approximates their fair value.

ADOPTION OF SFAS NO. 133, "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES"

         In June 1998, the Financial Accounting Standards Board issued Statement
No. 133, "Accounting for Derivative Instruments and Hedging Activities," which
is required to be adopted in years beginning after June 15, 2000. Because of the
Company's minimal use of derivatives, adoption of the new Statement will not
have a significant effect on earnings or the financial position of the Company.

RECLASSIFICATIONS

         Certain reclassifications have been made to prior period financial
statements to conform to the current year presentation.



2.       BUSINESS ACQUISITIONS

         On December 2, 1999, Landec acquired Apio, Inc. and certain related
entities ("Apio"), located in Guadalupe, California, one of the nation's leading
marketers and packers of produce and specialty packaged fresh-cut vegetables.
Upon closing, Landec paid $21.0 million in cash and stock, before expenses, for
Apio, which will operate as a wholly owned subsidiary of Landec. In addition,
the agreement provides for future payments to the former owners of Apio of up to
$16.55 million at October 29, 2000. These payments consist of a) up to $10
million in earn-out payments to a former owner and current CEO of Apio which are
based on pre-established earnings targets, $4.1 million of which was earned in
fiscal year 2000 based on Apio's results and is payable in March 2001 and was
added to the purchase price in the fourth quarter. An additional $5.9 million
may be paid under this earn-out if Apio exceeds the specified earnings targets
for fiscal year 2001, b) $5.3 million non-interest bearing notes to the sellers
which will be paid in equal annual installments over the next five years
(recorded at $4.1 million on a discounted basis). The first payment of $1.1
million was made in January 2001 and, c) up to $1.25 million to the sellers if
Landec's Common Stock is trading at an average price below $6.00 per share
during the last twenty trading days of June 2001. The twenty-day period had
originally been designated for August 2000, however, in September 2000, the
purchase price agreement was amended to reflect the revised terms. The
transaction was accounted for as a purchase. The purchase price has been
allocated to the acquired assets and liabilities based on their relative fair
market values, subject to final adjustments. These allocations are based on
independent valuations and other studies. Certain adjustments have been made to
the purchase price allocation originally reported by the Company, including the
addition of $4.1 million in the fourth quarter of fiscal year 2000 due to the
earn-out previously discussed, as well as the recording of an additional
$500,000 of transaction related costs. In addition, the purchase price was
increased in the second quarter of fiscal year 2000 by $2.1 million to reflect a
change in the estimated value of Landec Common Stock issued at close.

         The following is a summary of the purchase price allocation (in
thousands):

<TABLE>
<S>                                     <C>
         Net assets and liabilities     $ 2,014
         Customer base                    1,821
         Work force in place              1,395
         Trademark                        9,100
         Goodwill                        19,518
                                        -------
                                        $33,848
                                        =======
</TABLE>


                                      -41-
<PAGE>

2.       BUSINESS ACQUISITIONS (CONTINUED)

         The acquisition by Landec of all the outstanding capital stock of Apio
was exchanged for the following:

<TABLE>
<S>                                                      <C>
         Landec common stock                             $14,217
         Contractual deferred obligations                  4,092
         Cash paid or set aside as a liability            13,192
                                                         -------
             Purchase price before acquisition costs      31,501
         Acquisition costs                                 2,347
                                                         -------
             Total purchase price                        $33,848
                                                         =======
</TABLE>


         To fund the transaction, Landec issued 2.5 million shares of common
stock to the prior owners of Apio. Apio replaced a portion of its existing bank
debt with a $11.25 million term note and entered into a new $12 million line of
credit agreement with a bank. Existing debt of $3.7 million was assumed in the
transaction. In a separate transaction, Landec sold $10 million ($9.1 million
net of issuance costs) of convertible preferred stock (convertible into
1,666,670 shares of Common Stock) to a private, long-term, investor at a $6.00
per share equivalent price.

         The results of operations and cash flows for fiscal year 2000 include
the results of Apio from November 29, 1999 through October 29, 2000.

         The following pro forma summary of consolidated revenues, net loss and
net loss per share for fiscal years 2000 and 1999 assumes the acquisition
occurred on November 1, 1998. These pro forma results have been prepared for
comparative purposes only and are not necessarily indicative of Landec's
financial results if the acquisition had taken place at the beginning of fiscal
year 1999 or of future results, and do not include the cumulative effect of the
change in accounting principle (Note 1) (in thousands, except per share
amounts).

<TABLE>
<CAPTION>
                                      Fiscal Year
                                ------------------------
                                  2000            1999
                                ---------      ---------
<S>                            <C>            <C>
         Revenue                $ 224,671      $ 197,031
         Net loss               $  (2,179)     $  (4,015)
         Net loss per share     $   (0.14)     $   (0.25)
</TABLE>


3.       EXIT OF FRUIT PROCESSING BUSINESS

         In September 2000, due to disappointing financial results, management
of Landec decided to discontinue processing fruit at its Reedley facility, part
of the Food Products Technology segment. At that time, Landec's management
determined that all fruit processing personnel and the majority of the
administrative staff at the facility would be terminated. The plan, including
termination benefits, was approved by management and communicated to the
affected employees during fiscal year 2000, and the facility was shut down in
January 2001. The Company's current plans are to sell the facility and the
packing and cold-storage assets in Reedley and relocate a few sales, field and
administrative staff to a leased facility in the Reedley area. The Company will
continue to provide field support and sales and marketing services to current
contracted growers through Apio's existing staff, and will outsource all
remaining services to third parties. The Company intends to enter into
contractual arrangements with one or more commercial packing and cold storage
operators to provide the necessary packing and cold storage services previously
provided to the growers through the Reedley facility.

         The Company has recorded a charge of $525,000, primarily for severance
and payroll related costs, in the accompanying consolidated statement of
operations. This amount is expected to be fully paid in fiscal 2001. An offer to
purchase the facility is currently pending with the closing projected in the
Company's second fiscal quarter. The sale is expected to result in a gain. The
current net book value of the assets is $3.0 million, which is recorded as
assets held for sale in the accompanying consolidated balance sheets as of
October 29, 2000.



                                      -42-
<PAGE>

4.       NOTES RECEIVABLE AND ADVANCES

Notes receivable and advances at October 29, 2000 consisted of the following (in
thousands):

<TABLE>
<S>                                                                                                      <C>
  Various notes receivable from growers, with principal and interest ranging from the prime rate to      $    7,189
      the prime rate plus 3% to a maximum of 10%, payments to be withheld from proceeds derived
      from crop sales, due through October 2001, secured by crops

  Note receivable due from grower in annual installments of $60,714 plus interest at prime rate                 304
      plus 1.0% with final payment due November 1, 2004, secured by crops

  Note receivable due from grower in annual installments of $20,000 plus interest at prime rate                 577
      plus 1.0% with final payment due January 31, 2005, secured by crops

  Note receivable due from grower plus interest based on Apio's cost to borrow funds. Note to be                129
  paid in full by May 1, 2003

  Unsecured note receivable due from a related party with interest at 7.5%, due July 31, 2001                   151

  Short term non-interest bearing note due from grower, secured by real property                                850

  Short term advances and other                                                                               1,221
                                                                                                         ----------
                                                                                                             10,421
  Less allowance for doubtful notes                                                                          (1,031)
                                                                                                         ----------
                                                                                                              9,390
  Less current portion of notes receivable, including related party note                                     (8,670)
                                                                                                         ----------
  Non-current portion of notes receivable                                                                $      720
                                                                                                         ==========
</TABLE>



         Landec is obligated to make additional loans to growers under certain
of these note receivable agreements. At October 29, 2000, Landec had outstanding
commitments to fund up to an additional $1.3 million to growers under these
existing note receivable agreements.

5.       PROPERTY AND EQUIPMENT

         Property and equipment consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                             OCTOBER 29,    OCTOBER 31,
                                                            -------------------------------
                                                                 2000           1999
                                                            -------------------------------
<S>                                                         <C>            <C>
 Land and buildings.........................................$   11,549     $    3,945
 Leasehold improvements.....................................     1,785          1,372
 Computer, machinery, equipment and autos...................    15,529          8,155
 Furniture and fixtures.....................................     1,915            592
 Construction in process....................................     1,218          1,173
                                                            ------------------------------
                                                                31,996         15,237
 Less accumulated depreciation and amortization.............    (7,559)        (4,235)
                                                            ------------------------------
                                                            $   24,437     $   11,002
                                                            ==============================
</TABLE>

         Depreciation expense for fiscal years 2000, 1999 and 1998 was
$3,283,000, $986,000 and $843,000, respectively. Equipment under capital leases,
which totals approximately $80,000 at October 29, 2000, is security for the
related lease obligations. The related accumulated amortization is $ 21,000.



                                      -43-
<PAGE>


6.            INTANGIBLE ASSETS

         Intangible assets consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                                OCTOBER 29,  OCTOBER 31,
                                                                   2000         1999
                                                              -------------  -----------
<S>                                                           <C>             <C>
                   Developed technology...................... $      5,036    $   5,036
                   Trademark.................................       14,075        4,975
                   Customer base.............................        4,217        2,396
                   Workforce in place........................        2,305          910
                   Covenants not to compete..................          277          277
                   Goodwill..................................       22,835        2,509
                                                              -------------  -----------
                                                                    48,745       16,103
                   Less accumulated amortization.............       (5,359)      (2,597)
                                                              -------------  -----------
                                                              $     43,386    $  13,506
                                                              =============  ===========
</TABLE>


         Amortization expense for fiscal years 2000, 1999 and 1998 was
$2,762,000, $1,142,000 and $1,120,000, respectively.

7.       WARRANTS

         In connection with the sale of Series D preferred stock in July 1993,
the Company issued warrants to purchase 186,349 shares of common stock at an
exercise price of $4.31 per share for $5,357 in cash. In a cashless exercise
during fiscal year 1998, 46,587 shares were issued in exchange for the warrants.

8.       SHAREHOLDERS' EQUITY


         CONVERTIBLE PREFERRED STOCK

         The Company has authorized two million shares of preferred stock, and
has issued 50,000 shares in Series A-1 and 116,667 shares in Series A-2.

         Each share of the Series A convertible preferred stock is, at the
option of the holder, convertible into shares of common stock, subject to
certain antidilution adjustments, in accordance with the conversion formula
provided in the Company's Articles of Incorporation (currently a 10:1 ratio).
Outstanding preferred shares automatically convert into common stock either on
November 29, 2003 or on an earlier date specified by written consent or
agreement of the holders of at least a majority of the then outstanding shares
of Series A convertible preferred stock.

         Each share of convertible preferred stock is entitled to the number of
votes equal to the number of shares of common stock into which such shares could
be converted and have the voting rights and powers of the common stock, voting
together as a single class.

         Upon liquidation, Series A preferred stockholders shall receive a
return equal to the original issue price of the shares plus any declared but
unpaid dividends.

         COMMON STOCK, STOCK PURCHASE PLANS AND STOCK OPTION PLANS

         In October 1998, certain directors and officers of the Company
purchased 200,425 shares of common stock for between $3.75 and $3.94 per share
for $776,000. At October 31, 1998, certain directors and officers of the Company
were obligated to the Company for $291,000 relating to this issuance. This
amount was recorded to shareholders' equity at October 31, 1998. The outstanding
balances were paid in full by December 1998.

         The Company has 5,501,466 common shares reserved for future issuance
under Landec Corporation stock option plans and employee stock purchase plans.

         The Company terminated its 1988 Stock Option Plan during fiscal year
1998 and canceled all stock options available for grant.


                                      -44-
<PAGE>

8.       SHAREHOLDERS' EQUITY (CONTINUED)

         The 1995 Directors' Stock Option Plan (the "Directors' Plan") provides
that each person who becomes a nonemployee director of the Company, who has not
received a previous grant, shall be granted a nonstatutory stock option to
purchase 20,000 shares of common stock on the date on which the optionee first
becomes a nonemployee director of the Company. Thereafter, on the date of each
annual meeting of the shareholders each non-employee director shall be granted
an additional option to purchase 10,000 shares of common stock if, on such date,
he or she shall have served on the Company's Board of Directors for at least six
months prior to the date of such annual meeting. The exercise price of the
options is the fair market value of the Company's common stock on the date the
options are granted. The Directors' Plan, as amended in 1998, authorizes the
issuance of 400,000 shares under the plan. Options granted under this plan are
exerciseable and vest upon grant. All directors' stock option grants outstanding
on December 4, 1997 with an exercise price greater than $6.75, were repriced to
$6.75 per share, the fair market value of the Company's common stock on April
15, 1998, the date of the annual shareholders' meeting.

         The 1996 Non-Executive Stock Option Plan authorizes the Board of
Directors to grant non-qualified stock options to employees and outside
consultants who are not officers or directors of the Company. The exercise price
of the options will be equal to the fair market value of the Company's common
stock on the date the options are granted. As amended in 1999, 1,500,000 shares
are authorized to be issued under this plan. Options are exercisable upon
vesting and generally vest ratably over four years and are subject to repurchase
if exercised before being vested.

         In November 1996, the Company's Board of Directors approved the 1996
Stock Option Plan. Under this plan, the Board of Directors of Landec may grant
stock purchase rights, incentive stock options or non-statutory stock options to
Landec executives. The exercise price of the stock purchase rights, incentive
stock options and non-statutory stock options may be no less than 100% of the
fair market value of Landec's common stock on the date the options are granted.
The plan, as amended, authorizes the issuance of 1,500,000 shares of Landec
common stock under the plan. Options are exercisable upon vesting and generally
vest ratably over four years and are subject to repurchase if exercised before
being vested.

         In October 2000, the Company's Board of Directors approved the New
Executive Stock Option Plan. Under this plan, the Board of Directors may grant
non-statutory stock options to officers of Landec or officers of Apio or Landec
Ag whose employment with each of those companies began after October 24, 2000.
The exercise price of the non-statutory stock options may be no less than 100%
and 85%, for named executives and non-named executives, respectively, of the
fair market value of Landec's common stock on the date the options are granted.
Options are exercisable upon vesting and generally vest ratably over four years
and are subject to repurchase if exercised before being vested, 210,000 shares
are authorized to be issued under this plan.

         In November 1999, the Company's Board of Directors granted to the
CEO of Apio a non-statutory stock option to purchase 790,000 shares of
Landec's common stock. The exercise price of the grant was the fair market
value of Landec's common stock on the date of grant. The option vests over
two years.

         In December 1999, the Company granted 200,000 performance options to a
member of management under the 1996 Stock Option Plan. The options have an
exercise price of $6.25 per share, and vest in three equal amounts if the stock
price reaches an average of $10, $20, and $30, respectively, for a twenty
consecutive day trading period prior to December 2003. At October 29, 2000, none
of the options had vested.

         In January 1997, the company effected an option repricing program to
allow non-officer employees and outside consultants who were issued options
under the 1988 Stock Option Plan at an exercise price above $14.50 per share to
exchange their out-of-money stock options for the same number of options at a
more favorable exercise price. Under this repricing program, one new option
could be obtained for every option cancelled. The exercise price of the new
option was based on the fair market value of the Company's common stock on the
date the old options were exchanged. The new options vest ratably over four
years (commencing one year from January 7, 1997, the repricing date) and are
subject to repurchase if exercised before being vested. As a result of this
repricing program, options to purchase 58,250 shares were repriced.

         In January 1998, the Company effected another option repricing program
to allow employees, directors and officers who were issued options under the
1988 Stock Option Plan, the Directors' Plan and 1996 Non-Executive Stock Option
Plan and 1996 Stock Option Plan at an exercise price above $5.00 per share to
exchange their out-of-money stock options for the same number of options at a
more favorable exercise price. The officers and directors repricing was approved
at the April 15, 1998 shareholders' meeting. Under this repricing program, one
new option could be obtained for every option cancelled. The exercise price of
the new option was based on the higher of fair market value of the Company's
common stock on the date the old options were exchanged, or $5.00 per share. The
new options vest ratably over four years (commencing


                                      -45-
<PAGE>

8.       SHAREHOLDERS' EQUITY (CONTINUED)


December 4, 1997, the repricing date) and are subject to repurchase if exercised
before being vested. As a result of this repricing program and the repricing of
the options issued under the 1995 Directors' Plan, options to purchase 753,100
shares were repriced.

         The various repricings effected by the Company do not result in
variable accounting under FASB Interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Compensation," since they were effected prior to
December 15, 1998.

         Activity under all Landec Stock Option Plans is as follows:

<TABLE>
<CAPTION>
                                                                           Outstanding Options
                                                                   -------------------------------------
                                                    Options                                Weighted
                                                   Available            Number             Average
                                                   for Grant           of Shares        Exercise Price
         ------------------------------------- ------------------- ------------------ ------------------
<S>                                            <C>                 <C>                <C>
         Balance at October 31, 1997              1,073,851           1,936,422              $5.11

         Additional shares reserved                 950,000                  --                 --
         Options granted                         (1,584,828)          1,584,828              $5.12
         Options exercised                               --            (163,394)             $0.69
         Options forfeited                          123,851            (123,851)             $6.46
         Options canceled                           753,100            (753,100)             $9.84
         Expired in 1988 Plan                       (60,633)                 --                 --
         ------------------------------------- ------------------- ------------------
         Balance at October 31, 1998              1,255,341           2,480,905              $3.90

         Additional shares reserved                 750,000                  --                 --
         Options granted                           (663,300)            663,300              $4.79
         Options exercised                               --            (100,265)             $1.52
         Options forfeited                          108,220            (108,220)             $5.20
         Expired in 1988 Plan                        (2,977)                 --                 --
         ------------------------------------- ------------------- ------------------
         Balance at October 31, 1999              1,447,284           2,935,720              $4.14

         Additional shares reserved               1,000,000                  --                 --
         Options granted                         (1,614,150)          1,614,150              $6.27
         Options exercised                               --             (94,002)             $3.42
         Options forfeited                          141,029            (141,029)             $5.19
         Expired in 1988 Plan                        (4,078)                 --                 --
         ------------------------------------- ------------------- ------------------
         Balance at October 29, 2000                970,085           4,314,839              $4.92
</TABLE>

         At October 29, 2000 and October 31, 1999 and 1998, options to purchase
1,974,146, 1,494,662 and 1,101,387 of Landec's common stock were vested,
respectively. No options have been exercised prior to being vested.

         Total deferred compensation expense recognized in the Company's
financial statements for stock-option awards under APB 25 for fiscal years 2000,
1999 and 1998 was $0, $86,000 and $112,000 respectively.



                                      -46-
<PAGE>

8.       SHAREHOLDERS' EQUITY (CONTINUED)

The following tables summarize information about Landec options outstanding and
exercisable at October 29, 2000.

<TABLE>
<CAPTION>
                                                   OPTIONS OUTSTANDING
                       -------------------------------------------------------------------
                                                                    Weighted
                                                                     Average        Weighted
                                                                   Contractual      Average
                               Range of              Number           Life          Exercise
                           Exercise Prices         of Shares       (in years)        Price
                       ------------------------- --------------- ---------------- -------------
                       <S>                       <C>             <C>              <C>
                          $0.5800 - $0.8600          489,800          2.40             $0.66
                          $1.4400 - $4.8750          270,879          6.81             $2.70
                          $4.9380 - $4.9380          441,551          8.29             $4.94
                          $5.0000 - $5.0000        1,221,542          7.16             $5.00
                          $5.0630 - $6.1250          496,317          6.11             $5.79
                          $6.2500 - $6.2500          877,000          5.15             $6.25
                          $6.3130 - $9.3400          517,750          8.52             $6.78
                                                 ---------------
                          $0.5800 - $9.3400        4,314,839          6.35             $4.92
</TABLE>

<TABLE>
<CAPTION>
                                              OPTIONS EXERCISEABLE
                       -------------------------------------------------------------------

                                                                           Weighted
                                Range of                 Number             Average
                             Exercise Prices           of Shares        Exercise Price
                       ---------------------------- ----------------- --------------------
                       <S>                          <C>               <C>
                            $0.5800 - $0.8600             489,078            $0.66
                            $1.4400 - $4.8750             199,431            $2.06
                            $4.9380 - $4.9380             194,547            $4.94
                            $5.0000 - $5.0000             656,645            $5.00
                            $5.0630 - $6.1250             180,622            $5.48
                            $6.2500 - $6.2500              20,000            $6.25
                            $6.3130 - $9.3400             233,823            $6.87
                                                    -----------------
                            $0.5800 - $9.3400           1,974,146            $3.90
</TABLE>

         EMPLOYEE STOCK PURCHASE PLAN. The Company has an employee stock
purchase plan which permits eligible employees to purchase common stock, which
may not exceed 10% of an employee's compensation, at a price equal to the lower
of 85% of the fair market value of the Company's common stock at the beginning
of the offering period or on the purchase date. As of October 29, 2000, 283,457
shares have been issued under the Purchase Plan.

         LANDEC AG STOCK PLAN. Under the 1996 Landec Ag Stock Plan, the Board of
Directors of Landec Ag may grant stock purchase rights, incentive stock options
or non-statutory stock options to employees and outside consultants. The
exercise price of the stock purchase rights, incentive stock options and
non-statutory stock options may be no less than 85%, 100% and 85%, respectively,
of the fair market value of Landec Ag's common stock as determined by Landec
Ag's Board of Directors. 2,000,000 shares are authorized to be issued under this
plan. Options are exercisable upon vesting and generally vest ratably over four
years and are subject to repurchase if exercised before being vested.



                                      -47-
<PAGE>

8.       SHAREHOLDERS' EQUITY (CONTINUED)


         The following table summarizes activity under the Landec Ag Stock
Option Plan.

<TABLE>
<CAPTION>
                                                                       Outstanding Options
                                                            ------------------------------------------
                                              Options                             Weighted Average
                                             Available      Number of Shares       Exercise Price
                                         ----------------   -----------------   ----------------------
<S>                                      <C>                <C>                 <C>
         Balance at October 31, 1997          764,000           1,236,000               $0.12

         Options granted                      (59,900)             59,900               $0.20
         Options forfeited                     11,800             (11,800)              $0.20
                                         ----------------   -----------------
         Balance at October 31, 1998          715,900           1,284,100               $0.12

         Options granted                     (248,800)            248,800               $0.83
         Options exercised                      --                   (534)              $0.20
         Options forfeited                      9,591              (9,591)              $0.20
                                         ----------------   -----------------
         Balance at October 31, 1999          476,691           1,522,775               $0.24

         Options granted                     (211,900)            211,900               $1.00
         Options exercised                      --                (18,215)              $0.21
         Options forfeited                     10,360             (10,360)              $0.37
                                         ----------------   -----------------
         Balance at October 29, 2000          275,151           1,706,100               $0.33
</TABLE>


         At October 29, 2000, options to purchase 1,302,393 shares with an
average exercise price of $0.19 per share of Landec Ag's common stock were
vested. For the options outstanding at October 29, 2000, 1,032,500 shares were
granted with an exercise price of $0.10, 263,200 shares were granted with an
exercise price of $0.20 and 410,400 were granted with an exercise price of
$1.00. As of October 29, 2000, the Company has 1,981,251 common shares reserved
for future issuance under the Landec Ag stock option plan.

         APIO STOCK PLAN. In connection with the acquisition of Apio, the Board
of Directors of Landec authorized the establishment of the 1999 Apio Stock
Option Plan ("1999 Plan"). Under the 1999 Plan, the Board of Directors of Apio
may grant incentive stock options or non-statutory stock options to employees
and outside consultants. The exercise price of the incentive stock options and
non-statutory stock options may be no less than 100% and 85%, respectively, of
the fair market value of Apio's common stock as determined by Apio's Board of
Directors. Five million shares are authorized to be issued under this plan.
Options are exercisable upon vesting and generally vest ratably over four years
and are subject to repurchase if exercised before being vested. As of October
29, 2000, options for two million shares have been granted at an exercise price
of $2.10 per share.

         In May 2000, the 1999 Plan was terminated. All existing grants remain
outstanding, and no future grants will be made from the plan. Concurrently, the
2000 Apio Stock Option Plan ("2000 Plan") was authorized by Apio's Board of
Directors, which authorized the issuance of two million shares under the same
terms and conditions as the 1999 Plan. As of October 29, 2000, options for
814,000 shares have been granted under the 2000 Plan at an exercise price of
$2.10 per share.

         The following table summarizes activity under the Apio Stock Option
Plan.

<TABLE>
<CAPTION>
                                                                        Outstanding Options
                                                           ---------------------------------------------

                                              Options                               Weighted Average
                                             Available       Number of Shares        Exercise Price
                                         ----------------  --------------------  -----------------------
        <S>                              <C>               <C>                   <C>
         Balance at December 2, 1999        4,000,000               --                     --

         Options granted                   (2,814,000)          2,814,000                 $2.10
         Options exercised                      --                  --
         Options forfeited                     57,000             (57,000)                $2.10
                                         ----------------  --------------------
         Balance at October 29, 2000        1,243,000           2,757,000                 $2.10
</TABLE>


                                      -48-
<PAGE>

8.       SHAREHOLDERS' EQUITY (CONTINUED)


         At October 29, 2000 no options to purchase Apio common stock were
vested. As of October 29, 2000, the Company has 4,000,000 common shares reserved
for future issuance under the Apio stock option plan.

         PRO FORMA INFORMATION. The Company has elected to follow APB 25 in
accounting for its employee stock option because, as discussed below, the
alternative fair value accounting provided for under SFAS 123 required the use
of option valuation models that were not developed for use in valuing employee
stock options. Under APB 25, no compensation expense is recognized in the
Company's financial statements unless the exercise price of the Company's
employee stock options is less than the market price of the underlying stock on
the date of grant.

         Pro forma information regarding net loss and net loss per share has
been determined as if the Company had accounted for the Landec stock option
plans under the fair value method and the Landec Ag stock plan and Apio stock
plans under the minimum value method prescribed by SFAS No. 123. The fair value
of options granted in fiscal years 2000, 1999 and 1998 reported below has been
estimated at the date of grant using a Black-Scholes options pricing model with
the following weighted average assumptions:

<TABLE>
<CAPTION>
                                                                  LANDEC
                                                          EMPLOYEE STOCK OPTIONS
         --------------------------------- -----------------------------------------------------
         YEARS ENDED                         OCTOBER 29,     OCTOBER 31,        OCTOBER 31,
                                                2000             1999              1998
                                                ----             ----              ----
    <S>                                        <C>              <C>               <C>
         Expected life (in years)               4.47             3.30              3.91
         Risk-free interest rate                6.26            5.08%              5.62%
         Volatility                              .85             .43                .44
         Dividend yield                          0%               0%                0%
</TABLE>

         The assumptions used for the Landec stock options for the expected
life, the risk-free interest rate and the dividend yield are the same
assumptions used to determine the fair value of the Landec Ag and Apio options
granted in fiscal year 2000, 1999, and 1998. The fair value for Landec Ag and
Apio options was estimated using the minimum value method since the stock of
these subsidiaries is not publicly traded.

         The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions, including the expected stock price
volatility. The change in the volatility in fiscal year 2000 is a result of
basing the volatility on Landec's stock price rather than that of comparable
companies as was done in prior years. Because the Company's options have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect the
fair value estimate, in the opinion of management, the existing models do not
necessarily provide a reliable single measure of the fair value of its options.

         The weighted average estimated fair value of Landec employee stock
options granted at grant date market prices during fiscal years 2000, 1999 and
1998 was $4.19, $1.71, and $1.67 per share, respectively. No stock options were
granted above grant date market prices during fiscal years 2000 and 1999. The
weighted average estimated fair value of Landec employee stock options granted
above grant date market prices during fiscal year 1998 was $7.84 per share. The
weighted average exercise price of employee stock options granted above grant
date market prices during fiscal year 1998 was $5.00 per share. The weighted
average estimated fair value of shares granted under the Landec Stock Purchase
Plan during fiscal years 2000, 1999 and 1998 was $1.87, $1.42 and $1.57 per
share, respectively. The weighted average estimated fair value of shares granted
under the Intellicoat Stock Purchase Plan during fiscal years 2000, 1999 and
1998 was $0.23, $0.30 and $0.03 per share, respectively. The weighted average
estimated fair value of shares granted under Apio Stock Purchase Plan during
fiscal year 2000 was $0.73.


                                      -49-
<PAGE>


8.       SHAREHOLDERS' EQUITY (CONTINUED)

         For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows (in thousands, except per share amounts):

<TABLE>
<CAPTION>
             YEARS ENDED                             OCTOBER 29,      OCTOBER 31,       OCTOBER 31,
             ------------------------------------- ---------------- ----------------- ----------------
                                                        2000              1999             1998
             ------------------------------------- ---------------- ----------------- ----------------
<S>                                                <C>               <C>              <C>
             Pro forma net loss                       $(8,429)          $(4,126)         $(4,355)
             Pro forma net loss per share              $(0.53)          $(0.31)           $(0.34)
</TABLE>

         The effects on pro forma disclosures of applying SFAS No. 123 are not
likely to be representative of the effects on pro forma disclosures of future
years.

9.      DEBT

         REVOLVING DEBT

         Apio has a revolving line of credit with a bank which allows for
borrowings up to a maximum of $12.0 million. Outstanding amounts bear interest
at the greater of the prime rate set by the bank or the Federal fund rate (9.5%
at October 29, 2000) plus a margin based on Apio's leverage ratio as defined in
the revolving note agreement, currently plus .50%. The revolving note agreement
expires on May 1, 2002. At October 29, 2000, $6.0 million was outstanding under
the revolving line of credit.

         Dock Resins has a revolving line of credit which allows for borrowings
of up to $1.25 million. The interest rate on the revolving line of credit is
principally charged at the one-month LIBOR rate plus 1.75%. The revolving line
of credit expires on February 28, 2002, and contains certain restrictive
covenants, which, among other things, require Dock Resins to maintain minimum
levels of net working capital and tangible net worth. At October 29, 2000,
$868,000 was outstanding under the revolving line of credit.

         Landec Ag has a revolving line of credit which allows for borrowings of
up to $3 million, based on Landec Ag's inventory levels, and a capital
expenditure line of credit which allows for borrowings up to $1 million. The
interest rate on the revolving line of credit is charged at the prime rate plus
0.75%, and on the capital expenditure line of credit at the five-year Treasury
bill rate plus 4.75%. These lines of credit contain certain restrictive
covenants, which, among other things, affect the ability of Landec to receive
payments on debt owed by Landec Ag to Landec. Landec has pledged substantially
all of the assets of Landec Ag to secure the lines of credit. At October 29,
2000, $2.3 million was outstanding under the revolving line of credit and
$419,000 was outstanding under the capital expenditure line of credit.

         The Company has entered into an interest rate swap agreement with a
bank to limit interest rates on a portion of its long-term debt to a maximum
effective rate of 9.52% from February 2, 2000 until October 30, 2002 when the
agreement expires. The notional amount covered by the agreement at October 29,
2000 is $5,250,000. The differential to be paid or received is accrued as
interest rate charges and recognized as an adjustment to interest expense
related to the debt. Any related amounts payable to the bank would be recorded
in other accrued liabilities. The fair value of the interest rate swap agreement
is approximately $25,000 at October 29, 2000.



                                      -50-
<PAGE>



9.      DEBT (CONTINUED)


         LONG-TERM DEBT

         Long-term debt consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                                              OCTOBER 29, 2000    OCTOBER 31, 1999
                                                                              ----------------    ----------------
<S>                                                                           <C>                 <C>
         Bankterm loan for Apio; due in quarterly payments of $500,000
             through October 31, 2000 increasing to $562,500 January 31,
             2001 and to $625,000 on January 31, 2002 through October 31,
             2004 with interest payable monthly at the LIBOR rate plus a
             margin based on Apio's leverage ratio as defined in the loan
             agreement, currently plus 2.5% (8.90% at October 29, 2000)         $    10,250         $        --
         Contractual obligation to former owners of Apio; due in
             annual installments of $1,060,000 beginning January 2,
             2001 through January 2, 2005 (see Note 2)                                4,092                  --
         Bank term loan for Dock Resins; due in monthly installments of
             $26,583 including interest at 8.19% beginning February 1,
             1999 through January, 2006 with the balance due January 31,
             2006                                                                     2,578               2,678
         Note payable of Apio to a commercial finance company; due in
             monthly installments of $13,366 including interest at
             7.0% with final payment due December 2019                                1,694                  --
         Note payable of Apio to a bank; due in monthly installments
             of $8,008 including interest at 9.5% with final payment
             due December 2015                                                          856                  --
         Various notes payable with interest rates ranging from 7.54%
              to 10.82%                                                                 417                  84
         Capitalized lease obligations with interest rates ranging from
              9.15% to 12.99%                                                           328                  --
                                                                              ----------------    ----------------
                                                                                     20,215               2,762
         Less current portion                                                        (3,584)               (125)
                                                                              ----------------    ----------------
                                                                                $    16,631         $     2,637
                                                                              ================    ================
</TABLE>


         Maturities of long-term debt, including obligations under capital lease
agreements, for each year presented are as follows (in thousands):

<TABLE>
                     <S>                                                             <C>
                         FY 2001...............................................       $    3,584
                         FY 2002...............................................            3,573
                         FY 2003...............................................            3,545
                         FY 2004...............................................            3,618
                         FY 2005...............................................            1,833
                         Thereafter............................................            4,062
                                                                                     --------------
                                                                                      $   20,215
                                                                                     ==============
</TABLE>


         The contractual obligation of $5.3 million to former shareholders of
Apio is non-interest bearing and accordingly has been discounted at Apio's
incremental borrowing rate of 9.5% over five years resulting in a discounted
value of $4,092,000 at October 29, 2000.

         Dock Resins' bank term loan limits dividend payments and contains
various financial covenants including minimum working capital levels, net worth
and debt service ratio.


                                      -51-
<PAGE>

9.      DEBT (CONTINUED)

         Apio's bank term loan limits payments to Landec for dividends,
corporate service fees and tax sharing expenses until the principal is reduced
to an amount specified in the loan agreement. In addition, the term loan and the
DEBT revolving note contain various financial covenants including minimum levels
of EBITDA, minimum fixed coverage ratio, minimum current ratio, minimum adjusted
net worth and maximum leverage ratios. These requirements and ratios generally
become more restrictive over time.

         Landec has pledged substantially all of Apio's, Landec Ag's and Dock
Resins' assets to secure their term debt.

10.      INCOME TAXES

         The Company's provision (benefit) for income taxes of $(42,000), 54,000
and 150,000 for the years ended October 29, 2000, October 31, 1999 and October
31, 1998, respectively, is attributable to state taxes.

         As of October 29, 2000, the Company had federal and state net operating
loss carryforwards of approximately $29.6 million and $7.9 million,
respectively. The Company also had federal and state research and development
tax credit carryforwards of approximately $1.2 million and $700,000,
respectively. The net operating loss and credit carryforwards will expire at
various dates beginning in 2003 through 2015, if not utilized.

         Utilization of the net operating losses and credits may be subject to a
substantial annual limitation due to the ownership change limitations provided
by the Internal Revenue Code of 1986. The annual limitation may result in the
expiration of net operating losses and credits before utilization.

         Significant components of the Company's deferred tax assets are as
follows (in thousands):

<TABLE>
<CAPTION>
                                                                      YEARS ENDED
       DEFERRED TAX ASSETS:                                     OCTOBER 29,     OCTOBER 31,
                                                                  2000           1999
                                                                  ----           ----
<S>                                                           <C>               <C>
        Net operating loss carryforwards....................  $  10,500         $  9,800
        Research credit carryforwards.......................      1,900            1,600
        Capitalized research and development................      1,600            1,400
        In-process research and development.................      1,000            1,000
        Other - net.........................................      1,300            1,100
                                                            ---------------  --------------
     Net deferred tax assets................................     16,300           14,900
     Valuation allowance....................................    (16,300)         (14,900)
                                                            ---------------  --------------
     Net deferred tax assets................................  $      --         $     --
                                                            ===============  ==============
</TABLE>

         Due to the Company's absence of earnings history, the net deferred tax
asset has been fully offset by a valuation allowance, which has increased by
$1.4 million in the current year.

         Approximately $100,000 of the valuation allowance for deferred tax
assets relates to benefits of stock option deductions which, when recognized,
will be allocated directly to contributed capital.



                                      -52-
<PAGE>


11.      COMMITMENTS AND CONTINGENCIES

         OPERATING LEASES

         Landec leases facilities and equipment under operating lease agreements
with various terms and conditions, which expire at various dates through
December 2002. The approximate future minimum lease payments under these
operating leases, excluding farmland leases, at October 29, 2000 are as follows
(in thousands):

<TABLE>
<CAPTION>
                                                                                           AMOUNT
                                                                                        -----------
                             <S>                                                        <C>
                                    FY2001..............................................$       996
                                    FY2002..............................................        508
                                    FY2003..............................................        110
                                                                                        -----------
                                                                                        $     1,614
                                                                                        ===========
</TABLE>

         Rent expense for operating leases, including month to month
arrangements was $1.1 million for fiscal year 2000, $522,000 for fiscal year
1999, and $481,000 for fiscal year 1998.

         LAND LEASES

         Landec, through its Apio subsidiary, also leases farmland under various
non-cancelable leases expiring through October 2004. Landec subleases
substantially all of the farmland to growers who, in turn, agree to market their
crops through Landec. The subleases are generally non-cancelable and expire
through October 2004. The approximate future minimum leases and sublease amounts
receivable under farmland leases at October 29, 2000 are as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                    Minimum           Sublease
                                                                     Lease              Rents
                                                                   Payments          Receivable          Net
                                                                ----------------  ---------------- ----------------
<S>                                                             <C>               <C>              <C>
         2001.................................................  $        1,342    $          634   $          708
         2002.................................................           1,196               529              667
         2003.................................................             791               321              470
         2004.................................................             401               150              251
                                                                ----------------  ---------------- ----------------
                                                                $        3,730    $        1,634   $        2,096
                                                                ================  ================ ================
</TABLE>


         OTHER

         Under the terms of the acquisition of Dock Resins, the former
shareholder of Dock Resins has indemnified the Company with regard to
expenditures subsequent to the acquisition for certain environmental matters
relating to circumstances existing at the time of the acquisition. To cover any
such cost, an escrow for $1.5 million in cash and all of the equity
consideration was set aside. During fiscal years 2000, 1999 and 1998, $370,000,
$460,000 and zero were drawn down from the escrow account to pay for
environmental expenses incurred by Dock Resins, that had been indemnified by the
former shareholder of Dock Resins in the purchase agreement.

         EMPLOYMENT AGREEMENTS

         Landec has entered into employment agreements with certain key
employees. These agreements provide for these employees to receive incentive
bonuses based on the financial performance of certain divisions in addition to
their annual base salaries. Certain key employees also receive minimum bonuses
for their second year assuming continued employment. The accrued incentive
bonuses amounted to $725,000 at October 29, 2000.

12.      EMPLOYEE SAVINGS AND INVESTMENT PLANS

         The Company sponsors a 401(k) plan available to substantially all of
Apio's salaried employees. The plan's participants can contribute from 1% to 5%
of their salary, up to the Internal Revenue Service limitation into designated
investment funds. The Company, in turn, contributes an amount, as required by
the plan, which is equal to the participant's contributions. Participants are at
all times fully vested in their contributions. The Company's contribution vests
over a seven-year period beginning in year three at a rate of 20% per year. The
Company retains the right, by action of the Board of Directors, to amend, modify
or terminate the plan. In fiscal year 2000, the Company contributed $282,000 to
the foregoing plan.



                                      -53-
<PAGE>

13.      BUSINESS SEGMENT REPORTING

         The acquisition of Apio in December 1999 resulted in a redefinition of
operating segments by management. Prior period segment information has been
restated to conform to the current segment definitions. Landec operates in two
business segments: the Food Products Technology segment and the Agricultural
Seed Technology segment. The Food Products Technology segment markets and packs
produce and specialty packaged fresh-cut vegetables that incorporate the
Intellipac(TM) breathable membrane for the fresh-cut produce industry through
its Apio subsidiary. The amounts presented for fiscal year 2000 include the
results of Apio from the effective close date of November 29, 1999 through
October 29, 2000. The Food Products Technology segment for the fiscal years
ended October 31, 1999 and 1998 only includes the operations of the Intellipac
business. The Agricultural Seed Technology segment markets and distributes
hybrid seed corn to the farming industry and is developing seed coatings using
Landec's proprietary Intelimer(R) polymers through Intellicoat. The Food
Products Technology and Agricultural Seed Technology segments include charges
for corporate services allocated from the Corporate and Other segment. Corporate
and Other amounts include non-core operating activities, corporate operating
costs and net interest expense. Assets classified as Corporate and Other consist
primarily of assets of Dock Resins.

         Operations by Business Segment (in thousands):

<TABLE>
<CAPTION>

                                                                     Agricultural
2000                                              Food Products         Seed         Corporate and
                                                    Technology        Technology         Other          Total
----------------------------------------------   ----------------  ---------------   --------------   ----------
<S>                                              <C>               <C>                 <C>            <C>
Net sales..................................      $    178,809      $      17,212       $  13,529      $ 209,550
Net income (loss) before cumulative effect of
accounting change..........................      $        249      $      (2,914)      $     581      $  (2,084)
Identifiable assets........................      $     95,267      $      15,775       $  22,210      $ 133,252
Depreciation and amortization..............      $      3,790      $       1,055       $   1,221      $   6,066
Capital expenditures.......................      $      2,839      $         763       $   1,736      $   5,338
Interest income............................      $        723      $          82       $      72      $     877
Interest expense...........................      $      2,120      $          23       $     192      $   2,335
Income tax expense (benefit) ..............      $        588      $          --       $    (630)     $     (42)


1999
----------------------------------------------
Net sales..................................      $      4,459      $      15,197       $  15,791      $  35,447
Net income (loss)..........................      $        105      $      (1,219)      $  (1,655)     $  (2,769)
Identifiable assets........................      $      2,352      $      17,318       $  21,038      $  40,708
Depreciation and amortization..............      $        139      $         983       $   1,006      $   2,128
Capital expenditures.......................      $        347      $         295       $   3,066      $   3,708
Interest income............................      $         --      $         113       $     250      $     363
Interest expense...........................      $         --      $          --       $      99      $      99
Income tax expense.........................      $         --      $          --       $      54      $      54


1998
----------------------------------------------
Net sales..................................      $      2,859      $      13,275       $  17,382      $  33,516
Net loss...................................      $       (353)     $      (1,427)      $  (1,110)     $  (2,890)
Identifiable assets........................      $      1,513      $      14,356       $  26,487      $  42,356
Depreciation and amortization..............      $        125      $         917       $     921      $   1,963
Capital expenditures.......................      $        142      $       1,389       $   2,569      $   4,100
Interest income............................      $         --      $          95       $     642      $     737
Interest expense...........................      $         --      $           9       $     128      $     137
Income tax expense.........................      $         --      $          --       $     150      $     150
</TABLE>




                                      -54-
<PAGE>


13.      BUSINESS SEGMENT REPORTING (CONTINUED)

         During fiscal years 1999 and 1998, a customer in the Corporate and
Other segment accounted for 10% and 13%, respectively, of the Company's total
revenue. This was the only customer with revenues individually representing 10%
or more of total revenues.

         Export product sales were $35.6 million, $828,000 and $863,000 in the
years ended October 29, 2000 and October 31, 1999 and 1998, respectively.

14.      QUARTERLY CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)

               The following is a summary of the unaudited quarterly results of
operations for fiscal years 2000 and 1999. The Company has included the
following information below to demonstrate the effect on the first, second and
third quarters of fiscal year 2000 as if the provisions of SAB No. 101 (See Note
1), had been applied as of the beginning of the fiscal year (in thousands,
except for per share amounts):


<TABLE>
<CAPTION>
                                                    1ST QUARTER           2ND QUARTER             3RD QUARTER        4TH QUARTER
                                                    -----------           -----------             -----------        -----------
                                                      As                    As                     As
                                                 Previously     As     Previously      As      Previously      As
                    FY 2000                       Reported  Restated    Reported    Restated    Reported    Restated
----------------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>       <C>        <C>         <C>         <C>         <C>           <C>
Revenues                                            33,797    33,890     60,771      60,864      61,401      61,494        53,302
Gross Profit                                         4,263     4,356     12,386      12,479       8,504       8,597         7,930
Income (Loss) Before Cumulative Effect of
Accounting Change                                   (2,734)   (2,641)     2,815       2,908        (662)       (569)       (1,782)
Cumulative Effect of Accounting Change (Note 1)               (1,914)
                                                 ---------------------------------------------------------------------------------
Net Income (Loss)                                   (2,734)   (4,555)     2,815       2,908        (662)       (569)       (1,782)
                                                 =================================================================================
Basic Amounts per Common Share:
Income Before Cumulative Effect of Accounting
Change                                               (0.18)    (0.17)      0.18        0.18       (0.04)      (0.04)        (0.11)
Cumulative Effect of Change in Accounting                      (0.13)
                                                 ---------------------------------------------------------------------------------
Net Income/(Loss)                                    (0.18)    (0.30)      0.18        0.18       (0.04)      (0.04)        (0.11)
                                                 =================================================================================
Dilutive Amounts Per Common Share:
Income Before Cumulative Effect of Change in
Accounting                                           (0.18)    (0.17)      0.12        0.13       (0.04)      (0.04)        (0.11)
Cumulative Effect of Change in Accounting (Note 1)             (0.13)
                                                 ---------------------------------------------------------------------------------
Net Income/(Loss)                                    (0.18)    (0.30)      0.12        0.13       (0.04)      (0.04)        (0.11)
                                                 =================================================================================
</TABLE>


<TABLE>
<CAPTION>
                    FY 1999                           1st                 2nd                     3rd                       4th
                                                    Quarter             Quarter                 Quarter                   Quarter
----------------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>                 <C>                      <C>                       <C>
Revenues                                             5,289               19,126                   5,530                     5,502
Gross Profit                                         2,276                8,054                   1,942                     1,699
Net Income (Loss)                                   (1,641)               3,451                  (2,027)                   (2,552)
Basic Earnings per Share                             (0.12)                0.26                   (0.15)                    (0.19)
Dilutive Earnings per Share                          (0.12)                0.22                   (0.15)                    (0.19)
</TABLE>


                                      -55-
<PAGE>


                               LANDEC CORPORATION
                        VALUATION AND QUALIFYING ACCOUNTS
                                 (IN THOUSANDS)



                                                                    SCHEDULE II

<TABLE>
<CAPTION>
                                                                ADDITIONS
                                                 BALANCE AT     CHARGED TO
                                                 BEGINNING      COSTS AND                   BALANCE AT
                                                 OF PERIOD       EXPENSES     DEDUCTIONS   END OF PERIOD
                                                 -----------    -----------   -----------  -------------
<S>                                              <C>            <C>           <C>          <C>
Year ended October 31, 1998
     Allowance for doubtful accounts............. $    27         $   31        $   (8)       $  50
Year ended October 31, 1999
     Allowance for doubtful accounts............. $    50         $   --        $   (5)       $  45
Year ended October 29, 2000
     Allowance for doubtful accounts............. $    45         $1,180        $ (598)       $ 627
</TABLE>



                                      -56-
<PAGE>


(b)      No reports on Form 8-K were filed by the Company during the period July
         31, 2000 to October 29, 2000.


(c)      Index of Exhibits

<TABLE>
<S>                 <C>
         2.1(6)     Stock Purchase Agreement by and among the Registrant, Dock Resins Corporation and A. Wayne
                    Tamarelli dated as of April 18, 1997.
         2.2(7)     Agreement and Plan of Reorganization by and among the Registrant, Intellicoat Corporation,
                    Williams & Sun, Inc. (d/b/a Fielder's Choice Hybrids) and Michael L. Williams dated as of
                    August 20, 1997.
         2.3(11)    Form of Agreement and Plan Merger and Purchase Agreement by and among the Registrant, Apio,
                    Inc. and related companies and each of the respective shareholders dated as of November 29,
                    1999.
         3.1(1)     Amended and Restated Bylaws of Registrant.
         3.2(2)     Ninth Amended and Restated Articles of Incorporation of Registrant.
         3.3(13)    Certificate of Determination of Series A Preferred Stock
         4.1(12)    Series A Preferred Stock Purchase Agreement between the Registrant and Frederick Frank, dated
                    as of November 19, 1999.
         10.1(3)    Form of Indemnification Agreement.
         10.3(4)*   1995 Employee Stock Purchase Plan, as amended, and form of Subscription Agreement.
         10.4(4)*   1995 Directors' Stock Option Plan, as amended, and form of Option Agreement.
         10.6(3)    Industrial Real Estate Lease dated March 1, 1993 between the Registrant and Wayne R. Brown &
                    Bibbits Brown, Trustees of the Wayne R. Brown & Bibbits Brown Living Trust dated December 30,
                    1987.
         10.14(4)*  Consulting Agreement dated May 1, 1996 between the Registrant and Richard Dulude.
         10.15(4)*  1996 Intellicoat Stock Option Plan and form of Option Agreements.
         10.16(4)*  1996 Non-Executive Stock Option Plan and form of Option Agreements.
         10.17(5)*  1996 Stock Option Plan and Form of Option Agreement.
         10.19(8)   Technology License Agreement between Bissell Healthcare Corporation and the Registrant, dated
                    as of August 28, 1997.
         10.21(9)*  Employment Agreement between the Registrant and A. Wayne Tamarelli dated as of April 18, 1997.
         10.22(10)* Form of Common Stock Purchase Agreement for certain officers and directors for restricted
                    stock purchase.
         10.23(10)  Loan agreement between Registrant and  Michael Williams dated October 1, 1998.
         10.24(13)* Employment agreement between the Registrant and Nicholas Tompkins dated as of November 29,
                    1999.
         10.25(13)* Stock Option Agreement between the Registrant and Nicholas
                    Tompkins dated as of November 29, 1999.
         10.26(13)* 1999 Apio, Inc. Stock Option Plan and form of Option Agreement.
         10.27(13)  Loan agreement between Apio, Inc. and the Bank of America dated as of November 29, 1999.
         10.28+*    2000 Apio, Inc. Stock Option Plan and form of Option Agreement
         10.29+     Loan Agreement between Landec Ag, Inc. and Old National Bank dated as of June 5, 2000, as
                    amended.
         10.30+*    New Executive Stock Option Plan.
         21.1       Subsidiaries of the Registrant.
                           SUBSIDIARY                                      STATE OF INCORPORATION
                    Landec Ag (formerly Intellicoat Corporation)                Delaware
                    Dock Resins Corporation                                     New Jersey
                    Apio, Inc.                                                  Delaware
         23.1+      Consent of Independent Auditors.
         24.1+      Power of Attorney.  See page 59.
</TABLE>

-------------------



                                      -57-
<PAGE>

(1)      Incorporated by reference to Exhibit 3.4 filed with Registrant's
         Registration Statement on Form S-1 (File No. 33-80723) declared
         effective on February 12, 1996.

(2)      Incorporated by reference to Exhibit 3.5 filed with Registrant's
         Registration Statement on Form S-1 (File No. 33-80723) declared
         effective on February 12, 1996.

(3)      Incorporated by reference to the identically numbered exhibits filed
         with the Registrant's Registration Statement on Form S-1 (File No.
         33-80723) declared effective on February 12, 1996.

(4)      Incorporated by reference to the identically numbered exhibits filed
         with the Registrant's Form 10-K filed for the years ended October 31,
         1996.

(5)      Incorporated by reference to the identically numbered exhibits filed
         with the Registrant's Form 10-Q filed for the quarter ended April 30,
         1997.

(6)      Incorporated by reference to Exhibit 2.1 filed with the Registrant's
         Form 8-K dated April 18, 1997.

(7)      Incorporated by reference to Exhibit 2.1 filed with the Registrant's
         Form 10-Q for the quarter ended July 31, 1997.

(8)      Incorporated by reference to the identically numbered exhibits filed
         with the Registrant's Form 8-K dated August 28, 1997.

(9)      Incorporated by reference to Exhibit C to Exhibit 2.1 filed with the
         Registrant's Form 8-K dated April 18, 1997.

(10)     Incorporated by reference to identically number exhibits filed with the
         Registrant's Form 10-K filed for the year ended October 10, 1998.

(11)     Incorporated by reference to the Exhibit 2.1 filed with the
         Registrant's Form 8-K dated December 2, 1999.

(12)     Incorporated by reference to identically numbered exhibits filed with
         the Registrant's Form 8-K dated December 2, 1999.

(13)     Incorporated by reference to identically numbered exhibits filed with
         the Registrant's Form 10-K filed for the year ended October 31, 1999.

* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to this report pursuant to item 14(c) of Form 10-K.

+ Filed herewith.



                                      -58-
<PAGE>
         SIGNATURES

         Pursuant to the requirements of section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report on Form 10-K to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Menlo Park, State of California, on January 26 , 2001.

                           LANDEC CORPORATION

                           By:   /s/ Gregory S. Skinner
                               ----------------------------
                                  Gregory S. Skinner
                                  Vice President of Finance and Administration
                                  and Chief Financial Officer

                                POWER OF ATTORNEY

         KNOW ALL PERSONS BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE
APPEARS BELOW HEREBY CONSTITUTES AND APPOINTS GARY T. STEELE AND GREGORY S.
SKINNER, AND EACH OF THEM, AS HIS ATTORNEY-IN-FACT, WITH FULL POWER OF
SUBSTITUTION, FOR HIM IN ANY AND ALL CAPACITIES, TO SIGN ANY AND ALL AMENDMENTS
TO THIS REPORT ON FORM 10-K, AND TO FILE THE SAME, WITH EXHIBITS THERETO AND
OTHER DOCUMENTS IN CONNECTION THEREWITH, WITH THE SECURITIES AND EXCHANGE
COMMISSION, HEREBY RATIFYING AND CONFIRMING OUR SIGNATURES AS THEY MAY BE SIGNED
BY OUR SAID ATTORNEY TO ANY AND ALL AMENDMENTS TO SAID REPORT ON FORM 10-K.

         PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT ON FORM 10-K HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:

<TABLE>
<CAPTION>
                      SIGNATURE                                              TITLE                                DATE
                      ---------                                              -----                                ----
<S>                                                    <C>                                                  <C>
                 /s/ Gary T. Steele
------------------------------------------------------
                   Gary T. Steele                      President and Chief Executive Officer and Director   January 26, 2001
                                                       (Principal Executive Officer)

               /s/ Gregory S. Skinner
------------------------------------------------------
                 Gregory S. Skinner                    Vice President of Finance and Administration and     January 26, 2001
                                                       Chief Financial Officer (Principal Financial and
                                                       Accounting Officer)

                 /s/ Kirby L. Cramer
------------------------------------------------------
                   Kirby L. Cramer                     Director                                             January 26, 2001

                 /s/ Richard Dulude
------------------------------------------------------
                   Richard Dulude                      Director                                             January 26, 2001

                 /s/ Frederick Frank
------------------------------------------------------
                   Frederick Frank                     Director                                             January 26, 2001

               /s/ Stephen E. Halprin
------------------------------------------------------
                 Stephen E. Halprin                    Director                                             January 26, 2001


------------------------------------------------------
                Richard S. Schneider                   Director                                             January 26, 2001
</TABLE>



                                      -59-
<PAGE>


                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
   EXHIBIT
   NUMBER                             EXHIBIT TITLE
   -------
<S>         <C>
   10.28    2000 Apio, Inc. Stock Option Plan and form of Option Agreement

   10.29    Loan Agreement between Landec Ag, Inc. and Old National Bank dated as
            of June 5, 2000, as amended

   10.30    New Executive Stock Option Plan

   23.1     Consent of Independent Auditors
</TABLE>






                                      -60-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.28
<SEQUENCE>2
<FILENAME>a2036262zex-10_28.txt
<DESCRIPTION>EX-10.28
<TEXT>

<PAGE>
                                                                  Exhibit 10.28


                                   APIO, INC.

                                 2000 STOCK PLAN


     1. PURPOSES OF THE PLAN. The purposes of this 2000 Stock Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and its Subsidiaries and to promote the success of the Company's
business. Options granted under the Plan may be Incentive Stock Options (as
defined under Section 422 of the Code) or Nonstatutory Stock Options, as
determined by the Administrator at the time of grant of an Option and subject to
the applicable provisions of Section 422 of the Code, as amended, and the
regulations promulgated thereunder. Stock Purchase Rights may also be granted
under the Plan.

     2. DEFINITIONS. As used herein, the following definitions shall apply:

                  (a)  "ADMINISTRATOR" means the Board or its Committee
appointed pursuant to Section 4 of the Plan.

                  (b) "AFFILIATE" means an entity other than a Subsidiary in
which the Company owns an equity interest or which, together with the Company,
is under common control of a third person or entity.

                  (c) "APPLICABLE LAWS" means the legal requirements relating to
the administration of stock option plans under applicable U.S. state corporate
laws, U.S. federal and applicable state securities laws, the Code, any Stock
Exchange rules or regulations and the applicable laws of any other country or
jurisdiction where Options or Stock Purchase Rights are granted under the Plan,
as such laws, rules, regulations and requirements shall be in place from time to
time.

                  (d) "BOARD" means the Board of Directors of the Company.

                  (e) "CHANGE OF CONTROL" means a sale of all or substantially
all of the Company's assets, or any merger or consolidation of the Company with
or into another corporation, other than a merger or consolidation in which the
holders of more than 50% of the shares of capital stock of the Company
outstanding immediately prior to such transaction continue to hold (either by
the voting securities remaining outstanding or by their being converted into
voting securities of the surviving entity) more than 50% of the total voting
power represented by the voting securities of the Company, or such surviving
entity, outstanding immediately after such transaction.

                  (f) "CODE" means the Internal Revenue Code of 1986, as
amended.

                  (g) "COMMITTEE" means one or more committees or subcommittees
of the Board appointed by the Board to administer the Plan in accordance with
Section 4 below.

                  (h) "COMMON STOCK" means the Common Stock of the Company.

<PAGE>

                  (i) "COMPANY" means Apio, Inc., a Delaware corporation.

                  (j) "CONSULTANT" means any person, including an advisor, who
renders services to the Company, or any Parent, Subsidiary or Affiliate, and is
compensated for such services, and any director of the Company whether
compensated for such services or not.

                  (k) "CONTINUOUS SERVICE STATUS" means the absence of any
interruption or termination of service as an Employee or Consultant to the
Company or a Parent, Subsidiary or Affiliate. Continuous Service Status shall
not be considered interrupted in the case of: (i) sick leave; (ii) military
leave; (iii) any other leave of absence approved by the Administrator, provided
that such leave is for a period of not more than 90 days, unless reemployment
upon the expiration of such leave is guaranteed by contract or statute, or
unless provided otherwise pursuant to Company policy adopted from time to time;
or (iv) in the case of transfers between locations of the Company or between the
Company, its Parents, Subsidiaries or Affiliates or their respective successors.
Unless otherwise determined by the Administrator, a change in status from an
Employee to a Consultant or from a Consultant to an Employee will not constitute
an interruption of Continuous Service Status.

                  (l) "CORPORATE TRANSACTION" means a sale of all or
substantially all of the Company's assets, or a merger, consolidation or other
capital reorganization of the Company with or into another corporation.

                  (m) "DIRECTOR" means a member of the Board.

                  (n) "EMPLOYEE" means any person, including officers and
Directors, employed by the Company or any Parent, Subsidiary or Affiliate of the
Company. The payment by the Company of a director's fee to a Director shall not
be sufficient to constitute "employment" of such Director by the Company.

                  (o) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.


                  (p) "FAIR MARKET VALUE" means, as of any date, the fair market
value of Common Stock determined as follows:

                           (i)      If the Common Stock is listed on any
established stock exchange or a national market system including without
limitation the National Market of the National Association of Securities
Dealers, Inc. Automated Quotation ("Nasdaq") System, its Fair Market Value shall
be the closing sales price for such stock (or the closing bid, if no sales were
reported), as quoted on such system or exchange on the date of determination, or
if no trading occurred on the date of determination, on the last market trading
day prior to the time of determination, as reported in THE WALL STREET JOURNAL
or such other source as the Administrator deems reliable;

                           (ii)     If the Common Stock is quoted on the Nasdaq
System (but not on the National Market thereof) or regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the high bid and low asked prices for the
Common Stock for the last market trading day prior to the time of


                                      -2-
<PAGE>

determination, as reported in THE WALL STREET JOURNAL or such other source as
the Administrator deems reliable; or

                           (iii)    In the absence of an established market for
the Common Stock, the Fair Market Value thereof shall be determined in good
faith by the Administrator.

                  (q) "INCENTIVE STOCK OPTION" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code, as designated in the applicable Option Agreement.

                  (r) "LISTED SECURITY" means any security of the Company that
is listed or approved for listing on a national securities exchange or
designated or approved for designation as a national market system security on
an interdealer quotation system by the National Association of Securities
Dealers, Inc.

                  (s) "NONSTATUTORY STOCK OPTION" means an Option not intended
to qualify as an Incentive Stock Option, as designated in the applicable Option
Agreement.

                  (t) "OPTION" means a stock option granted pursuant to the
Plan.

                  (u) "OPTION AGREEMENT" means a written document, the form(s)
of which shall be approved from time to time by the Administrator, reflecting
the terms of an Option granted under the Plan and includes any documents
attached to or incorporated into such Option Agreement, including, but not
limited to, a notice of stock option grant and a form of exercise notice.

                  (v) "OPTION EXCHANGE PROGRAM" means a program approved by the
Administrator whereby outstanding Options are exchanged for Options with a lower
exercise price.

                  (w) "OPTIONED STOCK" means the Common Stock subject to an
Option or a Stock Purchase Right.

                  (x) "OPTIONEE" means an Employee or Consultant who receives an
Option.

                  (y) "PARENT" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code, or any successor
provision.

                  (z) "PARTICIPANT" means any holder of one or more Options or
Stock Purchase Rights, or of the Shares issuable or issued upon exercise of such
awards, under the Plan.

                  (aa) "PLAN" means this 2000 Stock Plan.

                  (bb) "REPORTING PERSON" means an officer, Director, or greater
than 10% shareholder of the Company within the meaning of Rule 16a-2 under the
Exchange Act, who is required to file reports pursuant to Rule 16a-3 under the
Exchange Act.

                                      -3-
<PAGE>

                  (cc) "RESTRICTED STOCK" means shares of Common Stock acquired
pursuant to a grant of a Stock Purchase Right under Section 10 below.

                  (dd) "RESTRICTED STOCK PURCHASE AGREEMENT" means a written
document, the form(s) of which shall be approved from time to time by the
Administrator, reflecting the terms of a Stock Purchase Right granted under the
Plan and includes any documents attached to such agreement.

                  (ee) "RULE 16B-3" means Rule 16b-3 promulgated under the
Exchange Act, as the same may be amended from time to time, or any successor
provision.

                  (ff) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.

                  (gg) "STOCK EXCHANGE" means any stock exchange or consolidated
stock price reporting system on which prices for the Common Stock are quoted at
any given time.

                  (hh) "STOCK PURCHASE RIGHT" means the right to purchase Common
Stock pursuant to Section 10 below.

                  (ii) "SUBSIDIARY" means a "subsidiary corporation," whether
now or hereafter existing, as defined in Section 424(f) of the Code, or any
successor provision.

                  (jj) "TEN PERCENT HOLDER" means a person who owns stock
representing more than 10% of the voting power of all classes of stock of the
Company or any Parent or Subsidiary.

     3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 12 of
the Plan, the maximum aggregate number of Shares that may be sold under the Plan
is 2,000,000 Shares of Common Stock. The Shares may be authorized, but unissued,
or reacquired Common Stock. If an Option expires or becomes unexercisable for
any reason without having been exercised in full, or is surrendered pursuant to
an Option Exchange Program, the unpurchased Shares that were subject thereto
shall, unless the Plan shall have been terminated, become available for future
grant under the Plan. In addition, any Shares of Common Stock that are retained
by the Company upon exercise of an Option or Stock Purchase Right in order to
satisfy the exercise or purchase price for such Option or Stock Purchase Right
or any withholding taxes due with respect to such exercise shall be treated as
not issued and shall continue to be available under the Plan. Shares issued
under the Plan and later repurchased by the Company pursuant to any repurchase
right that the Company may have shall not be available for future grant under
the Plan.

     4. ADMINISTRATION OF THE PLAN.

                  (a) GENERAL. The Plan shall be administered by the Board or a
Committee, or a combination thereof, as determined by the Board. The Plan may be
administered by different administrative bodies with respect to different
classes of Optionees and, if permitted by the Applicable Laws, the Board may
authorize one or more officers to grant Options or Stock Purchase Rights under
the Plan.

                                      -4-
<PAGE>

                  (b) ADMINISTRATION WITH RESPECT TO REPORTING PERSONS. With
respect to Options granted to Reporting Persons and Named Executives, the Plan
may (but need not) be administered so as to permit such Options to qualify for
the exemption set forth in Rule 16b-3 and to qualify as performance-based
compensation under Section 162(m) of the Code.

                  (c) COMMITTEE COMPOSITION. If a Committee has been appointed
pursuant to this Section 4, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board. From time to time the
Board may increase the size of any Committee and appoint additional members
thereof, remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies (however caused) and remove all members of
a Committee and thereafter directly administer the Plan, all to the extent
permitted by the Applicable Laws and, in the case of a Committee administering
the Plan pursuant to Section 4(b) above, to the extent permitted or required by
Rule 16b-3 and Section 162(m) of the Code.

                   (d) POWERS OF THE ADMINISTRATOR. Subject to the provisions of
the Plan and in the case of a Committee, the specific duties delegated by the
Board to such Committee, and subject to the approval of any relevant
authorities, including the approval, if required, of any Stock Exchange, the
Administrator shall have the authority, in its discretion:

                           (i)      to determine the Fair Market Value of the
Common Stock, in accordance with Section 2(p) of the Plan;

                           (ii)     to select the Consultants and Employees to
whom Options and Stock Purchase Rights or any combination thereof may from time
to time be granted;

                           (iii)    to determine whether and to what extent
Options and Stock Purchase Rights or any combination thereof are granted;

                           (iv)     to determine the number of Shares of Common
Stock to be covered by each such award granted hereunder;

                           (v)      to approve forms of agreement for use under
the Plan;

                           (vi)     to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder, which
terms and conditions include but are not limited to the exercise or purchase
price, the time or times when Options or Stock Purchase Rights may be exercised
(which may be based on performance criteria), any vesting acceleration or waiver
of forfeiture restrictions, and any restriction or limitation regarding any
Option, Optioned Stock, Stock Purchase Right or Restricted Stock, based in each
case on such factors as the Administrator, in its sole discretion, shall
determine;

                           (vii)    to determine whether and under what
circumstances an Option may be settled in cash under Section 9(f) instead of
Common Stock;

                           (viii)   to reduce the exercise price of any Option
to the then current Fair Market Value if the Fair Market Value of the Common
Stock covered by such Option shall have declined since the date the Option was
granted and to make any other amendments or


                                      -5-
<PAGE>

adjustments to any Option that the Administrator determines, in its discretion
and under the authority granted to it under the Plan, to be necessary or
advisable, provided however that no amendment or adjustment to an Option that
would materially and adversely affect the rights of any Optionee shall be made
without the prior written consent of the Optionee;

                           (ix)     to determine the terms and restrictions
applicable to Stock Purchase Rights and the Restricted Stock purchased by
exercising such Stock Purchase Rights;

                           (x)      to initiate an Option Exchange Program;

                           (xi)     to construe and interpret the terms of the
Plan and awards granted under the Plan; and

                           (xii)    in order to fulfill the purposes of the Plan
and without amending the Plan, to modify grants of Options or Stock Purchase
Rights to Participants who are foreign nationals or employed outside of the
United States in order to recognize differences in local law, tax policies or
customs.

                  (e) EFFECT OF ADMINISTRATOR'S DECISION.  All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Participants.

     5. ELIGIBILITY.

                  (a) RECIPIENTS OF GRANTS. Nonstatutory Stock Options and Stock
Purchase Rights may be granted to Employees and Consultants. Incentive Stock
Options may be granted only to Employees; provided however that Employees of
Affiliates shall not be eligible to receive Incentive Stock Options. An Employee
or Consultant who has been granted an Option or Stock Purchase Right may, if he
or she is otherwise eligible, be granted additional Options or Stock Purchase
Rights.

                  (b) TYPE OF OPTION. Each Option shall be designated in the
Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock
Option. However, notwithstanding such designations, to the extent that the
aggregate Fair Market Value of Shares with respect to which Options designated
as Incentive Stock Options are exercisable for the first time by any Optionee
during any calendar year (under all plans of the Company or any Parent or
Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options. For purposes of this Section 5(b), Incentive Stock
Options shall be taken into account in the order in which they were granted, and
the Fair Market Value of the Shares subject to an Incentive Stock Option shall
be determined as of the date of grant of such Option.

                  (c) AT-WILL RELATIONSHIP. The Plan shall not confer upon any
Participant any right with respect to continuation of employment or consulting
relationship with the Company, nor shall it interfere in any way with such
holder's right or the Company's right to terminate his or her employment or
consulting relationship at any time, with or without cause.

                                      -6-
<PAGE>

     6. TERM OF PLAN. The Plan shall become effective upon its adoption by the
Board. It shall continue in effect for a term of ten years unless sooner
terminated under Section 15 of the Plan.

     7. TERM OF OPTION. The term of each Option shall be the term stated in the
Option Agreement; provided, however, that the term shall be no more than ten
years from the date of grant thereof or such shorter term as may be provided in
the Option Agreement. However, in the case of an Incentive Stock Option granted
to an Optionee who, at the time the Option is granted, is a Ten Percent Holder,
the term of such Option shall be five years from the date of grant thereof or
such shorter term as may be provided in the Option Agreement.

     8. OPTION EXERCISE PRICE AND CONSIDERATION.

                  (a) The per Share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Administrator and set forth in the Option Agreement, but shall be subject to the
following:

                           (i)      In the case of an Incentive Stock Option
that is:

                                    (A)     granted to an Employee who at the
time of grant is a Ten Percent Holder, the per Share exercise price shall be no
less than 110% of the Fair Market Value per Share on the date of grant.

                                    (B)     granted to any other Employee, the
per Share exercise price shall be no less than 100% of the Fair Market Value per
Share on the date of grant.

                           (ii)     In the case of a Nonstatutory Stock Option
that is:

                                    (A)     granted prior to the date, if any,
on which the Common Stock becomes a Listed Security to a person who at the time
of grant is a Ten Percent Holder, the per Share exercise price shall be no less
than 110% of the Fair Market Value per Share on the date of the grant if
required by the Applicable Laws and, if not so required, shall be such price as
is determined by the Administrator.

                                    (B)     granted prior to the date, if any,
on which the Common Stock becomes a Listed Security to any other eligible
person, the per Share exercise price shall be no less than 85% of the Fair
Market Value per Share on the date of grant if required by the Applicable Laws
and, if not so required, shall be such price as is determined by the
Administrator.

                           (iii)    Notwithstanding the foregoing, Options may
be granted with a per Share exercise price other than as required above pursuant
to a merger or other corporate transaction.

                  (b) The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall be determined
by the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist

                                      -7-
<PAGE>

entirely of (1) cash; (2) check; (3) delivery of Optionee's promissory note with
such recourse, interest, security and redemption provisions as the Administrator
determines to be appropriate; (4) cancellation of indebtedness; (5) other Shares
that (x) in the case of Shares acquired upon exercise of an Option, either have
been owned by the Optionee for more than six months on the date of surrender or
such other period as may be required to avoid a charge to the Company's earnings
or were not acquired, directly or indirectly, from the Company, and (y) have a
Fair Market Value on the date of surrender equal to the aggregate exercise price
of the Shares as to which such Option shall be exercised; (6) authorization for
the Company to retain from the total number of Shares as to which the Option is
exercised that number of Shares having a Fair Market Value on the date of
exercise equal to the exercise price for the total number of Shares as to which
the Option is exercised; (7) delivery of a properly executed exercise notice
together with such other documentation as the Administrator and the broker, if
applicable, shall require to effect exercise of the Option and prompt delivery
to the Company of the sale or loan proceeds required to pay the exercise price
and any applicable withholding taxes; (8) any combination of the foregoing
methods of payment; or (9) such other consideration and method of payment for
the issuance of Shares to the extent permitted under the Applicable Laws. In
making its determination as to the type of consideration to accept, the
Administrator shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company, and the Administrator may refuse to
accept a particular form of consideration at the time of any Option exercise if,
in its sole discretion, acceptance of such form of consideration is not in the
best interests of the Company at such time.

     9. EXERCISE OF OPTION.

                  (a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Administrator, consistent with the term of the
Plan and reflected in the Option Agreement, including vesting requirements
and/or performance criteria with respect to the Company and/or the Optionee;
provided however, that, if required by the Applicable Laws, any Option granted
prior to the date, if any, upon which the Common Stock becomes a Listed Security
shall become exercisable at the rate of at least 20% per year over five years
from the date the Option is granted. In the event that any of the Shares issued
upon exercise of an Option (which exercise occurs prior to the date, if any,
upon which the Common Stock becomes a Listed Security) should be subject to a
right of repurchase in the Company's favor, such repurchase right shall, if
required by the Applicable Laws, lapse at the rate of at least 20% per year over
five years from the date the Option is granted. Notwithstanding the above, in
the case of an Option granted to an officer, Director or Consultant of the
Company or any Parent, Subsidiary or Affiliate of the Company, the Option may
become fully exercisable, or a repurchase right, if any, in favor of the Company
shall lapse, at any time or during any period established by the Administrator.
The Administrator shall have the discretion to determine whether and to what
extent the vesting of Options shall be tolled during any leave of absence.

         An Option may not be exercised for a fraction of a Share.

         An Option shall be deemed exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the

                                      -8-
<PAGE>

Option and the Company has received full payment for the Shares with respect to
which the Option is exercised. Full payment may, as authorized by the
Administrator, consist of any consideration and method of payment allowable
under Section 8(b) of the Plan. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, not withstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such stock certificate promptly
upon exercise of the Option. No adjustment will be made for a dividend or other
right for which the record date is prior to the date the stock certificate is
issued, except as provided in Section 12 of the Plan.

         Exercise of an Option in any manner shall result in a decrease in the
number of Shares that thereafter may be available, both for purposes of the Plan
and for sale under the Option, by the number of Shares as to which the Option is
exercised.

                  (b) TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. In
the event of termination of an Optionee's Continuous Service Status with the
Company, such Optionee may, but only within three months (or such other period
of time, not less than 30 days, as is determined by the Administrator, with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option) after the date of such termination (but in no event later
than the expiration date of the term of such Option as set forth in the Option
Agreement), exercise his or her Option to the extent that the Optionee was
entitled to exercise it at the date of such termination. To the extent that the
Optionee was not entitled to exercise the Option at the date of such
termination, or if the Optionee does not exercise the Option to the extent so
entitled within the time specified above, the Option shall terminate and the
Optioned Stock underlying the unexercised portion of the Option shall revert to
the Plan. Unless otherwise determined by the Administrator, no termination shall
be deemed to occur and this Section 9(b) shall not apply if (i) the Optionee is
a Consultant who becomes an Employee, or (ii) the Optionee is an Employee who
becomes a Consultant.

                  (c) DISABILITY OF OPTIONEE.

                           (i)      Notwithstanding Section 9(b) above, in the
event of termination of an Optionee's Continuous Service Status as a result of
his or her total and permanent disability (within the meaning of Section
22(e)(3) of the Code), such Optionee may, but only within twelve months (or such
other period of time as is determined by the Administrator, with such
determination in the case of an Incentive Stock Option made at the time of grant
of the Option) from the date of such termination (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise the Option to the extent otherwise entitled to exercise it
at the date of such termination. To the extent that the Optionee was not
entitled to exercise the Option at the date of termination, or if the Optionee
does not exercise such Option to the extent so entitled within the time
specified above, the Option shall terminate and the Optioned Stock underlying
the unexercised portion of the Option shall revert to the Plan.

                           (ii)     In the event of termination of an Optionee's
Continuous Service Status as a result of a disability which does not fall within
the meaning of total and permanent

                                      -9-
<PAGE>

disability (as set forth in Section 22(e)(3) of the Code), such Optionee may,
but only within twelve months (or such other period of time as is determined by
the Administrator, with such determination in the case of an Incentive Stock
Option made at the time of grant of the Option) from the date of such
termination (but in no event later than the expiration date of the term of such
Option as set forth in the Option Agreement), exercise the Option to the extent
otherwise entitled to exercise it at the date of such termination. However, to
the extent that such Optionee fails to exercise an Option that is an Incentive
Stock Option (within the meaning of Section 422 of the Code) within three months
of the date of such termination, the Option will not qualify for Incentive Stock
Option treatment under the Code. To the extent that the Optionee was not
entitled to exercise the Option at the date of termination, or if the Optionee
does not exercise such Option to the extent so entitled within the time period
specified above, the Option shall terminate and the Optioned Stock underlying
the unexercised portion of the Option shall revert to the Plan.

                  (d) DEATH OF OPTIONEE. In the event of the death of an
Optionee during the period of Continuous Service Status since the date of grant
of the Option, or within 30 days following termination of the Optionee's
Continuous Service Status, the Option may be exercised, at any time within
twelve months following the date of death (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), by such Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent of the
right to exercise that had accrued at the date of death or, if earlier, the date
of termination of the Optionee's Continuous Service Status. To the extent that
the Optionee was not entitled to exercise the Option at the date of death or
termination, as the case may be, or if the Optionee does not exercise such
Option to the extent so entitled within the time specified above, the Option
shall terminate and the Optioned Stock underlying the unexercised portion of the
Option shall revert to the Plan.

                  (e) EXTENSION OF EXERCISE PERIOD. The Administrator shall have
full power and authority to extend the period of time for which an Option is to
remain exercisable following termination of an Optionee's Continuous Status as
an Employee or Consultant from the periods set forth in Sections 9(b), 9(c) and
9(d) above or in the Option Agreement to such greater time as the Board shall
deem appropriate, provided, that in no event shall such Option be exercisable
later than the date of expiration of the term of such Option as set forth in the
Option Agreement.

                  (f) BUY-OUT PROVISIONS. The Administrator may at any time
offer to buy out for a payment in cash or Shares an Option previously granted
under the Plan based on such terms and conditions as the Administrator shall
establish and communicate to the Optionee at the time such offer is made. Landec
Corporation ("LANDEC"), the Company's parent corporation, may offer to
repurchase for a payment of cash or shares of Landec common stock any of the
Shares issuable under the Plan pursuant to an Option or Stock Purchase Right
based on such terms and conditions as the Administrator shall establish and
communicate to the Participant at the time such offer is made.

                                      -10-
<PAGE>

     10. STOCK PURCHASE RIGHTS.

                  (a) RIGHTS TO PURCHASE. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing of the terms, conditions and restrictions related
to the offer, including the number of Shares that such person shall be entitled
to purchase, the price to be paid, and the time within which such person must
accept such offer, which shall in no event exceed 30 days from the date upon
which the Administrator made the determination to grant the Stock Purchase
Right. If required by the Applicable Laws, the purchase price of Shares subject
to Stock Purchase Rights shall not be less than 85% of the Fair Market Value of
the Shares as of the date of the offer, or, in the case of a person owning stock
representing more than 10% of the total combined voting power of all classes of
stock of the Company or any Parent or Subsidiary, the price shall not be less
than 100% of the Fair Market Value of the Shares as of the date of the offer. If
the Applicable Laws do not impose restrictions on the purchase price, the
purchase price of Shares subject to Stock Purchase Rights shall be as determined
by the Administrator. The offer to purchase Shares subject to Stock Purchase
Rights shall be accepted by execution of a Restricted Stock Purchase Agreement
in the form determined by the Administrator.

                  (b) REPURCHASE OPTION. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's employment with the Company for any reason (including death or
disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock Purchase Agreement shall be the original purchase price paid by
the purchaser and may be paid by cancellation of any indebtedness of the
purchaser to the Company. The repurchase option shall lapse at such rate as the
Administrator may determine; provided, however, that with respect to a purchaser
who is not an officer, Director or Consultant of the Company or of any Parent or
Subsidiary of the Company, it shall lapse at a minimum rate of 20% per year if
required by the Applicable Laws.

                  (c) OTHER PROVISIONS. The Restricted Stock Purchase Agreement
shall contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock Purchase Agreements need not be the
same with respect to each purchaser.

                  (d) RIGHTS AS A SHAREHOLDER. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 12
of the Plan.

     11. TAXES.

                                      -11-
<PAGE>

                  (a) As a condition of the exercise of an Option or Stock
Purchase Right granted under the Plan, the Participant (or in the case of the
Participant's death, the person exercising the Option) shall make such
arrangements as the Administrator may require for the satisfaction of any
applicable federal, state, local or foreign withholding tax obligations that may
arise in connection with the exercise of an Option or Stock Purchase Right and
the issuance of Shares. The Company shall not be required to issue any Shares
under the Plan until such obligations are satisfied.

                  (b) In the case of an Employee and in the absence of any other
arrangement, the Employee shall be deemed to have directed the Company to
withhold or collect from his or her compensation an amount sufficient to satisfy
such tax obligations from the next payroll payment otherwise payable after the
date of an exercise of the Option.

                  (c) This Section 11(c) shall apply only after the date, if
any, upon which the Common Stock becomes a Listed Security. In the case of a
Participant other than an Employee (or in the case of an Employee where the next
payroll payment is not sufficient to satisfy such tax obligations, with respect
to any remaining tax obligations), in the absence of any other arrangement and
to the extent permitted under the Applicable Laws, the Participant shall be
deemed to have elected to have the Company withhold from the Shares to be issued
upon exercise of the Option or Stock Purchase Right that number of Shares having
a Fair Market Value determined as of the applicable Tax Date (as defined below)
equal to the amount required to be withheld. For purposes of this Section 11,
the Fair Market Value of the Shares to be withheld shall be determined on the
date that the amount of tax to be withheld is to be determined under the
Applicable Laws (the "TAX DATE").

                  (d) If permitted by the Administrator, in its discretion, a
Participant may satisfy his or her tax withholding obligations upon exercise of
an Option or Stock Purchase Right by surrendering to the Company Shares that (i)
in the case of Shares previously acquired from the Company, have been owned by
the Participant for more than six months on the date of surrender, and (ii) have
a Fair Market Value determined as of the applicable Tax Date equal to the amount
required to be withheld.

                  (e) Any election or deemed election by a Participant to have
Shares withheld to satisfy tax withholding obligations under Section 11(c) or
(d) above shall be irrevocable as to the particular Shares as to which the
election is made and shall be subject to the consent or disapproval of the
Administrator. Any election by a Participant under Section 11(d) above must be
made on or prior to the applicable Tax Date.

                  (f) In the event an election to have Shares withheld is made
by a Participant and the Tax Date is deferred under Section 83 of the Code
because no election is filed under Section 83(b) of the Code, the Participant
shall receive the full number of Shares with respect to which the Option or
Stock Purchase Right is exercised but such Participant shall be unconditionally
obligated to tender back to the Company the proper number of Shares on the Tax
Date.

                                      -12-
<PAGE>

     12. NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS. Options and
Stock Purchase Rights may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or by the laws of
descent or distribution; provided however that, after the date, if any, upon
which the Common Stock becomes a Listed Security, the Administrator may in its
discretion grant transferable Nonstatutory Stock Options pursuant to Option
Agreements specifying (i) the manner in which such Nonstatutory Stock Options
are transferable and (ii) that any such transfer shall be subject to the
Applicable Laws. The designation of a beneficiary by an Optionee will not
constitute a transfer. An Option or Stock Purchase Right may be exercised,
during the lifetime of the holder of the Option or Stock Purchase Right, only by
such holder or a transferee permitted by this Section 12.

     13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, CORPORATE TRANSACTIONS AND
CERTAIN OTHER TRANSACTIONS.

                  (a) CHANGES IN CAPITALIZATION. Subject to any required action
by the shareholders of the Company, the number of shares of Common Stock covered
by each outstanding Option or Stock Purchase Right, and the number of shares of
Common Stock that have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or that have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per Share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued Shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination, recapitalization or reclassification of the Common Stock (including
any change in the number of Shares of Common Stock effected in connection with a
change of domicile of the Company), or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the
Administrator, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares of Common Stock subject to an Option
or Stock Purchase Right.

                  (b) DISSOLUTION OR LIQUIDATION. In the event of the
dissolution or liquidation of the Company, each outstanding Option or Stock
Purchase Right shall terminate immediately prior to the consummation of such
action, unless otherwise provided by the Administrator.

                  (c) CORPORATE TRANSACTIONS. In the event of a Corporate
Transaction, each outstanding Option and Stock Purchase Right shall be assumed
or an equivalent option or right shall be substituted by the successor
corporation or a Parent or Subsidiary of such successor corporation, unless such
successor corporation does not agree to assume the outstanding Options or Stock
Purchase Rights or to substitute equivalent options or rights, in which case
such Options or Stock Purchase Rights shall terminate upon the consummation of
the transaction.

                                      -13-
<PAGE>

                  For purposes of this Section 13(c), an Option or a Stock
Purchase Right shall be considered assumed, without limitation, if, at the time
of issuance of the stock or other consideration upon a Corporate Transaction,
each holder of an Option or Stock Purchase Right would be entitled to receive
upon exercise of the Option or Stock Purchase Right the same number and kind of
shares of stock or the same amount of property, cash or securities as such
holder would have been entitled to receive upon the occurrence of the
transaction if the holder had been, immediately prior to such transaction, the
holder of the number of Shares of Common Stock covered by the Option or the
Stock Purchase Right at such time (after giving effect to any adjustments in the
number of Shares covered by the Option or Stock Purchase Right as provided for
in this Section 13); provided however that if such consideration received in the
transaction is not solely common stock of the successor corporation or its
Parent, the Administrator may, with the consent of the successor corporation,
provide for the consideration to be received upon exercise of the Option or
Stock Purchase Right to be solely common stock of the successor corporation or
its Parent equal to the Fair Market Value of the per Share consideration
received by holders of Common Stock in the transaction.

                  (d) CERTAIN DISTRIBUTIONS. In the event of any distribution to
the Company's shareholders of securities of any other entity or other assets
(other than dividends payable in cash or stock of the Company) without receipt
of consideration by the Company, the Administrator may, in its discretion,
appropriately adjust the price per Share of Common Stock covered by each
outstanding Option or Stock Purchase Right to reflect the effect of such
distribution.

         14. TIME OF GRANTING OPTIONS AND STOCK PURCHASE RIGHTS. The date of
grant of an Option or Stock Purchase Right shall, for all purposes, be the date
on which the Administrator makes the determination granting such Option or Stock
Purchase Right, or such other date as is determined by the Administrator;
provided, however, that in the case of any Incentive Stock Option, the grant
date shall be the later of the date on which the Administrator makes the
determination granting such Incentive Stock Option or the date of commencement
of the Optionee's employment relationship with the Company. Notice of the
determination shall be given to each Employee or Consultant to whom an Option or
Stock Purchase Right is so granted within a reasonable time after the date of
such grant.

     15. AMENDMENT AND TERMINATION OF THE PLAN.

                  (a) AUTHORITY TO AMEND OR TERMINATE. The Board may at any time
amend, alter, suspend, discontinue or terminate the Plan, but no amendment,
alteration, suspension, discontinuation or termination (other than an adjustment
made pursuant to Section 13 above) shall be made that would materially and
adversely affect the rights of any Optionee or holder of Stock Purchase Rights
under any outstanding grant, without his or her consent. In addition, to the
extent necessary and desirable to comply with the Applicable Laws, the Company
shall obtain shareholder approval of any Plan amendment in such a manner and to
such a degree as required.

                  (b) EFFECT OF AMENDMENT OR TERMINATION. No amendment or
termination of the Plan shall materially and adversely affect Options already
granted, unless mutually agreed


                                      -14-
<PAGE>

otherwise between the Optionee and the Administrator, which agreement must be in
writing and signed by the Optionee and the Company.

     16. CONDITIONS UPON ISSUANCE OF SHARES. Notwithstanding any other provision
of the Plan or any agreement entered into by the Company pursuant to the Plan,
the Company shall not be obligated, and shall have no liability for, failure to
issue or deliver any Shares under the Plan unless such issuance or delivery
would comply with the Applicable Laws, with such compliance determined by the
Company in consultation with its legal counsel.

         As a condition to the exercise of an Option or Stock Purchase Right,
the Company may require the person exercising such Option or Stock Purchase
Right to represent and warrant at the time of any such exercise that the Shares
are being purchased only for investment and without any present intention to
sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required by law.

     17. RESERVATION OF SHARES. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

     18. AGREEMENTS. Options and Stock Purchase Rights shall be evidenced by
Option Agreements and Restricted Stock Purchase Agreements, respectively, in
such form(s) as the Administrator shall from time to time approve.

     19. SHAREHOLDER APPROVAL. If required by the Applicable Laws, continuance
of the Plan shall be subject to approval by the shareholders of the Company
within twelve months before or after the date the Plan is adopted. Such
shareholder approval shall be obtained in the degree and manner required under
the Applicable Laws.

     20. INFORMATION AND DOCUMENTS TO OPTIONEES AND PURCHASERS. Prior to the
date, if any, upon which the Common Stock becomes a Listed Security and if
required by the Applicable Laws, the Company shall provide financial statements
at least annually to each Optionee and to each individual who acquired Shares
pursuant to the Plan, during the period such Optionee or purchaser has one or
more Options or Stock Purchase Rights outstanding, and in the case of an
individual who acquired Shares pursuant to the Plan, during the period such
individual owns such Shares. The Company shall not be required to provide such
information if the issuance of Options or Stock Purchase Rights under the Plan
is limited to key employees whose duties in connection with the Company assure
their access to equivalent information. In addition, at the time of issuance of
any securities under the Plan, the Company shall provide to the Optionee or the
purchaser a copy of the Plan and any agreement(s) pursuant to which securities
granted under the Plan are issued.


                                      -15-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.29
<SEQUENCE>3
<FILENAME>a2036262zex-10_29.txt
<DESCRIPTION>EX-10.29
<TEXT>

<PAGE>

                                                                   EXHIBIT 10.29









                                CREDIT AGREEMENT

                                     BETWEEN

                             INTELLICOAT CORPORATION

                                       AND

                          AMERICAN NATIONAL BANK D/B/A
                               OLD NATIONAL BANK,


                                   DATED AS OF

                                  JUNE 5, 2000


















<PAGE>


                                TABLE OF CONTENTS

<TABLE>

<S>                                                                                                         <C>
CREDIT AGREEMENT.............................................................................................Page 1

         Section 1.  ACCOUNTING TERMS -- DEFINITIONS.........................................................Page 1

         Section 2.  THE LOANS...............................................................................Page 7
                  a.       The Revolving Loan................................................................Page 7
                           (i)      The Commitment -- Use of Proceeds........................................Page 7
                           (ii)     Method of Borrowing......................................................Page 7
                           (iii)    Interest on the Revolving Loan...........................................Page 9
                           (iv)     Extensions of Revolving Loan Maturity Date...............................Page 9
                           (v)      Special Repayments of Principal ........................................Page 10
                  b.       The Capital Expenditure Line of Credit...........................................Page 10
                           (i)      The Capital Expenditure of Line Commitment --
                                            Use of Proceeds.................................................Page 10
                           (ii)     Method of Borrowing.....................................................Page 11
                           (iii)    Interest on the Capital Expenditure Line of Credit......................Page 12
                           (iv)     Extensions of Capital Expenditure Line of Credit
                                            Maturity Date...................................................Page 13
                  c.       The Capital Expenditure Term Loan................................................Page 13
                           (i)      Amount..................................................................Page 13
                           (ii)     The Capital Expenditure Term Note.......................................Page 13
                           (iii)    Interest on the Capital Expenditure Term Loan...........................Page 14
                           (iv)     Use of Proceeds of the Capital Expenditure Term Loan....................Page 15
                  d.       Provisions Applicable to All of the Loans........................................Page 15
                           (i)      Calculation of Interest.................................................Page 15
                           (ii)     Manner of Payment -- Application........................................Page 15
                           (iii)    Commitment Fee..........................................................Page 15
                           (iv)     Automatic Debit.........................................................Page 15
                           (v)      Prepayment..............................................................Page 16

         Section 3.  REPRESENTATIONS AND WARRANTIES.........................................................Page 16
                  a.       Organization of the Company......................................................Page 16
                  b.       Authorization; No Conflict.......................................................Page 16
                  c.       Validity and Binding Nature......................................................Page 17
                  d.       Financial Statements.............................................................Page 17
                  e.       Litigation and Contingent Liabilities............................................Page 17
                  f.       Liens............................................................................Page 18
                  g.       Employee Benefit Plans...........................................................Page 18
                  h.       Payment of Taxes.................................................................Page 18
                  i.       Investment Company Act...........................................................Page 19
</TABLE>

                                        i

<PAGE>

<TABLE>
<S>                                                                                                        <C>
                  j.       Regulation U and other Federal Regulations.......................................Page 19
                  k.       Hazardous Substances.............................................................Page 19
                  l.       Subsidiaries.....................................................................Page 20
                  m.       Organization of Landec...........................................................Page 20
                  n.       Landec Authorization; No Conflict................................................Page 20
                  o.       Landec Validity and Binding Nature...............................................Page 21

         Section 4  COLLATERAL FOR THE OBLIGATIONS..........................................................Page 21
                  a.       Security Agreement...............................................................Page 21
                  b.       Mortgage.........................................................................Page 21
                           (i)      Title Search............................................................Page 22
                           (ii)     Flood Hazard Determination Form.........................................Page 22
                  c.       Subordination Agreement..........................................................Page 22
                           (i)      Ratio of Liabilities to Tangible Capital Base...........................Page 23
                  d.       Guaranty Agreement...............................................................Page 23
                  e.       Assignment of Licensing Agreement................................................Page 23
                  f.       Intercreditor Agreement..........................................................Page 23

         Section 5.  AFFIRMATIVE COVENANTS OF THE COMPANY...................................................Page 24
                  a.       Corporate Existence..............................................................Page 24
                  b.       Reports, Certificates and Other Information......................................Page 24
                           (i)      Annual Statements.......................................................Page 24
                           (ii)     Interim Statements......................................................Page 24
                           (iii)    Guarantor's Financial Statements........................................Page 25
                           (iv)     Borrowing Base Certificates.............................................Page 25
                           (v)      Orders..................................................................Page 25
                           (vi)     Notice of Default or Litigation.........................................Page 26
                           (vii)    Registration Statements and Reports.....................................Page 26
                           (viii)   Other Information.......................................................Page 26
                  c.       Books, Records and Inspections...................................................Page 26
                  d.       Insurance........................................................................Page 26
                  e.       Taxes and Liabilities............................................................Page 27
                  f.       Compliance with Legal and Regulatory Requirements................................Page 27
                  g.       Primary Banking Relationship.....................................................Page 27
                  h.       Employee Benefit Plans...........................................................Page 27
                  i.       Hazardous Substances.............................................................Page 27
                  j.       Annual Cleanup...................................................................Page 29

         Section 6.  NEGATIVE COVENANTS OF THE COMPANY......................................................Page 29
                  a.       Restricted Payments..............................................................Page 29
                           (i)      Ratio of Liabilities to Tangible Capital Base...........................Page 29
                           (ii)     Cash Flow Coverage Ratio................................................Page 30
                  b.       Liens............................................................................Page 30
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                                        <C>
                  c.       Guaranties.......................................................................Page 31
                  d.       Loans or Advances................................................................Page 32
                  e.       Mergers, Consolidations, Sales, Acquisition or Formation
                                    of Subsidiaries ........................................................Page 32
                  f.       Margin Stock.....................................................................Page 32
                  g.       Other Agreements.................................................................Page 32
                  h.       Judgments........................................................................Page 33
                  i.       Principal Office.................................................................Page 33
                  j.       Hazardous Substances.............................................................Page 33
                  k.       Debt.............................................................................Page 33

         Section 7.  CONDITIONS OF LENDING..................................................................Page 33
                  a.       No Default.......................................................................Page 34
                  b.       Documents to be Furnished at Closing.............................................Page 34

         Section 8.  EVENTS OF DEFAULT......................................................................Page 37
                  a.       Nonpayment of the Loans..........................................................Page 37
                  b.       Nonpayment of Other Indebtedness for Borrowed Money..............................Page 37
                  c.       Other Material Obligations.......................................................Page 37
                  d.       Bankruptcy, Insolvency, etc......................................................Page 37
                  e.       Warranties and Representations...................................................Page 38
                  f.       Violations of Negative Covenants.................................................Page 38
                  g.       Noncompliance With Other Provisions of this Agreement............................Page 38

         Section 9.  EFFECT OF EVENT OF DEFAULT.............................................................Page 38

         Section 10.  WAIVER -- AMENDMENTS..................................................................Page 39

         Section 11.  NOTICES...............................................................................Page 39

         Section 12.  COSTS, EXPENSES AND TAXES.............................................................Page 40

         Section 13.  SEVERABILITY..........................................................................Page 41

         Section 14.  CAPTIONS..............................................................................Page 41

         Section 15.  GOVERNING LAW -- JURISDICTION.........................................................Page 41

         Section 16.  PRIOR AGREEMENTS, ETC.................................................................Page 41

         Section 17.  SUCCESSORS AND ASSIGNS................................................................Page 42

         Section 18.  WAIVER OF JURY TRIAL..................................................................Page 42

         Section 19.  ARBITRATION...........................................................................Page 42
</TABLE>

                                       iii



<PAGE>




         Exhibit "A"       Promissory Note (Revolving Loan)($3,000,000.00)

         Exhibit "B"       Promissory Note (Capital Expenditure Line of Credit)
                           ($1,000,000.00)

         Exhibit "C"       Promissory Note (Capital Expenditure Term Loan)
                           ($1,000,000.00)

         Exhibit "D"       Schedule of Exceptions

         Exhibit "E"       Security Agreement (Equipment, Inventory, Accounts
                           Receivable and General Intangibles)

         Exhibit "F"       Mortgage, Security Agreement, Assignment of Rents and
                           Fixture Filing

         Exhibit "G"       Subordination Agreement (Landec Corporation)

         Exhibit "H"       Guaranty Agreement (Landec Corporation)

         Exhibit "I"       Collateral Assignment of Licensing Agreement

         Exhibit "J"       Intercreditor Agreement







                                       iv


<PAGE>

                                CREDIT AGREEMENT


       INTELLICOAT CORPORATION, a Delaware corporation (the "Company"), and
AMERICAN NATIONAL BANK D/B/A OLD NATIONAL BANK, a national banking association
with its principal office in Indianapolis, Indiana (the "Bank"), agree as
follows:

       SECTION 1. ACCOUNTING TERMS -- DEFINITIONS. All accounting and financial
terms used in this Agreement are used with the meanings such terms would be
given in accordance with generally accepted accounting principles except as may
be otherwise specifically provided in this Agreement. The following terms have
the meanings indicated when used in this Agreement with the initial letter
capitalized:

       -      "ADVANCE" means a disbursement of proceeds of the Revolving Loan
              or the Capital Expenditure Line of Credit, as the context
              requires.

       -      "AGREEMENT" means this Credit Agreement between the Company and
              the Bank, as it may from time to time be amended.

       -      "ASSIGNMENT OF LICENSING AGREEMENTS" is used as defined in Section
              4(e).

       -      "AUTHORIZED OFFICER" means the Chief Financial Officer or the
              Controller of the Company or such other officer whose authority to
              perform acts to be performed only by an Authorized Officer under
              the terms of this Agreement is evidenced to the Bank by a
              certified copy of an appropriate resolution of the Board of
              Directors of the Company.

       -      "BANK" is used as defined in the preamble.

       -      "BANKING DAY" means a day on which the principal office of the
              Bank in the City of Indianapolis, Indiana, is open for the purpose
              of conducting substantially all of the Bank's business activities.

       -      "BORROWING BASE" means an amount equal to the sum of seventy
              percent (70%) of the book value of the Company's Eligible
              Inventory.

<PAGE>

       -      "BORROWING BASE CERTIFICATE" means a certificate of the Company
              signed by an appropriate officer indicating the amount of the
              Borrowing Base as of a stated date and in such form and showing
              such detail as the Bank may reasonably require.

       -      "CAPITAL EXPENDITURE LINE OF CREDIT" is used as defined in Section
              2(b)(i).

         -      "CAPITAL EXPENDITURE LINE OF CREDIT COMMITMENT" means the
                agreement of the Bank to extend the Capital Expenditure Line of
                Credit to the Company until the Capital Expenditure Line of
                Credit Maturity Date, and if the context so requires, the term
                may also refer to the maximum principal amount which is
                permitted to be outstanding under the Capital Expenditure Line
                of Credit at any time.

         -      "CAPITAL EXPENDITURE LINE OF CREDIT MATURITY DATE" means
                initially June 30, 2001, and thereafter any subsequent date to
                which the Capital Expenditure Line of Credit Commitment may be
                extended by the Bank pursuant to the terms of Section 2(b)(iv).

       -      "CAPITAL EXPENDITURE LINE OF CREDIT NOTE" is used as defined in
              Section 2(b)(ii).

       -      "CAPITAL EXPENDITURE TERM LOAN" is used as defined in Section
              2(c).

       -      "CAPITAL EXPENDITURE TERM NOTE" is used as defined in Section
              2(c)(ii).

       -      "CODE" means the Internal Revenue Code of 1986, as amended.

       -      "COMMITMENT" means the agreement of the Bank to extend the
              Revolving Loan to the Company until the Revolving Loan Maturity
              Date, and if the context so requires, the term may also refer to
              the maximum principal amount which is permitted to be outstanding
              under the Revolving Loan at any time, assuming the Borrowing Base
              is equal to or in excess of such amount.

       -      "COMPANY" is used as defined in the Preamble.


                                       2
<PAGE>

       -      "EBITDA" means earnings before interest, taxes, depreciation, and
              amortization, all determined in accordance with GAAP.

       -      "ELIGIBLE INVENTORY" means seed corn inventory :(i) for which the
              Company has made payment, (ii) that is held in a warehouse in
              Illinois or Indiana approved in advance by the Bank, or at
              Hubner's plant located in West Lebanon, Indiana (each of the
              foregoing called a "Warehouse"), (iii) which is segregated at each
              such Warehouse from other non-Fielder's Choice Direct seed corn
              inventory that is clearly marked in bags or other containers with
              the words "Fielder's Choice Direct" or another name clearly
              identifying the Company's seed corn supported by the books and
              records of the Company as being owned by the Company, (iv) as to
              which all creditors of the owner or lessee of the Warehouse where
              such inventory is located have entered into an Ownership
              Acknowledgment Agreement or similar agreement, appropriate lien
              waivers have been executed, and appropriate UCC financing
              statements disclaiming any interest in such seed corn inventory
              have been filed, complete copies of which have been provided to
              the Bank, and (v) as to which the Bank has filed the appropriate
              UCC financing statements giving notice of the Bank's security
              interest in the Company's seed corn inventory located at such
              Warehouse and perfecting the Bank's lien thereon.

       -      "ERISA" means the Employee Retirement Income Security Act of 1974,
              as amended.

       -      "EVENT OF DEFAULT" means any of the events described in Section 8.

       -      "GAAP" means generally accepted account principles as then in
              effect, which shall include the official interpretations thereof
              by the Financial Accounting Standards Board, consistently applied.

       -      "GUARANTY AGREEMENT" is used as defined in Section 4(d).

       -      "HAZARDOUS SUBSTANCE" means any hazardous or toxic substance
              regulated by any federal, state or local statute or regulation
              including but not limited


                                       3
<PAGE>

              to the Comprehensive Environmental Response, Compensation and
              Liability Act, the Resource Conservation and Recovery Act and the
              Toxic Substance Control Act, or by any federal, state or local
              governmental agencies having jurisdiction over the control of any
              such substance including but not limited to the United States
              Environmental Protection Agency.

       -      "HUBNER" means Hubner Industries, LLC, together with its
              successors and assigns.

       -      "INFORMAL REQUEST" has the meaning set forth in Section 2(a)(ii)
              herein.

       -      "INTERCREDITOR AGREEMENT" is used as defined in Section 4(f)
              herein.

       -      "INTEREST PERIOD" means each consecutive one year period for which
              the Company shall have selected the T-Bill Rate, effective as of
              the first day of each Interest Period and ending on the last day
              of each Interest Period.

       -      "LANDEC" means Landec Corporation, a California corporation,
              together with its successors and assigns.

       -      "LOAN" means any of the Revolving Loan, the Capital Expenditure
              Line of Credit, or the Capital Expenditure Term Loan, as the
              context requires, and when used in the plural form refers to all
              of the Loans.

       -      "LOAN DOCUMENT" means any of this Agreement, the Revolving Note,
              the Capital Expenditure Line of Credit Note, the Capital
              Expenditure Term Note, the Mortgage, the Security Agreement, the
              Subordination Agreement, the Guaranty Agreement, the Assignment of
              Licensing Agreements, the Intercreditor Agreement, and any other
              instrument or document which evidences or secures the Loans or any
              of them or which expresses an agreement as to terms applicable to
              the Loans or any of them, and in the plural means any two or more
              of the Loan Documents, as the context requires.

       -      "MORTGAGE" is used as defined in Section 4(b).


                                       4
<PAGE>

       -      "NOTE" means any of the Revolving Note, the Capital Expenditure
              Line of Credit Note, or the Equipment Term Note, as the context
              requires, and when used in the plural form refers to all of the
              Notes.

       -      "OBLIGATIONS" means all obligations of the Company in favor of the
              Bank of every type and description, direct or indirect, absolute
              or contingent, due or to become due, now existing or hereafter
              arising pursuant to this Agreement and the other Loan Documents,
              including but not limited to: (i) all of such obligations on
              account of the Loans, including any Advances made pursuant to any
              extension of the Commitment beyond the initial Revolving Loan
              Maturity Date, any extension of the Capital Expenditure Line of
              Credit Commitment beyond the initial Capital Expenditure Line of
              Credit Maturity Date, or pursuant to any other amendment of this
              Agreement, and (ii) all other obligations arising under any Loan
              Document as amended from time to time.

       -      "OWNERSHIP ACKNOWLEDGMENT AGREEMENT" means that certain Ownership
              Acknowledgment Agreement entered into by and among the Company,
              Hubner, and Civitas Bank, now known as Fifth Third Bank, Indiana,
              dated as of November 1, 1998, as it may be amended.

       -      "PLAN" means an employee pension benefit plan as defined in ERISA.

       -      "PLEDGE AGREEMENT" is used as defined in Section 4(e).

       -      "PRIME RATE" means the interest rate announced from time to time
              in the Money Section of the WALL STREET JOURNAL (MidWest Edition)
              as the "Prime Rate." Any change in such Prime Rate shall take
              effect on the date specified in the published change in such rate.

       -      "PRIME-BASED RATE" means any variable rate at which interest may
              accrue on all or a portion of any of the Loans under the terms of
              this Agreement determined by reference to the Prime Rate.

       -      "REVOLVING LOAN" is used as defined in Section 2(a)(i).


                                       5
<PAGE>

       -      "REVOLVING LOAN MATURITY DATE" means initially June 30, 2003, and
              thereafter any subsequent date to which the Commitment may be
              extended by the Bank pursuant to the terms of Section 2(a)(iv).

       -      "REVOLVING NOTE" is used as defined in Section 2(a)(ii).

       -      "SECURITY AGREEMENT" is used as defined in Section 4(a).

       -      "SEED AGREEMENT" means that certain Hybrid Seed Corn Production
              and Sales Agreement entered into by and between Hubner and the
              Company dated as of November 1, 1998, pursuant to which, among
              other things, Hubner has agreed to supply seed corn to the Company
              (as amended, and as further amended, restated or otherwise
              modified from time to time).

       -      "SUBORDINATED DEBT" means indebtedness of the Company which is
              subordinated to the indebtedness of the Company to the Bank under
              the terms of the Subordination Agreement and any other
              indebtedness of the Company which is subordinated to the Company's
              indebtedness to the Bank on substantially similar terms.

       -      "SUBORDINATION AGREEMENT" is used as defined in Section 4(c).

       -      "SUBSIDIARY" means any corporation, partnership, joint venture or
              other business entity over which the Company owns, directly or
              indirectly fifty-one percent (51%) or more of the equity of such
              entity having ordinary voting power to elect a majority of the
              board of directors.

       -      "T-BILL RATE" means the sum of the 5-Year T-Bill Rate plus two and
              three-quarters percent (2-3/4%) per annum.

       -      "5-YEAR T-BILL RATE" means the 5-Year T-Bill Rate as published in
              the "Money Section" of the WALL STREET JOURNAL (MidWest Edition)
              two (2) Banking Days prior to the first day of Capital Expenditure
              Term Loan.

       -      "TANGIBLE CAPITAL BASE" means the shareholders' equity of the
              Company less any recorded goodwill, patents, trademarks, trade
              secrets, and any other assets which would be classified as
              intangible assets under generally


                                       6
<PAGE>

              accepted accounting principles, plus the principal amount of the
              Company's Subordinated Debt.

       -      "UNMATURED EVENT OF DEFAULT" means any event specified in Section
              8, which is not initially an Event of Default, but which would, if
              uncured, become an Event of Default with the giving of notice or
              the passage of time or both.

       -      "WAREHOUSE" is used as defined in the definition of Eligible
              Inventory.

       SECTION 2. THE LOANS. Subject to all of the terms and conditions of this
Agreement, the Bank will make the Loans described in this Section to the
Company.

       a.     THE REVOLVING LOAN. The Bank will make a revolving loan to the
              Company on the following terms and subject to the following
              conditions:

              (i)    THE COMMITMENT -- USE OF PROCEEDS. From the date of this
                     Agreement and until the Revolving Loan Maturity Date, the
                     Bank agrees to make Advances (collectively, the "Revolving1
                     Loan") under a revolving line of credit from time to time
                     to the Company of amounts not exceeding in the aggregate at
                     any time outstanding the lesser of Three Million and 00/100
                     Dollars ($3,000,000.00) (the "Commitment") or the Borrowing
                     Base, provided that all of the conditions of lending stated
                     in Section 7 of this Agreement as being applicable to the
                     Revolving Loan have been fulfilled at the time of each
                     Advance. Proceeds of the Revolving Loan may be used by the
                     Company only for working capital purposes.

              (ii)   METHOD OF BORROWING. The obligation of the Company to repay
                     the Revolving Loan shall be evidenced by a promissory note
                     (the "Revolving Note") of the Company in the form of
                     EXHIBIT "A" attached hereto. So long as no Event of Default
                     or Unmatured Event of Default shall have occurred and be
                     continuing and until the Revolving Loan Maturity Date, the
                     Company may borrow,


                                       7
<PAGE>

                     repay and reborrow (subject to the "annual cleanup
                     requirements set forth in Section 5(j)) under the Revolving
                     Note on any Banking Day; provided, that no borrowing may
                     cause the principal balance of the Loan to exceed the
                     lesser of the Commitment or the Borrowing Base or may
                     result in an Event of Default or an Unmatured Event of
                     Default, and provided further, that the Company may receive
                     the proceeds of only one Advance per Banking Day. Each
                     Advance under the Revolving Loan shall be conditioned upon
                     receipt by the Bank from the Company of a Borrowing Base
                     Certificate completed as of the date of the request. The
                     Bank shall make a disbursement upon the oral request of the
                     Company made by an Authorized Officer, or upon a request
                     transmitted to the Bank by telephone facsimile ("fax")
                     machine, or by any other form of written electronic
                     communication (all such requests for Advances being
                     hereafter referred to as "Informal Requests"). In so doing,
                     the Bank may rely on any Informal Request which shall have
                     been received by it in good faith from a person reasonably
                     believed to be an Authorized Officer. Upon making each
                     Informal Request, the Company shall promptly deliver to the
                     Bank a Borrowing Base Certificate completed as of the date
                     of such Informal Request, and shall in and of itself
                     constitute the representation of the Company that no Event
                     of Default or Unmatured Event of Default has occurred and
                     is continuing or would result from the making of the
                     requested Advance, and that the making of the requested
                     Advance shall not cause the principal balance of the
                     Revolving Loan to exceed the lesser of the Commitment or
                     the Borrowing Base. All borrowings and reborrowings and all
                     repayments shall be in amounts of not less than One
                     Thousand Dollars ($1,000.00), except for repayment


                                       8
<PAGE>

                     of the entire principal balance of the Revolving Loan and
                     except for special prepayments of principal required under
                     the terms of Section 2(a)(v). Upon receipt of a request for
                     an Advance, a Borrowing Base Certificate, and upon
                     compliance with any other conditions of lending stated in
                     Section 7 of this Agreement applicable to the Revolving
                     Loan, the Bank shall disburse the amount of the requested
                     Advance to the Company. All Advances by the Bank and
                     payments by the Company shall be recorded by the Bank on
                     its books and records, and the principal amount outstanding
                     from time to time, plus interest payable thereon, shall be
                     determined by reference to the books and records of the
                     Bank. The Bank's books and records shall be presumed PRIMA
                     FACIE to be correct as to such matters.

              (iii)  INTEREST ON THE REVOLVING LOAN. The principal amount of the
                     Revolving Loan outstanding from time to time shall bear
                     interest until maturity of the Revolving Note at a rate per
                     annum equal to the Prime Rate plus three-quarters percent
                     (3/4%). After maturity, whether on the Revolving Loan
                     Maturity Date or on account of acceleration upon the
                     occurrence of an Event of Default, and until paid in full,
                     the Revolving Loan shall bear interest at a per annum rate
                     equal to the Prime Rate plus four and three-quarters
                     percent (4-3/4%). Accrued interest shall be due and payable
                     monthly on the last Banking Day of each month prior to
                     maturity. After maturity, interest shall be payable as
                     accrued and without demand.

              (iv)   EXTENSIONS OF REVOLVING LOAN MATURITY DATE. The Bank may,
                     upon the request of the Company, but at the Bank's sole
                     discretion, extend the Revolving Loan Maturity Date from
                     time to time to such date or dates as the Bank may elect by
                     notice in writing to


                                       9
<PAGE>

                     the Company, and upon any such extension and upon execution
                     and delivery by the Company of a Revolving Note reflecting
                     the extended maturity date, the date to which the
                     Commitment is then extended will become the "Revolving Loan
                     Maturity Date" for purposes of this Agreement.

              (v)    SPECIAL REPAYMENTS OF PRINCIPAL. At any time the principal
                     balance of the Revolving Loan exceeds the Borrowing Base,
                     as determined on the basis of the most recent Borrowing
                     Base Certificate furnished by the Company or as determined
                     by the Bank upon an inspection of the books and records of
                     the Company, the Company shall immediately repay that
                     portion of the principal balance of the Revolving Loan
                     which is in excess of the Borrowing Base. Such repayment
                     shall be due without demand.

       b.     THE CAPITAL EXPENDITURE LINE OF CREDIT. The Bank will make a
              Capital Expenditure Line of Credit to the Company on the following
              terms and subject to the following conditions:

              (i)    THE CAPITAL EXPENDITURE LINE OF CREDIT COMMITMENT -- USE OF
                     PROCEEDS. From the date of this Agreement and until the
                     Capital Expenditure Line of Credit Maturity Date, the Bank
                     agrees to make Advances (collectively, the "Capital
                     Expenditure Line of Credit") from time to time to the
                     Company of amounts not exceeding in the aggregate during
                     the term of the Capital Expenditure Line of Credit the
                     amount of One Million and 00/100 Dollars ($1,000,000.00)
                     (the "Capital Expenditure Line of Credit Commitment");
                     provided, that all of the conditions of lending stated in
                     Section 7 of this Agreement as being applicable to the
                     Capital Expenditure Line of Credit have been fulfilled at
                     the time of each Advance; and provided further, that no
                     Advance of the Capital Expenditure Line of Credit shall
                     exceed one hundred


                                       10
<PAGE>

                     percent (100%) of the amount of the invoice evidencing the
                     cost to the Company of each piece of equipment (including
                     without limitation, freight and installation costs and
                     expenses, and taxes, all as evidenced on the invoice)
                     purchased with proceeds of the Loan. Proceeds of the
                     Capital Expenditure Line of Credit may be used by the
                     Company only for capital expenditures.

              (ii)   METHOD OF BORROWING. The obligation of the Company to repay
                     the Capital Expenditure Line of Credit shall be evidenced
                     by a promissory note (the "Capital Expenditure Line of
                     Credit Note") of the Company in the form of EXHIBIT "B"
                     attached hereto. So long as no Event of Default or
                     Unmatured Event of Default shall have occurred and be
                     continuing and until the Capital Expenditure Line of Credit
                     Maturity Date, the Company may borrow under the Capital
                     Expenditure Line of Credit Note on any Banking Day;
                     provided, that no borrowing may cause the principal amount
                     of the Loan disbursed to the Company during the term of the
                     Loan to exceed in the aggregate the Capital Expenditure
                     Line of Credit Commitment or may result in an Event of
                     Default or an Unmatured Event of Default. Each Advance
                     under the Capital Expenditure Line of Credit shall be
                     conditioned upon receipt by the Bank from the Company of a
                     copy of the invoice for the equipment to be purchased with
                     the proceeds of the Advance. The Bank shall make a
                     disbursement upon receipt of an Informal Request. In so
                     doing, the Bank may rely on any Informal Request which
                     shall have been received by it in good faith from a person
                     reasonably believed to be an Authorized Officer. Upon
                     making each Informal Request, the Company shall promptly
                     deliver to the Bank an invoice for the equipment to be
                     purchased with proceeds of the Advance, and shall in and of
                     itself constitute the representation


                                       11
<PAGE>

                     of the Company that no Event of Default or Unmatured Event
                     of Default has occurred and is continuing or would result
                     from the making of the requested Advance and that the
                     making of the requested Advance shall not cause the
                     aggregate principal amount disbursed under of the Capital
                     Expenditure Line of Credit to exceed the Capital
                     Expenditure Line of Credit Commitment. All borrowings and
                     all repayments shall be in amounts of not less than One
                     Thousand Dollars ($1,000.00), except for repayment of the
                     entire principal balance of the Capital Expenditure Line of
                     Credit. Upon receipt of receipt of a request for an Advance
                     and the associated invoice or invoices, and upon compliance
                     with any other conditions of lending stated in Section 7 of
                     this Agreement applicable to the Capital Expenditure Line
                     of Credit, the Bank shall disburse the amount of the
                     requested Advance to the Company. All Advances by the Bank
                     and payments by the Company shall be recorded by the Bank
                     on its books and records, and the principal amount
                     outstanding from time to time, plus interest payable
                     thereon, shall be determined by reference to the books and
                     records of the Bank. The Bank's books and records shall be
                     presumed PRIMA FACIE to be correct as to such matters.

              (iii)  INTEREST ON THE CAPITAL EXPENDITURE LINE OF CREDIT. The
                     principal amount of the Capital Expenditure Line of Credit
                     outstanding from time to time shall bear interest until
                     maturity of the Capital Expenditure Line of Credit Note at
                     a rate per annum equal to the Prime Rate plus
                     three-quarters percent (3/4%). After maturity, whether on
                     the Capital Expenditure Line of Credit Maturity Date or on
                     account of acceleration upon the occurrence of an Event of
                     Default, and until paid in full, the Capital Expenditure
                     Line of Credit shall bear interest at a per annum rate
                     equal to the Prime


                                       12
<PAGE>

                     Rate plus four and three-quarters percent (4-3/4%). Accrued
                     interest shall be due and payable monthly on the last
                     Banking Day of each month prior to maturity. After
                     maturity, interest shall be payable as accrued and without
                     demand.

              (iv)   EXTENSIONS OF CAPITAL EXPENDITURE LINE OF CREDIT MATURITY
                     DATE. The Bank may, upon the request of the Company, but at
                     the Bank's sole discretion, extend the Capital Expenditure
                     Line of Credit Maturity Date from time to time to such date
                     or dates as the Bank may elect by notice in writing to the
                     Company, and upon any such extension and upon execution and
                     delivery by the Company of a Capital Expenditure Line of
                     Credit Note reflecting the extended maturity date, the date
                     to which the Capital Expenditure Line of Credit Commitment
                     is then extended will become the "Capital Expenditure Line
                     of Credit Maturity Date" for purposes of this Agreement.

       c.     THE CAPITAL EXPENDITURE TERM LOAN. The Bank will make a Capital
              Expenditure Term Loan (the "Capital Expenditure Term Loan") to the
              Company on the Capital Expenditure Line of Credit Maturity Date on
              the following terms and subject to the following conditions:

              (i)    AMOUNT. The principal amount of the Capital Expenditure
                     Term Loan shall be equal to the lesser of One Million and
                     00/100 Dollars ($1,000,000.00), or the amount of the
                     aggregate principal amount of the Capital Expenditure Line
                     of Credit outstanding on the Capital Expenditure Line of
                     Credit Maturity Date.

              (ii)   THE CAPITAL EXPENDITURE TERM NOTE. The obligation of the
                     Company to repay the Capital Expenditure Term Loan shall be
                     evidenced by a promissory note (the "Capital Expenditure
                     Term Note") in the form of EXHIBIT "C" attached hereto.
                     Principal and interest of the Capital Expenditure Term Loan
                     shall be repayable


                                       13
<PAGE>

                     in equal monthly installments, each of which shall be equal
                     to one-forty-eighth (1/48th) of the sum of the initial
                     principal amount of the Capital Expenditure Line of Credit
                     outstanding on the Capital Expenditure Line of Credit
                     Maturity Date plus interest calculated at the rate provided
                     in Section 2(c)(iii) herein for the entire scheduled term
                     of the Capital Expenditure Term Loan , which monthly
                     payments shall be due commencing on the last Banking Day of
                     the month in which the Capital Expenditure Term Loan is
                     made, and continuing thereafter on the last Banking Day of
                     each month thereafter until the fourth anniversary of the
                     making of the Capital Expenditure Term Loan, on which date
                     the entire principal balance of the Capital Expenditure
                     Term Loan shall be due and payable together with all
                     accrued and unpaid interest. The principal of the Capital
                     Expenditure Term Loan may be prepaid at any time in whole
                     or in part without premium or penalty, provided that: (A)
                     any partial prepayment shall be in an amount which is an
                     integral multiple of $1,000.00, and (B) all partial
                     prepayments shall be applied to the latest maturing
                     scheduled installments of principal in inverse order of
                     maturity.

              (iii)  INTEREST ON THE CAPITAL EXPENDITURE TERM LOAN. The unpaid
                     principal balance from time to time of the Capital
                     Expenditure Term Loan shall bear interest from the date the
                     Loan is made prior to the maturity of the Capital
                     Expenditure Term Note at a rate per annum equal to the
                     T-Bill Rate. After maturity, whether scheduled maturity or
                     maturity by virtue of acceleration on account of the
                     occurrence of an Event of Default, interest will accrue on
                     the Capital Expenditure Term Loan at a rate per annum equal
                     to the T-Bill Rate plus four percent (4%). Prior to
                     maturity, interest shall be due and payable on the last
                     Banking Day of each


                                       14
<PAGE>

                     month together with payment of principal due on such dates
                     as provided in Section 2(c)(ii) above. After maturity,
                     interest shall be payable as accrued and without demand.

              (iv)   USE OF PROCEEDS OF THE CAPITAL EXPENDITURE TERM LOAN. The
                     proceeds of the Capital Expenditure Term Loan shall be used
                     in their entirety to refinance the Capital Expenditure Line
                     of Credit on the Capital Expenditure Line of Credit
                     Maturity Date.

       d.     PROVISIONS APPLICABLE TO ALL OF THE LOANS. The following
              provisions are applicable to both of the Loans:

              (i)    CALCULATION OF INTEREST. Interest on the Loans shall be
                     calculated by applying the ratio of the annual interest
                     rate over a year of 360 days, multiplied by the outstanding
                     principal balance, multiplied by the actual number of days
                     the principal balance is outstanding.

              (ii)   MANNER OF PAYMENT - APPLICATION. All payments of principal
                     and interest on the Loans shall be payable at the principal
                     office of the Bank in Indianapolis, Indiana, in funds
                     available for the Bank's immediate use in that city and no
                     payment will be considered to have been made until received
                     in such funds. All payments received on account of each
                     Loan will be applied first to the satisfaction of any
                     interest which is then due and payable on account of such
                     Loan, and to principal only after all interest which is due
                     and payable has been satisfied.

              (iii)  COMMITMENT FEE. The Bank acknowledges receipt from the
                     Company of the sum of $5,000.00, either previous to or
                     contemporaneously with the execution of this Agreement, as
                     a fee for the Bank's commitment to make the Loans.

              (iv)   AUTOMATIC DEBIT. Upon prior notice to the Company, the Bank
                     may debit when due all payments of principal and interest
                     due under


                                       15
<PAGE>

                     the terms of this Agreement to any deposit account of the
                     Company carried with the Bank without further authority.

              (v)    PREPAYMENT. The Loans may be prepaid at any time in whole
                     or in part without penalty or premium.

       SECTION 3. REPRESENTATIONS AND WARRANTIES. To induce the Bank to make the
Loans, the Company represents and warrants to the Bank that:

       a.     ORGANIZATION OF THE COMPANY. The Company is a corporation
              organized, existing and in good standing under the laws of the
              State of Delaware. The Company is qualified to do business in
              every jurisdiction in which: (i) the nature of the business
              conducted or the character or location of properties owned or
              leased, or the residences or activities of employees make such
              qualification necessary, and (ii) failure so to qualify might
              impair the title of the Company to material properties or the
              Company's right to enforce material contracts or result in
              exposure of the Company to liability for material penalties in
              such jurisdiction. No jurisdiction in which the Company is not
              qualified to do business has asserted in writing that the Company
              is required to be qualified therein. The principal office of the
              Company is located at 306 North Main Street, Monticello, Indiana
              47960. The Company does not conduct any material operations or
              keep any material amounts of property at any other location,
              except the Warehouses. The Company has not done business under any
              name other than its present corporate name at any time during the
              six years preceding the date of this Agreement except for the
              names "Fielder's Choice Direct," "Fielder's Choice," and "Williams
              & Sun, Inc."

       b.     AUTHORIZATION; NO CONFLICT. The execution and delivery of this
              Agreement, the borrowings hereunder, the execution and delivery of
              all of the other Loan Documents and the performance by the Company
              of its obligations under this Agreement and all of the other Loan
              Documents are within the Company's corporate powers, have been
              duly authorized by all necessary


                                       16
<PAGE>

              corporate action, have received any required governmental or
              regulatory agency approvals and do not and will not contravene or
              conflict with any provision of law or of the Articles of
              Incorporation or ByLaws of the Company or of any agreement binding
              upon the Company or its properties.

       c.     VALIDITY AND BINDING NATURE. This Agreement and all of the other
              Loan Documents are the legal, valid and binding obligations of the
              Company, enforceable against the Company in accordance with their
              respective terms, except to the extent that enforcement thereof
              may be limited by bankruptcy, insolvency, reorganization,
              moratorium and other laws enacted for the relief of debtors
              generally and other similar laws affecting the enforcement of
              creditors' rights generally or by equitable principles which may
              affect the availability of specific performance and other
              equitable remedies.

       d.     FINANCIAL STATEMENTS. The Company has delivered to the Bank the
              audited financial statements of Landec (which includes the Company
              as a separate segment) as of October 31, 1999, and for the fiscal
              year of Landec then ended and its unaudited interim financial
              statements as of March 31, 2000, and for the month and partial
              fiscal year then ended. Such statements have been prepared in
              accordance with generally accepted accounting principles
              consistently applied except, as to the interim statements, for the
              absence of a statement of cash flows, footnotes and adjustments
              normally made at year end which are not material in amount. Such
              statements present fairly the financial position of the Company as
              of the dates thereof and the results of its operations for the
              periods covered and since the date of the latest of such
              statements there has been no material adverse change in the
              financial position of the Company or in the results of its
              operations.

       e.     LITIGATION AND CONTINGENT LIABILITIES. No litigation, arbitration
              proceedings or governmental proceedings are pending or to the
              Company's knowledge threatened against the Company which would, if
              adversely


                                       17
<PAGE>

              determined, materially and adversely affect its financial position
              or continued operations. The Company has no material contingent
              liabilities not provided for or disclosed in the financial
              statements referred to in Section 3(d) or in the "Schedule of
              Exceptions" attached as EXHIBIT "D."

       f.     LIENS. None of the assets of the Company are subject to any
              mortgage, pledge, title retention lien, or other lien, encumbrance
              or security interest except for liens and security interests
              described in the exceptions enumerated in Section 6(b).

       g.     EMPLOYEE BENEFIT PLANS. Each Plan maintained by the Company is in
              material compliance with ERISA, the Code, and all applicable rules
              and regulations adopted by regulatory authorities pursuant
              thereto, and the Company has filed all reports and returns
              required to be filed by ERISA, the Code and such rules and
              regulations. No Plan maintained by the Company and no trust
              created under any such Plan has incurred any "accumulated funding
              deficiency" within the meaning of Section 412(c)(1) of the Code,
              and the present value of all benefits vested under each Plan did
              not exceed, as of the last annual valuation date, the value of the
              assets of the respective Plans allocable to such vested benefits.
              The Company has no knowledge that any "reportable event" as
              defined in ERISA has occurred with respect to any Plan.

       h.     PAYMENT OF TAXES. The Company has filed all federal, state and
              local tax returns and tax related reports which the Company is
              required to file by any statute or regulation and all taxes and
              any tax related interest payments and penalties that are due and
              payable have been paid, except for such as are being contested in
              good faith and by appropriate proceedings and as to which
              appropriate reserves have been established. Adequate provision has
              been made for the payment when due of all tax liabilities which
              have been incurred, but are not as yet due and payable.


                                       18
<PAGE>

       i.     INVESTMENT COMPANY ACT. The Company is not an "investment company"
              or a company "controlled" by an "investment company" within the
              meaning of the Investment Company Act of 1940, as amended.

       j.     REGULATION U AND OTHER FEDERAL REGULATIONS. The Company is not
              engaged principally, or as one of its important activities, in the
              business of extending credit for the purpose of purchasing or
              carrying margin stock within the meaning of Regulation U of the
              Board of Governors of the Federal Reserve System. Not more than
              twenty-five percent (25%) of the assets of the Company consists of
              margin stock, within the contemplation of Regulation U, as
              amended. No portion of any Loan made hereunder shall be used
              directly or indirectly to purchase ineligible securities, as
              defined by applicable regulations of the Federal Reserve Board,
              underwritten by any affiliate of the Bank during the underwriting
              period and for thirty (30) days thereafter.

       k.     HAZARDOUS SUBSTANCES. Except as disclosed on the "Schedule of
              Exceptions" attached as EXHIBIT "D", to the knowledge of the
              Company after reasonable inquiry and investigation; (i) there are
              no underground storage tanks of any kind on any premises owned or
              occupied by or under lease to the Company; (ii) there are no
              tanks, drums or other containers of any kind on premises owned or
              occupied by or under lease to the Company, the contents of which
              are unknown to the Company; (iii) no premises owned or occupied by
              or under lease to the Company have ever been used, and as of the
              date of this Agreement, no such premises are being used for any
              activities involving the use, treatment, transportation,
              generation, storage or disposal of any Hazardous Substances in
              reportable quantities, and (iv) no Hazardous Substances in
              reportable quantities have been released on any such premises nor
              is there any threat of release of any Hazardous Substances in
              reportable quantities on any such premises.


                                       19
<PAGE>

       l.     SUBSIDIARIES. The Company has no Subsidiaries as of the date of
              this Agreement.

       m.     ORGANIZATION OF LANDEC. Landec is a corporation organized,
              existing and in good standing under the laws of the State of
              California. Landec is qualified to do business in every
              jurisdiction in which: (i) the nature of the business conducted or
              the character or location of properties owned or leased, or the
              residences or activities of employees make such qualification
              necessary, and (ii) failure so to qualify might impair the title
              of Landec's material properties or Landec's right to enforce
              material contracts or result in exposure of Landec to liability
              for material penalties in such jurisdiction. No jurisdiction in
              which Landec is not qualified to do business has asserted in
              writing that Landec is required to be qualified therein. The
              principal office of Landec is located at 3603 Haven Avenue, Menlo
              Park, California 94025-1010. Landec does not conduct any material
              operations or keep any material amounts of property at any other
              location, except at the principal office of its subsidiary, Apio,
              Inc. located at 4575 West Main, Guadalupe, California 93434 and
              41646 Road 62, Reedly, California 93654, and its subsidiary Dock
              Resins Corporation at 1512 West Elizabeth Avenue, Linden, New
              Jersey 07036. Landec has not done business under any name other
              than its present corporate name at any time during the six years
              preceding the date of this Agreement.

       n.     LANDEC AUTHORIZATION; NO CONFLICT. The execution and delivery of
              the Guaranty and the performance thereunder, and the execution and
              delivery of all of the other Loan Documents to which Landec is a
              party and the performance by Landec of its obligations under the
              Guaranty and all of the other Loan Documents to which Landec is a
              party are within Landec's corporate powers, have been duly
              authorized by all necessary corporate action, have received any
              required governmental or regulatory agency approvals and do not
              and will not contravene or conflict with any provision


                                       20
<PAGE>

              of law or of the Articles of Incorporation or ByLaws of Landec or
              of any agreement binding upon Landec or its properties.

       o.     LANDEC VALIDITY AND BINDING NATURE. The Guaranty and all of the
              other Loan Documents to which Landec is a party are the legal,
              valid and binding obligations of Landec, enforceable against
              Landec in accordance with their respective terms, except to the
              extent that enforcement thereof may be limited by bankruptcy,
              insolvency, reorganization, moratorium and other laws enacted for
              the relief of debtors generally and other similar laws affecting
              the enforcement of creditors' rights generally or by equitable
              principles which may affect the availability of specific
              performance and other equitable remedies.

       SECTION 4. COLLATERAL FOR THE OBLIGATIONS. The Obligations shall be
secured and supported as provided in this Section.

       a.     SECURITY AGREEMENT. The Obligations shall be secured by a security
              interest in all equipment, inventory, accounts receivable, chattel
              paper and general intangibles of the Company now owned and
              hereafter acquired and in the proceeds thereof, which security
              interest will be created by a Security Agreement (the "Security
              Agreement") in the form attached as EXHIBIT "E." The Security
              Agreement will provide a security interest in the collateral
              described therein subject only to liens and security interests
              described in the exceptions enumerated in Section 6(b).

       b.     MORTGAGE. The Obligations will further be secured by the mortgage
              lien and security interests created by a Mortgage, Security
              Agreement, Assignment of Rents and Fixture Filing (the "Mortgage")
              on the real estate in White County, Indiana, owned by the Company
              and commonly known as 306 North Main Street, Monticello, Indiana
              47960, (referred to in this Section as the "Real Estate"). The
              Real Estate is more particularly described in the form of the
              Mortgage which is attached as EXHIBIT "F." In


                                       21
<PAGE>

              support of the Mortgage, the Company shall provide to the Bank at
              the Bank's expense the following documentation:

              (i)    TITLE SEARCH. The Bank shall obtain a title search which
                     shall show no liens or encumbrances on the Real Estate
                     other than (i) the Bank's Mortgage, if recorded at the time
                     such search is conducted, (ii) standard exceptions as to
                     rights of parties in possession and matters which would be
                     disclosed by survey which do not materially and adversely
                     affect the value or marketability of the Real Estate or the
                     usefulness of the Real Estate in the operations of the
                     Company, (iii) easements not shown by the public records
                     and mechanic's liens not shown by the public records, and
                     (iv) those liens described in the exceptions enumerated in
                     Section 6(b).

              (ii)   FLOOD HAZARD DETERMINATION FORM. The Bank shall obtain the
                     completion of a Flood Hazard Determination Form from a
                     registered land surveyor or engineer pursuant to the
                     requirements of the Office of the Comptroller of the
                     Currency and the Federal Emergency Management Agency. If
                     such form shows that the Real Estate is in a flood plain,
                     the Company shall be required to obtain flood hazard
                     insurance as required by the Office of the Comptroller of
                     the Currency in order to close the Loans.

       c.     SUBORDINATION AGREEMENT. The indebtedness of the Company to Landec
              in an amount not less than $7,000,000 shall be subordinated to the
              indebtedness of the Company to the Bank under the terms of a
              Subordination Agreement (the "Subordination Agreement") in the
              form of EXHIBIT "G" attached hereto. The Subordination Agreement
              shall not allow payments of principal to be made by Landec unless
              the Company is in compliance with the following financial
              covenants:



                                       22
<PAGE>

              (i)    RATIO OF LIABILITIES TO TANGIBLE CAPITAL BASE. The Company
                     shall maintain at all times the ratio of its total
                     liabilities less Subordinated Debt to its Tangible Capital
                     Base at a level not greater than 2.00 to1.00. For purposes
                     of testing compliance with this covenant, the term
                     "liabilities" shall include the present value of all
                     capital lease obligations of the Company, determined as of
                     any date the ratio is to be tested.

              (ii)   CASH FLOW COVERAGE RATIO. Semiannually on a year-to-date
                     basis measured as of the end of each April and October, the
                     Company shall maintain a cash flow coverage ratio of not
                     less than 1.50 to1.00. For purposes of this covenant, the
                     phrase "cash flow coverage ratio" means the ratio of: (A)
                     the Company's EBITDA over (B) the sum of the principal paid
                     plus interest expense.

       d.     GUARANTY AGREEMENT. The Obligations shall be supported by the
              unconditional guaranty of prompt payment of Landec, which guaranty
              shall be evidenced by a Guaranty Agreement (the "Guaranty
              Agreement") in the form of EXHIBIT "H."

       e.     ASSIGNMENT OF LICENSING AGREEMENT. The Obligations shall further
              be secured by an assignment by the Company to the Bank of all of
              the Company's rights, title, and interest in the Licensing
              Agreements entered into between the Company and Landec which
              assignment shall be evidenced by the Collateral Assignment of
              Licensing Agreement (the "Assignment of Licensing Agreement") in
              the form attached hereto as EXHIBIT "I."

       f.     INTERCREDITOR AGREEMENT. The Bank and Fifth Third Bank, Indiana
              shall enter into an Intercreditor Agreement substantially in the
              form of EXHIBIT "J" attached hereto (the "Intercreditor
              Agreement") setting forth terms


                                       23
<PAGE>

              which, among other things, provide for the acknowledgment by Fifth
              Third Bank, Indiana, as lender to Hubner, of the first priority
              lien rights of the Bank in the Eligible Inventory.

       SECTION 5. AFFIRMATIVE COVENANTS OF THE COMPANY. Until all Obligations of
the Company terminate or are paid and satisfied in full, and so long as the
Commitment or the Capital Expenditure Line of Credit Commitment is outstanding,
the Company shall strictly observe the following covenants.

       a.     CORPORATE EXISTENCE. The Company shall preserve its corporate
              existence, and shall cause Landec to preserve its corporate
              existence.

       b.     REPORTS, CERTIFICATES AND OTHER INFORMATION. The Company shall
              furnish to the Bank copies of the following financial statements,
              certificates and other information:

              (i)    ANNUAL STATEMENTS. As soon as available and in any event
                     within one hundred twenty (120) days after the close of
                     each fiscal year, the consolidated and consolidating
                     financial statements of Landec, which shall have a segment
                     broken out for the Company, for such fiscal year prepared
                     and presented in accordance with generally accepted
                     accounting principles, consistently applied (except for
                     changes in which the independent accountants of Landec
                     concur) in each case setting forth in comparative form
                     corresponding figures for the preceding fiscal year for
                     Landec and for the Company, together with the audit report,
                     unqualified as to scope, of independent certified public
                     accountants approved by the Bank, which approval shall not
                     be unreasonably withheld, together with the management
                     letter, if any, issued by such independent certified public
                     accountants.

              (ii)   INTERIM STATEMENTS. As soon as available and in any event
                     within thirty (30) days after the end of each month, a copy
                     of the interim financial statements of the Company,
                     consisting at a minimum of:


                                       24
<PAGE>

                     A.     the balance sheet as of the end of the month, and

                     B.     a statement of income for the month and for the
                            partial or full fiscal year ended as of the end of
                            the month,

                     all in reasonable detail and accompanied by the written
                     representation of the chief financial officer of the
                     Company that such financial statements have been prepared
                     in accordance with generally accepted accounting principles
                     (except that they need not include a statement of cash
                     flows and footnotes and need not reflect adjustments
                     normally made at year end, if such adjustments are not
                     material in amount), consistently applied, (except for
                     changes in which the independent accountants of the Company
                     concur) and present fairly the financial position of the
                     Company and the results of its operation as of the dates of
                     such statements and for the fiscal periods then ended.

              (iii)  GUARANTOR'S FINANCIAL STATEMENTS. The Company shall provide
                     the Bank within one hundred twenty (120) days after the
                     close of each fiscal year with a copy of Landec's Form
                     10-K. Within forty-five (45) days after the end of each of
                     Landec's fiscal quarters, the Company shall provide to the
                     Bank a copy of Landec's Form 10-Q.

              (iv)   BORROWING BASE CERTIFICATES. At the time of each request
                     for an Advance of the Revolving Loan, within thirty (30)
                     days after the end of each month, a Borrowing Base
                     Certificate as of the date of the Advance or such month
                     end, as applicable, and promptly as of such other dates as
                     the Bank may reasonably require.

              (v)    ORDERS. Prompt notice of any orders in any material
                     proceedings to which the Company is a party, issued by any
                     court or regulatory agency, federal or state, and if the
                     Bank should so request, a copy of any such order.


                                       25
<PAGE>

              (vi)   NOTICE OF DEFAULT OR LITIGATION. Immediately upon learning
                     of the occurrence of an Event of Default or Unmatured Event
                     of Default, or the institution of or any adverse
                     determination in any litigation, arbitration proceeding or
                     governmental proceeding which is material to the Company,
                     or the occurrence of any event which could have a material
                     adverse effect upon the Company, written notice thereof
                     describing the same and the steps being taken with respect
                     thereto.

              (vii)  REGISTRATION STATEMENTS AND REPORTS. Within five (5)
                     Banking Days of the filing by the Company or Landec with
                     the Securities and Exchange Commission or any state
                     securities regulatory authority, complete copies of all
                     registration statements or periodic and special reports
                     filed under federal or state securities laws and
                     regulations.

              (viii) OTHER INFORMATION. From time to time such other information
                     concerning the Company or Landec as the Bank may reasonably
                     request.

       c.     BOOKS, RECORDS AND INSPECTIONS. The Company shall maintain
              complete and accurate books and records. The Company shall permit
              the Bank to inspect such books and records for purposes of copying
              and audit, and inspect its properties and operations, upon
              reasonable notice and all at reasonable times during normal
              business hours; provided, however, that unless there is an Event
              of Default or Unmatured Event of Default, the Bank shall not
              perform more than three (3) such inspections per year.

       d.     INSURANCE. In addition to any insurance required by the Mortgage
              and the Security Agreement, the Company shall maintain such
              insurance as may be required by law and such other insurance, to
              such extent and against such hazards and liabilities, as is
              customarily maintained by companies similarly situated. The
              Company agrees to name the Bank as additional


                                       26
<PAGE>

              loss payee on any such insurance policy under a standard lender's
              loss payable clause and to provide a copy of any such policy to
              the Bank.

       e.     TAXES AND LIABILITIES. The Company shall pay when due all taxes,
              license fees, assessments and other liabilities except such as are
              being contested in good faith and by appropriate proceedings and
              for which appropriate reserves have been established.

       f.     COMPLIANCE WITH LEGAL AND REGULATORY REQUIREMENTS. The Company
              shall maintain material compliance with the applicable provisions
              of all federal, state and local statutes, ordinances and
              regulations and any court orders or orders of regulatory
              authorities issued thereunder.

       g.     PRIMARY BANKING RELATIONSHIP. The Company shall maintain its
              primary concentration and depository accounts with the Bank.

       h.     EMPLOYEE BENEFIT PLANS. The Company shall maintain and shall cause
              any Subsidiary to maintain any Plan in material compliance with
              ERISA, the Code, and all rules and regulations of regulatory
              authorities pursuant thereto and shall file and shall cause any
              Subsidiary to file all reports required to be filed pursuant to
              ERISA, the Code, and such rules and regulations.

       i.     HAZARDOUS SUBSTANCES. If the Company or any Subsidiary should
              commence the use, treatment, transportation, generation, storage
              or disposal of any Hazardous Substance in reportable quantities in
              its operations in addition to those noted in EXHIBIT "D", the
              Company shall immediately notify the Bank of the commencement of
              such activity with respect to each such Hazardous Substance. The
              Company shall cause any Hazardous Substances which are now or may
              hereafter be used or generated in the operations of the Company or
              any Subsidiary in reportable quantities to be accounted for and
              disposed of in compliance with all applicable federal, state and
              local laws and regulations. The Company shall notify the Bank
              immediately upon obtaining actual knowledge that:


                                       27
<PAGE>

              (i)    any premises which have at any time been owned or occupied
                     by or have been under lease to the Company or any
                     Subsidiary are the subject of an environmental
                     investigation by any federal, state or local governmental
                     agency having jurisdiction over the regulation of any
                     Hazardous Substances, the purpose of which investigation is
                     to quantify the levels of Hazardous Substances located on
                     such premises, or

              (ii)   the Company or any Subsidiary has been named or is
                     threatened to be named as a party responsible for the
                     possible contamination of any real property or ground water
                     with Hazardous Substances, including, but not limited to
                     the contamination of past and present waste disposal sites.

              If the Company or any Subsidiary is notified of any event
              described at items (i) or (ii) above, the Company shall
              immediately engage or cause the Subsidiary to engage a firm or
              firms of engineers or environmental consultants appropriately
              qualified to determine as quickly as practical the extent of
              contamination and the potential financial liability of the Company
              or the Subsidiary with respect thereto, and the Bank shall be
              provided with a copy of any report prepared by such firm or by any
              governmental agency as to such matters as soon as any such report
              becomes available to the Company, and Company shall immediately
              take appropriate steps to establish reserves in the amount of the
              potential financial liability of the Company or the Subsidiary
              identified by such environmental consultants or engineers. The
              selection of any engineers or environmental consultants engaged
              pursuant to the requirements of this Section shall be subject to
              the approval of the Bank, which approval shall not be unreasonably
              withheld.


                                       28
<PAGE>

       j.     ANNUAL CLEANUP. The outstanding principal balance of the Revolving
              Loan shall be $0 for a period of thirty (30) consecutive days in
              each fiscal year of the Company.

       SECTION 6. NEGATIVE COVENANTS OF THE COMPANY. Until all Obligations of
the Company terminate or are paid and satisfied in full, and so long as the
Commitment or the Capital Expenditure Line of Credit Commitment is outstanding,
the Company shall strictly observe the following covenants.

       a.     RESTRICTED PAYMENTS. The Company shall not purchase or redeem any
              shares of the capital stock of the Company or declare or pay any
              dividends thereon except for dividends payable entirely in capital
              stock, and the Company shall not make any other distributions to
              shareholders as shareholders, or set aside any funds for any such
              purpose, or prepay, purchase or redeem any Subordinated Debt of
              the Company; provided, however, that notwithstanding the
              foregoing, such distributions, redemptions, dividends and payments
              (each hereinafter called a "Shareholder Payment") may be made at
              any time that no Event of Default or Unmatured Event of Default
              exists at the time of the making of such Shareholder Payment or
              would result from the making thereof, and upon compliance with the
              following financial covenants at the time of the making of such
              Shareholder Payments:

              (i)    RATIO OF LIABILITIES TO TANGIBLE CAPITAL BASE. The Company
                     shall maintain at all times the ratio of its total
                     liabilities less Subordinated Debt to its Tangible Capital
                     Base at a level not greater than 2.00 to 1.00. For purposes
                     of testing compliance with this covenant, the term
                     "liabilities" shall include the present value of all
                     capital lease obligations of the Company, determined as of
                     any date the ratio is to be tested.


                                       29
<PAGE>

              (ii)   CASH FLOW COVERAGE RATIO. Semiannually on a year-to-date
                     basis measured at the end of each April and October, the
                     Company shall maintain a cash flow coverage ratio of not
                     less than 1.50 to1.00. For purposes of this covenant, the
                     phrase "cash flow coverage ratio" means the ratio of: (A)
                     the Company's EBITDA over (B) the sum of the principal paid
                     plus interest expense.

       b.     LIENS. The Company shall not create or permit to exist any
              mortgage, pledge, title retention lien or other lien, encumbrance
              or security interest (all of which are hereafter referred to in
              this subsection as a "lien" or "liens") with respect to any
              property or assets now owned or hereafter acquired except:

              (i)    liens in favor of the Bank created pursuant to the
                     requirements of this Agreement or otherwise;

              (ii)   any lien or deposit with any governmental agency required
                     or permitted to qualify the Company to conduct business or
                     exercise any privilege, franchise or license, or to
                     maintain self-insurance or to obtain the benefits of or
                     secure obligations under any law pertaining to worker's
                     compensation, unemployment insurance, old age pensions,
                     social security or similar matters, or to obtain any stay
                     or discharge in any legal or administrative proceedings, or
                     any similar lien or deposit arising in the ordinary course
                     of business;

              (iii)  any mechanic's, worker's, repairmen's, carrier's,
                     warehousemen's or other like liens arising in the ordinary
                     course of business for amounts not yet due and for the
                     payment of which adequate reserves have been established,
                     or deposits made to obtain the release of such liens;


                                       30
<PAGE>

              (iv)   easements, licenses, minor irregularities in title or minor
                     encumbrances on or over any real property which do not, in
                     the judgment of the Bank, materially detract from the value
                     of such property or its marketability or its usefulness in
                     the business of the Company;

              (v)    liens for taxes and governmental charges which are not yet
                     due or which are being contested in good faith and by
                     appropriate proceedings and for which appropriate reserves
                     have been established;

              (vi)   liens created by or resulting from any litigation or legal
                     proceeding which is being contested in good faith and by
                     appropriate proceedings and for which appropriate reserves
                     have been established;

              (vii)  liens securing indebtedness not exceeding $100,000.00 in
                     the aggregate, provided such liens are subordinated at all
                     times to liens in favor of the Bank securing the
                     Obligations; and

              (viii) those specific liens now existing described on the
                     "Schedule of Exceptions" attached as EXHIBIT "D."

       c.     GUARANTIES. The Company shall not be a guarantor or surety of, or
              otherwise be responsible in any manner with respect to any
              undertaking of any other person or entity, whether by guaranty
              agreement or by agreement to purchase any obligations, stock,
              assets, goods or services, or to supply or advance any funds,
              assets, goods or services, or otherwise, except for:

              (i)    guaranties in favor of the Bank;

              (ii)   guaranties by endorsement of instruments for deposit made
                     in the ordinary course of business; and

              (iii)  those specific existing guaranties listed in the "Schedule
                     of Exceptions" attached as EXHIBIT "D."


                                       31
<PAGE>

       d.     LOANS OR ADVANCES. The Company shall not make or permit to exist
              any loans or advances to any other person or entity, except for:

              (i)    extensions of credit or credit accommodations to customers
                     or vendors made by the Company in the ordinary course of
                     its business as now conducted;

              (ii)   reasonable salary advances to non-executive employees, and
                     other advances to agents and employees for anticipated
                     expenses to be incurred on behalf of the Company in the
                     course of discharging their assigned duties; and

              (iii)  the specific items listed in the "Schedule of Exceptions"
                     attached as EXHIBIT "D."


       e.     MERGERS, CONSOLIDATIONS, SALES, ACQUISITION OR FORMATION OF
              SUBSIDIARIES. The Company shall not be a party to any
              consolidation or to any merger and shall not purchase the capital
              stock of or otherwise acquire any equity interest in any other
              business entity without the prior written consent of the Bank
              which shall not be unreasonably withheld. The Company shall not
              acquire any material part of the assets of any other business
              entity, except in the ordinary course of business. The Company
              shall not sell, transfer, convey or lease all or any material part
              of its assets, except in the ordinary course of business, or sell
              or assign with or without recourse any receivables. The Company
              shall not cause to be created or otherwise acquire any
              Subsidiaries.

       f.     MARGIN STOCK. The Company shall not use or cause or permit the
              proceeds of the Loans to be used, either directly or indirectly,
              for the purpose, whether immediate, incidental or ultimate, of
              purchasing or carrying any margin stock within the meaning of
              Regulation U of the Board of Governors of the Federal Reserve
              System, as amended from time to time.

       g.     OTHER AGREEMENTS. The Company shall not enter into any agreement
              containing any provision which would be violated or breached in
              material


                                       32
<PAGE>

              respect by the performance of its obligations under this Agreement
              or under any other Loan Document.

       h.     JUDGMENTS. The Company shall not permit any uninsured judgment or
              monetary penalty rendered against it in any judicial or
              administrative proceeding to remain unsatisfied for a period in
              excess of forty-five (45) days unless such judgment or penalty is
              being contested in good faith by appropriate proceedings and
              execution upon such judgment has been stayed, and unless an
              appropriate reserve has been established with respect thereto.

       i.     PRINCIPAL OFFICE. The Company shall not change the location of its
              principal office unless it gives not less than ten (10) days prior
              written notice of such change to the Bank.

       j.     HAZARDOUS SUBSTANCES. The Company shall not allow or permit to
              continue the release or threatened release of any Hazardous
              Substance on any premises owned or occupied by or under lease to
              the Company or any Subsidiary.

       k.     DEBT. The Company shall not incur nor permit to exist any
              indebtedness for borrowed money except:

              (i)    to the Bank;

              (ii)   indebtedness permitted to be secured under Section
                     6(b)(vii) herein; and

              (iii)  except for those existing obligations disclosed on the
                     "Schedule of Exceptions" attached as EXHIBIT "D."

       For purposes of this covenant, the phrase "indebtedness for borrowed
       money," shall be construed to include capital lease obligations.

       SECTION 7. CONDITIONS OF LENDING. The obligation of the Bank to make any
Advance and to make the Capital Expenditure Term Loan shall be subject to
fulfillment of each of the following conditions precedent:


                                       33
<PAGE>

       a.     NO DEFAULT. No Event of Default or Unmatured Event of Default
              shall have occurred and be continuing, and the representations and
              warranties of the Company contained in Section 3 shall be true and
              correct as of the date of this Agreement and as of the date of
              each Advance (except for representations and warranties expressly
              made as of a specific time and correct as of such date), except
              that after the date of this Agreement: (i) the representations
              contained in Section 3(d) will be construed so as to refer to the
              latest financial statements furnished to the Bank by the Company
              or Landec pursuant to the requirements of this Agreement, (ii) the
              representations contained in Section 3(k) (with respect to
              Hazardous Substances) will be construed so as to apply not only to
              the Company, but also to any Subsidiaries, (iii) the
              representation contained in Section 3(l) will be construed so as
              to except any Subsidiary which may hereafter be formed or acquired
              by the Company with the consent of the Bank, and (iv) all other
              representations will be construed to have been amended to conform
              with any changes of which the Bank shall previously have been
              given notice in writing by the Company.

       b.     DOCUMENTS TO BE FURNISHED AT CLOSING. The Bank shall have received
              contemporaneously with the execution of this Agreement, the
              following, each duly executed, currently dated and in form and
              substance satisfactory to the Bank:

              (i)    The Revolving Note, the Capital Expenditure Line of Credit,
                     and the Capital Expenditure Term Note.

              (ii)   The Mortgage and requisite Uniform Commercial Code
                     financing statements.

              (iii)  The Security Agreement and requisite Uniform Commercial
                     Code financing statements.

              (iv)   The Subordination Agreement together with a photocopy of
                     the Subordinated Note with the subordination legend
                     thereon.


                                       34
<PAGE>

              (v)    The Guaranty Agreement.

              (vi)   The Collateral Assignment of Licensing Agreement together
                     with complete copies of the Licensing Agreement.

              (vii)  The Schedule of Exceptions.

              (viii) A certified copy of a Resolution of the Board of Directors
                     of the Company authorizing the execution, delivery and
                     performance, respectively, of this Agreement and the other
                     Loan Documents provided for in this Agreement to which the
                     Company is a party.

              (ix)   A certificate of the Secretary of the Board of Directors of
                     the Company certifying the names of the officer or officers
                     authorized to sign this Agreement and the other Loan
                     Documents provided for in this Agreement to which the
                     Company is a party, together with a sample of the true
                     signature of each such officer.

              (x)    A copy of the file-marked Articles of Incorporation of the
                     Company certified as complete and correct as of a recent
                     date by the Secretary of State of Delaware, and a copy of
                     the By-Laws of the Company, certified as complete and
                     correct by the Secretary of the Board of Directors of the
                     Company.

              (xi)   A currently dated Certificate of Good Standing of the
                     Company issued by the Secretary of State of Delaware.

              (xii)  A currently dated Certificate of Existence of the Company
                     issued by the Secretary of State of Indiana.

              (xiii) A certified copy of a Resolution of the Board of Directors
                     of Landec authorizing the execution, delivery and
                     performance, respectively, of the Guaranty , the
                     Subordination Agreement, the Collateral Assignment of
                     Licensing Agreement and the other Loan Documents provided
                     for in this Agreement to which Landec is a party.


                                       35
<PAGE>

              (xiv)  A certificate of the Secretary of the Board of Directors of
                     Landec certifying the names of the officer or officers
                     authorized to sign the Guaranty and the other Loan
                     Documents provided for in this Agreement to which Landec is
                     a party, together with a sample of the true signature of
                     each such officer.

              (xv)   A copy of the file-marked Articles of Incorporation of
                     Landec certified as complete and correct as of a recent
                     date by the Secretary of State of California, and a copy of
                     the By-Laws of Landec, certified as complete and correct by
                     the Secretary of the Board of Directors of Landec.

              (xvi)  A currently dated Certificate of Good Standing of Landec
                     issued by the Secretary of State of California.

              (xvii) A currently dated Certificate of Existence of Landec issued
                     by the Secretary of State of Indiana.

             (xviii) The results of the title search required under the terms
                     of Section 4(b)(i).

              (xix)  Certificates evidencing the existence of all insurance
                     required under the terms of this Agreement or any other
                     Loan Documents.

              (xx)   The commitment fee required under the terms of Section
                     2(d)(iii).

              (xxi)  The Flood Hazard Determination Form required under the
                     terms of Section 4(b)(ii).

              (xxii) A complete copy of the Ownership Acknowledgment Agreement
                     and all amendments thereto, together with all lien waivers
                     and UCC filings by creditors of Hubner.

             (xxiii) The Intercreditor Agreement.

              (xxiv) A complete copy of the Seed Agreement.

              (xxv)  Such other documents as the Bank may reasonably require.

              (xxvi) Fees of legal counsel for the Bank incurred in connection
                     with the drafting, negotiation, and execution of this
                     Agreement.


                                       36
<PAGE>

       SECTION 8. EVENTS OF DEFAULT. Each of the following shall constitute an
Event of Default under this Agreement:

       a.     NONPAYMENT OF THE LOANS. Default in the payment, within five (5)
              Banking Days of being due, of any amount payable under the terms
              of either of the Notes, or otherwise payable to the Bank or any
              other holder of the Notes under the terms of this Agreement.

       b.     NONPAYMENT OF OTHER INDEBTEDNESS FOR BORROWED MONEY. Default by
              the Company in the payment when due, whether by acceleration or
              otherwise, of any other material indebtedness for borrowed money,
              or default in the performance or observance of any obligation or
              condition with respect to any such other indebtedness if the
              effect of such default is to accelerate the maturity of such other
              indebtedness or to permit the holder or holders thereof, or any
              trustee or agent for such holders, to cause such indebtedness to
              become due and payable prior to its scheduled maturity, unless the
              Company is contesting the existence of such default in good faith
              and by appropriate proceedings.

       c.     OTHER MATERIAL OBLIGATIONS. Subject to the expiration of any
              applicable grace period, default by the Company in the payment
              when due, or in the performance or observance of any material
              obligation of, or condition agreed to by the Company with respect
              to any material purchase or lease of goods, securities or services
              except only to the extent that the existence of any such default
              is being contested in good faith and by appropriate proceedings
              and that appropriate reserves have been established with respect
              thereto.

       d.     BANKRUPTCY, INSOLVENCY, ETC. The Company admitting in writing its
              inability to pay its debts as they mature or an administrative or
              judicial order of dissolution or determination of insolvency being
              entered against the Company; or the Company applying for,
              consenting to, or acquiescing in the appointment of a trustee or
              receiver for the Company or any property


                                       37
<PAGE>

              thereof, or the Company making a general assignment for the
              benefit of creditors; or, in the absence of such application,
              consent or acquiescence, a trustee or receiver being appointed for
              the Company or for a substantial part of its property and not
              being discharged within forty-five (45) days; or any bankruptcy,
              reorganization, debt arrangement, or other proceeding under any
              bankruptcy or insolvency law, or any dissolution or liquidation
              proceeding being instituted by or against the Company, and, if
              involuntary, being consented to or acquiesced in by the Company or
              remaining for forty-five (45) days undismissed.

       e.     WARRANTIES AND REPRESENTATIONS. Any warranty or representation
              made by the Company in this Agreement proving to have been false
              or misleading in any material respect when made, or any schedule,
              certificate, financial statement, report, notice, or other writing
              furnished by the Company to the Bank proving to have been false or
              misleading in any material respect when made or delivered.

       f.     VIOLATIONS OF NEGATIVE COVENANTS. Failure by the Company to comply
              with or perform any covenant stated in Section 6 of this Agreement

       g.     NONCOMPLIANCE WITH OTHER PROVISIONS OF THIS AGREEMENT. Failure of
              the Company to comply with or perform any covenant or other
              provision of this Agreement or to perform any other Obligation
              (which failure does not constitute an Event of Default under any
              of the preceding provisions of this Section 8) and continuance of
              such failure for forty-five (45) days after notice thereof to the
              Company from the Bank.

       SECTION 9. EFFECT OF EVENT OF DEFAULT. If any Event of Default described
in Section 8(d) shall occur, the maturity of the Loans shall immediately be
accelerated and the Notes and the Loans evidenced thereby, and all other
indebtedness and any other payment Obligations of the Company to the Bank shall
become immediately due and payable, and the Commitment and the Capital
Expenditure Line of Credit Commitment shall immediately terminate, all without
notice of any kind.


                                       38
<PAGE>

When any other Event of Default has occurred and is continuing, the Bank or any
other holder of the Notes may accelerate payment of the Loans and declare the
Notes and all other payment Obligations due and payable, whereupon maturity of
the Loans shall be accelerated and the Notes and the Loans evidenced thereby,
and all other payment Obligations shall become immediately due and payable and
the Commitment shall immediately terminate, all without notice of any kind. The
Bank or such other holder shall promptly advise the Company of any such
declaration, but failure to do so shall not impair the effect of such
declaration. The remedies of the Bank specified in this Agreement or in any
other Loan Document shall not be exclusive, and the Bank may avail itself of any
other remedies provided by law as well as any equitable remedies available to
the Bank.

       SECTION 10. WAIVER -- AMENDMENTS. No delay on the part of the Bank, or
any holder of the Notes in the exercise of any right, power or remedy shall
operate as a waiver thereof, nor shall any single or partial exercise by any of
them of any right, power or remedy preclude any other or further exercise
thereof, or the exercise of any other right, power or remedy. No amendment,
modification or waiver of, or consent with respect to any of the provisions of
this Agreement or the other Loan Documents or otherwise of the Obligations shall
be effective unless such amendment, modification, waiver or consent is in
writing and signed by the Bank.

       SECTION 11. NOTICES. Any notice given under or with respect to this
Agreement to the Company or the Bank shall be in writing and, if delivered by
hand or sent by overnight courier service, shall be deemed to have been given
when delivered and, if mailed, shall be deemed to have been given five (5) days
after the date when sent by registered or certified mail, postage prepaid, and
addressed to the Company or the Bank (or other holder of the Notes) at its
address shown below, or at such other address as any such party may, by written
notice to the other party to this Agreement, have designated as its address for
such purpose. The addresses referred to are as follows:


                                       39
<PAGE>

         As to the Company:    Intellicoat Corporation
                               306 North Main Street
                               P.O. Box 898 (for mail)
                               Monticello, Indiana 47960
                               Attention:  Michael E. Godlove, Chief
                                           Financial Officer

         As to the Bank:       Old National Bank
                               101 West Ohio Street
                               Suite 1400
                               Indianapolis, Indiana 46204
                               Attention: John T. Travis, Vice President
                                          and Senior Lender

                               with copy to: Madalyn S. Kinsey, Esquire
                                             KROGER, GARDIS & REGAS
                                             Bank One Center/Circle
                                             Suite 900
                                             111 Monument Circle
                                             Indianapolis, Indiana 46204-5175

       SECTION 12. COSTS, EXPENSES AND TAXES. The Company shall pay or reimburse
the Bank on demand for all reasonable out-of-pocket costs and expenses of the
Bank including reasonable attorneys' fees and legal expenses incurred by it in
connection with the drafting, negotiation, execution, and delivery of this
Agreement and the other Loan Documents, and in connection with the enforcement,
or restructuring in the nature of a workout, of this Agreement or any other Loan
Document. The Company shall also reimburse the Bank for expenses incurred by the
Bank in connection with any audit of the books and records or physical assets of
the Company conducted pursuant to any right granted to the Bank under the terms
of this Agreement or any other Loan Document. Such reimbursement shall include,
without limitation, reimbursement of the Bank for its overhead expenses
reasonably allocated to such audits. In addition, the Company shall pay or
reimburse the Bank for all expenses incurred by the Bank in connection with the
perfection of any security interests or mortgage liens granted to the Bank by
the Company and for any stamp or similar documentary or transaction taxes which
may be payable in connection with the execution or delivery of this Agreement or
any other Loan Document or in connection with any other instruments or documents
provided for herein or delivered or required


                                       40
<PAGE>

in connection herewith including, without limitation, expenses incident to any
lien or title search or title insurance commitment or policy. All obligations
provided for in this Section shall survive termination of this Agreement.

       SECTION 13. SEVERABILITY. If any provision of this Agreement or any other
Loan Document is determined to be illegal or unenforceable, such provision shall
be deemed to be severable from the balance of the provisions of this Agreement
or such Document and the remaining provisions shall be enforceable in accordance
with their terms.

       SECTION 14. CAPTIONS. Section captions used in this Agreement are for
convenience only and shall not affect the construction of this Agreement.

       SECTION 15. GOVERNING LAW -- JURISDICTION. Except as may otherwise be
expressly provided in any other Loan Document, this Agreement and all other Loan
Documents are made under and will be governed in all cases by the substantive
laws of the State of Indiana, notwithstanding the fact that Indiana conflicts of
law rules might otherwise require the substantive rules of law of another
jurisdiction to apply. The Company consents to the jurisdiction of any state or
federal court located within Marion County, Indiana, and waives personal service
of any and all process upon the Company. All service of process may be made by
messenger, by certified mail, return receipt requested, or by registered mail
directed to the Company at the address stated in Section 11. The Company waives
any objection which the Company may have to any proceeding commenced in a
federal or state court located within Marion County, Indiana, based upon
improper venue or FORUM NON CONVENIENS. Nothing contained in this Section shall
affect the right of the Bank to serve legal process in any other manner
permitted by law or to bring any action or proceeding against the Company or its
property in the courts of any other jurisdiction.

       SECTION 16. PRIOR AGREEMENTS, ETC. This Agreement supersedes all previous
agreements and commitments made by the Bank and the Company with respect to the
Loans and all other subjects of this Agreement, including, without limitation,
any oral or written proposals or commitments made or issued by the Bank.


                                       41
<PAGE>

       SECTION 17. SUCCESSORS AND ASSIGNS. This Agreement and the other Loan
Documents shall be binding upon and shall inure to the benefit of the Company
and the Bank and their respective successors and assigns, provided that the
Company's rights under this Agreement shall not be assignable without the prior
written consent of the Bank.

       SECTION 18. WAIVER OF JURY TRIAL. THE BANK (BY ITS ACCEPTANCE HEREOF)AND
THE COMPANY HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE OR CLAIM, WHETHER
BASED UPON CONTRACT, TORT, OR OTHERWISE, BETWEEN THE BANK AND THE COMPANY
ARISING OUT OF, OR IS ANY WAY RELATED TO THE RELATIONSHIP ESTABLISHED BETWEEN
THE COMPANY AND THE BANK BY THIS OR ANY OTHER LOAN DOCUMENT, OR ANY RELATIONSHIP
BETWEEN THE BANK AND THE COMPANY. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE
BANK TO ENTER INTO THIS AGREEMENT AND TO PROVIDE THE FINANCING DESCRIBED HEREIN.

       SECTION 19. ARBITRATION. BANK AND THE COMPANY AGREE THAT UPON THE WRITTEN
DEMAND OF EITHER PARTY, WHETHER MADE BEFORE OR AFTER THE INSTITUTION OF ANY
LEGAL PROCEEDINGS, BUT PRIOR TO THE RENDERING OF ANY JUDGMENT IN THAT
PROCEEDING, ALL DISPUTES, CLAIMS AND CONTROVERSIES BETWEEN THEM, WHETHER
INDIVIDUAL, JOINT, OR CLASS IN NATURE, ARISING FROM THIS AGREEMENT, OR ANY LOAN
DOCUMENT OR OTHERWISE, INCLUDING WITHOUT LIMITATION CONTRACT AND TORT DISPUTES,
SHALL BE RESOLVED BY BINDING ARBITRATION PURSUANT TO THE COMMERCIAL RULES OF THE
AMERICAN ARBITRATION ASSOCIATION ("AAA"). ANY ARBITRATION PROCEEDING HELD
PURSUANT TO THIS ARBITRATION PROVISION SHALL BE CONDUCTED IN THE CITY NEAREST
THE COMPANY'S ADDRESS HAVING AN AAA REGIONAL OFFICE, OR AT ANY OTHER PLACE
SELECTED BY MUTUAL AGREEMENT OF


                                       42
<PAGE>

THE PARTIES. NO ACT TO TAKE OR DISPOSE OF ANY COLLATERAL SHALL CONSTITUTE A
WAIVER OF THIS ARBITRATION AGREEMENT OR BE PROHIBITED BY THIS ARBITRATION
AGREEMENT.

       THIS ARBITRATION PROVISION SHALL NOT LIMIT THE RIGHT OF EITHER PARTY
DURING ANY DISPUTE TO SEEK, USE, AND EMPLOY ANCILLARY OR PRELIMINARY RIGHTS
AND/OR REMEDIES, JUDICIAL OR OTHERWISE, FOR THE PURPOSES OF REALIZING UPON,
PRESERVING, PROTECTING, FORECLOSING UPON OR PROCEEDING UNDER FORCIBLE ENTRY AND
DETAINER FOR POSSESSION OF ANY REAL OR PERSONAL PROPERTY, AND ANY SUCH ACTION
SHALL NOT BE DEEMED AN ELECTION OF REMEDIES. SUCH REMEDIES INCLUDE, WITHOUT
LIMITATION, OBTAINING INJUNCTIVE RELIEF OR A TEMPORARY RESTRAINING ORDER,
INVOKING A POWER OF SALE UNDER ANY DEED OF TRUST OR MORTGAGE; OBTAINING A WRIT
OF ATTACHMENT OR IMPOSITION OF A RECEIVERSHIP; OR EXERCISING ANY RIGHTS RELATING
TO PERSONAL PROPERTY, INCLUDING EXERCISING THE RIGHT OF SETOFF, OR TAKING OR
DISPOSING OF SUCH PROPERTY WITH OR WITHOUT JUDICIAL PROCESS PURSUANT TO THE
UNIFORM COMMERCIAL CODE. ANY DISPUTES, CLAIMS, OR CONTROVERSIES CONCERNING THE
LAWFULNESS OR REASONABLENESS OF ANY ACT, OR EXERCISE OF ANY RIGHT OR REMEDY,
CONCERNING ANY COLLATERAL, INCLUDING ANY CLAIM TO RESCIND, REFORM, OR OTHERWISE
MODIFY ANY AGREEMENT RELATING TO THE COLLATERAL, SHALL ALSO BE ARBITRATED;
PROVIDED, HOWEVER THAT NO ARBITRATOR SHALL HAVE THE RIGHT OR THE POWER TO ENJOIN
OR RESTRAIN ANY ACT OF ANY PARTY. JUDGMENT UPON ANY AWARD RENDERED BY ANY
ARBITRATOR MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. THE STATUTE OF
LIMITATIONS, ESTOPPEL, WAIVER, LACHES AND SIMILAR DOCTRINES WHICH WOULD
OTHERWISE BE APPLICABLE IN AN ACTION BROUGHT BY A PARTY SHALL BE APPLICABLE IN
ANY ARBITRATION


                                       43
<PAGE>

PROCEEDING, AND THE COMMENCEMENT OF AN ARBITRATION PROCEEDING
SHALL BE DEEMED THE COMMENCEMENT OF ANY ACTION FOR THESE PURPOSE. THE FEDERAL
ARBITRATION ACT (TITLE 9 OF THE UNITED STATES CODE) SHALL APPLY TO THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT OF THIS ARBITRATION PROVISION.

       Dated as of June 5, 2000.


                                  INTELLICOAT CORPORATION,  a Delaware
                                  corporation



                                  By:________________________________________
                                     Michael E. Godlove, Chief Financial Officer




                                  AMERICAN NATIONAL BANK d/b/a OLD NATIONAL
                                  BANK, a national banking association



                                   By:_______________________________________
                                      John T. Travis, Vice President and
                                      Senior Lender





                                       44
<PAGE>

                              SCHEDULE OF EXHIBITS


Exhibit "A"     -     Promissory Note (Revolving Loan)($3,000,000.00)


Exhibit "B"     -     Promissory Note (Capital Expenditure Line of Credit)
                      ($1,000,000.00)


Exhibit "C"     -     Promissory Note (Capital Expenditure Term Loan)
                      ($1,000,000.00)


Exhibit "D"     -     Schedule of Exceptions


Exhibit "E"     -     Security Agreement (Equipment, Inventory, Accounts
                      Receivable, Chattel Paper, and General Intangibles)


Exhibit "F"     -     Mortgage, Security Agreement, Assignment of Rents and
                      Fixture Filing


Exhibit "G"     -     Subordination Agreement (Landec Corporation)


Exhibit "H"     -     Guaranty Agreement (Landec Corporation)


Exhibit "I"     -     Collateral Assignment of Licensing Agreement


Exhibit "J"     -     Intercreditor Agreement





                                       45
<PAGE>




                       FIRST AMENDMENT TO CREDIT AGREEMENT


     LANDEC AG, INC., formerly know as Intellicoat Corporation, a Delaware
corporation (the "Company") and OLD NATIONAL BANK, formerly known as American
National Bank, a national banking association (the "Bank"), being parties to
that certain Credit Agreement dated as of June 5, 2000 (the "Agreement"), hereby
agree to amend the Agreement by this First Amendment to Credit Agreement (this
"Amendment"), on the terms and subject to the conditions set forth as follows.


     1.   DEFINITIONS. Terms used in this Amendment with their initial letters
capitalized are used as defined in the Agreement, unless otherwise
defined herein.

     a.   AMENDED DEFINITIONS. The following definitions are hereby amended and
          restated in their respective entireties as follows:

          -    "ADVANCE" means a disbursement of proceeds of the Revolving Loan,
               the Capital Expenditure Line of Credit, or the Overline, as the
               context requires.

          -    "LOAN" means any of the Revolving Loan, the Capital Expenditure
               Line of Credit, the Overline, or the Capital Expenditure Term
               Loan, as the context requires, and when used in the plural form
               refers to all of the Loans.

          -    "LOAN DOCUMENT" means any of this Agreement, the Revolving Note,
               the Capital Expenditure Line of Credit Note, the Overline Note,
               the Capital Expenditure Term Note, the Mortgage, the Security
               Agreement, the Subordination Agreement, the Guaranty Agreement,
               the Assignment of Licensing Agreements, the Intercreditor
               Agreement, and any other instrument or document which evidences
               or secures the Loans or any of them or which expresses an
               agreement as to terms applicable to the Loans or any of them, and
               in the plural means any two or more of the Loan Documents, as the
               context requires.

          -    "NOTE" means any of the Revolving Note, the Capital Expenditure
               Line of Credit Note, the Overline Note, or the Capital
               Expenditure Term Note, as the context requires, and when used in
               the plural form refers to all of the Notes.




                                  Page 1 of 9


<PAGE>


          -    "OBLIGATIONS" means all obligations of the Company in favor of
               the Bank of every type and description, direct or indirect,
               absolute or contingent, due or to become due, now existing or
               hereafter arising pursuant to this Agreement and the other
               Loan Documents, including but not limited to: (i) all of such
               obligations on account of the Loans, including any Advances
               made pursuant to any extension of the Commitment beyond the
               initial Revolving Loan Maturity Date, any extension of the
               Capital Expenditure Line of Credit Commitment beyond the
               initial Capital Expenditure Line of Credit Maturity Date, any
               extension of the Overline Commitment beyond the initial
               Overline Maturity Date, or pursuant to any other amendment of
               this Agreement, and (ii) all other obligations arising under
               any Loan Document as amended from time to time.

     b.   NEW DEFINITIONS. The following definitions are hereby added to Section
          1 of the Agreement as follows:

          -    "FIRST AMENDMENT" means that agreement entitled "First Amendment
               to Credit Agreement" between the Company and the Bank dated as of
               December 15, 2000.

          -    "OVERLINE" is used as defined in Section 2(e)(i).

          -    "OVERLINE COMMITMENT" means the agreement of the Bank to extend
               the Overline to the Company until the Overline Maturity Date, and
               if the context so requires, the term may also refer to the
               maximum principal amount which is permitted to be outstanding
               under the Overline at any time.

          -    "OVERLINE MATURITY DATE" means January 15, 2001, and thereafter
               any subsequent date to which the Overline Commitment may be
               extended by the Bank pursuant to the terms of Section 2(e)(iv).

          -    "OVERLINE NOTE" is used as defined in Section 2(e)(ii).


     2.   OVERLINE. A new Section 2(e) is hereby added to the Agreement as
          follows:


     e.   THE OVERLINE. The Bank will make a revolving loan to the Company on
          the following terms and subject to the following conditions:




                                  Page 2 of 9


<PAGE>


          (i)  THE OVERLINE COMMITMENT -- USE OF PROCEEDS. From the date of the
               First Amendment and until the Overline Maturity Date, the Bank
               agrees to make Advances (collectively, the "Overline") under a
               revolving line of credit from time to time to the Company of
               amounts not exceeding in the aggregate at any time outstanding
               the lesser of (A) Two Million Four Hundred Thousand and 00/100
               Dollars ($2,400,000.00) (the "Overline Commitment") or (B) the
               remainder of the Borrowing Base minus the aggregate outstanding
               principal amount of the Revolving Loan, provided that all of the
               conditions of lending stated in this Agreement as being
               applicable to the Overline have been fulfilled at the time of
               each Advance. Proceeds of the Overline may be used by the Company
               only for working capital purposes.

          (ii) METHOD OF BORROWING. The obligation of the Company to repay the
               Overline shall be evidenced by a promissory note (the "Overline
               Note") of the Company in the form of EXHIBIT "A" attached to the
               First Amendment. So long as no Event of Default or Unmatured
               Event of Default shall have occurred and be continuing and until
               the Overline Maturity Date, the Company may borrow, repay and
               reborrow under the Overline Note on any Banking Day; provided,
               that no borrowing may cause the principal balance of the Overline
               to exceed the lesser of the Overline Commitment or the Borrowing
               Base or may result in an Event of Default or an Unmatured Event
               of Default, and provided further, that the Company may receive
               the proceeds of only one Advance per Banking Day. Each Advance
               under the Overline shall be conditioned upon receipt by the Bank
               from the Company of a Borrowing Base Certificate completed as of
               the date of the request. The Bank shall make a disbursement upon
               the oral request of the Company made by an Authorized Officer, or
               upon a request transmitted to the Bank by telephone facsimile
               ("fax") machine, or by any other form of written electronic
               communication (all such requests for Advances being hereafter
               referred to as "Informal Requests"). In so doing, the Bank may
               rely on any Informal Request which shall have been received by it
               in good faith from a person reasonably believed to be an
               Authorized Officer. Upon making each Informal Request, the
               Company shall promptly deliver to the Bank a Borrowing Base
               Certificate completed as of the date of such Informal Request,
               and shall in and of itself constitute the representation of the
               Company that no Event of Default or Unmatured Event of Default
               has occurred and is continuing or would result from the making of
               the requested




                                  Page 3 of 9


<PAGE>


               Advance, and that the making of the requested Advance shall not
               cause the principal balance of the Overline to exceed the lesser
               of the Overline Commitment or the Borrowing Base. All borrowings
               and reborrowings and all repayments shall be in amounts of not
               less than One Thousand Dollars ($1,000.00), except for repayment
               of the entire principal balance of the Overline and except for
               special prepayments of principal required under the terms of
               Section 2(e)(v). Upon receipt of a request for an Advance, a
               Borrowing Base Certificate, and upon compliance with any other
               conditions of lending stated in Section 7 of this Agreement
               applicable to the Overline, the Bank shall disburse the amount of
               the requested Advance to the Company. All Advances by the Bank
               and payments by the Company shall be recorded by the Bank on its
               books and records, and the principal amount outstanding from time
               to time, plus interest payable thereon, shall be determined by
               reference to the books and records of the Bank. The Bank's books
               and records shall be presumed PRIMA FACIE to be correct as to
               such matters.

         (iii) INTEREST ON THE OVERLINE. The principal amount of the Overline
               outstanding from time to time shall bear interest until maturity
               of the Overline Note at a rate per annum equal to the Prime Rate
               plus three-quarters percent (3/4%). After maturity, whether on
               the Overline Maturity Date or on account of acceleration upon the
               occurrence of an Event of Default, and until paid in full, the
               Overline shall bear interest at a per annum rate equal to the
               Prime Rate plus four and three-quarters percent (4-3/4%). Accrued
               interest shall be due and payable monthly on the last Banking Day
               of each month prior to maturity. After maturity, interest shall
               be payable as accrued and without demand.

          (iv) EXTENSIONS OF THE OVERLINE MATURITY DATE. The Bank may, upon the
               request of the Company, but at the Bank's sole discretion, extend
               the Overline Maturity Date from time to time to such date or
               dates as the Bank may elect by notice in writing to the Company,
               and upon any such extension and upon execution and delivery by
               the Company of a Overline Note reflecting the extended maturity
               date, the date to which the Commitment is then extended will
               become the "Overline Maturity Date" for purposes of this
               Agreement.

          (v)  SPECIAL REPAYMENTS OF PRINCIPAL. At any time the outstanding





                                  Page 4 of 9


<PAGE>


               principal balance of the Overline exceeds the maximum amount
               permitted pursuant to Section 2(e)(i)(B) herein (such amount
               hereinafter called the "Maximum Amount"), as determined on the
               basis of the most recent Borrowing Base Certificate furnished by
               the Company or as determined by the Bank upon an inspection of
               the books and records of the Company, the Company shall
               immediately repay that portion of the principal balance of the
               Overline which is in excess of such Maximum Amount. Such
               repayment shall be due without demand.

          (vi) COMMITMENT FEE. The Bank acknowledges receipt from the Company of
               the sum of $12,500.00, either previous to or contemporaneously
               with the execution of this First Amendment, as a fee for the
               Bank's commitment to make the Overline.

     3.   REPRESENTATIONS AND WARRANTIES. To induce the Bank to enter into this
Amendment, the Company affirms that the representations and warranties continued
in the Agreement are correct and accurate as of the date of this Amendment,
except that (i) they shall be deemed also to refer this Amendment, as well as
all documents named herein, and (ii) Section 3(d) shall be deemed also to refer
to the most recent audited and unaudited financial statements of the Company
furnished to the Bank.

     4.   EVENTS OF DEFAULT. The Company certifies to the Bank that no Event of
Default or Unmatured Event of Default under the Agreement has occurred and is
continuing as of the date of this Amendment.

     5.   CONDITIONS PRECEDENT. This Amendment shall become effective upon
receipt of the following by the Bank, duly executed and in form and substance
satisfactory to the Bank:

     a.   This Amendment.

     b.   The Overline Note.

     c.   The Amendment to Mortgage, Security Agreement, Assignment of Rents and
          Fixture Filing in the form attached hereto as EXHIBIT "B."

     d.   The Reaffirmation of Guaranty Agreement in the form attached hereto as
          EXHIBIT "C."




                                  Page 5 of 9


<PAGE>


     e.   The Acknowledgment and Consent of Subordinated Creditor in the form
          attached hereto as EXHIBIT "D."

     f.   UCC-1 Financing Statement to be filed with the Delaware Secretary of
          State.

     g.   UCC-3 Amendment to UCC-1 Financing Statement to be filed with the
          Indiana Secretary of State to amend UCC-1 Financing Statement Number
          2329223 filed on June 8, 2000.

     h.   UCC-4 Amendment to UCC-2 Financing Statement to be filed with the
          Recorder of White County, Indiana to amend UCC-2 Financing Statement
          Number 060000873 filed on June 14, 2000.

     i.   A certified copy of a Resolution of the Board of Directors of the
          Company authorizing the execution, delivery and performance of this
          Amendment and the other Loan Documents named herein to which the
          Company is a party.

     j.   A certificate of the Secretary of the Board of Directors of the
          Company certifying the names of the officer or officers authorized to
          sign this Amendment and other Loan Documents named herein to which the
          Company is a party.

     k.   A certified copy of a Resolution of the Board of Directors of Landec
          authorizing the execution, delivery and performance of the
          Reaffirmation of Guaranty Agreement, the Acknowledgment and Consent of
          Subordinated Creditor, and the other Loan Documents named herein to
          which Landec is a party.

     l.   A certificate of the Secretary of the Board of Directors of the Landec
          certifying the names of the officer or officers authorized to sign the
          Reaffirmation of Guaranty Agreement, the Acknowledgment and Consent of
          Subordinated Creditor, and other Loan Documents named herein to which
          Landec is a party.

     m.   A certified copy of the Articles of Amendment to the Articles of
          Incorporation filed with the Delaware Secretary of State to evidence
          the change of the name of the Company.

     n.   A certified copy of the Application for Amended Certificate of
          Authority approved by the Indiana Secretary of State to evidence the
          change of the




                                  Page 6 of 9


<PAGE>


          name of the Company.

          o.   Certificate of Good Standing issued as of a recent date by the
               Delaware Secretary of State evidencing the change of the name of
               the Company

          p.   Certificate of Existence issued as of a recent date by the
               Indiana Secretary of State evidencing the change of the name of
               the Company.

          q.   Payment of the commitment fee required under the terms of Section
               2(e)(vi).

          r.   Payment of the reasonable attorneys' fees of counsel for the Bank
               incurred in connection with the drafting and negotiation of this
               Amendment; and

          s.   Such other instruments, agreements, and documents as may be
               required by the Bank pursuant hereto.


          6.   EFFECT OF FIRST AMENDMENT. Except as amended by this Amendment,
all of the terms and conditions of the Agreement shall continue unchanged and in
full force and effect together with this Amendment.

     IN WITNESS WHEREOF, the Company and the Bank, by their respective duly
authorized officers, have executed and delivered in Indiana this First Amendment
to Credit Agreement as of December 15, 2000.



                                LANDEC AG, INC., formerly known as
                                Intellicoat Corporation, a Delaware corporation



                                By: ________________________________
                                    Michael E. Godlove, Chief Financial Officer




                                  Page 7 of 9


<PAGE>

                                OLD NATIONAL BANK,  formerly known as
                                American  National Bank, a national banking
                                association



                                By: ________________________________
                                    John T. Travis, Vice President and
                                    Senior  Lender




                                  Page 8 of 9


<PAGE>

<TABLE>
<CAPTION>

                              SCHEDULE OF EXHIBITS
                              --------------------
<S>                <C>        <C>
Exhibit "A"         -          Promissory Note (Overline) ($2,400,000.00)

Exhibit "B"         -          Amendment  to Mortgage,  Security  Agreement,
                               Assignment  of Rents and Fixture Filing

Exhibit "C"         -          Reaffirmation of Guaranty Agreement (Landec
                               Corporation)

Exhibit "D"         -          Acknowledgment   and   Consent   of   Subordinated
                               Creditor (Landec Corporation)
</TABLE>



                                  Page 9 of 9

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.30
<SEQUENCE>4
<FILENAME>a2036262zex-10_30.txt
<DESCRIPTION>EXHIBIT 10.30
<TEXT>

<PAGE>

                                                                   Exhibit 10.30

                         NEW EXECUTIVE STOCK OPTION PLAN

         1.       PURPOSES OF THE PLAN. The purposes of this Stock Option Plan
are to attract the best available personnel for positions of substantial
responsibility, to provide additional incentive to the new Officers of the
Company and its Subsidiaries and to promote the success of the Company's
business. Options granted hereunder shall be Nonstatutory Stock Options.

         2.       DEFINITIONS.  As used herein, the following definitions shall
apply:

                  (a)      "ADMINISTRATOR"  shall mean the Board or any of its
Committees appointed pursuant to Section 4 of the Plan.

                  (b)      "AFFILIATE" shall mean an entity other than a
Subsidiary (as defined below) in which the Company owns an equity interest.

                  (c)      "APPLICABLE  LAWS" shall have the meaning set forth
in Section 4(a) below.

                  (d)      "BOARD" shall mean the Board of Directors of the
Company.

                  (e)      "CODE"  shall mean the Internal Revenue Code of
1986, as amended.

                  (f)      "COMMITTEE" shall mean the Committee appointed by the
Board of Directors in accordance with Section 4(a) of the Plan, if one is
appointed.

                  (g)      "COMMON STOCK" shall mean the Common Stock of the
Company.

                  (h)      "COMPANY" shall mean Landec Corporation, a California
corporation.

                  (i)      "CONTINUOUS STATUS AS AN EMPLOYEE" shall mean the
absence of any interruption or termination of service as an Employee. Continuous
Status as an Employee shall not be considered interrupted in the case of sick
leave, military leave, or any other leave of absence approved by the
Administrator; provided that such leave is for a period of not more than 90 days
or reemployment upon the expiration of such leave is guaranteed by contract or
statute. For purposes of this Plan, a change in status from an Employee to a
consultant will not constitute a termination of employment.

                  (j)      "DIRECTOR" shall mean a member of the Board.

                  (k)      "EMPLOYEE" shall mean any person (including any Named
Executive, Officer or Director) employed by the Company or any Parent,
Subsidiary or Affiliate of the Company. The payment by the Company of a
director's fee to a Director shall not be sufficient to constitute "employment"
of such Director by the Company.

                  (l)      "EXCHANGE ACT" shall mean the  Securities  Exchange
Act of 1934, as amended.

<PAGE>

                  (m)      "FAIR MARKET  VALUE" means, as of any date, the value
of Common Stock determined as follows:

                           (i)      If the Common Stock is listed on any
established stock exchange or a national market system including without
limitation the National Market of the National Association of Securities
Dealers, Inc. Automated Quotation ("Nasdaq") System, its Fair Market Value shall
be the closing sales price for such stock as quoted on such system on the date
of determination (if for a given day no sales were reported, the closing bid on
that day shall be used), as such price is reported in The Wall Street Journal or
such other source as the Administrator deems reliable;

                           (ii)     If the Common Stock is quoted on the Nasdaq
System (but not on the National Market thereof) or regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the bid and asked prices for the Common
Stock or;

                           (iii)    In the absence of an established market for
the Common Stock, the Fair Market Value thereof shall be determined in good
faith by the Administrator.

                  (n)      "NAMED EXECUTIVE" shall mean any individual who, on
the last day of the Company's fiscal year, is the chief executive officer of the
Company (or is acting in such capacity) or among the four highest compensated
officers of the Company (other than the chief executive officer). Such officer
status shall be determined pursuant to the executive compensation disclosure
rules under the Exchange Act.

                  (o)      "NONSTATUTORY STOCK OPTION" shall mean an Option not
intended to qualify as an Incentive Stock Option, as designated in the
applicable written option agreement.

                  (p)      "OFFICER" shall mean a person who is an officer of
the Company within the meaning of Section 16 of the Exchange Act and the rules
and regulations promulgated thereunder.

                  (q)      "OPTION" shall mean a stock option granted pursuant
to the Plan.

                  (r)      "OPTIONED STOCK" shall mean the Common Stock subject
to an Option.

                  (s)      "OPTIONEE"  shall mean an Employee who receives an
Option.

                  (t)      "PARENT" shall mean a "parent corporation," whether
now or hereafter existing, as defined in Section 424(e) of the Code.

                  (u)      "PLAN" shall mean this New Executive Stock Option
Plan.

<PAGE>

                  (v)      "RULE 16b-3" shall mean Rule 16b-3 promulgated under
the Exchange Act as the same may be amended from time to time, or any successor
provision.

                  (w)      "SHARE" shall mean a share of the Common Stock, as
adjusted in accordance with Section 13 of the Plan.

                  (x)      "SUBSIDIARY"  shall mean a "subsidiary  corporation,"
whether now or hereafter existing, as defined in Section 424(f) of the Code.

         3.       STOCK SUBJECT TO THE PLAN.  Subject to the  provisions of
Section 13 of the Plan, the maximum aggregate number of shares that may be
optioned and sold under the Plan is 210,000 shares of Common Stock. The Shares
may be authorized, but unissued, or reacquired Common Stock.

         If an Option should expire or become unexercisable for any reason
without having been exercised in full the unpurchased Shares that were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan. Notwithstanding any other provision of the Plan,
shares issued under the Plan and later repurchased by the Company shall not
become available for future grant under the Plan.

         4.       ADMINISTRATION OF THE PLAN.

                  (a)      COMPOSITION OF ADMINISTRATOR.

                           (i)      ADMINISTRATION.  Grants under the Plan shall
be made by (A) the Board, if the Board may make grants under the Plan in
compliance with Rule 16b-3, or (B) a Committee designated by the Board to make
grants under the Plan, which Committee shall be constituted in such a manner as
to permit grants under the Plan to comply with Rule 16b-3 and otherwise so as to
satisfy the Applicable Laws.

                           (ii)     GENERAL.  If a Committee has been appointed
pursuant to subsection (i) of this Section 4(a), such Committee shall continue
to serve in its designated capacity until otherwise directed by the Board. From
time to time the Board may increase the size of any Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies (however caused) and remove
all members of a Committee and thereafter directly administer the Plan, all to
the extent permitted by the Applicable Laws and, in the case of a Committee
appointed under subsection (i), to the extent permitted by Rule 16b-3.

                  (b)      POWERS OF THE ADMINISTRATOR. Subject to the
provisions of the Plan and in the case of a Committee, the specific duties
delegated by the Board to such Committee, the Administrator shall have the
authority, in its discretion:

                           (i)      to determine the Fair Market Value of the
Common Stock, in accordance with Section 2(m) of the Plan;

<PAGE>

                           (ii)     to select the new Officers of the Company or
its Subsidiaries to whom Options may from time to time be granted hereunder;

                           (iii)    to determine whether and to what extent
Options are granted hereunder;

                           (iv)     to determine the number of shares of Common
Stock to be covered by each such award granted hereunder;

                           (v)      to approve forms of agreement for use under
the Plan;

                           (vi)     to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder
(including, but not limited to, the share price and any restriction or
limitation, or any vesting acceleration or waiver of forfeiture restrictions
regarding any Option and/or the shares of Common Stock relating thereto, based
in each case on such factors as the Administrator shall determine, in its sole
discretion);

                           (vii)    to reduce the exercise price of any Option
to the then current Fair Market Value if the Fair Market Value of the Common
Stock covered by such Option shall have declined since the date the Option was
granted.

                  (c)      EFFECT OF ADMINISTRATOR'S DECISION. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options.

         5.       ELIGIBILITY.

                  (a)      RECIPIENTS OF GRANTS. Nonstatutory Stock Options may
be granted to Officers of the Company or any of its Subsidiaries whose
employment with the Company or its Subsidiaries began after October 24, 2000.

                  (b)      NO EMPLOYMENT RIGHTS. The Plan shall not confer upon
any Optionee any right with respect to continuation of employment or consulting
relationship with the Company, nor shall it interfere in any way with his or her
right or the Company's right to terminate his or her employment relationship at
any time, with or without cause.

         6.       TERM OF PLAN.  The Plan shall become effective upon its
adoption by the Board. It shall continue in effect for a term of five (5) years
unless sooner terminated under Section 15 of the Plan.

         7.       TERM OF OPTION.  The term of each Option shall be the term
stated in the Option Agreement.

         8.       OPTION EXERCISE PRICE AND CONSIDERATION.

<PAGE>

                  (a)      EXERCISE PRICE.  The per Share exercise price for the
Shares to be issued pursuant to exercise of an Option shall be such price as is
determined by the Administrator, but shall be subject to the following:

                           (i)      Options granted to a person who, at the time
of the grant of such Option, is a Named Executive of the Company, the per share
Exercise Price shall be no less than 100% of the Fair Market Value on the date
of grant; or

                           (ii)     Options granted to any person other than a
Named Executive, the per Share exercise price shall be no less than 85% of the
Fair Market Value per Share on the date of grant.

                           (iii)    Notwithstanding anything to the contrary in
subsections 8(a)(i) or 8(a)(ii) above, in the case of an Option granted on or
after the effective date of registration of any class of equity security of the
Company pursuant to Section 12 of the Exchange Act and prior to six months after
the termination of such registration, the per Share exercise price shall be no
less than 100% of the Fair Market Value per Share on the date of grant.

                  (b)      PERMISSIBLE CONSIDERATION. The consideration to be
paid for the Shares to be issued upon exercise of an Option, including the
method of payment, shall be determined by the Administrator and may consist
entirely of (1) cash, (2) check, (3) authorization from the Company to retain
from the total number of Shares as to which the Option is exercised that number
of Shares having a Fair Market Value on the date of exercise equal to the
exercise price for the total number of Shares as to which the Option is
exercised, (4) delivery of a properly executed exercise notice together with
irrevocable instructions to a broker to deliver promptly to the Company the
amount of sale or loan proceeds required to pay the exercise price, (5) any
combination of the foregoing methods of payment, or (6) such other consideration
and method of payment for the issuance of Shares to the extent permitted under
Applicable Laws. In making its determination as to the type of consideration to
accept, the Administrator shall consider if acceptance of such consideration may
be reasonably expected to benefit the Company.

         9.       EXERCISE OF OPTION.

                  (a)      PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Administrator, including performance criteria
with respect to the Company and/or the Optionee, and as shall be permissible
under the terms of the Plan. An Option may not be exercised for a fraction of a
Share. An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any

<PAGE>

other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 13 of the Plan. Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.

                  (b)      TERMINATION OF STATUS AS AN EMPLOYEE. In the event of
termination of an Optionee's Continuous Status as an Employee, such Optionee
may, but only within thirty (30) days (or such other period of time, not
exceeding six (6) months, as is determined by the Administrator) after the date
of such termination (but in no event later than the date of expiration of the
term of such Option as set forth in the Option Agreement), exercise his or her
Option to the extent that he or she was entitled to exercise it at the date of
such termination. To the extent that the Optionee was not entitled to exercise
the Option at the date of such termination, or if the Optionee does not exercise
such Option (which he or she was entitled to exercise) within the time specified
herein, the Option shall terminate.

                  (c)      DISABILITY OF OPTIONEE. Notwithstanding Section 9(b)
above, in the event of termination of an Optionee's Continuous Status as an
Employee as a result of his or her total and permanent disability (as defined in
Section 22(e)(3) of the Code), he or she may, but only within six (6) months (or
such other period of time not exceeding twelve (12) months as is determined by
the Administrator) from the date of such termination (but in no event later than
the date of expiration of the term of such Option as set forth in the Option
Agreement), exercise his or her Option to the extent he or she was entitled to
exercise it at the date of such termination. To the extent that he or she was
not entitled to exercise the Option at the date of termination, or if he does
not exercise such Option (which he was entitled to exercise) within the time
specified herein, the Option shall terminate.

                  (d)      DEATH OF OPTIONEE. In the event of the death of an
Optionee:

                           (i)      during the term of the Option who is at the
time of his death an Employee of the Company and who shall have been in
Continuous Status as an Employee since the date of grant of the Option, the
Option may be exercised, at any time within six (6) months (or such other period
of time, not exceeding six (6) months, as is determined by the Administrator)
following the date of death (but in no event later than the date of expiration
of the term of such Option as set forth in the Option Agreement), by the
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance but only to the extent of the right to exercise that
would have accrued had the Optionee continued living and remained in Continuous
Status as an Employee three (3) months (or such other period of time as is
determined by the Administrator as provided above) after the date of death,
subject to the limitation set forth in Section 5(b); or

                           (ii)     within thirty (30) days (or such other
period of time not exceeding three (3) months as is determined by the
Administrator) after the termination of Continuous Status as an Employee, the
Option may be exercised, at any time within six (6) months

<PAGE>

following the date of death (but in no event later than the date of expiration
of the term of such Option as set forth in the Option Agreement), by the
Optionee' s estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the right to exercise that
had accrued at the date of termination.

                  (e)      RULE 16b-3. Options granted to persons subject to
Section 16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain
such additional conditions or restrictions as may be required thereunder to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.

         10.      WITHHOLDING TAXES. As a condition to the exercise of Options
granted hereunder, the Optionee shall make such arrangements as the
Administrator may require for the satisfaction of any federal, state, local or
foreign withholding tax obligations that may arise in connection with the
exercise, receipt or vesting of such Option. The Company shall not be required
to issue any Shares under the Plan until such obligations are satisfied.

         11.      STOCK WITHHOLDING TO SATISFY WITHHOLDING TAX OBLIGATIONS. At
the discretion of the Administrator, Optionees may satisfy withholding
obligations as provided in this paragraph. When an Optionee incurs tax liability
in connection with an Option which tax liability is subject to tax withholding
under applicable tax laws, and the Optionee is obligated to pay the Company an
amount required to be withheld under applicable tax laws, the Optionee may
satisfy the withholding tax obligation by one or some combination of the
following methods: (a) by cash payment, or (b) out of Optionee's current
compensation, or (c) if permitted by the Administrator, in its discretion, by
surrendering to the Company Shares that (i) in the case of Shares previously
acquired from the Company, have been owned by the Optionee for more than six
months on the date of surrender, and (ii) have a fair market value on the date
of surrender equal to or less than Optionee's marginal tax rate times the
ordinary income recognized, or (d) by electing to have the Company withhold from
the Shares to be issued upon exercise of the Option that number of Shares having
a fair market value equal to the amount required to be withheld. For this
purpose, the fair market value of the Shares to be withheld shall be determined
on the date that the amount of tax to be withheld is to be determined (the "Tax
Date").

                  Any surrender by an Officer or Director of previously owned
Shares to satisfy tax withholding obligations arising upon exercise of this
Option must comply with the applicable provisions of Rule 16b-3.

                  All elections by an Optionee to have Shares withheld to
satisfy tax withholding obligations shall be made in writing in a form
acceptable to the Administrator and shall be subject to the following
restrictions:

                  (a)      the election must be made on or prior to the
applicable Tax Date;

                  (b)      once made, the election shall be irrevocable as to
the particular Shares of the Option as to which the election is made; and

<PAGE>

                  (c)      all elections shall be subject to the consent or
disapproval of the Administrator.

                  In the event the election to have Shares withheld is made by
an Optionee and the Tax Date is deferred under Section 83 of the Code because no
election is filed under Section 83(b) of the Code, the Optionee shall receive
the full number of Shares with respect to which the Option is exercised but such
Optionee shall be unconditionally obligated to tender back to the Company the
proper number of Shares on the Tax Date.

         12.      NON-TRANSFERABILITY OF OPTIONS. The Option may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution; provided that the
Administrator may in its discretion grant transferable Nonstatutory Stock
Options pursuant to option agreements specifying (i) the manner in which such
Nonstatutory Stock Options are transferable and (ii) that any such transfer
shall be subject to the Applicable Laws. The designation of a beneficiary by an
Optionee will not constitute a transfer. An Option may be exercised, during the
lifetime of the Optionee, only by the Optionee or a transferee permitted by this
Section 12.

         13.      ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CORPORATE
TRANSACTIONS.

                  (a)      ADJUSTMENT. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, the number of shares of Common Stock that have been
authorized for issuance under the Plan but as to which no Options have yet been
granted or which have been returned to the Plan upon cancellation or expiration
of an Option, the maximum number of shares of Common Stock for which Options may
be granted to any employee under Section 8 of the Plan, and the price per share
of Common Stock covered by each outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the
Administrator, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option.

                  (b)      CORPORATE TRANSACTIONS. In the event of the proposed
dissolution or liquidation of the Company, the Option will terminate immediately
prior to the consummation of such proposed action, unless otherwise provided by
the Administrator. The Administrator may, in the exercise of its sole discretion
in such instances, declare that any Option shall terminate as of a date fixed by
the Administrator and give each Optionee the right to exercise his or her Option
as to all or any part of the Optioned Stock, including Shares as to which the
Option would not otherwise be exercisable. In the event of a proposed sale of
all or substantially all

<PAGE>

of the assets of the Company, or the merger of the Company with or into another
corporation, the Option shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation, unless the Administrator determines, in the exercise of
its sole discretion and in lieu of such assumption or substitution, that the
Optionee shall have the right to exercise the Option as to some or all of the
Optioned Stock, including Shares as to which the Option would not otherwise be
exercisable. If the Administrator makes an Option exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee that the Option shall be exercisable for
a period of fifteen (15) days from the date of such notice, and the Option will
terminate upon the expiration of such period.

         14.      TIME OF GRANTING OPTIONS. The date of grant of an Option
shall, for all purposes, be the date on which the Administrator makes the
determination granting such Option or such other date as is determined by the
Administrator. Notice of the determination shall be given to each Employee to
whom an Option is so granted within a reasonable time after the date of such
grant.

         15.      AMENDMENT AND TERMINATION OF THE PLAN.

                  (a)      AMENDMENT AND TERMINATION. The Board may amend or
terminate the Plan from time to time in such respects as the Board may deem
advisable.

                  (b)      EFFECT OF AMENDMENT OR TERMINATION. Any such
amendment or termination of the Plan shall not affect Options already granted
and such Options shall remain in full force and effect as if this Plan had not
been amended or terminated, unless mutually agreed otherwise between the
Optionee and the Board, which agreement must be in writing and signed by the
Optionee and the Company.

         16.      CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.

                  As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.

         17.      RESERVATION OF SHARES. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan. The inability of
the Company to obtain authority from any regulatory body having jurisdiction,
which authority is deemed by the Company's counsel to

<PAGE>

be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.

         18.      OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Board shall approve.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>5
<FILENAME>a2036262zex-23_1.txt
<DESCRIPTION>EXHIBIT 23.1
<TEXT>

<PAGE>

                                                                   Exhibit 23.1


                      Consent of Independent Auditors


We consent to the incorporation by reference in the Registration Statement
(Form S-8 Nos. 333-06163 and 333-29103) pertaining to the 1995 Employee Stock
Purchase Plan, 1995 Directors' Stock Option Plan, 1996 Stock Option Plan and
1996 Non-Executive Stock Option Plan, of our report dated December 22, 2000,
with respect to the consolidated financial statements and schedules of Landec
Corporation included in this Annual Report (Form 10-K) for the year ended
October 29, 2000.

                                                          /s/ Ernst & Young LLP

San Francisco, California
January 24, 2001



</TEXT>
</DOCUMENT>
</SUBMISSION>
