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<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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

                 FOR THE FISCAL QUARTER ENDED APRIL 29, 2001, 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

     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 at least the past 90 days.

                                    Yes   X        No
                                        -----        -----

     As of May 25, 2001, there were 16,348,138 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, outstanding.



<PAGE>


                               LANDEC CORPORATION

                 FORM 10-Q For the Quarter Ended April 29, 2001

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                               Page
<S>            <C>                                                                                             <C>

               Facing sheet                                                                                     1

               Index                                                                                            2

PART I.        FINANCIAL INFORMATION

Item 1.        a)     Consolidated condensed balance sheets as of April 29, 2001 and October 29, 2000           3

               b)     Consolidated statements of operations for the three months and six months ended
                      April 29, 2001 and April 30, 2000.                                                        4

               c)     Consolidated statements of cash flows for the six months ended April 29, 2001 and
                      April 30, 2000.                                                                           5

               d)     Notes to consolidated financial statements                                                6

Item 2.        Management's Discussion and Analysis of Financial Condition and Results of Operations            10

Item 3.        Quantitative and Qualitative Disclosures About Market Risk                                       19

PART II.       OTHER INFORMATION                                                                                20

Item 1.        Legal Proceedings                                                                                20

Item 2.        Changes in Securities and Use of Proceeds                                                        20

Item 3.        Defaults Upon Senior Securities                                                                  20

Item 4.        Submission of Matters to a Vote of Security Holders                                              20

Item 5.        Other Information                                                                                21

Item 6.        Exhibits and Reports on Form 8-K                                                                 21

               a)     Exhibits                                                                                  21

               b)     Reports on Form 8-K                                                                       21

               Signature                                                                                        22

               Index to Exhibits                                                                                23
</TABLE>

                                      -2-

<PAGE>

                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                               LANDEC CORPORATION
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                                   (UNAUDITED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                  April 29,    October 29,
                                                                    2001         2000
                                                                  ---------    ---------
<S>                                                               <C>          <C>
                            ASSETS
Current Assets:
   Cash and cash equivalents                                      $   5,937    $   9,589
   Accounts receivable, less allowance for doubtful accounts of
     $587 and $627 at April 29, 2001 and October 29, 2000            19,469       22,725
   Inventory                                                         17,853       14,501
   Investment in farming activities                                     288        2,672
   Notes and advances receivable                                      6,901        8,519
   Notes receivable, related party                                      156          151
   Prepaid expenses and other current assets                          1,861        1,958
   Assets held for sale                                               3,014        2,963
                                                                  ---------    ---------

Total Current Assets                                                 55,479       63,078

Property and equipment, net                                          27,021       24,437
Intangible assets, net                                               42,148       43,386
Notes receivable                                                        689          720
Other assets                                                            886        1,631
                                                                  ---------    ---------
                                                                  $ 126,223    $ 133,252
                                                                  =========    =========

              LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
   Accounts payable                                               $  22,012    $  19,374
   Grower payables                                                    2,859       13,651
   Related party payables                                               381          262
   Accrued compensation                                               1,449        2,470
   Other accrued liabilities                                          9,037        9,522
   Deferred revenue                                                     560        2,265
   Lines of credit                                                   16,666        9,609
   Current maturities of long term debt                               3,757        3,584
                                                                  ---------    ---------
Total Current Liabilities                                            56,721       60,737

Long term debt, less current maturities                              14,597       16,631
Other liabilities                                                     2,087        2,442
Minority interest                                                     1,070        1,264
                                                                  ---------    ---------
Total Liabilities                                                    74,475       81,074

Shareholders' Equity:
Preferred stock                                                       9,149        9,149
Common stock                                                         92,882       92,555
Accumulated deficit                                                 (50,283)     (49,526)
                                                                  ---------    ---------
Total Shareholders' Equity                                           51,748       52,178
                                                                  ---------    ---------
                                                                  $ 126,223    $ 133,252
                                                                  =========    =========
</TABLE>

                             SEE ACCOMPANYING NOTES.


                                     -3-

<PAGE>


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

<TABLE>
<CAPTION>
                                                            Three Months Ended             Six Months Ended
                                                        ------------------------      -------------------------
                                                        April 29,   April 30, 2000    April 29,   April 30, 2000
                                                          2001        (restated)         2001        (restated)
                                                        ---------      ---------      ---------      ---------
<S>                                                     <C>            <C>            <C>            <C>
Revenues:
     Product sales                                      $  47,010      $  43,481      $  80,035      $  65,543
     Services revenue                                      14,422         16,943         28,879         27,989
     Services revenue, related party                          615            202          1,028            761
     Research and development revenues                        122            145            229            275
     License fees                                              93             93            187            187
                                                        ---------      ---------      ---------      ---------
Total revenues                                             62,262         60,864        110,358         94,755

Cost of revenue:
     Cost of product sales                                 36,220         33,406         65,099         52,182
     Cost of product sales, related party                      93             80            107            138
     Cost of services revenue                              13,940         14,899         27,319         25,599
                                                        ---------      ---------      ---------      ---------
Total cost of revenue                                      50,253         48,385         92,525         77,919

Gross profit                                               12,009         12,479         17,833         16,836

Operating costs and expenses:
     Research and development                               1,102          1,103          2,217          2,154
     Selling, general and administrative                    7,290          8,133         15,450         13,886
                                                        ---------      ---------      ---------      ---------
Total operating costs and expenses                          8,392          9,236         17,667         16,040
                                                        ---------      ---------      ---------      ---------
Operating profit                                            3,617          3,243            166            796

Interest income                                               169            274            310            416
Interest expense                                             (620)          (709)        (1,285)        (1,039)
Other income                                                   16            100             52             95
                                                        ---------      ---------      ---------      ---------
Net income (loss) before the cumulative effect of
   change in accounting principle                           3,182          2,908           (757)           268


Cumulative effect of change in accounting principle          --             --             --           (1,914)
                                                        ---------      ---------      ---------      ---------
Net income (loss)                                       $   3,182      $   2,908      $    (757)     $  (1,646)
                                                        =========      =========      =========      =========
Amounts per common share:
   Net income (loss) before cumulative effect of
     change in accounting principle                     $    0.20      $    0.18      $   (0.05)     $    0.01

   Cumulative effect of change in accounting
     principle                                               --             --             --            (0.12)
                                                        ---------      ---------      ---------      ---------

Basic net income (loss) per share                       $    0.20      $    0.18      $   (0.05)     $   (0.11)
                                                        =========      =========      =========      =========
   Net income (loss) before cumulative effect of
     change in accounting principle                     $    0.15      $    0.13      $   (0.05)     $    0.01
   Cumulative effect of change in accounting
     principle                                               --             --             --            (0.12)
                                                        ---------      ---------      ---------      ---------
Diluted net income (loss) per share                     $    0.15      $    0.13      $   (0.05)     $   (0.11)
                                                        =========      =========      =========      =========
Shares used in per share computation:
         Basic                                             16,306         15,993         16,228         15,537
                                                        =========      =========      =========      =========
         Diluted                                           18,357         18,558         16,228         15,537
                                                        =========      =========      =========      =========
</TABLE>

                             SEE ACCOMPANYING NOTES.

                                      -4-

<PAGE>

                               LANDEC CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                   Six Months Ended
                                                                                April 29,  April 30, 2000
                                                                                  2001       (restated)
                                                                                 -------       -------
<S>                                                                             <C>           <C>
Cash flows from operating activities:
Net income (loss)                                                               $   (757)     $    268
Adjustments to reconcile net income (loss) to net cash used in operating
activities:
     Depreciation and amortization                                                 3,139         2,701
     Cumulative effect of change in accounting principle                            --           1,914
     Disposal of property and equipment                                              486          --
     Changes in current assets and liabilities:
         Accounts receivable                                                       3,256        (4,013)
         Inventory                                                                (3,352)       (2,330)
         Investment in farming activities                                          2,384         1,467
         Prepaid expenses and other current assets                                    97         1,069
         Accounts payable                                                          2,638         7,681
         Grower payables                                                         (10,792)         (197)
         Related party payables                                                      119           157
         Accrued compensation                                                     (1,021)         (344)
         Other accrued liabilities                                                  (485)       (3,654)
         Deferred revenue                                                         (1,705)       (4,125)
                                                                                 -------       -------
     Total adjustments                                                            (5,236)          326
                                                                                 -------       -------
Net cash (used in) provided by operating activities                               (5,993)          594
                                                                                 -------       -------

Cash flows from investing activities:
Decrease in other assets and liabilities                                             390           500
Purchases of property and equipment                                               (4,657)       (1,727)
Decrease (increase) in notes receivable and advances                               1,644        (4,621)
Acquisition costs related to earn-out provisions                                    (363)         (407)
Acquisition of Apio, Inc., net of cash received                                     --          (5,813)
                                                                                 -------       -------
Net cash used in investing activities                                             (2,986)      (12,068)

Cash flows from financing activities:
Proceeds from sale of preferred stock                                               --           9,149
Proceeds from sale of common stock                                                   327           308
Borrowings on lines of credit                                                     21,459         6,177
Payments on lines of credit                                                      (14,402)         --
Borrowing of long term debt                                                          250          --
Repayment of long term debt                                                       (2,113)         (647)
Increase (decrease) in minority interest liability                                    19           (18)
Distributions to minority interest                                                  (213)         (245)
                                                                                 -------       -------
Net cash provided by financing activities                                          5,327        14,724

Net increase (decrease) in cash and cash equivalents                              (3,652)        3,250
Cash and cash equivalents at beginning of period                                   9,589         3,203
                                                                                 -------       -------
Cash and cash equivalents at end of period                                         5,937      $  6,453
                                                                                 =======       =======
</TABLE>

                             SEE ACCOMPANYING NOTES.

                                      -5-
<PAGE>


                               LANDEC CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    UNAUDITED



1.   BASIS OF PRESENTATION

     The accompanying unaudited consolidated financial statements of Landec
Corporation ("Landec" or the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions for Form 10-Q and Article 10 of Regulation S-X. In the
opinion of management, all adjustments (consisting of normal recurring accruals)
necessary to present fairly the financial position, results of operations, and
cash flows at April 29, 2001, and for all periods presented, have been made.
Although Landec believes that the disclosures in these financial statements are
adequate to make the information presented not misleading, certain information
normally included in financial statements and related footnotes prepared in
accordance with generally accepted accounting principles have been condensed or
omitted per the rules and regulations of the Securities and Exchange Commission.
The accompanying financial data should be reviewed in conjunction with the
audited financial statements and accompanying notes included in Landec's Annual
Report on Form 10-K for the fiscal year ended October 29, 2000.

     The results of operations for the six month period ended April 29, 2001 are
not necessarily indicative of the results that may be expected for the fiscal
year ended October 28, 2001. For instance, due to the cyclical nature of the
corn seed industry, a significant portion of revenues and profits for Landec Ag,
Landec's agricultural technology subsidiary, is concentrated over a few months
during the spring planting season (generally during Landec's second fiscal
quarter).

2.   RECENT PRONOUNCEMENTS

     As of October 30, 2000, the Company adopted the Statement of Financial
Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative
Instruments and Hedging Activities," as amended in June 2000 by Statement of
Financial Accounting Standards No. 138 ("SFAS 138"), "Accounting for Certain
Derivative Instruments and Certain Hedging Activities," which requires companies
to recognize all derivatives as either assets or liabilities in the balance
sheet and measure such instruments at fair value. The adoption of these
statements did not have a material impact on the Company's consolidated
financial statements.

3.   RECLASSIFICATIONS

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

                                      -6-

<PAGE>


4.   NET INCOME PER SHARE


     The following table sets forth the computation of basic and diluted net
income for the periods with net income (in thousands except per share amounts):

<TABLE>
<CAPTION>
                                                             Three Months     Three Months
                                                                Ended             Ended
                                                            April 29, 2001   April 30, 2000
                                                            --------------   --------------
<S>                                                           <C>            <C>
Numerator:
Net income for basic net income per share                      $  3,182        $  2,908
Less:  Minority interest in income of subsidiary                   (458)           (551)
                                                               --------        --------
Net income for diluted net income per share                    $  2,724        $  2,357

Denominator:
Weighted average shares for basic net income per share           16,306          15,993
Effect of dilutive securities:
   Stock Options                                                    384             898
   Convertible preferred stock                                    1,667           1,667
                                                               --------        --------
Total dilutive common shares                                      2,051           2,565

Weighted average shares for diluted net income per share         18,357          18,558

Basic net income per share                                     $   0.20        $   0.18
Diluted net income per share                                   $   0.15        $   0.13
</TABLE>


5.   REVENUE RECOGNITION AND RESTATEMENT

     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. On 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 the Staff Accounting Bulletin ("SAB") 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 originally reported
as a charge in the quarter ended October 29, 2000. SAB No. 101 was adopted in
accordance with APB No. 2 and accordingly the financial statements for the six
months ended April 29, 2000 have been restated as if the provisions of SAB No.
101 had been applied at the beginning of the year of adoption. The cumulative
effect was recorded as deferred revenue and is being recognized as revenue over
the research and development period or supply period commitment of the
agreement. For the three months and six months ended April 29, 2001 and April
30, 2000, $93,000 and $187,000, respectively, of the related deferred revenue
was recognized as "recycled" revenue.

                                      -7-



<PAGE>


6.   INVENTORIES

     Inventories are stated at the lower of cost (first-in, first-out method) or
market and consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                         April 29,     October 29,
                                           2001           2000
                                          -------       -------
<S>                                       <C>           <C>
     Finished goods.....................  $ 9,167       $ 5,889
     Raw material.......................    7,745         7,661
     Work in process....................      941           951
                                          -------       -------

                                          $17,853       $14,501
                                          =======       =======
</TABLE>


7.   REVOLVING DEBT AND AMENDMENT TO CREDIT AGREEMENT

     The $7.1 million increase in the Company's lines of credit during the first
six months of fiscal year 2001 was due to seasonal needs at Landec Ag for seed
corn purchases that will be carried over and sold in fiscal year 2002 and for
sourcing of produce at Apio, Inc. ("Apio") which requires up-front investments
of cash.

     In February 2001, the Apio revolving line of credit was amended. The
amendment reduces the maximum borrowings from $12.0 million to $10.0 million but
increases the computed amount available under the line, determined as a
percentage of certain eligible assets (primarily receivables) by $4.0 million
through March 31, 2001 and $2.0 million from April 1, 2001 through July 31,
2001. The amendment also precludes the payment of earn-outs due under the Apio
purchase agreement until August 2001.

     In April 2001, the Apio revolving line of credit was further amended. The
amendment increases the maximum borrowings to $12.0 million from $10.0 million
until July 31, 2001 and increased the interest rate margin by 75 basis points
from prime plus .50% to prime plus 1.25%. In addition, the computed amount
available under the line as determined as a percentage of certain eligible
assets (primarily receivables) was increased by $4.0 million through July 31,
2001 and capital expenditure limits for fiscal year 2001 were increased from
$3.3 million up to $5.7 million based on the additional $2.4 million being
financed by a third party lender.

     In May 2001, Apio entered into a lease agreement to fund the purchase of an
ERP business system. Terms of the agreement are 36 months at an average annual
interest rate of 11% with a fair market value buyout at the end of the term.
Security for the lease is the hardware portion plus a Letter of Credit ("LOC")
equal to 50% of the non-hardware portion of the lease. As of June 12, 2001 the
LOC balance was $740,000.

8.   BUSINESS SEGMENT REPORTING

     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 whole and
fresh-cut vegetables that incorporate the Intellipac-TM- breathable membrane for
the retail grocery, club store and food services industry through its Apio
subsidiary. The amounts presented for the first six months of fiscal year 2000
include the results of Apio from the effective close date of November 29, 1999
through April 30, 2000. 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. 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.

                                      -8-

<PAGE>



Operations by Business Segment (in thousands):



<TABLE>
<CAPTION>
                                                                     Agricultural
                                                  Food Products         Seed           Corporate
Quarter ended April 29, 2001                       Technology        Technology        and Other        TOTAL
-------------------------------------------       --------------   --------------   --------------    ---------
<S>                                              <C>               <C>              <C>               <C>
Net sales..................................      $     43,379      $      15,685       $   3,198      $  62,262
Net income (loss)..........................      $       (462)     $       4,049       $    (405)     $   3,182

Quarter ended April 30, 2000
-------------------------------------------
Net sales..................................      $     40,896      $      16,399       $   3,569      $  60,864
Net income (loss)..........................      $     (1,588)     $       4,468       $      28      $   2,908

Six months ended April 29, 2001
-------------------------------------------
Net sales..................................      $     88,299      $      15,737       $   6,322      $ 110,358
Net income (loss)..........................      $     (1,283)     $       1,462       $    (936)     $    (757)

Six months ended April 30, 2000
-------------------------------------------
Net sales..................................      $     71,129      $      16,654       $   6,972      $  94,755
Net income (loss) before cumulative effect of
   change in accounting principle..........      $     (1,834)     $       2,022       $      80      $     268
</TABLE>

                                     -9-
<PAGE>



ITEM 2.

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following discussion should be read in conjunction with the unaudited
consolidated financial statements and accompanying notes included in Part
I--Item 1 of this Form 10-Q and the audited consolidated financial statements
and accompanying notes and Management's Discussion and Analysis of Financial
Condition and Results of Operations included in Landec's Annual Report on Form
10-K for the fiscal year ended October 29, 2000.

     Except for the historical information contained herein, the matters
discussed in this report are forward-looking statements within the meaning of
Section 21E of the Securities and Exchange Act of 1934. These forward-looking
statements 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," and those mentioned in Landec's Annual
Report on Form 10-K for the fiscal year ended October 29, 2000. Landec
undertakes no obligation to revise any forward-looking statements in order to
reflect events or circumstances that may arise after the date of this report.

OVERVIEW

     Landec Corporation and its subsidiaries ("Landec" or the "Company") design,
develop, manufacture and sell temperature-activated and other polymer products
for a variety of food products, agricultural products, and licensed partner
applications. This proprietary polymer technology is the foundation, and key
differentiating advantage, upon which Landec 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 Landec
acquired Apio, Inc. and certain related entities (collectively "Apio").

     Landec's Agricultural Seed Technology business, operated through its wholly
owned subsidiary Landec Ag, combines Landec's proprietary seed coating
technology with a unique Fielder's Choice Direct system of selling called
eDC(TM) - e-commerce, direct marketing and consultative sales.

     In addition to its core businesses, Landec also operates a Technology
Licensing/Research and Development Business which licenses products to industry
leaders such as Alcon Laboratories, Inc., Nitta Corporation and Hitachi
Chemicals. It also engages in research and development activities with companies
such as ConvaTec, a division of Bristol-Myers Squibb, and UCB Chemicals
Corporation.

     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 addition
to providing manufacturing capabilities, Dock Resins sells industrial specialty
products under the Doresco(R) trademark which are used by more than 300
customers throughout the United States in coatings, printing inks, laminating
and adhesives markets.

     Landec's core polymer manufacturing products are based on its patented
proprietary Intelimer(R) 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 space 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
Landec's target markets.


                                      -10-
<PAGE>

     Based on this core technology, Landec has launched to date four broad
product lines - QuickCast(TM) splints and casts in April 1994, which was
subsequently sold to Bissell Healthcare Corporation in August 1997;
Intellipac(TM) breathable membranes for the fresh-cut produce packaging market
beginning in September 1995; Intelimer polymer systems for the industrial
specialties market beginning in June 1997; and Intellicoat(R) coatings for
inbred corn seed beginning in October 1999.

     Landec has been unprofitable during each fiscal year since its inception
and 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. From inception
through April 29, 2001, Landec's accumulated deficit was $50.3 million.

RESULTS OF OPERATIONS

     Total revenues were $62.3 million for the second quarter of fiscal year
2001, compared to $60.9 million for the second quarter of fiscal year 2000.
Revenues from product sales and services increased to $62.0 million in the
second quarter of fiscal year 2001 from $60.6 million in the second quarter
of fiscal year 2000. The increase in product sales and service revenues was
primarily due to increased revenues for Apio's value added fresh-cut
vegetable business which increased from $13.3 million in the second quarter
of fiscal year 2000 to $16.0 million during the same period of fiscal year
2001, partially offset by a reduction in sales for Landec Ag to $15.7 million
in the second quarter of fiscal year 2001 from $16.4 million in the second
quarter of fiscal year 2000. The decrease in Landec Ag revenues was due to a
decrease in the sales volume of uncoated hybrid corn seed. Revenues from
research and development funding were $122,000 for second quarter of fiscal
year 2001 compared to $145,000 for the second quarter of fiscal year 2000.
Revenues from license fees remained unchanged at $93,000 for the second
quarter of fiscal years 2001 and 2000. For the first six months of fiscal
year 2001 total revenues were $110.4 million compared to $94.8 million during
the same period in 2000. Revenues from product sales and services for the
first six months of fiscal year 2001 increased to $109.9 million from $94.3
million during the same period of fiscal year 2000 due primarily to including
the results of Apio for a full six months in fiscal year 2001 versus only
five months in fiscal year 2000. Revenues from research and development
funding for the first six months of fiscal year 2001 decreased to $229,000
from $275,000 during the same period of fiscal year 2000. Revenues from
licensing fees remained unchanged at $187,000 for the six month period of
fiscal years 2001 and 2000.

     Cost of product sales and services consists of material, labor and
overhead. Cost of product sales and services was $50.3 million for the second
quarter of fiscal year 2001 compared to $48.4 million for the second quarter
of fiscal year 2000. Gross profit from product sales and services as a
percentage of revenue from product sales and services decreased from 20% in
the second quarter of fiscal year 2000 to 19% in the second quarter of fiscal
year 2001. Cost of product sales and services for the first six months of
fiscal year 2001 was $92.5 million compared to $77.9 million during the same
period in fiscal year 2000. Gross profit from product sales and services as a
percentage of revenue from product sales and services decreased to 16% for
the first six months of fiscal year 2001 from 17% during the same period of
fiscal year 2000. The decreases in gross profit percentages were primarily
the result of Apio's higher costs during fiscal year 2001 associated with
sourcing crops during the winter months. Overall gross profit decreased from
$12.5 million for the three month period ended April 30, 2000 to $12.0
million for the same period of fiscal year 2001. This decrease was due
primarily to lower margins on lower Landec Ag revenues during the second
quarter of fiscal year 2001 as compared to the year ago second quarter. For
the six month period ended April 30, 2000 gross profits increased from $16.8
million in fiscal year 2000 to $17.8 million for the same period in fiscal
year 2001, an increase of 6% for the first six months of fiscal year 2001
compared to the same period in fiscal year 2000. This increase is primarily
due to gross profit from Apio value added fresh-cut business partially offset
by lower margins on decreased sales at Landec Ag and Apio's increased farming
losses from winter season produce sourcing in the desert.

     Research and development expenses remained the same at $1.1 million for
the second quarter of fiscal years 2001 and 2000. Research and development
expenses also remained flat at $2.2 million for the first six months of
fiscal years 2001 and 2000. 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

                                      -11-
<PAGE>

Landec's enabling side chain crystallizable polymer technology and research and
development expenses related to Dock Resins' products.

     Selling, general and administrative expenses were $7.3 million for the
second quarter of fiscal year 2001 compared to $8.1 million for the second
quarter of fiscal year 2000, a decrease of 10%. For the first six months of
fiscal year 2001 selling, general and administrative expenses were $15.5 million
compared to $13.9 million during the same period in fiscal year 2000, an
increase of 11%. 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 decreased during the three month
period ended April 29, 2001 as compared to the same period of fiscal year 2000
primarily as a result of decreased expenses at Landec Ag after a February 2001
reduction in force. The increase in selling, general and administrative expense
during the six month period ended April 29, 2001 as compared to the same period
of fiscal year 2000 results from including Apio for a full six months in fiscal
year 2001 compared to only five months in fiscal year 2000. Sales and marketing
expenses decreased to $3.0 million for the second quarter of fiscal year 2001
from $3.5 million for the second quarter of fiscal year 2000. For the first six
months of fiscal year 2001 sales and marketing expenses decreased to $6.2
million from $6.4 million during the same period of fiscal year 2000.

     Interest income for the three and six month periods ended April 29, 2001
were $169,000 and $310,000, respectively, compared to $274,000 and $416,000 for
the same periods of fiscal year 2000. These decreases in interest income were
due principally to less cash available for investing. Interest expense for the
three and six months periods ended April 29, 2001 were $620,000 and $1.3
million, respectively, compared to $709,000 and $1.0 million for the same
periods of fiscal year 2000. The decrease in interest expense for the second
quarter of fiscal year 2001 as compared to the same period in fiscal year 2000
is due to the capitalization of interest incurred to finance Apio's new business
system and Dock Resins' new laboratory and office building. For the six month
period interest expense was higher in fiscal year 2001 as compared to fiscal
year 2000 due to having Apio debt for a full six months in fiscal year 2001
versus only five months in fiscal year 2000.

LIQUIDITY AND CAPITAL RESOURCES

     As of April 29, 2001, Landec had cash and cash equivalents of $5.9 million,
a net decrease of $3.7 million from $9.6 million as of October 29, 2000. This
decrease was primarily due to the net of: a) cash used in operations of $6.0
million; b) the purchase of $4.7 million of property, plant and equipment; c)
payment on long term debt and to minority interests of $2.4 million, partially
offset by; d) net borrowings of $7.3 million and; e) collections of notes
receivable and advances of $1.6 million.

     During the first six months of fiscal year 2001, Landec purchased equipment
to support the development of Apio's value added products, and incurred building
and laboratory improvement and equipment upgrade expenditures at Dock Resins and
initiated implementation of a new ERP business system at Apio. These
expenditures represented the majority of the $4.7 million of property and
equipment purchased during the first six months of fiscal year 2001.

     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 February 2001 and April 2001, the
Apio revolving line of credit was amended. The amendments reduce the maximum
borrowings from $12.0 million to $10.0 million effective July 31, 2001 and
increase the computed amount available under the line, determined as a
percentage of certain eligible assets (primarily receivables) by $4.0 million
through July 31, 2001. The amendment also precludes the payment of earn-outs due
under the Apio purchase agreement until August 2001. Management does not believe
that the reduction of


                                      -12-
<PAGE>

the borrowing capacity on July 31, 2001, adversely impacts liquidity as the
Company has generally not needed to borrow in excess of $10.0 million on the
line with the exception of the current year due to excess costs incurred in
sourcing produce this winter. In May 2001, Apio entered into a lease agreement
to fund the purchase of a new ERP business system. As of June 2001, $1.6 million
of the estimated $2.3 million in total costs had been financed. In June 2000,
Landec Ag established a $3.0 million bank line of credit for working capital
needs based on inventory values 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. In February 2001, Dock Resins increased its equipment
line of credit by $1.0 million to pay for building and lab improvements. Landec
believes that these facilities, the sale of the Reedley facility and related
fruit processing equipment, 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.

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 April 29, 2001 totaled $50.3 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 April 29, 2001, Landec's total debt, including current maturities and
capital lease obligations, was approximately $35.0 million and the total debt to
equity ratio was approximately 68%. 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.


                                      -13-
<PAGE>

     In connection with the Apio acquisition, Landec may be obligated to make
future payments to the former stockholders of Apio of up to $15.5 million for a
performance based earnout and future supply of produce. Of this amount, $4.1
million is due to be paid in August 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 in their
loan agreements which limit the ability of Landec Ag and Dock Resins to make
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 agreements, 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
agreements.

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, Landec Ag, 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
high cost of sourcing product during the first quarter of fiscal year 2001 as a
result of weather related freezes in November and early December of 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 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



                                      -14-
<PAGE>

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 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.

     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 hindered its ability to
develop new products and samples for potential and existing customers. The
laboratory has been rebuilt and became fully operational in June 2001.


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 Landec Ag 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


                                      -15-
<PAGE>

     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 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.



                                      -16-
<PAGE>

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. During the first quarter of fiscal year
2001, optimal weather conditions after the November/December freezes 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 during the first six months of fiscal
year 2001. 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 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
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.

                                      -17-
<PAGE>

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

     For the first six months of fiscal year 2001, approximately 13% 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 the six months ended April 29, 2001, sales to Landec's top five
customers accounted for approximately 44% of Landec's revenues, with the top
customer accounting for 14% 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 Landec Ag 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 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


                                      -18-
<PAGE>


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.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         There has been no material change in the Company's reported market
risks since the end of fiscal year 2000.


                                      -19-
<PAGE>

                           PART II. OTHER INFORMATION



ITEM 1.  LEGAL PROCEEDINGS

         None.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None.

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

         At the Company's Annual Meeting of Shareholders held on March 29, 2001
the following proposals were adopted by the margins indicated:

<TABLE>
<CAPTION>

                                                                                  Number of Shares
                                                                                  ----------------
                                                                             Voted For           Withheld
                                                                             ---------           --------
<S>                                                                          <C>                 <C>
1.  Three Class I directors were elected by the margins indicated to serve
    until the next odd-numbered year Annual Meeting (2003) during which their
    successors will be elected and qualified:

         Frederick Frank                                                     12,897,801          1,070,630
         Stephen E. Halprin                                                  12,898,301          1,070,130
         Richard S. Schneider, PH.D.                                         12,898,301          1,070,130
</TABLE>

    The three Class II directors were not up for election at the
    Annual Meeting.  These three Class II directors, Gary T. Steele,
    Kirby. L. Cramer and Richard Dulude, will serve as Class II
    directors until the next even-numbered Annual Meeting (2002),
    when their successors will be elected and qualified.


<TABLE>
<CAPTION>
                                                              Voted           Voted                       Broker
                                                               For           Against        Abstain      Non-Votes
                                                           ----------     -------------     -------      ----------
<C>                                                        <C>              <C>             <C>               <C>
2.  To approve an amendment to the Company's 1996 Stock    12,030,079       1,909,808       28,544            0
    Option Plan to increase the number of shares of
    Common Stock reserved for issuance thereunder by
    500,000 shares to an aggregate total of 2,000,000
    shares.
</TABLE>


<TABLE>
<CAPTION>
                                                              Voted           Voted                       Broker
                                                               For           Against        Abstain      Non-Votes
                                                           ----------     -------------     -------      ----------
<C>                                                        <C>              <C>             <C>               <C>
3.  To ratify the appointment of Ernst & Young LLP as        13,952,302         15,680            449              0
    independent public accountants of the Company for
    the fiscal year ending October 28, 2001.
</TABLE>



                                      -20-
<PAGE>

ITEM 5.  OTHER INFORMATION

         None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits.

<TABLE>
<S>                        <C>
                  3.1+     Amended and Restated Bylaws of Registrant
                  10.17+   1996 Stock Option Plan, as amended
                  10.31+   Amendment No. 2 to the Loan Agreement between Apio, Inc. and the Bank of America
                           dated as of February 28, 2001.
                  10.32+   Amendment No. 3 to the Loan Agreement between Apio, Inc. and the Bank of America
                           dated as of April 26, 2001.
</TABLE>

(b)      Reports on Form 8-K

                  None

-----------------------
+ Filed herewith.



                                      -21-
<PAGE>

                                   SIGNATURES


         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                               LANDEC CORPORATION


                             By:   /s/           Gregory S. Skinner
                                   --------------------------------------------
                                                 Gregory S. Skinner

                                    Vice President, Finance and Chief Financial
                                    Officer (Duly Authorized and Principal
                                    Financial and Accounting Officer)


Date:    June 13, 2001



                                      -22-
<PAGE>

                               LANDEC CORPORATION

                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                         EXHIBIT
------                                         -------
<S>                       <C>
3.1                       Amended and Restated Bylaws of Registrant
10.17                     1996 Stock Option Plan, as amended
10.31                     Amendment No. 2 to the Loan Agreement between Apio, Inc. and
                          the Bank of America dated as of February 28, 2001.
10.32                     Amendment No. 3 to the Loan Agreement between Apio, Inc. and
                          the Bank of America dated as of April 26, 2001.

</TABLE>


                                       -23-


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.1
<SEQUENCE>2
<FILENAME>a2051246zex-3_1.txt
<DESCRIPTION>EXHIBIT 3.1
<TEXT>

<PAGE>

                                                                     EXHIBIT 3.1


                           AMENDED AND RESTATED BYLAWS

                                       OF

                               LANDEC CORPORATION



<PAGE>

                           AMENDED AND RESTATED BYLAWS

                                       OF

                               LANDEC CORPORATION


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                              Page
                                                                                                              ----
<S>                                                                                                           <C>
ARTICLE I - CORPORATE OFFICES..................................................................................1

         1.1      PRINCIPAL OFFICE.............................................................................1
         1.2      OTHER OFFICES................................................................................1

ARTICLE II - MEETINGS OF SHAREHOLDERS..........................................................................1

         2.1      PLACE OF MEETINGS............................................................................1
         2.2      ANNUAL MEETING...............................................................................1
         2.3      SPECIAL MEETING..............................................................................1
         2.4      NOTICE OF SHAREHOLDERS' MEETINGS.............................................................2
         2.5      MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.................................................3
         2.6      QUORUM.......................................................................................3
         2.7      ADJOURNED MEETING; NOTICE....................................................................3
         2.8      VOTING.......................................................................................4
         2.9      CUMULATIVE VOTING............................................................................4
         2.10     SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING......................................5
         2.11     VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT............................................5
         2.12     RECORD DATE FOR SHAREHOLDER NOTICE; VOTING...................................................5
         2.13     PROXIES......................................................................................6
         2.14     INSPECTORS OF ELECTION.......................................................................6

ARTICLE III - DIRECTORS........................................................................................7

         3.1      POWERS.......................................................................................7
         3.2      NUMBER OF DIRECTORS..........................................................................7
         3.3      ELECTION AND TERM OF OFFICE OF DIRECTORS.....................................................8
         3.4      RESIGNATION AND VACANCIES....................................................................8
         3.5      PLACE OF MEETINGS; MEETINGS BY TELEPHONE....................................................10
         3.6      REGULAR MEETINGS............................................................................10
         3.7      SPECIAL MEETINGS; NOTICE....................................................................10
         3.8      QUORUM......................................................................................10
         3.9      WAIVER OF NOTICE............................................................................11
         3.10     ADJOURNMENT.................................................................................11
         3.11     NOTICE OF ADJOURNMENT.......................................................................11


                                      -i-
<PAGE>


                                TABLE OF CONTENTS
                                   (continued)
                                                                                                              Page
                                                                                                              ----
         3.12     BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING...........................................11
         3.13     FEES AND COMPENSATION OF DIRECTORS..........................................................12
         3.14     APPROVAL OF LOANS TO OFFICERS*..............................................................12

ARTICLE IV - COMMITTEES.......................................................................................12

         4.1      COMMITTEES OF DIRECTORS.....................................................................12
         4.2      MEETINGS AND ACTION OF COMMITTEES...........................................................13

ARTICLE V - OFFICERS..........................................................................................13

         5.1      OFFICERS....................................................................................13
         5.2      ELECTION OF OFFICERS........................................................................14
         5.3      SUBORDINATE OFFICERS........................................................................14
         5.4      REMOVAL AND RESIGNATION OF OFFICERS.........................................................14
         5.5      VACANCIES IN OFFICES........................................................................14
         5.6      CHAIRMAN OF THE BOARD.......................................................................14
         5.7      PRESIDENT...................................................................................15
         5.8      VICE PRESIDENTS.............................................................................15
         5.9      SECRETARY...................................................................................15
         5.10     CHIEF FINANCIAL OFFICER.....................................................................16

ARTICLE VI - INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND OTHER AGENTS..............................16

         6.1      INDEMNIFICATION OF DIRECTORS AND OFFICERS...................................................16
         6.2      INDEMNIFICATION OF OTHERS...................................................................16
         6.3      PAYMENT OF EXPENSES IN ADVANCE..............................................................17
         6.4      INDEMNITY NOT EXCLUSIVE.....................................................................17
         6.5      INSURANCE INDEMNIFICATION...................................................................17
         6.6      CONFLICTS...................................................................................17

ARTICLE VII - RECORDS AND REPORTS.............................................................................18

         7.1      MAINTENANCE AND INSPECTION OF SHARE REGISTER................................................18
         7.2      MAINTENANCE AND INSPECTION OF BYLAWS........................................................18
         7.3      MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS.......................................19
         7.4      INSPECTION BY DIRECTORS.....................................................................19
         7.5      ANNUAL REPORT TO SHAREHOLDERS; WAIVER.......................................................19
         7.6      FINANCIAL STATEMENTS........................................................................20
         7.7      REPRESENTATION OF SHARES OF OTHER CORPORATIONS..............................................20

ARTICLE VIII - GENERAL MATTERS................................................................................21

         8.1      RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING.......................................21
         8.2      CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS...................................................21
         8.3      CORPORATE CONTRACTS AND INSTRUMENTS; HOW EXECUTED...........................................21


                                      -ii-

<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

                                                                                                              Page
                                                                                                              ----
         8.4      CERTIFICATES FOR SHARES.....................................................................21
         8.5      LOST CERTIFICATES...........................................................................22
         8.6      CONSTRUCTION; DEFINITIONS...................................................................22

ARTICLE IX - AMENDMENTS.......................................................................................22

         9.1      AMENDMENT BY SHAREHOLDERS...................................................................22
         9.2      AMENDMENT BY DIRECTORS......................................................................23
</TABLE>


                                      -iii-


<PAGE>

                           AMENDED AND RESTATED BYLAWS

                                       OF

                               LANDEC CORPORATION


                                    ARTICLE I

                                CORPORATE OFFICES

         1.1      PRINCIPAL OFFICE

         The board of directors shall fix the location of the principal
executive office of the corporation at any place within or outside the State of
California. If the principal executive office is located outside such state and
the corporation has one or more business offices in such state, then the board
of directors shall fix and designate a principal business office in the State of
California.

         1.2      OTHER OFFICES

         The board of directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.


                                   ARTICLE II

                            MEETINGS OF SHAREHOLDERS

         2.1      PLACE OF MEETINGS

         Meetings of shareholders shall be held at any place within or outside
the State of California designated by the board of directors. In the absence of
any such designation, shareholders' meetings shall be held at the principal
executive office of the corporation.

         2.2      ANNUAL MEETING

         The annual meeting of shareholders shall be held each year on a date
and at a time designated by the board of directors. In the absence of such
designation, the annual meeting of shareholders shall be held on the third
Wednesday of March in each year at 10:00 a.m. However, if such day falls on a
legal holiday, then the meeting shall be held at the same time and place on the
next succeeding full business day. At the meeting, directors shall be elected,
and any other proper business may be transacted.

         2.3      SPECIAL MEETING

         A special meeting of the shareholders may be called at any time by the
board of directors, or by the chairman of the board, or by the president, or by
one or more shareholders holding
<PAGE>

shares in the aggregate entitled to cast not less than ten percent (10%) of the
votes at that meeting.

         If a special meeting is called by any person or persons other than the
board of directors or the president or the chairman of the board, then the
request shall be in writing, specifying the time of such meeting and the general
nature of the business proposed to be transacted, and shall be delivered
personally or sent by registered mail or by telegraphic or other facsimile
transmission to the chairman of the board, the president, any vice president or
the secretary of the corporation. The officer receiving the request shall cause
notice to be promptly given to the shareholders entitled to vote, in accordance
with the provisions of Sections 2.4 and 2.5 of these bylaws, that a meeting will
be held at the time requested by the person or persons calling the meeting, so
long as that time is not less than thirty-five (35) nor more than sixty (60)
days after the receipt of the request. If the notice is not given within twenty
(20) days after receipt of the request, then the person or persons requesting
the meeting may give the notice. Nothing contained in this paragraph of this
Section 2.3 shall be construed as limiting, fixing or affecting the time when a
meeting of shareholders called by action of the board of directors may be held.

         2.4      NOTICE OF SHAREHOLDERS' MEETINGS

         All notices of meetings of shareholders shall be sent or otherwise
given in accordance with Section 2.5 of these bylaws not less than ten (10) (or,
if sent by third-class mail pursuant to Section 2.5 of these bylaws, thirty
(30)) nor more than sixty (60) days before the date of the meeting. The notice
shall specify the place, date, and hour of the meeting and (i) in the case of a
special meeting, the general nature of the business to be transacted (no
business other than that specified in the notice may be transacted) or (ii) in
the case of the annual meeting, those matters which the board of directors, at
the time of giving the notice, intends to present for action by the shareholders
(but subject to the provisions of the next paragraph of this Section 2.4 any
proper matter may be presented at the meeting for such action). The notice of
any meeting at which directors are to be elected shall include the name of any
nominee or nominees who, at the time of the notice, the board intends to present
for election.

         If action is proposed to be taken at any meeting for approval of (i) a
contract or transaction in which a director has a direct or indirect financial
interest, pursuant to Section 310 of the Corporations Code of California (the
"Code"), (ii) an amendment of the articles of incorporation, pursuant to Section
902 of the Code, (iii) a reorganization of the corporation, pursuant to Section
1201 of the Code, (iv) a voluntary dissolution of the corporation, pursuant to
Section 1900 of the Code, or (v) a distribution in dissolution other than in
accordance with the rights of outstanding preferred shares, pursuant to Section
2007 of the Code, then the notice shall also state the general nature of that
proposal.

                                      -2-
<PAGE>

         2.5      MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE

         Written notice of any meeting of shareholders shall be given either (i)
personally or (ii) by first-class mail or (iii) by third-class mail but only if
the corporation has outstanding shares held of record by five hundred (500) or
more persons (determined as provided in Section 605 of the Code) on the record
date for the shareholders' meeting, or (iv) by telegraphic or other written
communication. Notices not personally delivered shall be sent charges prepaid
and shall be addressed to the shareholder at the address of that shareholder
appearing on the books of the corporation or given by the shareholder to the
corporation for the purpose of notice. If no such address appears on the
corporation's books or is given, notice shall be deemed to have been given if
sent to that shareholder by mail or telegraphic or other written communication
to the corporation's principal executive office, or if published at least once
in a newspaper of general circulation in the county where that office is
located. Notice shall be deemed to have been given at the time when delivered
personally or deposited in the mail or sent by telegram or other means of
written communication.

         If any notice addressed to a shareholder at the address of that
shareholder appearing on the books of the corporation is returned to the
corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice to the shareholder
at that address, then all future notices or reports shall be deemed to have been
duly given without further mailing if the same shall be available to the
shareholder on written demand of the shareholder at the principal executive
office of the corporation for a period of one (1) year from the date of the
giving of the notice.

         An affidavit of the mailing or other means of giving any notice of any
shareholders' meeting, executed by the secretary, assistant secretary or any
transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice.

         2.6      QUORUM

         The presence in person or by proxy of the holders of a majority of the
shares entitled to vote thereat constitutes a quorum for the transaction of
business at all meetings of shareholders. The shareholders present at a duly
called or held meeting at which a quorum is present may continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum, if any action taken (other than adjournment) is
approved by at least a majority of the shares required to constitute a quorum.

         2.7      ADJOURNED MEETING; NOTICE

         Any shareholders' meeting, annual or special, whether or not a quorum
is present, may be adjourned from time to time by the vote of the majority of
the shares represented at that meeting,

                                      -3-
<PAGE>

either in person or by proxy. In the absence of a quorum, no other business may
be transacted at that meeting except as provided in Section 2.6 of these bylaws.

         When any meeting of shareholders, either annual or special, is
adjourned to another time or place, notice need not be given of the adjourned
meeting if the time and place are announced at the meeting at which the
adjournment is taken. However, if a new record date for the adjourned meeting is
fixed or if the adjournment is for more than forty-five (45) days from the date
set for the original meeting, then notice of the adjourned meeting shall be
given. Notice of any such adjourned meeting shall be given to each shareholder
of record entitled to vote at the adjourned meeting in accordance with the
provisions of Sections 2.4 and 2.5 of these bylaws. At any adjourned meeting the
corporation may transact any business which might have been transacted at the
original meeting.

         2.8      VOTING

         The shareholders entitled to vote at any meeting of shareholders shall
be determined in accordance with the provisions of Section 2.10 of these bylaws,
subject to the provisions of Sections 702 through 704 of the Code (relating to
voting shares held by a fiduciary, in the name of a corporation or in joint
ownership).

         The shareholders' vote may be by voice vote or by ballot; provided,
however, that any election for directors must be by ballot if demanded by any
shareholder at the meeting and before the voting has begun.

         Except as may be otherwise provided in the articles of incorporation,
each outstanding share, regardless of class, shall be entitled to one vote on
each matter submitted to a vote of the shareholders. Any shareholder entitled to
vote on any matter may vote part of the shares in favor of the proposal and
refrain from voting the remaining shares or, except when the matter is the
election of directors, may vote them against the proposal; but, if the
shareholder fails to specify the number of shares which the shareholder is
voting affirmatively, it will be conclusively presumed that the shareholder's
approving vote is with respect to all shares which the shareholder is entitled
to vote.

         If a quorum is present, the affirmative vote of the majority of the
shares represented and voting at a duly held meeting (which shares voting
affirmatively also constitute at least a majority of the required quorum) shall
be the act of the shareholders, unless the vote of a greater number or a vote by
classes is required by the Code or by the articles of incorporation.

         2.9      CUMULATIVE VOTING

         Shareholders shall not be entitled to cumulate votes for the election
of directors of this corporation.

                                      -4-
<PAGE>

         This Article shall become effective only when the corporation becomes,
and only for so long as the corporation remains, a listed corporation within the
meaning of Section 301.5 of the California Corporations Code.

         2.10     SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING

         No action shall be taken by the shareholders of the corporation other
than at an annual or special meeting of the shareholders, upon due notice and in
accordance with the other provisions of these Bylaws.

         2.11     VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT

         The transactions of any meeting of shareholders, either annual or
special, however called and noticed, and wherever held, shall be as valid as
though they had been taken at a meeting duly held after regular call and notice,
if a quorum be present either in person or by proxy, and if, either before or
after the meeting, each person entitled to vote, who was not present in person
or by proxy, signs a written waiver of notice or a consent to the holding of the
meeting or an approval of the minutes thereof. The waiver of notice or consent
or approval need not specify either the business to be transacted or the purpose
of any annual or special meeting of shareholders, except that if action is taken
or proposed to be taken for approval of any of those matters specified in the
second paragraph of Section 2.4 of these bylaws, the waiver of notice or consent
or approval shall state the general nature of the proposal. All such waivers,
consents, and approvals shall be filed with the corporate records or made a part
of the minutes of the meeting.

         Attendance by a person at a meeting shall also constitute a waiver of
notice of and presence at that meeting, except when the person objects at the
beginning of the meeting to the transaction of any business because the meeting
is not lawfully called or convened. Attendance at a meeting is not a waiver of
any right to object to the consideration of matters required by the Code to be
included in the notice of the meeting but not so included, if that objection is
expressly made at the meeting.

         2.12     RECORD DATE FOR SHAREHOLDER NOTICE; VOTING

         For purposes of determining the shareholders entitled to notice of any
meeting or to vote thereat, the board of directors may fix, in advance, a record
date, which shall not be more than sixty (60) days nor less than ten (10) days
before the date of any such meeting, and in such event only shareholders of
record on the date so fixed are entitled to notice and to vote, notwithstanding
any transfer of any shares on the books of the corporation after the record
date, except as otherwise provided in the Code.

                                      -5-
<PAGE>

         If the board of directors does not so fix a record date the record date
for determining shareholders entitled to notice of or to vote at a meeting of
shareholders shall be at the close of business on the business day next
preceding the day on which notice is given or, if notice is waived, at the close
of business on the business day next preceding the day on which the meeting is
held; and

         The record date for any other purpose shall be as provided in Article
VIII of these bylaws.

         2.13     PROXIES

         Every person entitled to vote for directors, or on any other matter,
shall have the right to do so either in person or by one or more agents
authorized by a written proxy signed by the person and filed with the secretary
of the corporation. A proxy shall be deemed signed if the shareholder's name is
placed on the proxy (whether by manual signature, typewriting, telegraphic
transmission or otherwise) by the shareholder or the shareholder's
attorney-in-fact. A validly executed proxy which does not state that it is
irrevocable shall continue in full force and effect unless (i) the person who
executed the proxy revokes it prior to the time of voting by delivering a
writing to the corporation stating that the proxy is revoked or by executing a
subsequent proxy and presenting it to the meeting or by voting in person at the
meeting, or (ii) written notice of the death or incapacity of the maker of that
proxy is received by the corporation before the vote pursuant to that proxy is
counted; provided, however, that no proxy shall be valid after the expiration of
eleven (11) months from the date of the proxy, unless otherwise provided in the
proxy. The dates contained on the forms of proxy presumptively determine the
order of execution, regardless of the postmark dates on the envelopes in which
they are mailed. The revocability of a proxy that states on its face that it is
irrevocable shall be governed by the provisions of Sections 705(e) and 705(f) of
the Code.

         2.14     INSPECTORS OF ELECTION

         Before any meeting of shareholders, the board of directors may appoint
an inspector or inspectors of election to act at the meeting or its adjournment.
If no inspector of election is so appointed, then the chairman of the meeting
may, and on the request of any shareholder or a shareholder's proxy shall,
appoint an inspector or inspectors of election to act at the meeting. The number
of inspectors shall be either one (1) or three (3). If inspectors are appointed
at a meeting pursuant to the request of one (1) or more shareholders or proxies,
then the holders of a majority of shares or their proxies present at the meeting
shall determine whether one (1) or three (3) inspectors are to be appointed. If
any person appointed as inspector fails to appear or fails or refuses to act,
then the chairman of the meeting may, and upon the request of any shareholder or
a shareholder's proxy shall, appoint a person to fill that vacancy.

         Such inspectors shall:

                                      -6-
<PAGE>

                  (a)   determine the number of shares outstanding and the
voting power of each, the number of shares represented at the meeting, the
existence of a quorum, and the authenticity, validity, and effect of proxies;

                  (b)   receive votes, ballots or consents;

                  (c)   hear and determine all challenges and questions in any
way arising in connection with the right to vote;

                  (d)   count and tabulate all votes or consents;

                  (e)   determine when the polls shall close;

                  (f)   determine the result; and

                  (g)   do any other acts that may be proper to conduct the
election or vote with fairness to all shareholders.


                                   ARTICLE III

                                    DIRECTORS

         3.1      POWERS

         Subject to the provisions of the Code and any limitations in the
articles of incorporation and these bylaws relating to actions required to be
approved by the shareholders or by the outstanding shares, the business and
affairs of the corporation shall be managed and all corporate powers shall be
exercised by or under the direction of the board of directors.

         3.2      NUMBER OF DIRECTORS

         The number of directors of the corporation shall be not less than four
(4) nor more than seven (7). The exact number of directors shall be seven (7)
until changed, within the limits specified above, by a bylaw amending this
Section 3.2, duly adopted by the board of directors or by the shareholders. The
indefinite number of directors may be changed, or a definite number may be fixed
without provision for an indefinite number, by a duly adopted amendment to the
articles of incorporation or by an amendment to this bylaw duly adopted by the
vote or written consent of holders of a majority of the outstanding shares
entitled to vote; provided, however, that an amendment reducing the fixed number
or the minimum number of directors to a number less than five (5) cannot be
adopted if the votes cast against its adoption at a meeting, or the shares not
consenting in the case of an action by written consent, are equal to more than
sixteen and two-thirds percent (16-2/3%) of the outstanding shares entitled to
vote thereon. No


                                      -7-
<PAGE>

amendment may change the stated maximum number of authorized directors to a
number greater than two (2) times the stated minimum number of directors minus
one (1).

         No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office expires.

         3.3      ELECTION AND TERM OF OFFICE OF DIRECTORS

         The board of directors shall be divided into two classes, as nearly
equal in number as possible. The term of office of the first class shall expire
at the 1997 annual meeting of shareholders or any special meeting in lieu
thereof and the term of office of the second class shall expire at the 1998
annual meeting of shareholders or any special meeting in lieu thereof. At each
annual meeting of shareholders or special meeting in lieu thereof following such
initial classification, directors elected to succeed those directors whose terms
expire shall be elected for a term of office to expire at the second succeeding
annual meeting of shareholders or special meeting in lieu thereof after their
election and until their successors are duly elected and qualified. The
foregoing provisions shall become effective only when the corporation becomes a
listed corporation within the meaning of Section 301.5 of the California
Corporations Code. Directors need not be shareholders unless so required by the
articles of incorporation or these bylaws, wherein other qualifications for
directors may be prescribed.

         3.4      RESIGNATION AND VACANCIES

         Any director may resign effective on giving written notice to the
chairman of the board, the president, the secretary or the board of directors,
unless the notice specifies a later time for that resignation to become
effective. If the resignation of a director is effective at a future time, the
board of directors may elect a successor to take office when the resignation
becomes effective.

         Vacancies in the board of directors may be filled by a majority of the
remaining directors, even if less than a quorum, or by a sole remaining
director; however, a vacancy created by the removal of a director by the vote of
the shareholders or by court order may be filled only by the affirmative vote of
a majority of the shares represented and voting at a duly held meeting at which
a quorum is present (which shares voting affirmatively also constitute a
majority of the required quorum). Each director so elected shall hold office for
a term expiring at the annual meeting of shareholders at which the term of
office of the class to which they have been elected expires, if applicable, and
if no such classes shall have been established, at the next annual meeting of
the shareholders and until a successor has been elected and qualified.

         A vacancy or vacancies in the board of directors shall be deemed to
exist (i) in the event of the death, resignation or removal of any director,
(ii) if the board of directors by resolution declares vacant the office of a
director who has been declared of unsound mind by an order of

                                      -8-
<PAGE>

court or convicted of a felony, (iii) if the authorized number of directors is
increased, or (iv) if the shareholders fail, at any meeting of shareholders at
which any director or directors are elected, to elect the number of directors to
be elected at that meeting.

         The shareholders may elect a director or directors at any time to fill
any vacancy or vacancies not filled by the directors, but any such election
other than to fill a vacancy created by

                                      -9-
<PAGE>


removal shall require the consent of the holders of a majority of the
outstanding shares entitled to vote thereon.

         3.5      PLACE OF MEETINGS; MEETINGS BY TELEPHONE

         Regular meetings of the board of directors may be held at any place
within or outside the State of California that has been designated from time to
time by resolution of the board. In the absence of such a designation, regular
meetings shall be held at the principal executive office of the corporation.
Special meetings of the board may be held at any place within or outside the
State of California that has been designated in the notice of the meeting or, if
not stated in the notice or if there is no notice, at the principal executive
office of the corporation.

         Any meeting, regular or special, may be held by conference telephone or
similar communication equipment, so long as all directors participating in the
meeting can hear one another; and all such directors shall be deemed to be
present in person at the meeting.

         3.6      REGULAR MEETINGS

         Regular meetings of the board of directors may be held without notice
if the times of such meetings are fixed by the board of directors.

         3.7      SPECIAL MEETINGS; NOTICE

         Special meetings of the board of directors for any purpose or purposes
may be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two directors.

         Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. If the notice is mailed, it
shall be deposited in the United States mail at least four (4) days before the
time of the holding of the meeting. If the notice is delivered personally or by
telephone or telegram, it shall be delivered personally or by telephone or to
the telegraph company at least forty-eight (48) hours before the time of the
holding of the meeting. Any oral notice given personally or by telephone may be
communicated either to the director or to a person at the office of the director
who the person giving the notice has reason to believe will promptly communicate
it to the director. The notice need not specify the purpose or the place of the
meeting, if the meeting is to be held at the principal executive office of the
corporation.

         3.8      QUORUM

         A majority of the authorized number of directors shall constitute a
quorum for the transaction of business, except to adjourn as provided in Section
3.10 of these bylaws. Every act

                                      -10-
<PAGE>

or decision done or made by a majority of the directors present at a duly held
meeting at which a quorum is present shall be regarded as the act of the board
of directors, subject to the provisions of Section 310 of the Code (as to
approval of contracts or transactions in which a director has a direct or
indirect material financial interest), Section 311 of the Code (as to
appointment of committees), Section 317(e) of the Code (as to indemnification of
directors), the articles of incorporation, and other applicable law.

         A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting.

         3.9      WAIVER OF NOTICE

         Notice of a meeting need not be given to any director (i) who signs a
waiver of notice or a consent to holding the meeting or an approval of the
minutes thereof, whether before or after the meeting, or (ii) who attends the
meeting without protesting, prior thereto or at its commencement, the lack of
notice to such director. All such waivers, consents, and approvals shall be
filed with the corporate records or made part of the minutes of the meeting. A
waiver of notice need not specify the purpose of any regular or special meeting
of the board of directors.

         3.10     ADJOURNMENT

         A majority of the directors present, whether or not constituting a
quorum, may adjourn any meeting to another time and place.

         3.11     NOTICE OF ADJOURNMENT

         Notice of the time and place of holding an adjourned meeting need not
be given unless the meeting is adjourned for more than twenty-four (24) hours.
If the meeting is adjourned for more than twenty-four (24) hours, then notice of
the time and place of the adjourned meeting shall be given before the adjourned
meeting takes place, in the manner specified in Section 3.7 of these bylaws, to
the directors who were not present at the time of the adjournment.

         3.12     BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING

         Any action required or permitted to be taken by the board of directors
may be taken without a meeting, provided that all members of the board
individually or collectively consent in writing to that action. Such action by
written consent shall have the same force and effect as a unanimous vote of the
board of directors. Such written consent and any counterparts thereof shall be
filed with the minutes of the proceedings of the board.

                                      -11-
<PAGE>

         3.13     FEES AND COMPENSATION OF DIRECTORS

         Directors and members of committees may receive such compensation, if
any, for their services and such reimbursement of expenses as may be fixed or
determined by resolution of the board of directors. This Section 3.13 shall not
be construed to preclude any director from serving the corporation in any other
capacity as an officer, agent, employee or otherwise and receiving compensation
for those services.

         3.14     APPROVAL OF LOANS TO OFFICERS**

         The corporation may, upon the approval of the board of directors alone,
make loans of money or property to, or guarantee the obligations of, any officer
of the corporation or its parent or subsidiary, whether or not a director, or
adopt an employee benefit plan or plans authorizing such loans or guaranties
provided that (i) the board of directors determines that such a loan or guaranty
or plan may reasonably be expected to benefit the corporation, (ii) the
corporation has outstanding shares held of record by 100 or more persons
(determined as provided in Section 605 of the Code) on the date of approval by
the board of directors, and (iii) the approval of the board of directors is by a
vote sufficient without counting the vote of any interested director or
directors.


                                   ARTICLE IV

                                   COMMITTEES

         4.1      COMMITTEES OF DIRECTORS

         The board of directors may, by resolution adopted by a majority of the
authorized number of directors, designate one (1) or more committees, each
consisting of two or more directors, to serve at the pleasure of the board. The
board may designate one (1) or more directors as alternate members of any
committee, who may replace any absent member at any meeting of the committee.
The appointment of members or alternate members of a committee requires the vote
of a majority of the authorized number of directors. Any committee, to the
extent provided in the resolution of the board, shall have all the authority of
the board, except with respect to:

                  (a)   the approval of any action which, under the Code, also
requires shareholders' approval or approval of the outstanding shares;

                  (b)   the filling of vacancies on the board of directors or in
any committee;

----------------------
*    This section is effective only if it has been approved by the shareholders
     in accordance with Sections 315(b) and 152 of the Code.


                                      -12-
<PAGE>

                  (c)   the fixing of compensation of the directors for serving
on the board or any committee;

                  (d)   the amendment or repeal of these bylaws or the adoption
of new bylaws;

                  (e)   the amendment or repeal of any resolution of the board
of directors which by its express terms is not so amendable or repealable;

                  (f)   a distribution to the shareholders of the corporation,
except at a rate or in a periodic amount or within a price range determined by
the board of directors; or

                  (g)   the appointment of any other committees of the board of
directors or the members of such committees.

         4.2      MEETINGS AND ACTION OF COMMITTEES

         Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the provisions of Article III of these bylaws, Section
3.5 (place of meetings), Section 3.6 (regular meetings), Section 3.7 (special
meetings and notice), Section 3.8 (quorum), Section 3.9 (waiver of notice),
Section 3.10 (adjournment), Section 3.11 (notice of adjournment), and Section
3.12 (action without meeting), with such changes in the context of those bylaws
as are necessary to substitute the committee and its members for the board of
directors and its members; provided, however, that the time of regular meetings
of committees may be determined either by resolution of the board of directors
or by resolution of the committee, that special meetings of committees may also
be called by resolution of the board of directors, and that notice of special
meetings of committees shall also be given to all alternate members, who shall
have the right to attend all meetings of the committee. The board of directors
may adopt rules for the government of any committee not inconsistent with the
provisions of these bylaws.


                                    ARTICLE V

                                    OFFICERS

         5.1      OFFICERS

         The officers of the corporation shall be a president, a secretary, and
a chief financial officer. The corporation may also have, at the discretion of
the board of directors, a chairman of the board, one or more vice presidents,
one or more assistant secretaries, one or more assistant treasurers, and such
other officers as may be appointed in accordance with the provisions of Section
5.3 of these bylaws. Any number of offices may be held by the same person.

                                      -13-
<PAGE>

         5.2      ELECTION OF OFFICERS

         The officers of the corporation, except such officers as may be
appointed in accordance with the provisions of Section 5.3 or Section 5.5 of
these bylaws, shall be chosen by the board, subject to the rights, if any, of an
officer under any contract of employment. Any contract of employment with an
officer shall be unenforceable unless in writing and specifically authorized by
the board of directors.

         5.3      SUBORDINATE OFFICERS

         The board of directors may appoint, or may empower the president to
appoint, such other officers as the business of the corporation may require,
each of whom shall hold office for such period, have such authority, and perform
such duties as are provided in these bylaws or as the board of directors may
from time to time determine.

         5.4      REMOVAL AND RESIGNATION OF OFFICERS

         Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by the
board of directors at any regular or special meeting of the board or, except in
case of an officer chosen by the board of directors, by any officer upon whom
such power of removal may be conferred by the board of directors.

         Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.

         5.5      VACANCIES IN OFFICES

         A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
these bylaws for regular appointments to that office.

         5.6      CHAIRMAN OF THE BOARD

         The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
board of directors or as may be prescribed by these bylaws. If there is no
president, then the chairman of the board shall also be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 5.7 of these bylaws.

                                      -14-
<PAGE>

         5.7      PRESIDENT

         Subject to such supervisory powers, if any, as may be given by the
board of directors to the chairman of the board, if there be such an officer,
the president shall be the chief executive officer of the corporation and shall,
subject to the control of the board of directors, have general supervision,
direction, and control of the business and the officers of the corporation. He
shall preside at all meetings of the shareholders and, in the absence or
nonexistence of a chairman of the board, at all meetings of the board of
directors. He shall have the general powers and duties of management usually
vested in the office of president of a corporation, and shall have such other
powers and duties as may be prescribed by the board of directors or these
bylaws.

         5.8      VICE PRESIDENTS

         In the absence or disability of the president, the vice presidents, if
any, in order of their rank as fixed by the board of directors or, if not
ranked, a vice president designated by the board of directors, shall perform all
the duties of the president and when so acting shall have all the powers of, and
be subject to all the restrictions upon, the president. The vice presidents
shall have such other powers and perform such other duties as from time to time
may be prescribed for them respectively by the board of directors, these bylaws,
the president or the chairman of the board.

         5.9      SECRETARY

         The secretary shall keep or cause to be kept, at the principal
executive office of the corporation or such other place as the board of
directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors and shareholders. The minutes shall show the
time and place of each meeting, whether regular or special (and, if special, how
authorized and the notice given), the names of those present at directors'
meetings or committee meetings, the number of shares present or represented at
shareholders' meetings, and the proceedings thereof.

         The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register, or a duplicate share register, showing the names of
all shareholders and their addresses, the number and classes of shares held by
each, the number and date of certificates evidencing such shares, and the number
and date of cancellation of every certificate surrendered for cancellation.

         The secretary shall give, or cause to be given, notice of all meetings
of the shareholders and of the board of directors required to be given by law or
by these bylaws. He shall keep the seal of the corporation, if one be adopted,
in safe custody and shall have such other powers and perform such other duties
as may be prescribed by the board of directors or by these bylaws.

                                      -15-
<PAGE>

         5.10     CHIEF FINANCIAL OFFICER

         The chief financial officer shall keep and maintain, or cause to be
kept and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.

         The chief financial officer shall deposit all money and other valuables
in the name and to the credit of the corporation with such depositories as may
be designated by the board of directors. He shall disburse the funds of the
corporation as may be ordered by the board of directors, shall render to the
president and directors, whenever they request it, an account of all of his
transactions as chief financial officer and of the financial condition of the
corporation, and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or these bylaws.


                                   ARTICLE VI

               INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES,
                                AND OTHER AGENTS

         6.1      INDEMNIFICATION OF DIRECTORS AND OFFICERS

         The corporation shall, to the maximum extent and in the manner
permitted by the Code, indemnify each of its directors and officers against
expenses (as defined in Section 317(a) of the Code), judgments, fines,
settlements, and other amounts actually and reasonably incurred in connection
with any proceeding (as defined in Section 317(a) of the Code), arising by
reason of the fact that such person is or was an agent of the corporation. For
purposes of this Article VI, a "director" or "officer" of the corporation
includes any person (i) who is or was a director or officer of the corporation,
(ii) who is or was serving at the request of the corporation as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise, or (iii) who was a director or officer of a corporation which was a
predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation.

         6.2      INDEMNIFICATION OF OTHERS

         The corporation shall have the power, to the extent and in the manner
permitted by the Code, to indemnify each of its employees and agents (other than
directors and officers) against expenses (as defined in Section 317(a) of the
Code), judgments, fines, settlements, and other amounts actually and reasonably
incurred in connection with any proceeding (as defined in Section 317(a) of the
Code), arising by reason of the fact that such person is or was an agent of the
corporation. For purposes of this Article VI, an "employee" or "agent" of the
corporation

                                      -16-
<PAGE>

(other than a director or officer) includes any person (i) who is or was an
employee or agent of the corporation, (ii) who is or was serving at the request
of the corporation as an employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, or (iii) who was an employee or agent
of a corporation which was a predecessor corporation of the corporation or of
another enterprise at the request of such predecessor corporation.

         6.3      PAYMENT OF EXPENSES IN ADVANCE

         Expenses incurred in defending any civil or criminal action or
proceeding for which indemnification is required pursuant to Section 6.1 or for
which indemnification is permitted pursuant to Section 6.2 following
authorization thereof by the Board of Directors shall be paid by the corporation
in advance of the final disposition of such action or proceeding upon receipt of
an undertaking by or on behalf of the indemnified party to repay such amount if
it shall ultimately be determined that the indemnified party is not entitled to
be indemnified as authorized in this Article VI.

         6.4      INDEMNITY NOT EXCLUSIVE

         The indemnification provided by this Article VI shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any bylaw, agreement, vote of shareholders or disinterested
directors or otherwise, both as to action in an official capacity and as to
action in another capacity while holding such office, to the extent that such
additional rights to indemnification are authorized in the articles of
incorporation.

         6.5      INSURANCE INDEMNIFICATION

         The corporation shall have the power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the corporation against any liability asserted against or incurred by such
person in such capacity or arising out of such person's status as such, whether
or not the corporation would have the power to indemnify him against such
liability under the provisions of this Article VI.

         6.6      CONFLICTS

         No indemnification or advance shall be made under this Article VI,
except where such indemnification or advance is mandated by law or the order,
judgment or decree of any court of competent jurisdiction, in any circumstance
where it appears:

                  (1)   That it would be inconsistent with a provision of the
articles of incorporation, these bylaws, a resolution of the shareholders or an
agreement in effect at the time of the accrual of the alleged cause of the
action asserted in the proceeding in which the expenses were incurred or other
amounts were paid, which prohibits or otherwise limits indemnification; or

                                      -17-
<PAGE>

                  (2)   That it would be inconsistent with any condition
expressly imposed by a court in approving a settlement.


                                   ARTICLE VII

                              RECORDS AND REPORTS

         7.1      MAINTENANCE AND INSPECTION OF SHARE REGISTER

         The corporation shall keep either at its principal executive office or
at the office of its transfer agent or registrar (if either be appointed), as
determined by resolution of the board of directors, a record of its shareholders
listing the names and addresses of all shareholders and the number and class of
shares held by each shareholder.

         A shareholder or shareholders of the corporation who holds at least
five percent (5%) in the aggregate of the outstanding voting shares of the
corporation or who holds at least one percent (1%) of such voting shares and has
filed a Schedule 14B with the Securities and Exchange Commission relating to the
election of directors, may (i) inspect and copy the records of shareholders'
names, addresses, and shareholdings during usual business hours on five (5)
days' prior written demand on the corporation, (ii) obtain from the transfer
agent of the corporation, on written demand and on the tender of such transfer
agent's usual charges for such list, a list of the names and addresses of the
shareholders who are entitled to vote for the election of directors, and their
shareholdings, as of the most recent record date for which that list has been
compiled or as of a date specified by the shareholder after the date of demand.
Such list shall be made available to any such shareholder by the transfer agent
on or before the later of five (5) days after the demand is received or five (5)
days after the date specified in the demand as the date as of which the list is
to be compiled.

         The record of shareholders shall also be open to inspection on the
written demand of any shareholder or holder of a voting trust certificate, at
any time during usual business hours, for a purpose reasonably related to the
holder's interests as a shareholder or as the holder of a voting trust
certificate.

         Any inspection and copying under this Section 7.1 may be made in person
or by an agent or attorney of the shareholder or holder of a voting trust
certificate making the demand.

         7.2      MAINTENANCE AND INSPECTION OF BYLAWS

         The corporation shall keep at its principal executive office or, if its
principal executive office is not in the State of California, at its principal
business office in California the original or a copy of these bylaws as amended
to date, which bylaws shall be open to inspection by the shareholders at all
reasonable times during office hours. If the principal executive office of the

                                      -18-
<PAGE>

corporation is outside the State of California and the corporation has no
principal business office in such state, then the secretary shall, upon the
written request of any shareholder, furnish to that shareholder a copy of these
bylaws as amended to date.

         7.3      MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS

         The accounting books and records and the minutes of proceedings of the
shareholders, of the board of directors, and of any committee or committees of
the board of directors shall be kept at such place or places as are designated
by the board of directors or, in absence of such designation, at the principal
executive office of the corporation. The minutes shall be kept in written form,
and the accounting books and records shall be kept either in written form or in
any other form capable of being converted into written form.

         The minutes and accounting books and records shall be open to
inspection upon the written demand of any shareholder or holder of a voting
trust certificate, at any reasonable time during usual business hours, for a
purpose reasonably related to the holder's interests as a shareholder or as the
holder of a voting trust certificate. The inspection may be made in person or by
an agent or attorney and shall include the right to copy and make extracts. Such
rights of inspection shall extend to the records of each subsidiary corporation
of the corporation.

         7.4      INSPECTION BY DIRECTORS

         Every director shall have the absolute right at any reasonable time to
inspect all books, records, and documents of every kind as well as the physical
properties of the corporation and each of its subsidiary corporations. Such
inspection by a director may be made in person or by an agent or attorney. The
right of inspection includes the right to copy and make extracts of documents.

         7.5      ANNUAL REPORT TO SHAREHOLDERS; WAIVER

         The board of directors shall cause an annual report to be sent to the
shareholders not later than one hundred twenty (120) days after the close of the
fiscal year adopted by the corporation. Such report shall be sent at least
fifteen (15) days (or, if sent by third-class mail, thirty-five (35) days)
before the annual meeting of shareholders to be held during the next fiscal year
and in the manner specified in Section 2.5 of these bylaws for giving notice to
shareholders of the corporation.

         The annual report shall contain (i) a balance sheet as of the end of
the fiscal year, (ii) an income statement, (iii) a statement of changes in
financial position for the fiscal year, and (iv) any report of independent
accountants or, if there is no such report, the certificate of an authorized
officer of the corporation that the statements were prepared without audit from
the books and records of the corporation.

                                      -19-
<PAGE>

         The foregoing requirement of an annual report shall be waived so long
as the shares of the corporation are held by fewer than one hundred (100)
holders of record.

         7.6      FINANCIAL STATEMENTS

         If no annual report for the fiscal year has been sent to shareholders,
then the corporation shall, upon the written request of any shareholder made
more than one hundred twenty (120) days after the close of such fiscal year,
deliver or mail to the person making the request, within thirty (30) days
thereafter, a copy of a balance sheet as of the end of such fiscal year and an
income statement and statement of changes in financial position for such fiscal
year.

         If a shareholder or shareholders holding at least five percent (5%) of
the outstanding shares of any class of stock of the corporation makes a written
request to the corporation for an income statement of the corporation for the
three-month, six-month or nine-month period of the then current fiscal year
ended more than thirty (30) days before the date of the request, and for a
balance sheet of the corporation as of the end of that period, then the chief
financial officer shall cause that statement to be prepared, if not already
prepared, and shall deliver personally or mail that statement or statements to
the person making the request within thirty (30) days after the receipt of the
request. If the corporation has not sent to the shareholders its annual report
for the last fiscal year, the statements referred to in the first paragraph of
this Section 7.6 shall likewise be delivered or mailed to the shareholder or
shareholders within thirty (30) days after the request.

         The quarterly income statements and balance sheets referred to in this
section shall be accompanied by the report, if any, of any independent
accountants engaged by the corporation or by the certificate of an authorized
officer of the corporation that the financial statements were prepared without
audit from the books and records of the corporation.

         7.7      REPRESENTATION OF SHARES OF OTHER CORPORATIONS

         The chairman of the board, the president, any vice president, the chief
financial officer, the secretary or assistant secretary of this corporation, or
any other person authorized by the board of directors or the president or a vice
president, is authorized to vote, represent, and exercise on behalf of this
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this corporation. The authority herein
granted may be exercised either by such person directly or by any other person
authorized to do so by proxy or power of attorney duly executed by such person
having the authority.

                                      -20-
<PAGE>


                                  ARTICLE VIII

                                 GENERAL MATTERS

         8.1      RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING

         For purposes of determining the shareholders entitled to receive
payment of any dividend or other distribution or allotment of any rights or the
shareholders entitled to exercise any rights in respect of any other lawful
action (other than action by shareholders by written consent without a meeting),
the board of directors may fix, in advance, a record date, which shall not be
more than sixty (60) days before any such action. In that case, only
shareholders of record at the close of business on the date so fixed are
entitled to receive the dividend, distribution or allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the corporation after the record date so fixed, except as
otherwise provided in the Code.

         If the board of directors does not so fix a record date, then the
record date for determining shareholders for any such purpose shall be at the
close of business on the day on which the board adopts the applicable resolution
or the sixtieth (60th) day before the date of that action, whichever is later.

         8.2      CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS

         From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.

         8.3      CORPORATE CONTRACTS AND INSTRUMENTS; HOW EXECUTED

         The board of directors, except as otherwise provided in these bylaws,
may authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.

         8.4      CERTIFICATES FOR SHARES

         A certificate or certificates for shares of the corporation shall be
issued to each shareholder when any of such shares are fully paid. The board of
directors may authorize the issuance of certificates for shares partly paid
provided that these certificates shall state the total

                                      -21-
<PAGE>

amount of the consideration to be paid for them and the amount actually paid.
All certificates shall be signed in the name of the corporation by the chairman
of the board or the vice chairman of the board or the president or a vice
president and by the chief financial officer or an assistant treasurer or the
secretary or an assistant secretary, certifying the number of shares and the
class or series of shares owned by the shareholder. Any or all of the signatures
on the certificate may be facsimile.

         In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed on a certificate ceases to be that
officer, transfer agent or registrar before that certificate is issued, it may
be issued by the corporation with the same effect as if that person were an
officer, transfer agent or registrar at the date of issue.

         8.5      LOST CERTIFICATES

         Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and canceled at the same time. The board of
directors may, in case any share certificate or certificate for any other
security is lost, stolen or destroyed, authorize the issuance of replacement
certificates on such terms and conditions as the board may require; the board
may require indemnification of the corporation secured by a bond or other
adequate security sufficient to protect the corporation against any claim that
may be made against it, including any expense or liability, on account of the
alleged loss, theft or destruction of the certificate or the issuance of the
replacement certificate.

         8.6      CONSTRUCTION; DEFINITIONS

         Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the Code shall govern the construction of these
bylaws. Without limiting the generality of this provision, the singular number
includes the plural, the plural number includes the singular, and the term
"person" includes both a corporation and a natural person.


                                   ARTICLE IX

                                   AMENDMENTS

         9.1      AMENDMENT BY SHAREHOLDERS

         New bylaws may be adopted or these bylaws may be amended or repealed by
the vote of holders of a majority of the outstanding shares entitled to vote;
provided, however, that if the articles of incorporation of the corporation set
forth the number of authorized directors of the corporation, then the authorized
number of directors may be changed only by an amendment of the articles of
incorporation.

                                      -22-
<PAGE>

         9.2      AMENDMENT BY DIRECTORS

         Subject to the rights of the shareholders as provided in Section 9.1 of
these bylaws, bylaws, other than a bylaw or an amendment of a bylaw changing the
authorized number of directors (except to fix the authorized number of directors
pursuant to a bylaw providing for a variable number of directors), may be
adopted, amended or repealed by the board of directors.


                                      -23-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.17
<SEQUENCE>3
<FILENAME>a2051246zex-10_17.txt
<DESCRIPTION>EXHIBIT 10.17
<TEXT>

<PAGE>

                                                                   EXHIBIT 10.17


                               LANDEC CORPORATION

                              AMENDED AND RESTATED

                             1996 STOCK OPTION PLAN



         1.       PURPOSES OF THE PLAN. The purposes of this Stock Option Plan
are to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to the Employees and
Consultants of the Company and to promote the success of the Company's business.

                  Options granted hereunder may be either Incentive Stock
Options (as defined under Section 422 of the Code) or Nonstatutory Stock
Options, at the discretion of the Board and as reflected in the terms of the
written option agreement.

         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)      "CONSULTANT" means any person, including an advisor,
who is engaged by the Company or any Parent or Subsidiary to render services and
is compensated for such services; PROVIDED that the term Consultant shall not
include directors who are not compensated for their services or are paid only a
director's fee by the Company.

                                      -1-
<PAGE>

                  (j)      "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT"
shall mean the absence of any interruption or termination of service as an
Employee or Consultant. Continuous Status as an Employee or Consultant 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 or from a Consultant to an
Employee will not constitute a termination of employment.

                  (k)      "DIRECTOR" shall mean a member of the Board.

                  (l)      "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.

                  (m)      "EXCHANGE ACT" shall mean the Securities Exchange Act
of 1934, as amended.

                  (n)      "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.

                  (o)      "INCENTIVE STOCK OPTION" shall mean an Option
intended to qualify as an incentive stock option within the meaning of Section
422 of the Code, as designated in the applicable written option agreement.

                  (p)      "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

                                      -2-
<PAGE>

than the chief executive officer). Such officer status shall be determined
pursuant to the executive compensation disclosure rules under the Exchange Act.

                  (q)      "NONSTATUTORY STOCK OPTION" shall mean an Option not
intended to qualify as an Incentive Stock Option, as designated in the
applicable written option agreement.

                  (r)      "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.

                  (s)      "OPTION" shall mean a stock option granted pursuant
to the Plan.

                  (t)      "OPTIONED STOCK" shall mean the Common Stock subject
to an Option.

                  (u)      "OPTIONEE" shall mean an Employee or Consultant who
receives an Option.

                  (v)      "PARENT" shall mean a "parent corporation," whether
now or hereafter existing, as defined in Section 424(e) of the Code.

                  (w)      "PLAN" shall mean this 1996 Stock Option Plan.

                  (x)      "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.

                  (y)      "SHARE" shall mean a share of the Common Stock, as
adjusted in accordance with Section 14 of the Plan.

                  (z)      "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 14 of the Plan, the maximum aggregate number of shares that may be
optioned and 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 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.

                                      -3-
<PAGE>

         4.       ADMINISTRATION OF THE PLAN.

                  (a)     COMPOSITION OF ADMINISTRATOR.

                          (i)        MULTIPLE ADMINISTRATIVE BODIES. If
permitted by Rule 16b-3, and by the legal requirements relating to the
administration of incentive stock option plans, if any, of applicable securities
laws and the Code (collectively, the "APPLICABLE LAWS"), grants under the Plan
may (but need not) be made by different administrative bodies with respect to
Directors, Officers who are not directors and Employees who are neither
Directors nor Officers.

                          (ii)       ADMINISTRATION WITH RESPECT TO DIRECTORS
AND OFFICERS. With respect to grants of Options to Employees or Consultants who
are also Officers or Directors of the Company, 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 and Section 162(m) of the Code as it applies so as to qualify
grants of Options to Named Executives as performance-based compensation, 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, to qualify grants of Options to Named Executives
as performance-based compensation under Section 162(m) of the Code and otherwise
so as to satisfy the Applicable Laws.

                          (iii)      ADMINISTRATION WITH RESPECT TO OTHER
PERSONS. With respect to grants of Options to Employees or Consultants who are
neither Directors nor Officers of the Company, the Plan shall be administered by
(A) the Board or (B) a Committee designated by the Board, which Committee shall
be constituted in such a manner as to satisfy the Applicable Laws.

                          (iv)       GENERAL. If a Committee has been appointed
pursuant to subsection (ii) or (iii) 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 (ii), to the extent permitted by Rule 16b-3
and to the extent required under Section 162(m) of the Code to qualify grants of
Options to Named Executives as performance-based compensation.

                  (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;

                                      -4-
<PAGE>

                          (ii)       to select the Employees and Consultants 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 Employees and Consultants. Incentive Stock Options may be granted
only to Employees, PROVIDED, HOWEVER, that Employees of an Affiliate shall not
be eligible to receive Incentive Stock Options. An Employee or Consultant who
has been granted an Option may, if he or she is otherwise eligible, be granted
an additional Option or Options.

                  (b)     TYPE OF OPTION. Each Option shall be designated in the
written 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 Incentive Stock
Options are exercisable for the first time by an 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 shall be determined as of the time the Option with respect to such
Shares is granted.

                  (c)     NO EMPLOYMENT RIGHTS. The Plan shall not confer upon
any Optionee any right with respect to continuation of employment or consulting
relationship

                                      -5-
<PAGE>

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 or consulting relationship at
any time, with or without cause.

         6.       TERM OF PLAN. The Plan shall become effective upon the earlier
to occur of its adoption by the Board or its approval by the shareholders of the
Company as described in Section 20 of the Plan. It shall continue in effect for
a term of ten (10) years unless sooner terminated under Section 16 of the Plan.

         7.       TERM OF OPTION. The term of each Option shall be the term
stated in the Option Agreement; PROVIDED, HOWEVER, that in the case of an
Incentive Stock Option, the term shall be no more than ten (10) 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, owns stock representing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Option shall
be five (5) years from the date of grant thereof or such shorter term as may be
provided in the Option Agreement.

         8.       LIMITATION ON GRANTS TO EMPLOYEES. Subject to adjustment as
provided in this Plan, the maximum number of Shares which may be subject to
options granted to any one Employee under this Plan for any fiscal year of the
Company shall be 500,000.

         9.       OPTION EXERCISE PRICE AND CONSIDERATION.

                  (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)      In the case of an Incentive Stock Option

                                    (A)     granted to an Employee who, at the
time of the grant of such Incentive Stock Option, owns stock representing more
than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price shall be no
less than 110% of the Fair Market Value per Share on the date of grant; or

                                    (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

                                    (A)     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

                                      -6-
<PAGE>

                                    (B)     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 9(a)(i) or 9(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, in the case of
an Incentive Stock Option, shall be determined at the time of grant) 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.

         10.      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 9(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,
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

                                      -7-
<PAGE>

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 14 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 OR CONSULTANT.
In the event of termination of an Optionee's Continuous Status as an Employee or
Consultant, such Optionee may, but only within thirty (30) days (or such other
period of time, not exceeding three (3) months in the case of an Incentive Stock
Option or six (6) months in the case of a Nonstatutory Stock Option, 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 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 10(b)
above, in the event of termination of an Optionee's Continuous Status as an
Employee or Consultant 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, with such determination in the case of an
Incentive Stock Option being made at the time of grant of the Option) 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 or Consultant of the Company and who shall have
been in Continuous Status as an Employee or Consultant 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, with such determination in the case of an Incentive Stock
Option being made at the time of grant of the Option) 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 or
Consultant three (3) months

                                      -8-
<PAGE>

(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, with such determination in the case of an Incentive Stock Option
being made at the time of grant of the Option) after the termination of
Continuous Status as an Employee or Consultant, the Option may be exercised, at
any time within six (6) months 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.

         11.      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.

         12.      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.

                                      -9-
<PAGE>

                  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

                  (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.

         13.      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 13.

         14.      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 such 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

                                      -10-
<PAGE>

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 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.

         15.      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; 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 is so granted within a reasonable time after the date of such grant.

         16.      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; provided that, the following revisions or amendments shall require
approval of the shareholders of the Company in the manner described in Section
20 of the Plan:

                           (i)      any increase in the number of Shares subject
to the Plan, other than an adjustment under Section 14 of the Plan;

                           (ii)     any change in the designation of the class
of persons eligible to be granted Options; or

                                      -11-
<PAGE>

                           (iii)    any change in the limitation on grants to
employees as described in Section 8 of the Plan or other changes which would
require shareholder approval to qualify options granted hereunder as
performance-based compensation under Section 162(m) of the Code.

                  (b)      SHAREHOLDER APPROVAL. If any amendment requiring
shareholder approval under Section 16(a) of the Plan is made subsequent to the
first registration of any class of equity securities by the Company under
Section 12 of the Exchange Act, such shareholder approval shall be solicited as
described in Section 20 of the Plan.

                  (c)      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.

         17.      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.

         18.      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 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.

         19.      OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Board shall approve.

         20.      SHAREHOLDER APPROVAL.

                  (a)      Continuance of the Plan shall be subject to approval
by the shareholders of the Company within twelve (12) months before or after the
date the Plan is adopted. Such shareholder approval shall be obtained in the
manner and to the degree

                                      -12-
<PAGE>

required under applicable federal and state law and the rules of any stock
exchange upon which the Shares are listed.

                  (b)      In the event that the Company registers any class of
equity securities pursuant to Section 12 of the Exchange Act, any required
approval of the shareholders of the Company obtained after such registration
shall be solicited substantially in accordance with Section 14(a) of the
Exchange Act and the rules and regulations promulgated thereunder.

                  (c)      If any required approval by the shareholders of the
Plan itself or of any amendment thereto is solicited at any time otherwise than
in the manner described in Section 20(b) hereof, then the Company shall, at or
prior to the first annual meeting of shareholders held subsequent to the later
of (1) the first registration of any class of equity securities of the Company
under Section 12 of the Exchange Act or (2) the granting of an Option hereunder
to an officer or director after such registration, do the following:

                           (i)     furnish in writing to the holders entitled to
vote for the Plan substantially the same information that would be required (if
proxies to be voted with respect to approval or disapproval of the Plan or
amendment were then being solicited) by the rules and regulations in effect
under Section 14(a) of the Exchange Act at the time such information is
furnished; and

                           (ii)    file with, or mail for filing to, the
Securities and Exchange Commission four copies of the written information
referred to in subsection (i) hereof not later than the date on which such
information is first sent or given to shareholders.

                                      -13-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.31
<SEQUENCE>4
<FILENAME>a2051246zex-10_31.txt
<DESCRIPTION>EXHIBIT 10.31
<TEXT>

<PAGE>

                                                                   EXHIBIT 10.31


                               AMENDMENT NO. 2 TO
                                 LOAN AGREEMENT

     This Amendment No. 2 to Loan Agreement (this "Amendment"), dated as of
February 28, 2001, is entered into with reference to the Loan Agreement (as
amended, supplemented or otherwise modified from time to time, the "Loan
Agreement") dated as of November 29, 1999 currently among Apio, Inc., a Delaware
corporation ("Borrower"), each lender from time to time a party thereto (each a
"Lender" and collectively, the "Lenders"), Bank of America, N. A., as Issuing
Lender, and Bank of America, N. A., as Administrative Agent (in such capacity,
the "Administrative Agent"). Capitalized terms not otherwise defined herein
shall have the meanings set forth in the Loan Agreement. Section references
herein relate to the Loan Agreement unless otherwise stated.

     The parties hereto hereby agree as follows:

     1. SECTION 1.1 - DEFINITION OF "BASE MARGIN"; "BASE RATE MARGIN". For
purposes of clarification, all references to the "BASE MARGIN" contained in the
Loan Agreement and the other Loan Documents are hereby amended in full to read
"BASE RATE MARGIN". The definition of "BASE MARGIN" is hereby amended in full to
read as follows:

          "BASE RATE MARGIN" means, for each Pricing Period, (a) with respect to
     the outstanding principal amount of Revolving Loans in excess of the
     Unaugmented Borrowing Base Amount, 1.50%, and (b) with respect to (i) the
     outstanding principal amount of Term Loans and (ii) the outstanding
     principal amount of Revolving Loans less than or equal to the Unaugmented
     Base Rate Amount, the interest rate margin set forth below opposite the
     Pricing Level for that Pricing Period:

<TABLE>
<CAPTION>
          PRICING LEVEL            EURODOLLAR MARGIN
          -------------            -----------------
          <S>                      <C>
               I                          0.00%
               II                         0.25%
               III                        0.50%
</TABLE>


     2. SECTION 1.1 - DEFINITION OF BORROWING BASE. The definition of "BORROWING
BASE" contained in SECTION 1.1 is hereby amended in full to read as follows:

          "BORROWING BASE" means, as of each date of determination, an amount
     determined by the Administrative Agent with reference to the most recent
     Borrowing Base Certificate to be equal to the SUM of:

          (a) eighty percent (80%) of the aggregate book value of the Eligible
     Receivables; PLUS


                                      -1-
<PAGE>

          (b) fifty percent (50%) of the aggregate amount of the of Eligible
Notes Receivable (such aggregate amount not to exceed $3,000,000 and resulting
in an increase to the Borrowing Base not to exceed $1,500,000); PLUS

          (c) twenty five percent (25%) of Eligible Inventory; MINUS

          (d) one hundred percent (100%) of Grower Payables; PLUS

          (e) the Borrowing Base Augmentation Amount, if any.

     3. SECTION 1.1 - NEW DEFINITION OF "BORROWING BASE AUGMENTATION AMOUNT".
The following definition is hereby added to the Loan Agreement:

          "BORROWING BASE AUGMENTATION AMOUNT" means (a) for the fiscal period
     from and including February 1, 2001 to and including March 31, 2001,
     $4,000,000 and (b) for the fiscal period from and including April 1, 2001
     to and including July 31, 2001, $2,000,000."

     4. SECTION 1.1 - DEFINITION OF "EURODOLLAR MARGIN". The definition of
"EURODOLLAR MARGIN" contained in SECTION 1.1 of the Loan Agreement is hereby
amended in full to read as follows:

          "EURODOLLAR MARGIN" means, for each Pricing Period, (a) with respect
     to the outstanding principal amount of Revolving Loans in excess of the
     Unaugmented Borrowing Base Amount, 3.50%, and (b) with respect to (i) the
     outstanding principal amount of Term Loans and (ii) the outstanding
     principal amount of Revolving Loans less than or equal to the Unaugmented
     Base Rate Amount, the interest rate margin set forth below opposite the
     Pricing Level for that Pricing Period:

<TABLE>
<CAPTION>
          PRICING LEVEL            EURODOLLAR MARGIN
          -------------            -----------------
          <S>                      <C>
               I                        1.50%
               II                       2.00%
               III                      2.50%
</TABLE>

     5. REDUCTION OF REVOLVING COMMITMENT. Notwithstanding the provisions of
SECTION 2.8, the Revolving Commitment is hereby reduced to $10,000,000. The
reference to "$ 12,000,000" contained in the definition of "REVOLVING
COMMITMENT" is hereby replaced with "$ 10,000,000".

     6. SECTION 1.1 - NEW DEFINITION OF "UNAUGMENTED BORROWING BASE AMOUNT". The
following definition is hereby added to the Loan Agreement:

          "UNAUGMENTED BORROWING BASE AMOUNT" means, the Borrowing Base, as set
     forth in the Borrowing Base Certificate most recently delivered to the


                                      -2-
<PAGE>

     Administrative Agent pursuant to SECTION 7.1(e), MINUS the applicable
     Borrowing Base Augmentation Amount.

     7. SECTION 6.5 - DISTRIBUTIONS AND OTHER RESTRICTED PAYMENTS. Each of the
parties hereto hereby agrees that the Distributions or other Restricted Payments
permitted by SECTION 6.5 (c) to by made to Landec, shall be suspended until such
time as the Borrowing Base Augmentation Amount shall have been permanently
reduced to zero and the aggregate principal amount of Revolving Loans
outstanding does not exceed the then applicable Borrowing Base as evidenced by a
certificate executed by a Responsible Official of Borrower.

     8. SECTION 6.21 - EARN-OUT PAYMENTS. SECTION 6.21 is hereby amended to (a)
delete the "and" at the end of SUBSECTION (ii), (b) delete the period at the end
of SUBSECTION (iii) and replace it with "; and" and (c) add a new SUBSECTION
(iv) as follows:

          "(iv) the Borrowing Base Augmentation Amount shall have been
     permanently reduced to zero and the aggregate principal amount of Revolving
     Loans outstanding does not exceed the then applicable Borrowing Base as
     evidenced by a certificate executed by a Responsible Official of Borrower."

     9. SECTION 7.1(b) - FINANCIAL AND BUSINESS INFORMATION. The first line of
SECTION 7.1(b) is hereby amended to replace "90 days" with "135 days".

     10. EXHIBIT B - BORROWING BASE CERTIFICATE. The Borrowing Base Certificate
attached to the Loan Agreement as EXHIBIT B is hereby amended and restated in
full in the form of ANNEX II attached to this Amendment.

     11. EFFECTIVENESS. This Amendment shall become effective on such date as
the Administrative Agent shall have received duly executed counterparts of (a)
this Amendment , (b) ANNEX I attached hereto, and (c) Annex III hereto, signed
by each Party thereto, each of the which shall be in form and substance
satisfactory to the Administrative Agent and the Lenders (the "Effective Date").

     12. REPRESENTATIONS AND WARRANTIES. Except (i) for representations and
warranties which expressly relate to a particular date or which are no longer
true and correct as a result of a change permitted by the Loan Agreement or the
other Loan Documents or (ii) as disclosed by Borrower and approved in writing by
the Requisite Lenders, the Borrower hereby represents and warrants that each
representation and warranty made by Borrower in ARTICLE 4 of the Loan Agreement
(other than SECTIONS 4.6 (first sentence), 4.11, and 4.18) are true and correct
as of the date hereof as though such representations and warranties were made on
and as of the date hereof. Without in any way limiting the foregoing, Borrower
represents and warrants to the Administrative Agent and the Lenders that no
Default or Event of Default has occurred and remains continuing or will result
from the consents, waivers, amendments or transactions set forth herein or
contemplated hereby.

                                      -3-

<PAGE>

     13. CONFIRMATION. In all respects, the terms of the Loan Agreement and the
other Loan Documents, in each case as amended hereby or by the documents
referenced herein, are hereby confirmed.

     IN WITNESS WHEREOF, Borrower, the Administrative Agent and the Lenders have
executed this Agreement as of the date first set forth above by their duly
authorized representatives.

                                APIO, INC., a Delaware corporation

                                By: /s/ GARY T. STEELE
                                   ---------------------------------------------
                                   Name: Gary T. Steele
                                   Title: Chairman of the Board


                                BANK OF AMERICA, N. A., as Administrative Agent,
                                Issuing Lender and sole Lender

                                By: /s/ JOHN PLECQUE
                                   ---------------------------------------------
                                   John Plecque, Senior Vice President



                                      S-1
<PAGE>

                           ANNEX I TO AMENDMENT NO. 2

               CONSENT AND REAFFIRMATION OF GUARANTOR AND PLEDGOR

     The undersigned guarantor and pledgor hereby consents to the execution,
delivery and performance by Borrower and the Administrative Agent of the
foregoing Amendment No. 2 to Loan Agreement ("Amendment No. 2"). In connection
therewith, the undersigned expressly and knowingly reaffirms its liability under
each of the Loan Documents to which it is a Party and expressly agrees (a) to be
and remain liable under the terms of each such Loan Document and (b) that it has
no defense, offset or counterclaim whatsoever against the Administrative Agent
or the Lenders with respect to any such Loan Document.

     The undersigned further agrees that each Loan Document to which it is a
Party shall remain in full force and effect and is hereby ratified and
confirmed.

     The undersigned further agrees that the execution of this Consent and
Reaffirmation of Guarantor and Pledgor is not necessary for the continued
validity and enforceability of any Loan Document to which it is a Party, but is
executed to induce the Administrative Agent and the Lenders to approve of and
otherwise enter into the Amendment No. 2.

     IN WITNESS WHEREOF, each of the undersigned, intending to be legally bound
hereby, has caused this Consent and Reaffirmation of Guarantor and Pledgor to be
executed as of February 28, 2001.


LANDEC CORPORATION, a California corporation

By: /s/ GARY T. STEELE
   -----------------------------------------
   Name: Gary T. Steele
   Title: President and CEO


                                      I-1

<PAGE>

                          ANNEX II TO AMENDMENT NO. 2

                                   EXHIBIT B

                           BORROWING BASE CERTIFICATE




                                      II-1

<PAGE>

                          ANNEX III TO AMENDMENT NO. 2

                           CONSENT AND ACKNOWLEDGMENT

     Each of the undersigned hereby consents to and acknowledges the execution,
delivery and performance by Borrower and the Administrative Agent of the
foregoing Amendment No. 2 to Loan Agreement ("Amendment No. 2"), including,
without limitation, Section 8 of Amendment No. 2. In connection therewith, each
of the undersigned expressly and knowingly agrees (a) to be subject to the terms
of Section 6.21 of the Loan Agreement, as amended from time to time, including
by Amendment No. 2 and (b) that it has no defense, offset or counterclaim
whatsoever against the Administrative Agent or the Lenders.

     IN WITNESS WHEREOF, each of the undersigned, intending to be legally
bound hereby, has caused this Consent and Acknowledgment to be executed as of
February 28, 2001.

                                             By:   /s/ NICHOLAS TOMPKINS
                                                --------------------------------
                                                       Nicholas Tompkins

                                             By:   /s/ KATHLEEN TOMPKINS
                                                --------------------------------
                                                       Kathleen Tompkins


                                     III-1
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.32
<SEQUENCE>5
<FILENAME>a2051246zex-10_32.txt
<DESCRIPTION>EXHIBIT 10.32
<TEXT>

<PAGE>

                                                                   EXHIBIT 10.32

                       AMENDMENT NO. 3 TO LOAN AGREEMENT

     This Amendment No. 3 to Loan Agreement (this "Amendment"), dated as of
April 26, 2001, is entered into with reference to the Loan Agreement (as
amended, supplemented or otherwise modified from time to time, the "Loan
Agreement") dated as of November 29, 1999 currently among Apio, Inc., a Delaware
corporation (successor by merger and name change to Bush Acquisition
Corporation, a Delaware corporation) ("Borrower"), each lender from time to
time a party thereto (each a "Lender" and collectively, the "Lenders"), Bank of
America, N. A., as Issuing Lender, and Bank of America, N. A., as Administrative
Agent (in such capacity, the "Administrative Agent"). Capitalized terms not
otherwise defined herein shall have the meanings set forth in the Loan
Agreement. Section references herein relate to the Loan Agreement unless
otherwise stated.

     The parties hereto hereby agree as follows:

     1. SECTION 1.1 - DEFINITION OF "BASE MARGIN". The definition of "BASE
MARGIN" contained in SECTION 1.1 of the Loan Agreement is hereby amended in full
to read as follows:

          "BASE MARGIN" means, for each Pricing Period, the interest rate margin
     set forth below opposite the Pricing Level for that Pricing Period:

<TABLE>
<CAPTION>
          Pricing Level       Base Rate Margin
          -------------       ----------------
          <S>                 <C>
               I              0.25%
               II             0.75%
               III            1.25%
</TABLE>

     2. SECTION 1.1 - DEFINITION OF "BORROWING BASE AUGMENTATION AMOUNT". The
definition of "BORROWING BASE AUGMENTATION AMOUNT" contained in SECTION 1.1 is
hereby amended in full to read as follows:

          "BORROWING BASE AUGMENTATION AMOUNT" means for the fiscal period from
     and including April 23, 2001 to and including July 31, 2001, $4,000,000."

     3. SECTION 1.1 - DEFINITION OF "EURODOLLAR MARGIN". The definition of
"EURODOLLAR MARGIN" contained in SECTION 1.1 of the Loan Agreement is hereby
amended in full to read as follows:

          "EURODOLLAR MARGIN" means, for each Pricing Period, with respect to
     (a) the outstanding principal amount of Term Loans and (b) the outstanding
     principal amount of Revolving Loans, the interest rate margin set forth
     below opposite the Pricing Level for that Pricing Period:



                                      -1-
<PAGE>

<TABLE>
<CAPTION>
          Pricing Level       Eurodollar Margin
          -------------       -----------------
<S>                           <C>
               I                   1.75%
               II                  2.50%
               III                 3.25%
</TABLE>

     4. SECTION 1.1 - DEFINITION OF FIXED CHARGE COVERAGE RATIO: The definition
of "FIXED CHARGE COVERAGE RATIO" contained in SECTION 1.1 of the Loan Agreement
is hereby amended in full to read as follows:

          "FIXED CHARGE COVERAGE RATIO" means, as of the last day of each Fiscal
     Quarter, for the four Fiscal Quarter period then ending, the RATIO of (a)
     the SUM OF (i) EBITDA for period MINUS (ii) Capital Expenditures (net of
     any Indebtedness constituting purchase money incurred to finance those
     Capital Expenditures) for such period, MINUS (iii) income taxes payable in
     cash for such period, MINUS (iv) Tax Gross-Up's for such period, MINUS (v)
     Management Fee Distributions to the extent paid in cash during such period
     TO (b) Fixed Charges for such period, PROVIDED that as of the last day of
     the Fiscal Quarters ending July 31, 2000 and October 31, 2000, the Fixed
     Charge Coverage Ratio shall be calculated for the period since the Closing
     Date.

     5. SECTION 1.1 - DEFINITION OF "REVOLVING COMMITMENT". The definition of
"REVOLVING COMMITMENT" contained in SECTION 1.1 of the Loan Agreement is hereby
amended in full to read as follows:

          "REVOLVING COMMITMENT" means the commitment by Lenders to make
     Revolving Loans to Borrower in an aggregate principal amount, subject to
     SECTION 2.8, not to exceed $12,000,000; PROVIDED, HOWEVER, that effective
     as of August 1, 2001, the Revolving Commitment shall be permanently reduced
     to $10,000,000.

     6. SECTION 3.16 - BORROWING BASE AUGMENTATION FEE. A new SECTION 3.16 is
hereby added to the Loan Agreement to read as follows:

        "3.16 BORROWING BASE AUGMENTATION FEE. Monthly, in arrears, commencing
on June 1, and continuing on the first day of each month thereafter until the
Borrowing Base Augmentation Amount has been reduced to zero, Borrower shall pay
to the Administrative Agent for the account of the Lenders in accordance with
their Pro Rata Shares, prorated on an annualized basis, an amount equal to one
percent (1.00%) TIMES the Borrowing Base Augmentation Amount."

     7. SECTION 6.18 - MAXIMUM CAPITAL EXPENDITURES. The maximum amount of
Capital Expenditures for the Fiscal Year ending October 31, 2001, shall be
increased as follows:

          (a) effective as of the date that the Borrower shall have provided to
     the Agent, in form and substance satisfactory to the Requisite Lenders,
     evidence that Borrower has obtained financing for its business system
     upgrade,



                                      -2-
<PAGE>

     Borrower shall be permitted an additional $1,200,000 of Capital
     Expenditures; provided, however, that such Capital Expenditures shall
     only be made with respect to such business system upgrade;

          (b) effective as of the date that the Borrower shall have provided to
     the Agent, in form and substance satisfactory to the Requisite Lenders,
     evidence that Borrower has obtained financing for its "value-added
     facility", Borrower shall be permitted an additional $1,200,000 of Capital
     Expenditures; provided, however, that such Capital Expenditures shall only
     be made with respect to such "value-added facility";

          (c) in no event shall the aggregate Capital Expenditures made in the
     Fiscal Year ending October 31, 2001 exceed, inclusive of any permitted
     carryover from the Fiscal Year ending October 31, 2000 (i) $4,500,000 if
     only the condition set forth in paragraph (a) above is satisfied, (ii)
     $4,500,000 if only the condition set forth in paragraph (b) above is
     satisfied, and (iii) $5,700,000 if the conditions set forth in both
     paragraph (a) and (b) above are satisfied.

     8. SECTION 6.12 - LEVERAGE RATIO. SECTION 6.12 is hereby amended such that
the maximum ratio for the second Fiscal Quarter of the 2000/2001 Fiscal Year
(i.e.: the 13 week Fiscal Quarter ending nearest to April 30, 2001) shall not
exceed 3.00:1.00.

     9. SECTION 6.16 - CURRENT RATIO. SECTION 6.16 is hereby amended such that
the ratio described therein for the second Fiscal Quarter of the 2000/2001
Fiscal Year (i.e.: the 13 week Fiscal Quarter ending nearest to April 30, 2001)
shall not be less than 0.75:1.00.

     10. SECTION 6.17 - PROFITABILITY. The provisions of SECTION 6.17 are hereby
suspended, and the Borrower shall not be required to comply therewith, for the
first two Fiscal Quarters of the 2000/2001 Fiscal Year (i.e.: the 26 week
fiscal period ending nearest April 30, 2001); PROVIDED, HOWEVER, that Borrower
shall be required to comply with the provisions of SECTION 6.17 for the third
Fiscal Quarter of the 2000/2001 Fiscal Year (i.e.: profitability of less than
zero for the second and third Fiscal Quarters of the 2000/2001 Fiscal Year shall
constitute an Event of Default).

     11. EXHIBIT B - BORROWING BASE CERTIFICATE. Each of the parties hereto
agrees that for purposes of the Borrowing Base Augmentation Amount as set forth
in the Borrowing Base Certificate, such amount shall be as set forth in SECTION
5 of this Amendment and that other than this reference, no further amendment
shall be required with respect to such Borrowing Base Certificate.

     12. EXHIBIT C - COMPLIANCE CERTIFICATE. Each of the parties hereto agrees
that the Compliance Certificate set forth on EXHIBIT C to the Loan Agreement
shall be amended in full as set in ANNEX II to this Amendment.

     13. EFFECTIVENESS. This Amendment shall become effective on such date (the
"Effective Date") as the Administrative Agent shall have received, in form and
substance


                                      -3-
<PAGE>

satisfactory to the Administrative Agent and the Lenders, (a) duly executed
counterparts of this Amendment, (b) duly executed counterparts of ANNEX I
attached hereto, signed by each Party thereto, and (c) for the account of the
Lenders in accordance with their Pro Rata Shares, an amendment fee in the amount
of $25,000.

     14. REPRESENTATIONS AND WARRANTIES. Except (i) for representations and
warranties which expressly relate to a particular date or which are no longer
true and correct as a result of a change permitted by the Loan Agreement or the
other Loan Documents or (ii) as disclosed by Borrower and approved in writing by
the Requisite Lenders, the Borrower hereby represents and warrants that each
representation and warranty made by Borrower in ARTICLE 4 of the Loan Agreement
(other than SECTIONS 4.6 (first sentence), 4.11, and 4.18) are true and correct
as of the date hereof as though such representations and warranties were made on
and as of the date hereof. Without in any way limiting the foregoing, Borrower
represents and warrants to the Administrative Agent and the Lenders that no
Default or Event of Default has occurred and remains continuing or will result
from the consents, waivers, amendments or transactions set forth herein or
contemplated hereby.

     15. CONFIRMATION. In all respects, the terms of the Loan Agreement and the
other Loan Documents, in each case as amended hereby or by the documents
referenced herein, are hereby confirmed.





                      [THIS SPACE INTENTIONALLY LEFT BLANK-
                            SIGNATURE PAGE TO FOLLOW]



                                      -4-
<PAGE>

     IN WITNESS WHEREOF, Borrower, the Administrative Agent and the Lenders have
executed this Agreement as of the date first set forth above by their duly
authorized representatives.

                                   APIO, INC., a Delaware corporation (successor
                                   by merger and name change to Bush Acquisition
                                   Corporation, a Delaware corporation)



                                   By: /s/ GARY T. STEELE
                                       ---------------------------------------
                                       Name: Gary T. Steele
                                       Title: Chairman of the Board


                                   BANK OF AMERICA, N. A., as Administrative
                                   Agent, Issuing Lender and sole Lender



                                   By: /s/ JOHN PLECQUE
                                       ---------------------------------------
                                       John Plecque, Senior Vice President




                                       S-1

<PAGE>

                           ANNEX I TO AMENDMENT NO. 3
                           --------------------------

               CONSENT AND REAFFIRMATION OF GUARANTOR AND PLEDGOR

     The undersigned guarantor and pledgor hereby consents to the execution,
delivery and performance by Borrower and the Administrative Agent of the
foregoing Amendment No. 3 to Loan Agreement ("Amendment No. 3"). In connection
therewith, the undersigned expressly and knowingly reaffirms its liability under
each of the Loan Documents to which it is a Party and expressly agrees (a) to be
and remain liable under the terms of each such Loan Document and (b) that it has
no defense, offset or counterclaim whatsoever against the Administrative Agent
or the Lenders with respect to any such Loan Document.

     The undersigned further agrees that each Loan Document to which it is a
Party shall remain in full force and effect and is hereby ratified and
confirmed.

     The undersigned further agrees that the execution of this Consent and
Reaffirmation of Guarantor and Pledgor is not necessary for the continued
validity and enforceability of any Loan Document to which it is a Party, but is
executed to induce the Administrative Agent and the Lenders to approve of and
otherwise enter into the Amendment No. 3.

     IN WITNESS WHEREOF, each of the undersigned, intending to be legally bound
hereby, has caused this Consent and Reaffirmation of Guarantor and Pledgor to be
executed as of April 26, 2001.

LANDEC CORPORATION, a California
corporation


By: /s/ GARY T. STEELE
    ------------------------------------
    Name: Gary T. Steele
    Title: President and CEO



                                       I-1
<PAGE>

                                    ANNEX II
                                    --------

                                    EXHIBIT C
                                    ---------

                             COMPLIANCE CERTIFICATE
                             ----------------------



                                       I-2
<PAGE>

                                   EXHIBIT C
                                   ---------

                             COMPLIANCE CERTIFICATE
                             ----------------------

     This COMPLIANCE CERTIFICATE (this "Certificate") is delivered with
reference to that certain Loan Agreement dated as of November 29, 1999 by and
among Bush Acquisition Corporation, a Delaware corporation (" Borrower"), the
lenders from time to time party thereto (the "Lenders"), and Bank of America, N.
A., as Administrative Agent for the Lenders (as amended, extended, renewed,
supplemented or otherwise modified from time to time, the "Loan Agreement").
Terms defined in the Loan Agreement and not otherwise defined in this
Certificate shall have the meanings defined for them in the Loan Agreement.
Section references herein relate to the Loan Agreement unless stated otherwise.

     This Certificate is delivered in accordance with Section 7.2 of the Loan
Agreement by a Senior Officer of Borrower. This Certificate is delivered with
respect to the Fiscal Quarter (the "Test Fiscal Quarter") ended ______________,
_____ (the "Determination Date").

I. SECTION 6.11 - NET WORTH. As of the Determination Date, beginning April 30,
2000, the Net Worth of Borrower and its Subsidiaries was $__________.

              Minimum Required:    $________ (as calculated below)

     MINIMUM REQUIRED NET WORTH IS CALCULATED AS FOLLOWS:

     (a) $19,125,000                                                $19,125,000

     PLUS (b) 75% of cumulative Net Income of Borrower and
     its Subsidiaries for each Fiscal Quarter which has then
     ended since the Closing Date (including the stub
     financial period beginning on the Closing Date and
     ending on January 31, 2000) and without deduction for
     any net loss during any such Fiscal Quarter and each
     Fiscal Quarter thereafter                                        $________

     PLUS (c) 100% of the Net Cash Proceeds to Borrower of
     the issuance of any equity securities by Borrower (or
     any holding company for any capital stock of Borrower
     since the Closing Date)                                         $_________

     EQUALS minimum required Net Worth [(a)+(b)+(c)]                 $_________


                             -1-
<PAGE>

II. SECTION 6.12 - LEVERAGE RATIO. As of the Determination Date, beginning
October 31, 2000, the Leverage Ratio (as calculated below) was ___:1.00.

          MAXIMUM PERMITTED:    _______:1.00(1)

THE LEVERAGE RATIO WAS COMPUTED AS FOLLOWS:

     (a) Total Funded Debt of Borrower and its Subsidiaries
     as of the Determination Date (as calculated below)              $_________

     DIVIDED BY (b) EBITDA of Borrower and its Subsidiaries
     for the four Fiscal Quarter period then ended (in the
     case of the four fiscal quarter period ending October
     31, 2000, including the pre-merger results of Borrower
     and its Subsidiaries) (the "TEST PERIOD") (as
     calculated below)                                               $_________

     EQUALS LEVERAGE RATIO [(a)/(b)]                         ___:1.00


TOTAL FUNDED DEBT OF BORROWER AND ITS SUBSIDIARIES -- COMPONENT CALCULATIONS

     In the above computation, Total Funded Debt of Borrower and its
Subsidiaries as of the Determination Date is (without duplication) the SUM OF
the following: determined on a consolidated basis for Borrower and its
Subsidiaries, (2)

     (a) all outstanding principal Indebtedness for borrowed
     money (INCLUDING debt securities issued by Borrower or
     any of its Subsidiaries)                                        $_________

     MINUS (b) obligations with respect to the Earn Out
     Payments and accumulated amounts due under the
     Management Agreement and the Tax Agreement                      $_________

     PLUS (c) all interest bearing obligations                       $_________

----------
     (1) Insert maximum required ratio as set forth in Section 6.12 of the Loan
Agreement, as as amended.

     (2) In calculating Total Funded Debt, the outstanding principal balance of
the Revolving Commitment shall be deemed to equal (y) as of October 31, 2000,
the average of the outstanding Revolving Usage as of October 31, 2000 and as of
each of the last days of the two immediately preceding Fiscal Quarters, and (z)
as of the last day of each subsequent Fiscal Quarter, the average of the
outstanding Revolving Usage as of the last days of that Fiscal Quarter and the
three immediately preceding Fiscal Quarters.


                                      -2-
<PAGE>


     PLUS (d) the aggregate amount of all Capital Lease
     Obligations                                                     $_________

     PLUS (e) all obligations in respect of letters of
     credit or other similar instruments for which Borrower
     or any of its Subsidiaries are account parties or are
     otherwise obligated                                             $_________

     PLUS (f) the aggregate amount of all Contingent
     Obligations and other similar contingent obligations of
     Borrower and its Subsidiaries with respect to any of
     the foregoing                                                   $_________

     PLUS (g) any obligations of Borrower or any of its
     Subsidiaries to the extent that the same are secured by
     a Lien on any of the assets of Borrower or its
     Subsidiaries                                                    $_________

     EQUALS TOTAL FUNDED DEBT [(a)-(b)+(c)+(d)+(e)+(f)+(g)]          $_________


EBITDA - COMPONENT CALCULATIONS

     EBITDA for the Test Period was calculated (without duplication) as follows,
in each case as determined on a consolidated basis for Borrower and its
Subsidiaries, in accordance with Generally Accepted Accounting Principles:

     (a) Net Income for the Test Period                              $_________

     PLUS (b) income tax expense (if any) for the Test Period        $_________

     PLUS (c) gross interest expense for the Test Period             $_________

     PLUS (d) depreciation for the Test Period                       $_________

     PLUS (e) non-cash amortization for the Test Period              $_________

     MINUS (f) extraordinary income and gains for the Test
     Period (other than proceeds of crop insurance settlements)     ($_________)

     MINUS (g) gains (or PLUS losses) on sales of fixed assets
     for the Test Period                                            ($_________)

     PLUS (h) accrued Management Fee Distributions and accrued
     Tax Agreement Amounts for the Test Period                       $_________

     EQUALS EBITDA [(a)+(b)+(c)+(d)+(e)-(f)-(g)+(h)]                 $_________


                                      -3-
<PAGE>

III. SECTION 6.13 - MINIMUM EBITDA. As of the Determination Date, EBITDA (as
calculated in item II above) was $_______________.

                  MINIMUM REQUIRED:    $______________ (3)

IV. SECTION 6.14 - MINIMUM EBITDA PRIOR TO FARMING LOSSES. As of the
Determination Date, the SUM OF EBITDA (as calculated in item II above) PLUS
farming losses was $_______________.

                  MINIMUM PERMITTED:   $______________ (4)

V. SECTION 6.15 - FIXED CHARGE COVERAGE RATIO

     A. As of the Determination Date, beginning July 31, 2000, the Fixed Charge
Coverage ratio (as calculated below) was ______: 1.00.

                  MINIMUM PERMITTED:    1.25: 1.00

THE FIXED CHARGE COVERAGE RATIO WAS COMPUTED AS FOLLOWS:

                  (a) the SUM OF:

                      (i) EBITDA for the Test Period(5)
                      (as calculated in item II above)                $________

                      MINUS (ii) Capital Expenditures (net
                      of any Indebtedness constituting
                      purchase money incurred to finance
                      those Capital Expenditures) for the
                      Test Period                                    ($________)

                      MINUS (iii) income taxes payable in
                      cash for the Test Period                       ($________)

-------

     3 Insert the applicable amount from Section 6.13 of the Loan Agreement, as
amended.

     4 Insert the applicable amount from Section 6.14 of the Loan Agreement, as
amended.

     5 PROVIDED that as of the last day of the Fiscal Quarters ending July 31,
2000 and October 31, 2000, the Fixed Charge Coverage Ratio shall be calculated
for the period since the Closing Date.


                                      -4-
<PAGE>

                      MINUS (iv) Tax Gross- Up's Per the
                      Test Period                                     $________

                      MINUS (v) Management Fee Distributions
                      to the extent paid in cash                      $________

               DIVIDED BY (b) Fixed Charges for the Test
               Fiscal Quarter (as calculated below)                   $________

               EQUALS Fixed Charge Coverage Ratio [a/b]      ___: 1.00

FIXED CHARGES CALCULATION:

               (a) gross interest expense of Borrower and its
               Subsidiaries on a consolidated basis (paid or
               payable in Cash)                                       $________

               PLUS (b) scheduled principal payments of Borrower
               and its Subsidiaries on indebtedness for borrowed
               money and Capital Leases                               $________

               EQUALS Fixed Charges [(a)+(b)]                         $________

VI. SECTION 6.16 - CURRENT RATIO. As of the Determination Date, the ratio of (a)
the consolidated current assets of Borrower and its Subsidiaries as of the
Determination Date, to (b) the consolidated current liabilities of Borrower and
its Subsidiaries as of the Determination Date (excluding accrual accounts for
Earn Out Payments, Tax Agreement Amounts and Management Fee Distributions, but
in any event including the Revolving Usage) (in each case determined in
accordance with GAAP) was $_____________________.

               MAXIMUM PERMITTED: ____________(6)

VII. SECTION 6.17 - PROFITABILITY. The SUM OF Net Income of Borrower and its
Subsidiaries for the Test Fiscal Quarter PLUS accrued but unpaid Management Fee
Distributions of Borrower and its Subsidiaries for the Test Fiscal Quarter was
$_____________________.

               MINIMUM PERMITTED: $_______________(7)

               PROFITABILITY FOR FISCAL QUARTER IMMEDIATELY
               PRECEDING THE TEST FISCAL QUARTER: $_______________

----------
     6 Insert applicable amount from Section 6.16 of the Loan Agreement, as
amended.

     7 This sum shall not be less than zero for any two consecutive Fiscal
Quarters (beginning with the two Fiscal Quarters ending April 30, 2000 and July
31, 2000).


                                      -5-
<PAGE>

VIII. SECTION 6.18 - MAXIMUM CAPITAL EXPENDITURES. As of the Determination Date,
the aggregate amount of Capital Expenditures made by Borrower and its
Subsidiaries during the current Fiscal Year was $_____________________.

               MAXIMUM PERMITTED: $_______________(8)

IX. SECTION 6.19 - MAXIMUM RESEARCH AND DEVELOPMENT EXPENDITURES. As of the
Determination Date, the aggregate amount of research and development
expenditures made by Borrower and its Subsidiaries during the current Fiscal
Year was $_____________________.

               MAXIMUM PERMITTED: $1,500,000

X. SECTION 6.8 - INDEBTEDNESS AND CONTINGENT OBLIGATIONS. As of the
Determination Date, the outstanding balance of Indebtedness and Contingent
Obligations permitted by Section 6.8 is as follows.

               (a) Existing Indebtedness and Contingent
               Obligations disclosed on Schedule 6.8            $______________

               (b) Indebtedness and Contingent Obligations
               in favor of the Creditors under the Loan
               Documents                                        $______________

               (c) Indebtedness and Contingent Obligations
               arising from the endorsement of instruments
               for collection in the ordinary course of
               Borrower's business                              $______________

               (d) Indebtedness and Contingent Obligations
               consisting of the Approved Swap Agreement        $______________

               (e) Purchase money Indebtedness and
               obligations in connection with Capital Leases
               PROVIDED that the aggregate amount of such
               Indebtedness and Capital Leases incurred in
               any Fiscal Year does not exceed $500,000         $______________

               (f) Subordinated Obligations                     $______________

----------
     8 Insert the applicable amount from Section 6.18 of the Loan Agreement.


                            -6-
<PAGE>

               (g) Deferred obligations under the Management
               Agreement and the Tax Agreement (subject to
               the subordination provisions contained in the
               Landec Guaranty)                                 $______________

               (h) Indebtedness and Contingent Obligations
               under initial or successive refinancings of
               any Indebtedness permitted under clauses (a)
               and (f) above, provided that the principal
               amount of any such refinancing does not
               exceed the principal amount of the
               Indebtedness being refinanced and the
               material terms and provisions of any such
               refinancing (including maturity, redemption,
               prepayment, default and subordination
               provisions) are no less favorable to the
               Lenders than the Indebtedness being
               refinanced                                       $______________

               (i) Indebtedness of Borrower with respect to
               the Secondary Partner Deferred Payments
               referred to in Section 2.6 of the Merger and
               Purchase Agreement                               $______________

XI. A review of the activities of Borrower and its Subsidiaries during the
fiscal period covered by this Certificate has been made under the supervision of
the undersigned with a view to determining whether during such fiscal period
Borrower performed and observed all of its Obligations. To the best knowledge of
the undersigned, during the fiscal period covered by this Certificate, all
covenants and conditions have been so performed and observed and no Default or
Event of Default has occurred and is continuing, with the exceptions set forth
below in response to which Borrower has taken or proposes to take the following
actions (if none, so state).

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

XII. The undersigned a Senior Officer of Borrower certifies that the
calculations made and the information contained herein are derived from the
books and records of Borrower and its Subsidiaries, as applicable, and that each
and every matter contained herein correctly reflects those books and records.



                                      -7-
<PAGE>

XIII. To the best knowledge of the undersigned no event or circumstance has
occurred that constitutes a Material Adverse Effect since the date the most
recent Compliance Certificate was executed and delivered, with the exceptions
set forth below (if none, so state).

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________


Dated: _______________

BUSH ACQUISITION CORPORATION,
a Delaware corporation



By: ______________________________
Name:
Title:



                                      -8-

</TEXT>
</DOCUMENT>
</SUBMISSION>
