EXHIBIT 10.23
PLEDGE AND SECURITY AGREEMENT
This Pledge and Security Agreement (the "AGREEMENT") is entered into
this 1st day of October, 1998 by and between Landec Corporation, a California
corporation (the "COMPANY") and Michael L. Williams ("PURCHASER").
RECITALS
In order to assist Purchaser in meeting certain financial commitments
and obligations, the Company has agreed to lend Purchaser $500,000 pursuant
to a promissory note of even date herewith (the "NOTE"). The Company
requires that the Note be secured by a pledge of Purchaser's interest in the
Earn-Out payments described in Section 1.3 of the Agreement and Plan of
Reorganization among the Company, the undersigned, Intellicoat Corporation
and Williams & Sun, Inc. dated August 20, 1997 (the "EARN-OUT") on the terms
set forth below.
AGREEMENT
In consideration of the Company's acceptance of the Note, and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto agree as follows:
1. The Note shall become payable as described therein.
2. Purchaser shall deliver to the Chief Financial Officer of the
Company, or her designee (hereinafter referred to as the "PLEDGE HOLDER"), an
Assignment of Interest in the form attached to this Agreement as ATTACHMENT A
executed by Purchaser and by Purchaser's spouse, in blank, for use in
transferring all or a portion of the Collateral to the Company if, as and
when required pursuant to this Agreement. In addition, if Purchaser is
married, Purchaser's spouse shall execute the signature page attached to this
Agreement.
3. As security for the payment of the Note and any renewal, extension
or modification of the Note, Purchaser hereby grants to the Company a
security interest in and pledges with and delivers to the Company, the
Earn-Out (sometimes referred to herein as the "COLLATERAL").
4. In the event of any foreclosure of the security interest created by
this Agreement, the Company may assign the rights to the Earn-Out payment to
a third party or retain the payments itself.
5. In the event of default in payment when due of any indebtedness
under the Note, the Company may elect then, or at any time thereafter, to
exercise all rights available to a secured party under the California
Commercial Code including the right to sell the Collateral at a private
or public sale or retain the Collateral as provided above. The proceeds of
any sale shall be applied in the following order:
(a) To the extent necessary, proceeds shall be used to
pay all reasonable expenses of the Company in enforcing this Agreement and
the Note, including, without limitation, reasonable attorney's fees and legal
expenses incurred by the Company.
(b) To the extent necessary, proceeds shall be used to
satisfy any remaining indebtedness under Purchaser's Note.
(c) Any remaining proceeds shall be delivered to
Purchaser.
6. Upon full payment by Purchaser of all amounts due under the Note,
Pledge Holder shall destroy the executed Assignment of Interest, and Pledge
Holder shall thereupon be discharged of all further obligations under this
Agreement.
The parties have executed this Pledge and Security Agreement as of the
date first set forth above.
COMPANY: PURCHASER:
LANDEC CORPORATION MICHAEL L. WILLIAMS
By: /s/ Joy T. Fry /s/ Michael L. Williams
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Joy T. Fry, VP and CFO
Address: 3603 Haven Avenue Address: 306 NORTH MIN STREET
Menlo Park, CA 94025 MONTICELLO, IN 47960
ASSIGNMENT OF INTEREST
Michael L. Williams does hereby sell, assign and/or transfer to Landec
Corporation or its assigns the right to receive $____________ pursuant to the
terms of Section 1.3 of that certain Agreement and Plan of Reorganization
dated August 20, 1997 among Landec Corporation, Intellicoat Corporation,
Williams & Sun, Inc. and Michael L. Williams and does hereby irrevocably
constitute and appoints Gary T. Steele and Joy T. Fry and each of them as his
attorney-in-fact to execute and deliver any documents associated with such
transfer with full power of substitution in the premises.
Dated:
---------------
/s/ Michael L. Williams
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Michael L. Williams
In consideration for the willingness of Landec Corporation to loan
$500,000.00 to Michael L. Williams, I hereby consent to the foregoing
assignment.
/s/ Diane Williams
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Diane Williams
PROMISSORY NOTE
$500,000 Monticello, Indiana
October 1, 1998
For value received, the undersigned promises to pay Landec Corporation,
a California corporation (the "COMPANY"), at its principal office the
principal sum of $500,000 (the "PRINCIPAL") with interest from the date
hereof at a rate of 7.50% per annum, compounded annually, on the unpaid
balance of such principal sum.
Such principal and interest shall be due and payable as follows:
(a) the greater of (1) $480,000, and (2) the payment payable to
the undersigned by the Company pursuant to Section 1.3 of the Agreement and
Plan of Reorganization among the Company, Intellicoat Corporation, Williams &
Sun, Inc. and the undersigned dated August 20, 1997 (the "REORGANIZATION
AGREEMENT") for the Base Year (as defined in the Reorganization Agreement)
ending on June 30, 1999, together with any accrued interest thereon, shall be
due and payable on July 31, 1999, PROVIDED HOWEVER, that in no event shall
this Note cause the undersigned to be obligated to pay more than the
Principal together with interest accrued thereon.
(b) All remaining amounts outstanding hereunder, including any
accrued but unpaid interest shall be due and payable on July 31, 2000.
Principal and interest are payable in lawful money of the United States
of America. AMOUNTS DUE UNDER THIS NOTE MAY BE PREPAID AT ANY TIME WITHOUT
INTEREST OR PENALTY.
Should suit be commenced to collect any sums due under this Note, such
sum as the Court may deem reasonable shall be added hereto as attorneys'
fees. The makers and endorsers have severally waived presentment for
payment, protest, notice of protest, and notice of nonpayment of this Note.
This Note, is secured by a pledge of the undersigned's interest in the
Earn-Out payments for all Base Years described in Section 1.3 of the
Reorganization Agreement and is subject to the terms of a Pledge and Security
Agreement between the undersigned and the Company of even date herewith.
/s/ Michael L. Williams
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Michael L. Williams