Exhibit 99.1
EXECUTIVE
EMPLOYMENT AGREEMENT
This Executive Employment Agreement
(this “Agreement”) is entered into as of
January 1, 2006, by and between Landec Corporation (the
“Company”) and Gary T. Steele (the
“Executive”).
WHEREAS , on April 5,
2003, Executive and the Company entered into an employment
agreement (the “Original Employment Agreement”);
and
WHEREAS , Executive and the
Company wish to replace the Original Employment Agreement (which
expires on December 31, 2005) with this Agreement;
NOW, THEREFORE , in
consideration of the mutual promises and covenants contained
herein, it is hereby agreed by and between the parties hereto as
follows:
1. POSITION AND DUTIES
(a) Position
Executive will continue in his present positions of President,
Chief Executive Officer (“CEO”) and Chairman of the
Board (“COB”) of the Company during the term of his
employment under this Agreement and for the period of time
specified in this Agreement. The prior sentence notwithstanding,
the Board of Directors (the “Board”) may designate
another Director as the COB, at the Board’s sole discretion,
without violating this Agreement. As President, CEO and COB,
Executive reports to the Board and will assist the Board in
developing and implementing the Company’s ongoing business
strategy and objectives. Executive shall have such duties,
authority and responsibilities that are commensurate with his being
the Company’s most senior executive officer, including, but
not limited to, being responsible for the general management and
operation of the Company, and such additional powers and duties as
are prescribed from time to time by the Board.
(b) Obligations
During the term of his employment, Executive will devote
Executive’s full business efforts and time to the Company.
For the duration of his employment, Executive agrees not to
actively engage in any other employment, occupation or consulting
activity for any direct or indirect remuneration without the prior
approval of the Board; provided, however, that Executive may,
without the approval of the Board, serve in any capacity with any
civic, educational or charitable organization, provided such
services do not interfere with Executive’s obligations to the
Company.
2. TERM OF EMPLOYMENT
This Agreement covers the Executive’s employment with the
Company from January 1, 2006 through December 31, 2008,
at which point it will expire unless renewed or extended by the
written consent of both parties.
3. LOCATION
Executive will be based at the Company’s executive offices
in Menlo Park, California or elsewhere as may be designated from
time to time by the Company. The Executive will be expected to
travel to the Company’s offices at other locations as needed
for the performance of his duties and responsibilities.
4. COMPENSATION, BENEFITS AND PERQUISITES
(a) Salary
In consideration of services to be rendered, Executive will be
paid an annual base salary of $375,000 per year (such annual
salary, as is then in effect, the “Base Salary”), to be
earned and paid in equal semi-monthly installments, less any
deductions required by law, pursuant to the procedures regularly
established by the Company. Executive’s Base Salary will be
subject to review by the Compensation Committee of the Board (the
“Committee”) not less than annually, and adjustments
can be made in the discretion of the Committee.
(b) Annual Incentive
Compensation
Executive will continue to participate in the Company’s
annual cash bonus plan as it may be modified from time to time (the
“Incentive Plan”). Under the terms of the current
Incentive Plan for fiscal year 2006, Executive’s annual bonus
(which may not exceed 100% of Executive’s Base Salary at the
beginning of the fiscal year) is based upon the attainment of
pre-determined goals mutually established by the Company and
Executive. Actual bonus(es) payable will be determined and paid
pursuant to the terms of the Incentive Plan. The Company reserves
the right to modify, amend or discontinue the Incentive Plan at any
time.
(c) Long Term Incentive
Compensation
Executive shall be eligible for grants of equity interests in
the Company (“Compensatory Equity”) at times and in
such amounts as determined by the Committee. All future grants of
Compensatory Equity (and the issuance of any underlying shares) to
Executive shall be: (i) issued pursuant to the 2005 Stock
Incentive Plan (or any applicable stockholder-approved successor
plan) (the “Plan”) and (ii) issued pursuant to an
effective registration statement filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended.
Executive may elect to establish a trading plan in accordance with
Rule 10b5-1 of the Securities Exchange Act of 1934 for any of
his shares of common stock of the Company, provided, however, that
such trading plan must comply with all of the requirements for the
safe harbor under Rule 10b5-1 and must be approved in
accordance with any Rule 10b5-1 Trading Plan Policy of the
Company then in effect.
(d) Benefits
Executive will participate in the Company’s standard
medical, life, accident, disability and retirement plans provided
to its eligible employees on no less favorable terms than for other
Company executives, subject in each case to the generally
applicable terms and conditions of the plan or arrangement in
question and to the determinations of any person or committee
administering such plan or arrangement. In addition, so long as
Executive is an employee of the Company, the Company will pay the
annual premium on the additional disability plan in which Executive
currently participates.
(e) Vacation
Executive shall accrue Company paid vacation in accordance with
the Company’s policies and procedures, as may be amended from
time to time and which currently provide for five weeks vacation
per year.
(f) Expenses
The Company will reimburse Executive for travel, lodging,
entertainment and other reasonable business expenses incurred by
him in the performance of his duties in accordance with the
Company’s general policies, as may be amended from time to
time.
5. TERMINATION OF EMPLOYMENT
(a) By Death or
Disability
Executive’s employment will terminate automatically upon
the death of Executive or when Executive begins to receive benefits
under the Company’s Long Term Disability Plan. In such cases,
the Company will pay Executive (in the case of long term
disability) or his estate or a person who acquired the right to
receive such payments by bequest or inheritance (in the case of
death):
(i) any earned, but unpaid,
Base Salary to which Executive is entitled through the date of
termination; and
(ii) Executive’s annual
incentive award, if any, to which he is entitled under the
Incentive Plan (disregarding any requirement that he be employed
through the end of the determination period or on the date the
payment is made), pro rated through the date of termination.
Upon payment of such amounts, the Company’s obligations
under this Agreement will then cease.
(b) By Company for
Cause
The Company may terminate, without liability, Executive’s
employment for Cause (as defined below) at any time and without
notice. The Company will pay Executive any earned, but unpaid, Base
Salary to which he is entitled through the date of termination and
thereafter the Company’s obligations under this Agreement
will then cease. Executive will not be entitled to any annual
incentive award under the Incentive Plan for the year in which
termination occurs.
Termination shall be for “Cause” if Executive:
(i) willfully breaches
significant and material duties he is required to perform;
(ii) commits a material act of
fraud, dishonesty, misrepresentation or other act of moral
turpitude;
(iii) is convicted of a felony
or another crime which is materially injurious to the reputation of
the Company;
(iv) exhibits gross negligence
in the course of his employment;
(v) is ordered removed by a
regulatory or other governmental agency pursuant to applicable law;
or
(vi) fails to obey a lawful
direction from the Board.
(c) By Company Without
Cause
The Company may terminate Executive’s employment and this
Agreement, at any time, for any reason, without Cause.
If Executive’s employment is terminated by the Company
without Cause and not in connection with a “Change of
Control” as described in Section 6(a) below, the Company will
(1) pay Executive (in a single lump-sum payment) an amount
equal to any earned, but unpaid, Base Salary to which he is
entitled through the date of termination, (2) pay Executive an
amount equal to 100% of the Base Salary over the 12-month period
immediately following the date of termination (such amount to be
paid in equal installments on the Company’s regularly
scheduled payroll dates), (3) if Executive elects to continue
his health coverage either pursuant to the Consolidated Omnibus
Budget Reconciliation Act of 1985 (“COBRA”) or through
an individual policy with any insurance carrier (not including
health coverage obtained in connection with any new employment)
following the termination of his employment (it being understood
that, if Executive elects health coverage under COBRA such coverage
may only continue for the maximum period permitted under COBRA or
any applicable state law and thereafter health coverage must be
received through an individual policy with an insurance carrier),
pay Executive’s monthly premium for such coverage directly to
the applicable insurance carrier (including any premium for
coverage of Executive’s spouse) until the earliest of the
date Executive attains age 65, or the date when Executive commences
receiving substantially equivalent health insurance coverage in
connection with new employment, and (4) continue to provide
secretarial support to Executive for the six-month period beginning
on the date of termination. In addition, such number of shares
subject to any unvested stock options and such number of shares of
restricted stock, restricted stock units or other awards made under
the Plan as would have vested over the one-year period beginning on
the date of termination shall vest as of the date of termination.
Executive will receive the annual incentive award, if any, to which
he is entitled under the Incentive Plan (disregarding any
requirement that he be employed through the end of the
determination period or on the date the payment is made), pro rated
through the date of termination. After payment of the termination
benefits described in this Section 5(c), the Company’s
obligations under this Agreement will cease.
(d) Voluntary
Termination
Executive may terminate his employment at any time by giving the
Company three (3) months’ advance written notice of such
termination. In this event, the Company will pay any earned, but
unpaid, Base Salary to which Executive is entitled through the date
of termination, and the Company’s obligations under this
Agreement will then cease. The Executive will not be entitled to
any annual incentive award under the Incentive Plan for the year in
which he terminates his employment.
(e) Termination for
“Good Reason”
Executive may also terminate his employment for “Good
Reason” within 30 days of the occurrence of any one of
the following events:
(i) any assignment to the
Executive of duties other than those contemplated by this Agreement
or typically assumed by a President and CEO or which represent a
material reduction in the scope and authority of Executive’s
position, except that the designation of another Director as
Chairman of the Board shall not constitute “Good
Reason”;
(ii) a Company required
relocation of Executive’s principal place of work which is
not agreed to by Executive and which requires an increase in
Executive’s normal commute of more than 35 miles, unless such
relocation results from the relocation of the Company’s
executive offices; or,
(iii) any reduction in salary
below $375,000 per year which is not agreed to by Executive.
If Executive terminates employment for “Good Reason”
and not in connection with a “Change of Control” as
described in Section 6(b) below, Company will (1) pay
Executive any earned, but unpaid, Base Salary to which he is
entitled through the date of termination, (2) pay Executive
(in a single lump-sum payment on the Company’s first payroll
date that occurs at least 6 months after Executive’s
termination date) an amount equal to 50% of the Base Salary at the
then current rate (or, if higher, the rate prior to a reduction
referred to in clause (iii) above (such amount referred to
herein as the “Good Reason Base Salary”)), (3) pay
Executive an amount equal to 50% of the Good Reason Base Salary
over the 6-month period immediately following the date the payment
is made pursuant to (2) above (such amount to be paid in equal
installments on the Company’s regularly scheduled payroll
dates), (4) if Executive elects to continue his health
coverage either pursuant to COBRA or through an individual policy
with any insurance carrier (not including health coverage obtained
in connection with any new employment) following the termination of
his employment (it being understood that, if Executive elects
health coverage under COBRA such coverage may only continue for the
maximum period permitted under COBRA or any applicable state law
and thereafter health coverage must be received through an
individual policy with an insurance carrier), pay Executive’s
monthly premium for such coverage directly to the applicable
insurance carrier (including any premium for coverage of
Executive’s spouse) until the earliest of the date Executive
attains age 65, or the date when Executive commences receiving
substantially equivalent health insurance coverage in connection
with new employment, and (5) continue to provide secretarial
support to Executive for the six-month period beginning on the date
of termination. In addition, such number of shares subject to any
unvested stock options and such number of shares of restricted
stock, restricted stock units or other awards made under the Plan
as would have vested over the one-year period beginning on the date
of termination shall vest as of the date of termination. Executive
will receiv
