UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED
PURSUANT TO RULE 13d-1(a) AND AMENDMENTS
THERETO FILED PURSUANT TO RULE 13d-2(a)
(Amendment No. )*
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Planet Polymer Technologies, Inc.
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(Name of Issuer)
Common Stock, No Par Value
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(Title of Class of Securities)
727044109
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(CUSIP Number)
David M. Hayes, Esq.
c/o Agway Inc.
P.O. Box 4933
Syracuse, New York 13221-4933
315-449-6436
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
November 12, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f), or 13d-1(g), check the following
box .
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Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
<PAGE>
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 or otherwise subject to the liabilities of that section of the Act but
shall be subject to all other provisions of the Act (however, see the Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 727044109
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(1) NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Agway Inc.
(I.R.S. Identification No. 15-0277720)
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |x|
(b) | |
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS*
AF
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO 2(d) OR 2(e)
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF (7) SOLE VOTING POWER 0 shares
SHARES ---------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER 3,000,000 shares
OWNED BY ---------------------------------------------------------
EACH (9) SOLE DISPOSITIVE POWER 0 shares
REPORTING ---------------------------------------------------------
PERSON WITH (10) SHARED DISPOSITIVE POWER 3,000,000 shares
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,000,000 shares
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<PAGE>
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
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(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
36%
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(14) TYPE OF REPORTING PERSON*
CO
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<PAGE>
SCHEDULE 13D
CUSIP No. 727044109
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(1) NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Agway Financial Corporation
(I.R.S. Identification No. 06-1174232)
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |x|
(b) | |
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS*
WC
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO 2(d) OR 2(e)
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF (7) SOLE VOTING POWER 0 shares
SHARES ---------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER 3,000,000 shares
OWNED BY ---------------------------------------------------------
EACH (9) SOLE DISPOSITIVE POWER 0 shares
REPORTING ---------------------------------------------------------
PERSON WITH (10) SHARED DISPOSITIVE POWER 3,000,000 shares
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,000,000 shares
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<PAGE>
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
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(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
36%
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(14) TYPE OF REPORTING PERSON*
CO
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<PAGE>
SCHEDULE 13D
CUSIP No.727044109
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(1) NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Agway Holdings Inc.
(I.R.S. Identification No. 06-1174231)
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) | |
- - ----------------------------------------------------------------
(3) SEC USE ONLY
- ------------------------------------------------------------------
(4) SOURCE OF FUNDS*
AF
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO 2(d) OR 2(e)
-----
- -----------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------
NUMBER OF (7) SOLE VOTING POWER 0 shares
SHARES ---------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER 3,000,000 shares
OWNED BY ---------------------------------------------------------
EACH (9) SOLE DISPOSITIVE POWER 0 shares
REPORTING ---------------------------------------------------------
PERSON WITH (10) SHARED DISPOSITIVE POWER 3,000,000 shares
- -------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,000,000 shares
- ------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
- -----------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
36%
- -----------------------------------------------------------------
<PAGE>
(14) TYPE OF REPORTING PERSON*
CO
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<PAGE>
Item 1. Security and Issuer. This Schedule relates to the Common Stock, no par
value, of Planet Polymer Technologies, Inc.. The Issuer's principal executive
offices are located at 9985 Businesspark Avenue, Suite A, San Diego, CA 92131.
Item 2. Identity and Background.
(a) This Schedule is filed on behalf of (i) Agway Inc., a Delaware corporation
("Agway"); (ii) Agway Financial Corporation, a Delaware corporation and wholly
owned subsidiary of Agway ("AFC"); and (iii) Agway Holdings Inc., a Delaware
corporation and wholly owned subsidiary of AFC ("AHI"). Each of the foregoing is
hereinafter referred to, individually, as a "Reporting Person" and,
collectively, as the "Reporting Persons." Information required by items 2
through 6 of this Schedule is also being provided regarding the directors and
executive officers of Agway, AFC and AHI (the "Individuals").
(b) The principal office and business address of the Reporting Persons is c/o
Agway Inc., 333 Butternut Drive, DeWitt, NY 13214.
(c) Agway is an agricultural cooperative that is directly engaged in
manufacturing, processing, distribution and marketing of products and services
to its farmer-members and other customers, primarily in the Northeastern United
States; through certain of its subsidiaries, Agway is involved in retail and
wholesale sales of farm supplies, yard and garden products, pet food and pet
supplies; distribution of petroleum products; repackaging and marketing of
produce; processing and marketing sunflower seeds; the underwriting and/or sale
of certain types of insurance; and lease financing.
AFC is a wholly owned subsidiary of Agway whose principal business consists of
securing financing through bank borrowings and the issuance of corporate debt
instruments to provide funds to Agway and its direct subsidiaries and to AHI and
AHI's subsidiaries.
AHI is a wholly owned subsidiary of AFC and is a holding company for various
subsidiaries involved in retail sales of yard and garden equipment, pet food and
pet supplies; distribution of petroleum products, processing and marketing of
sunflower seeds; repackaging and marketing of vegetables; and leasing and
insurance operations.
The names and certain information regarding the directors and executive officers
of Agway, AFC and AHI are set forth in Exhibit G.
(d) N/A
(e) N/A
(f) Agway is a Delaware corporation.
AFC is a Delaware corporation.
AHI is a Delaware corporation.
The Individuals are all United States citizens.
<PAGE>
Item 3. Source and Amount of Funds or Other Consideration.
The securities were purchased (i) in the case of the acquisition by AHI of the
securities covered by this Schedule 13D, by an advance to AHI of the aggregate
purchase price from the available cash assets of AFC and (ii) in the case of the
Individuals, from personal cash assets.
Item 4. Purpose of the Transaction.
The acquisition of the shares covered by this Schedule 13D is one of several
agreements being entered into between the issuer and one or more of the
Reporting Persons. The consummation of the Stock Purchase Agreement which gives
rise to the obligation to file this Schedule 13D is subject to satisfaction of a
number of conditions set forth in a Stock Purchase Agreement, dated November 12,
1998 (attached hereto as Exhibit A), including shareholder approval of the
acquisition of the Shares and the Warrant (each as defined below). If all the
conditions to consummation of the acquisition of the Shares and Warrant are
satisfied, AHI will acquire 1,000,000 shares of the issuer's common stock, no
par value (the "Shares"), for a purchase price of $1.00 per share; AHI will also
acquire a warrant (the "Warrant") (attached hereto as Exhibit B) to purchase
2,000,000 shares of the issuer's common stock, no par value (the "Warrant
Shares"). The Warrant Shares are exercisable on the following terms: for a
period of twelve (12) months following the date of the acquisition of the
Shares, AHI will have the right to purchase up to all or any part of 2,000,000
Warrant Shares. After the expiration of the first twelve (12) month period, and
for the twelve (12) month period immediately thereafter, and provided that AHI
had acquired at least 1,000,000 Warrant Shares during the first twelve (12)
months following the initial acquisition of the Shares, AHI shall have the right
to purchase up to all or any part of the Warrant Shares not acquired by AHI
prior to the expiration of the previous twelve (12) month period. AHI may
transfer the Warrant to any of its subsidiaries or affiliates.
In connection with the acquisition of the Shares and the Warrant, AHI has agreed
that it will not, nor will it permit any of its affiliates to, directly or
indirectly, acquire, or agree to acquire, any shares of the issuer's common
stock or any other securities to the extent such acquisition would result in AHI
and its affiliates owning more than forty-five percent (45%) of the issuer's
common stock outstanding at the time of such acquisition or acquisition
agreement.
In connection with the acquisition of the Shares and the Warrant, AHI has been
granted certain "anti-dilution" rights in order to allow it, through the
purchase of additional shares of common stock at the then current market price,
to maintain its percentage voting power with respect to the issuer. In addition,
the Warrant provides for adjustment to the number and/or exercise price of the
Warrant Shares in the event that the issuer (i) combines or subdivides its
outstanding shares of common stock; (ii) sells shares or rights to acquire
shares of common stock at a price less than $1.00 per share; (iii) changes the
purchase or exercise price provided for in any right or option, or the rate at
which convertible securities shall be convertible into or exchangeable for the
shares of its common stock; or (iv) reclassifies or changes the outstanding
shares of its common stock, or consolidates with or merges into another company.
At the closing of the acquisition of Shares, AHI and the issuer will enter into
a Registration Rights Agreement (attached hereto as Exhibit C), pursuant to
which the issuer will be obligated to file a registration statement by April 1,
1999
<PAGE>
pertaining to the resale by AHI of the Shares and Warrant Shares.
In connection with the acquisition of the Shares and the Warrant, a subsidiary
of AHI, Agway Consumer Products, Inc., a Delaware corporation ("ACP"), has
entered into a License Agreement, dated November 12, 1998 (attached hereto as
Exhibit D), and a Product Feasibility Agreement, dated November 12, 1998
(attached hereto as Exhibit E) with the issuer regarding certain of the issuer's
polymer coating technologies. Under the license agreements, the issuer will
grant to ACP an exclusive worldwide license (including the right to grant
sublicenses to others) to the issuer's polymer coating technologies as they
relate to certain products other than fertilizers and certain biological
products. Under the product feasibility agreements, the issuer will conduct
product feasibility work in connection with these uses of the issuer's polymer
coating technologies.
Shareholders of the issuer have cumulative voting rights with respect to the
shares of common stock they own. Accordingly, as a result of the acquisition of
the Shares, and based upon the number of shares of common stock issued and
outstanding on November 10, 1998, AHI will be entitled to elect one member of
the issuer's board of directors. If all of the Warrant Shares were to be
acquired, and based on the number of shares of the issuer's common stock issued
and outstanding as of November 10, 1998, AHI would be entitled to elect members
of the issuer's board of directors commensurate with AHI's ownership interest.
AHI's ability to elect directors of the issuer in the future will depend upon
its future ownership of common stock and the total number shares of voting
securities issued and outstanding.
The Individuals and other employees of Agway, AFC, and AHI may purchase
securities of the issuer solely for investment purposes, subject to the
percentage limitations described above.
Also in connection with the agreements, Agway and AHI entered into a binding
commitment to provide a $480,000 line of credit (the "Line of Credit") to the
issuer in the event the closing under the Stock Purchase Agreement ("Closing")
does not occur on or before December 31, 1998. Subject to the execution and
delivery of definitive agreements containing such terms as Agway and AHI deem
necessary, the Line of Credit will provide that, if the Closing does not occur
on or before December 31, 1998, the issuer will be permitted to draw down a
maximum of $480,000 in four installments of $120,000 each, commencing on January
1, 1999 and thereafter on the first day of each month until the earlier of
repayment of the loans made under the Line of Credit or April 30, 1999. Interest
on the Line of Credit will be based on the prime rate (as published in the Wall
Street Journal), plus one percent, compounded monthly and accruing daily on the
outstanding principal. See Exhibit F of the Schedule setting forth terms of this
agreement.
Item 5. Interest in Securities of the Issuer. See pps. 2-4 of this Schedule,
setting forth the aggregate number and percentage of the Securities beneficially
owned by each Reporting Person, the number of shares as to which there is sole
or shared power to vote, or to direct the vote, and sole or shared power to
dispose or to direct the disposition. See Exhibit G of this Schedule, setting
forth the aggregate number and percentage of the Securities beneficially owned
by each of the Individuals listed therein, the number of shares as to which
there is sole or shared power to vote, or to direct the vote, and sole or shared
power to dispose or to direct the disposition.
<PAGE>
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
The owner of the shares, AHI, is wholly-owned by AFC, which is a wholly-owned
subsidiary of Agway.
See also the response to Item 4 above.
No arrangement exists with respect to control or ownership of shares purchased
by the Individuals.
Item 7. Materials to be Filed as Exhibits:
Exhibit A - Stock Purchase Agreement, Dated November 12, 1998, Between the
Issuer and AHI.
Exhibit B - Exhibit A to Stock Purchase Agreement, Dated November 12, 1998,
Between the Issuer and AHI - Form of Warrant relating to the
purchase of up to 2,000,000 Shares of Common Stock.
Exhibit C - Exhibit B to Stock Purchase Agreement, Dated November 12, 1998,
Between the Issuer and AHI - Registration Rights Agreement to
be entered into Between the Issuer and AHI upon the closing of the
purchase of the Shares.
Exhibit D - License Agreement, Dated November 12, 1998, Between the Issuer and
ACP.
Exhibit E - Product Feasibility Agreement, Dated November 12, 1998, Between
the Issuer and ACP.
Exhibit F - Letter and Term Sheet of Line of Credit Agreement
Exhibit G - Information Regarding Directors and Executive Officers of Agway, AFC
and AHI
Exhibits and Schedules to the above Agreements which have not been included with
this filing will be submitted to the Securities and Exchange Commission upon
request.
<PAGE>
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
November 19, 1998
/s/ Peter J. O'Neill
---------------------------
Agway Inc.
by: Peter J. O'Neill
Senior Vice President
Finance & Control
/s/ Peter J. O'Neill
---------------------------
Agway Financial Corporation
by: Peter J. O'Neill
Vice President & Director
/s/ Peter J. O'Neill
----------------------------
Agway Holdings Inc.
by: Peter J. O'Neill
Vice President & Director
EXHIBIT A
<PAGE>
PLANET POLYMER TECHNOLOGIES, INC.
STOCK PURCHASE AGREEMENT
DATED AS OF NOVEMBER 12, 1998
<PAGE>
SUBSCRIPTION INSTRUCTIONS - PLEASE READ CAREFULLY
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE NOT BEEN
QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. THE SECURITIES
CANNOT BE SOLD OR TRANSFERRED WITHOUT SUCH REGISTRATION OR
QUALIFICATION UNLESS AN EXEMPTION FROM SUCH REGISTRATION OR
QUALIFICATION IS THEN AVAILABLE
PLANET POLYMER TECHNOLOGIES, INC.
STOCK PURCHASE AGREEMENT
------------------------
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of November 12,
1998 by and among Planet Polymer Technologies, Inc., a California corporation
with headquarters located at 9985 Business Park Avenue, Suite A, San Diego,
California 92131 (the "Company") and Agway Holdings Inc., a Delaware corporation
("Buyer").
WHEREAS:
A. The Company and Buyer are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Rule 506 of
Regulation D ("Regulation D") as promulgated by the United States Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 Act");
B. Buyer wishes to purchase, upon the terms and conditions stated in
this Agreement, 1,000,000 newly issued shares (the "Shares") of the Company's
common stock (the "Common Stock"), no par value;
C. Buyer shall receive upon issuance of the Shares a warrant (the
"Warrant") to acquire up to 2,000,000 shares of Common Stock (the "Warrant
Shares" and, together with the Shares and the Warrant, the "Securities") at the
Per Share Price (defined below) during the one-and two-year periods immediately
following the closing date of the initial sale of Shares (the "Initial Closing
Date"), on the terms described below and as set forth more fully in the form of
Warrant attached hereto as Exhibit A; and
D. The Company will, in connection with the issuance of the Shares and
the Warrant Shares and pursuant to the terms of the Registration Rights
Agreement substantially in the form
<PAGE>
of Exhibit B attached hereto (the "Registration Rights Agreement"), grant to
Buyer certain rights to register for resale by Buyer the Shares and the Warrant
Shares under the 1933 Act and the rules and regulations promulgated thereunder,
and applicable state securities laws; and
E. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering an agreement relating to the
funding by Buyer of an evaluation of the feasibility of the Company's polymer
coating technology (the "Feasibility Agreement") and a license agreement (the
"License Agreement" and, together with the Feasibility Agreement and the
Registration Rights Agreement, the "Ancillary Agreements") pursuant to which
Buyer will obtain an exclusive worldwide license to distribute all current and
future products that utilize the Company's polymer coating technology for
agricultural and food- related purposes;
NOW THEREFORE, the Company and Buyer hereby agree as follows:
1. PURCHASE AND SALE OF SHARES.
a. PURCHASE OF SHARES. At the Initial Closing (defined below),
the Company shall issue and sell to Buyer, and Buyer shall purchase
from the Company, the Shares. The per share purchase price (the "Per
Share Price") of the Shares shall be $1.00. The total purchase price
(the "Purchase Price") for Buyer's Shares shall be $1,000,000 (i.e.,
the number of Shares to be purchased by Buyer multiplied by the Per
Share Price). The Shares shall be sold at the Initial Closing as
hereinafter provided.
b. CLOSING. The initial closing (the "Initial Closing") of the
issuance and sale of the Shares shall occur on a date that is within
three (3) business days of the satisfaction (or waiver) of all
conditions to closing set forth in Sections 8 and 9 hereof (but in no
event shall the Initial Closing occur later than January 31, 1999). The
date of the occurrence of the Initial Closing shall be referred to
herein as the "Initial Closing Date."
c. FORM OF PAYMENT. Buyer shall pay the Purchase Price by wire
transfer of immediately available United States Dollars on the Initial
Closing Date to:
Bank: Citibank New York
111 Wall Street, New York, NY 10005
ABA: 021000089
FBO: Morgan Stanley Dean Witter
Beneficiary Account: 40611172
For Further CR to: 212-032582-001
Account Name: Planet Polymer Technologies, Inc.
TIN: 33-0502606
Account Broker: KD Shanley #001
Branch Address: Morgan Stanley Dean Witter
1131 Monterey St., San Luis Obispo,
CA 93401
<PAGE>
(ABA# 021000089, Attention . At the Initial Closing, the
--------------------
Company shall deliver one or more stock certificates, duly executed on behalf of
the Company, representing the Shares (the "Stock Certificates"), together with
the Warrants described below.
d. WARRANT ISSUANCES. At the Initial Closing, the Company will
issue to Buyer a Warrant duly executed on behalf of the Company,
substantially in the form of Exhibit A attached hereto, to acquire the
Warrant Shares at an exercise price per Warrant Share equal to the per
share price for the Shares (subject to adjustment in the manner set
forth in the Warrant), which Warrant may be exercised as follows: (i)
during the twelve (12) month period commencing on the Initial Closing
Date and ending on the date which is twelve (12) months after the
Initial Closing Date (the "First Warrant Period"), Buyer shall be
entitled to purchase up to the full amount of the Warrant Shares (i.e.,
2,000,000 shares) at the Per Share Price; and (ii) during the period
commencing twelve (12) months after the Initial Closing Date and ending
twenty-four (24) months after the Initial Closing Date (the "Second
Warrant Period"), and provided that Buyer acquired at least 1,000,000
of the Warrant Shares during the First Warrant Period, Buyer shall be
entitled to purchase all Warrant Shares not purchased during the First
Warrant Period.
2. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
Buyer represents and warrants to the Company as of the date hereof and
as of the date of the Initial Closing that:
a. INVESTMENT PURPOSE. Buyer is purchasing the Shares and the
Warrants and will acquire the Warrant Shares for its own account for
investment only and not with a view towards, or for resale in
connection with, the distribution thereof except pursuant to sales
registered under the 1933 Act or exempt from the registration
requirements thereof. Buyer is not purchasing the Shares, the Warrants
or the Warrant Shares for the purpose of covering short sale positions
in the Common Stock established on or prior to the date of the Initial
Closing.
b. ACCREDITED INVESTOR STATUS. Buyer hereby represents and
warrants to the Company as follows:
(i) Buyer is an "Accredited Investor," as such term
is defined in Regulation D under the 1933 Act in that the
undersigned is a corporation having total assets in excess of
$5,000,000 not formed for the specific purpose of acquiring
the Securities (as defined below) .
(ii) Buyer is in a financial position to hold the
Securities for an indefinite period of time, is able to bear
the economic risk of an investment in the Securities and can
withstand a complete loss of the Buyer's investment in the
Securities.
<PAGE>
(iii) Buyer either alone or together with the
assistance of its own professional advisor or advisors, has
the knowledge and experience in business and financial matters
to read and interpret financial statements of and concerning
the Company and to evaluate the merits and risks of an
investment in the Securities.
c. RELIANCE ON EXEMPTIONS. Buyer understands that the
Securities are being offered and sold to it in reliance on specific
exemptions from the registration requirements of United States federal
and state securities laws and that the Company is relying upon the
truth and accuracy of, and Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and
understandings of Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of Buyer to acquire
the Securities.
d. INFORMATION. Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale
of the Securities which have been requested by Buyer. Buyer and its
advisors, if any, have been afforded the opportunity to ask questions
of the Company and have received answers to such inquiries. Buyer
understands that its investment in Securities involves a high degree of
risk. Buyer nevertheless believes that an investment in the Securities
is suitable for Buyer based upon Buyer's investment objectives and
financial needs. Buyer has adequate means for providing for its current
financial needs and contingencies and has no need for liquidity of its
investment in the Securities. Buyer has sought such accounting, legal
and tax advice as it has considered necessary to make an informed
investment decision with respect to its acquisition of the Securities.
e. NO GOVERNMENTAL REVIEW. Buyer understands that no United
States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the
Securities or the fairness or suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits
of the offering of the Securities.
f. TRANSFER OR RESALE. Buyer understands that (i) except as
contemplated in the Registration Rights Agreement, the Securities have
not been and are not being registered under the 1933 Act or any state
securities laws, and may not be offered for sale, sold, assigned or
transferred unless (a) subsequently registered thereunder, (b) Buyer
shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company, to the effect
that the securities to be sold, assigned or transferred may be sold,
assigned or transferred pursuant to an exemption from such
registration, or (c) Buyer shall provide the Company with reasonable
assurances that the Securities can be sold pursuant to Rule 144 under
the 1933 Act (or a successor rule thereto); (ii) any sale of such
securities made in reliance on Rule 144 promulgated under the 1933 Act
may be made only in accordance with the terms of said
<PAGE>
Rule and further, if said Rule is not applicable, any resale of such
securities under circumstances in which the seller (or the person
through whom the sale is made) may be deemed to be an underwriter (as
that term is defined in the 1933 Act) may require compliance with some
other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other person is
under any obligation to register such securities (other than pursuant
to the Registration Rights Agreement) under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any
exemption thereunder.
g. LEGENDS. Buyer understands that subject to the removal
provisions set forth below, the certificates representing the
Securities shall bear a restrictive legend in substantially the
following form (and, subject to Section 6 hereof and only so long as
the Securities have the legend set forth below in accordance with this
paragraph, a stop-transfer order may be placed against transfer of such
Securities certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS,
OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE
REASONABLY ACCEPTABLE TO THE ISSUER THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR
UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. ANY SUCH
OFFER, SALE, ASSIGNMENT OR TRANSFER MUST ALSO COMPLY WITH
APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THE SECURITIES
MAY ALSO BE SUBJECT TO RESTRICTIONS UNDER A STOCK PURCHASE
AGREEMENT BETWEEN THE ISSUER AND AGWAY HOLDINGS INC., DATED AS
OF NOVEMBER 12, 1998.
The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of any Securities upon
which such legend is stamped, unless otherwise required by state
securities laws (1)(a) in the case of any Shares or Warrant Shares,
upon the sale of such Shares or Warrant Shares pursuant to an effective
registration statement under the 1933 Act in connection with the
Registration Rights Agreement, (b) in connection with any other sale,
assignment or transfer transaction, such holder provides the Company
with an opinion of counsel, in form, substance, scope and as, to the
counsel delivering such opinion, reasonably acceptable to the Company,
to the effect that the sale, assignment or other transfer of the
Securities may be made
<PAGE>
without registration under the 1933 Act, or (c) such holder provides
the Company with reasonable assurances that the Securities can be sold
pursuant to Rule 144 under the 1933 Act (or a successor rule thereto);
and (2) if the limits imposed by this Agreement do not apply to the
Securities being sold. Such Buyer agrees to sell the Securities,
including those represented by certificate(s) from which the legend has
been removed, only in compliance with all applicable securities laws.
h. AUTHORIZATION; ENFORCEMENT. This Agreement has been duly
and validly authorized, executed and delivered by Buyer and (assuming
due execution and delivery by the Company) is a valid and binding
agreement of Buyer enforceable against Buyer in accordance with its
terms, subject as to enforceability to general principles of equity and
to bankruptcy, insolvency, moratorium, and other similar laws affecting
the enforcement of creditors' rights generally.
i. RESIDENCY. Buyer is a resident of that country and state
specified in its address set forth below.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth on a Schedule of Exceptions provided to Buyer five
(5) days prior to the execution of this Agreement, the Company represents and
warrants to Buyer as of the date hereof and as of the Initial Closing that:
a. ORGANIZATION AND QUALIFICATION. The Company and its
subsidiaries are corporations duly organized and validly existing in
good standing under the laws of the jurisdiction in which they are
incorporated, and have the requisite corporate power to own their
properties and to carry on their business as now being conducted and
presently proposed to be conducted. Each of the Company and its
subsidiaries is duly qualified as a foreign corporation to do business
and is in good standing in every jurisdiction in which the nature of
the business conducted by it makes such qualification necessary except
where the failure to be so qualified would not have a Material Adverse
Effect. "Material Adverse Effect" means any material adverse effect on
the business, operations, properties, prospects, condition (financial
or otherwise) or results of operation of the Company and its
subsidiaries taken as a whole.
b. AUTHORIZATION; ENFORCEMENT; COMPLIANCE WITH OTHER
INSTRUMENTS. (i) The Company has the requisite corporate power and
authority to enter into and perform this Agreement and the Ancillary
Agreements, and to issue the Securities in accordance with the terms
hereof and thereof; (ii) the execution and delivery of this Agreement
and the Ancillary Agreements by the Company and the consummation by it
of the transactions contemplated hereby and thereby, including the
issuance of the Securities, have been duly authorized by the Company's
Board of Directors and, except as required by the rules of the NASDAQ
SmallCap Market System, no further consent or corporate authorization
is required therefor; (iii) this Agreement and the Ancillary Agreements
have been duly
<PAGE>
executed and delivered by the Company; and (iv) this Agreement and the
Ancillary Agreements (assuming due execution and delivery by the other
parties thereto) constitute the valid and binding obligations of the
Company enforceable against the Company in accordance with their
respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies or by other equitable
principles of general application or by the public policy provisions of
federal securities laws.
c. CAPITALIZATION. As of the date hereof, the authorized
capital stock of the Company consists of (i) twenty million
(20,000,000) shares of Common Stock of which, as of November 10, 1998,
five million three hundred thirty-two thousand four hundred ninety one
(5,332,491) shares were issued and outstanding, and (ii) seven hundred
fifty thousand (750,000) shares of Series A Convertible Preferred
Stock, no par value, of which, as of November 10, 1998, five hundred
thousand(500,000) shares were issued and outstanding and since that
date, there have been no material changes to such number. All of such
outstanding shares have been validly issued and are fully paid and
nonassessable. No shares of Common Stock or preferred stock are subject
to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company. Except as disclosed
in the Schedule of Exceptions, (i) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible
into or exchangeable for, any shares of capital stock of the Company or
any of its subsidiaries, or arrangements by which the Company or any of
its subsidiaries is or may become bound to issue additional shares of
capital stock of the Company or any of its subsidiaries, and (ii) there
are no outstanding debt securities of the Company. The Company has
furnished the Buyer with true and correct copies of the Company's
Articles of Incorporation, as amended, as in effect on the date hereof
("Articles of Incorporation"), and the Company's By-laws, as in effect
on the date hereof (the "Bylaws").
d. ISSUANCE OF SECURITIES. The Securities have been duly
authorized and, upon issuance in accordance with the terms hereof and
thereof, shall be validly issued, fully paid and non-assessable, and
free from all taxes, liens and charges with respect to the issue
thereof.
e. NO CONFLICTS. The execution, delivery and performance of
this Agreement and the Ancillary Agreements by the Company and the
consummation by the Company of the transactions contemplated hereby and
thereby will not (i) result in a violation of the Certificate of
Incorporation or Bylaws or (ii) conflict with, or constitute a default
(or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument
to which the Company or any of its subsidiaries is a party, or result
in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations)
applicable to the Company or
<PAGE>
any of its subsidiaries or by which any property or asset of the
Company or any of its subsidiaries is bound or affected (except for
such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect). Neither the Company nor its
subsidiaries is in violation of any term of or in default under its
Articles of Incorporation or Bylaws or, in any material respect, any
contract, agreement, mortgage, indebtedness, indenture, instrument,
judgment, decree or order or any statute, rule or regulation applicable
to the Company or its subsidiaries. The business of the Company and its
subsidiaries is not being conducted in violation of any law, ordinance,
regulation or rule of any governmental entity, except for possible
violations which either singly or in the aggregate do not and will not
have a Material Adverse Effect. Except as required under the 1933 Act,
any applicable state securities laws, or the rules of the NASDAQ
SmallCap Market System the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration
with any court or governmental agency or third party in order for it to
execute, deliver or perform any of its obligations under or
contemplated by this Agreement and the Ancillary Agreements in
accordance with the terms hereof.
f. SEC DOCUMENTS, FINANCIAL STATEMENTS. Since August 2, 1995,
the Company has timely filed all reports, schedules, forms, statements
and other documents required to be filed by it with the SEC pursuant to
Section 13, 14 and 15(d) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), including all exhibits included therein and
financial statements and schedules thereto and documents incorporated
by reference therein (other than exhibits to incorporated documents).
The Buyer has been provided with true and complete copies of all
reports on Forms 10-KSB, 10-QSB and 8-K and proxy statements (or their
equivalents under the rules of the SEC applicable to small business
issuers) filed by the Company with the SEC since December 31, 1997
(such reports, including the financial statements and related schedules
being referred to hereinafter as the "SEC Documents"). As of their
respective dates, the SEC Documents complied in all material respects
with the requirements of the 1934 Act and the rules and regulations of
the SEC promulgated thereunder applicable to the SEC Documents, and
none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading. As of their respective dates, the
financial statements of the Company included in the SEC Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in
accordance with generally accepted accounting principles, consistently
applied during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto, or (ii) in
the case of unaudited interim statements, to the extent they may
exclude footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the Company
as of the dates thereof and the results of its operations and cash
flows for the periods then ended (subject, in the case of unaudited
statements, to normal
<PAGE>
year-end audit adjustments). None of the information provided by the
Company or its representatives to Buyer contained any untrue statement
of a material fact or omitted to state any material fact necessary in
order to make the statements therein, in the light of the circumstance
under which they were made, not misleading. Prior to the date hereof,
the Company has corrected all statements in the SEC Documents which
have required correction and has filed all necessary amendments to the
SEC Documents, in each case as required by applicable law.
g. ABSENCE OF CERTAIN CHANGES. Since December 31, 1997, except
as disclosed in the SEC Documents, there has been no material adverse
change and no material adverse development in the business, properties,
operations, prospects, condition (financial or otherwise), or results
of operations of the Company. Since December 31, 1997, except as
disclosed in the SEC Documents, neither the Company nor any of its
subsidiaries has (i) incurred or become subject to any material
liabilities (absolute or continent) except liabilities incurred in the
ordinary course of business consistent with past practices; (ii)
discharged or satisfied any material obligation or liability (absolute
or contingent), other than current liabilities paid in the ordinary
course of business consistent with past practices; (iii) declared or
made any payment or distribution of cash or other property to
stockholders with respect to its capital stock, or purchased or
redeemed, or made agreements to purchase or redeem, any shares of its
capital stock; (iv) sold, assigned or transferred any other tangible
assets, or canceled any debts or claims, except in the ordinary course
of business consistent with past practices; (v) suffered any
substantial losses or waived any rights of material value, whether or
not in the ordinary course of business, or suffered the loss of any
material amount of existing business; (vi) made any changes in employee
compensation except in the ordinary course of business consisted with
past practices; or (vii) experienced any material problems with labor
or management in connection with the terms and conditions of their
employment. The Company has not taken any steps, and does not currently
expect to take any steps, to seek protection pursuant to any bankruptcy
law nor does the Company have any knowledge that its creditors intend
to initiate involuntary bankruptcy proceedings against the Company.
h. ABSENCE OF LITIGATION. Except as expressly set forth in its
SEC Documents, there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board or body pending or,
to the knowledge of the Company, overtly threatened against or
affecting the Company, wherein an unfavorable decision, ruling or
finding would have a Material Adverse Effect or which would adversely
affect the validity or enforceability of, or the authority or ability
of the Company to perform its obligations under, this Agreement, the
Ancillary Agreements or any of the other agreements contemplated
herein. There are no material outstanding orders, judgments,
injunctions, awards or decrees of any court, public board or body
against the Company or any of its subsidiaries.
<PAGE>
i. PURPOSE OF INVESTMENT. The Company recognizes that Buyer's
investment in the Company is being made, and shall use the proceeds
therefrom, in order to provide financing for the Company's ongoing
operations and especially for the funding of research and development,
feasibility funding projects and for project and licensing
arrangements; costs of patent prosecution; and working capital and
general corporate purposes, including the possible acquisitions of
rights in new technologies in the Company's ordinary course of
business.
j. ACKNOWLEDGMENT REGARDING BUYER'S PURCHASE OF THE SHARES.
The Company acknowledges and agrees that Buyer is acting solely in the
capacity of an arm's length purchaser with respect to this Agreement
and the Ancillary Agreements and the transactions contemplated hereby
and thereby. The Company further acknowledges that Buyer is not acting
as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the Ancillary Agreements
and the transactions contemplated hereby and thereby and any advice
given by Buyer or any of its representatives or agents in connection
with this Agreement, the Ancillary Agreements and the transactions
contemplated hereby and thereby is merely incidental to Buyer's
purchase of the Securities. The Company further represents to Buyer
that the Company's decision to enter into this Agreement and the
Ancillary Agreements has been based solely on the independent
evaluation by the Company and its representatives.
k. NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. No material event
or circumstances has occurred or exists with respect to the Company or
its subsidiaries or their respective business, properties, prospects,
operations or financial condition which has not been publicly announced
or disclosed.
l. NO GENERAL SOLICITATION. Neither the Company, any of its
affiliates, nor, to its knowledge, any person acting on its or their
behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the 1933 Act), in
connection with the offer or sale of the Securities.
m. NO REGISTRATION REQUIRED. Except as provided herein,
neither the Company, nor to its knowledge, any of its affiliates, nor
any person acting on its or their behalf has, directly or indirectly,
made any offers or sales of any securities or solicited any offers to
buy any security, under circumstances that would require registration
of the Securities under the 1933 Act.
n. EMPLOYEE RELATIONS. Neither the Company nor any of its
subsidiaries is involved in any union labor dispute nor, to the
knowledge of the Company, is any such dispute threatened. None of the
Company's or its subsidiaries' employees is a member of a union and the
Company believes that its relations with its employees for the most
part are good.
<PAGE>
o. INTELLECTUAL PROPERTY RIGHTS. The Company and its
subsidiaries own, have obtained or possess rights to use the
trademarks, trade names, service marks, service mark registrations,
patents, copyrights, licenses, approvals, governmental authorizations,
trade secrets and other rights necessary to conduct their respective
businesses as now conducted, the Company does not have any knowledge of
any material infringement by the Company or its subsidiaries of any
trademark, trade name rights, patent rights, copyrights, licenses,
service marks, service mark registrations, trade secrets or other
similar rights of others and there is no claim being made against the
Company or its subsidiaries regarding trademark, trade name, patent,
copyright, license, service marks, service mark registrations, trade
secret or other infringement which could have a Material Adverse
Effect. The Company and its subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of
their intellectual properties, whether currently owned or acquired in
the future, and the Company has entered into agreements with all
current officers and employees, and will enter into agreements with all
future officers and employees, which provide or will provide that all
legal rights concerning newly developed technologies by such officers
or employees shall be the sole property of the Company.
p. DILUTIVE EFFECT. The Company understands and acknowledges
the potentially dilutive effect to the Common Stock of the issuance of
the Securities.
4. COVENANTS.
a. BEST EFFORTS. Each party shall use its best efforts to
take, or cause to be taken, all action and to do, or cause to be done,
all things necessary to consummate the transactions contemplated
hereby, including without limitation, timely satisfaction of the
conditions set forth in Sections 8 and 9 of this Agreement.
b. FORM D. The Company agrees to file a Form D with respect to
the Shares and Warrants as required under Regulation D and to provide a
copy thereof to Buyer promptly after such filing.
c. REPORTING STATUS. Until the date on which Buyer has sold
all the Shares and Warrant Shares held by it, the Company shall use its
best efforts to file all reports required to be filed with the SEC
pursuant to the 1934 Act, and the Company shall not voluntarily
terminate its status as an issuer required to file reports under the
1934 Act even if the 1934 Act or the rules and regulations thereunder
would permit such termination.
d. USE OF PROCEEDS. The Company will use the proceeds from the
sale of the Securities to provide financing for the Company's ongoing
operations and principally for the funding of research and development,
feasibility funding projects and for project and licensing
arrangements; costs of patent prosecution; and working capital and
general
<PAGE>
corporate purposes, including the possible acquisitions of rights in
new technologies in the Company's ordinary course of business.
e. FINANCIAL INFORMATION.
(i) The Company will deliver to Buyer as soon as
practicable after the end of each fiscal quarter or fiscal
year of the Company, as appropriate, and in no event later
than twenty (20) days following the end of the relevant
period, one copy of an unaudited consolidated balance sheet of
the Company and its subsidiaries as at the end of such
quarter, and unaudited consolidated statements of income,
retained earnings and changes in financial position of the
Company and its subsidiaries for such quarter; setting forth
in each case in comparative form the figures for the
corresponding periods in the previous fiscal year; all
prepared in accordance with GAAP except that the financial
statements referred to in this Section 4(e)(i) do not contain
footnotes and are subject to normal year-end audit
adjustments, which will not, individually or in the aggregate,
be material in magnitude.
(ii) In addition, the Company will deliver to Buyer
(x) no later than forty (40) days after the end of the
relevant period, any and all information necessary for the
Buyer to fulfill its reporting obligations with the SEC; (y)
within five (5) days after the filing thereof with the SEC, a
copy of each filing made by the Company with the SEC; and (z)
within two (2) days after release thereof, copies of all press
releases issued by the Company or any of its subsidiaries.
(iii) With respect to annual information, the Company
will deliver to Buyer, no later than sixty (60) days after
year end, one copy of an audited consolidated balance sheet of
the Company and its subsidiaries as at the end of such year,
and audited consolidated statements of income, retained
earnings and changes in financial position of the Company and
its subsidiaries for such year; setting forth in each case in
comparative form the figures for the corresponding periods in
the previous fiscal year; all prepared in accordance with
GAAP, and which audited financial statements shall be
accompanied by (A) an opinion thereon of the independent
certified public accountants regularly retained by the
Company, or any other form of independent certified public
accountants of recognized national standing selected by the
Company and (B) a report of such independent certified public
accountants confirming any calculation or adjustment made
pursuant to Section 5 herein, Section 6 of the Form of Warrant
attached hereto as Exhibit A, and any other adjustments
relating to securities authorized by the Company during such
year.
f. RESERVATION OF SHARES. The Company shall at all times have
authorized and reserved for the purpose of issuance, a sufficient
number of shares of Common Stock to provide for the issuance of the
Warrant Shares and any other shares of Common Stock issuable upon the
conversion, exercise or exchange of the Company's outstanding
securities.
<PAGE>
g. LISTING. The Company shall use its best efforts to promptly
secure the listing of the Shares and the Warrant Shares upon each
national securities exchange or automated quotation system, if any,
upon which shares of Common Stock are now or may in the future be
listed or quoted, including without limitation the NASDAQ SmallCap
Market System (collectively, the "Exchange") (subject to official
notice of issuance) and shall use its best efforts to maintain, so long
as any other shares of Common Stock shall be so listed, such listing of
all Warrant Shares from time to time issuable under the terms of this
Agreement and the Warrant. During the Registration Period, the Company
shall use its best efforts to maintain the Common Stock's authorization
for listing on the Exchange. The Company shall promptly provide to
Buyer copies of any notices it receives from the Exchange regarding the
continued eligibility of the Common Stock for listing on the relevant
Exchange.
5. RIGHTS OF FIRST REFUSAL
a. SUBSEQUENT OFFERINGS. Buyer shall have a right of first
refusal to purchase its pro rata share of all Equity Securities, as
defined below, that the Company may, from time to time, propose to sell
and issue after the date of this Agreement, other than the Equity
Securities excluded by Section 5(e) hereof. Buyer's pro rata share is
equal to the ratio of (a) the number of shares of the Company's Common
Stock (including all shares of Common Stock issued or issuable upon
conversion of the Shares) which Buyer is deemed to be a holder
immediately prior to the issuance of such Equity Securities to (b) the
total number of shares of the Company's outstanding Common Stock
(including all shares of Common Stock issued or issuable upon
conversion of the Warrant Shares or upon the exercise of any
outstanding warrants or options) immediately prior to the issuance of
the Equity Securities. The term "Equity Securities" shall mean (i) any
Common Stock, Preferred Stock or other security of the Company, (ii)
any security convertible, with or without consideration, into any
Common Stock, Preferred Stock or other security (including any option
to purchase such a convertible security), (iii) any security carrying
any warrant or right to subscribe to or purchase any Common Stock,
Preferred Stock or other security or (iv) any such warrant or right.
b. EXERCISE OF RIGHTS. If the company proposes to issue any
Equity Securities, it shall give Buyer written notice of its intention,
describing the Equity Securities, the price and the terms and
conditions upon which the Company proposes to issue the same. Buyer
shall have twenty (20) days from the giving of such notice to agree to
purchase its pro rata share of the Equity Securities for the price and
upon the terms and conditions specified in the notice by giving written
notice to the Company and stating therein the quantity of Equity
Securities to be purchased.
<PAGE>
c. ISSUANCE OF EQUITY SECURITIES TO OTHER PERSONS. If Buyer
fails to exercise in full the rights of first refusal, the Company
shall have ninety (90) days thereafter to sell the Equity Securities in
respect of which the Buyer's rights were not exercised, at a price and
upon general terms and conditions materially no more favorable to the
purchasers thereof than specified in the Company's notice to the Buyer
pursuant to Section 5(b) hereof. If the company has not sold such
Equity Securities within ninety (90) days of the notice provided
pursuant to Section 5(b), the Company shall not thereafter issue or
sell any Equity Securities, without first offering such securities to
the Buyer in the manner provided above.
d. WAIVER OF RIGHTS OF FIRST REFUSAL. The rights of first
refusal established by this Section 5 may be amended, or any provision
waived with the written consent of Buyer.
e. EXCLUDED SECURITIES. The rights of first refusal
established by this Section 5 shall have no application to any of the
following Equity Securities:
(i) up to an aggregate amount of 500,000 shares of
Common Stock issued pursuant to stock options under the
Company's 1995 Stock Option Plan;
(ii) shares of Common Stock issued upon the exercise
or conversion, as the case may be, or the dividend or
antidilution provisions thereof, if any, of options, warrants,
preferred stock, convertible securities or other rights to
purchase Common Stock which options, warrants, preferred
stock, convertible securities or other rights are issued and
outstanding on the date hereof;
(iii) shares of Common Stock issued pursuant to any
rights or agreements granted after the date of this Agreement;
provided that the rights of first refusal established by this
Section 5 did apply with respect to the initial sale or grant
by the Company of such rights or agreements;
(iv) any Equity Securities issued for consideration
other than cash pursuant to a merger, consolidation,
acquisition or similar business combination;
(v) shares of Common Stock issued in connection with
any Common Stock split or Common Stock dividend by the
Company.
6. TRANSFER AGENT INSTRUCTIONS.
The Company shall instruct its transfer agent to issue certificates,
registered in the name of the Buyer or its nominee, for the Shares and Warrant
Shares in such amounts as specified from time to time by the Buyer to the
Company. All such certificates shall bear the restrictive legend specified in
Section 2(g) of this Agreement but only to the extent provided in such Section.
The Company shall provide instructions and opinions of counsel to its transfer
agent in
<PAGE>
accordance with the Registration Rights Agreement. The Company warrants and
covenants that no instruction other than such instructions referred to in this
Section 6, and stop transfer instructions to give effect to Section 2(f) hereof,
in the case of the Shares or Warrants, will be given by the Company to its
transfer agent and that the Securities shall otherwise be freely transferable on
the books and records of the Company as and to the extent provided in this
Agreement and the Warrants. Nothing in this Section 6 shall affect in any way
Buyer's obligations and agreement to comply with all applicable securities laws
upon the sale, assignment or other transfer of the Securities. If Buyer provides
the Company with an opinion of counsel, reasonably satisfactory in form, scope,
substance and as to the counsel delivering such opinion to the Company, that
registration of the sale, assignment or other transfer by Buyer of any of the
Securities is not required under the 1933 Act, the Company shall permit the
transfer, and promptly instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by Buyer.
7. STANDSTILL AND NO-SALE.
From the period beginning on the Initial Closing until the earlier of
(i) thirty (30) months after the Initial Closing, or (ii) the cessation of all
business activity between the Company and the Buyer (the "Standstill Period"):
a. STANDSTILL PROVISION. Buyer will not, nor will it permit
any of its affiliates (including parents, subsidiaries or other related
entities) to, in any manner, singly or as part of a partnership,
limited partnership, syndicate or other "Group" (within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Securities Exchange Act")), directly or indirectly, acquire, or
offer or agree to acquire, record ownership or beneficial ownership of
any shares of capital stock of the Company, any securities convertible
into or exchangeable for capital stock of the Company or any other
right to acquire capital stock of the Company, without the prior
written consent of the Company to the extent such acquisition, offer or
agreement would result in the Buyer owning more than forty-five percent
(45%) of the Common Stock outstanding at the time of such acquisition,
offer or agreement; provided, however, that this clause shall not apply
to (i) increases in percentage ownership due to the buy-back of Common
Stock by the Company; (ii) Common Stock purchases precipitated by an
unaffiliated third party attempt to acquire control of the Company; or
(iii) other Company securities purchased with the consent of the
Company.
b. AGREEMENT NOT TO SELL. During the twelve (12) month period
following the execution of this Agreement, Buyer will not, nor will it
permit any of its corporate affiliates (including parents, subsidiaries
or other related entities) to, directly or indirectly sell, contract to
sell (including, without limitation, any short sale), grant any option
to purchase or otherwise transfer or dispose of any of the Shares or
Warrant Shares or other securities of the Company. In any twelve (12)
month period, beginning with the anniversary of this Agreement and each
anniversary thereafter, Buyer will not, nor will it permit any of its
corporate affiliates (including parents, subsidiaries or other related
<PAGE>
entities) to, directly or indirectly sell, contract to sell (including,
without limitation, any short sale), grant any option to purchase or
otherwise transfer or dispose of any of the Shares or Warrant Shares or
other securities of the Company in excess of one-third of such Shares,
Warrant Shares or other securities held by the Buyer on the first day
of the relevant twelve (12) month period without the prior written
consent of the Company. Notwithstanding the foregoing in the event the
business activity between the Company and the Buyer is terminated other
than pursuant to a breach by or the insolvency of the Company then,
following such termination, Buyer may sell the Shares or the Warrant
Shares in accordance with the volume and other limitations under
applicable securities laws. Buyer will notify the Company prior to any
such sale and work with the Company to effect such sales in an orderly
manner. In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the securities held
by Buyer and its affiliates that are subject to the foregoing
restriction until the end of such period.
8. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
The obligation of the Company hereunder to sell the Shares and the
Warrants is subject to the satisfaction, at or before the date of the Initial
Closing, of each of the following conditions, provided that these conditions are
for the Company's sole benefit and may be waived by the Company at any time in
its sole discretion.
a. The parties shall have executed this Agreement and the
Ancillary Agreements, and delivered the same to each other.
b. The shareholders of the Company shall have approved the
issuance of Shares contemplated hereunder in accordance with applicable
rules of the NASDAQ SmallCap Market System;
c. Pursuant to Section 1(d) of this Agreement, Buyer shall
have delivered to Company the Purchase Price for all Shares being
purchased by Buyer by certified check or wire transfer of immediately
available funds.
d. The representations and warranties of Buyer contained
herein shall be true and correct in all material respects as of the
date when made and as of the date of the Initial Closing as though made
at that time (except for representations and warranties that speak as
of a specific date), and Buyer shall have performed, satisfied and
complied in all material respects with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or
complied with by Buyer at or prior to the date of the Initial Closing.
<PAGE>
9. CONDITIONS TO BUYER'S OBLIGATION TO PURCHASE
The obligation of Buyer to purchase the Shares and the Warrants at the
Initial Closing is subject to the satisfaction, at or before the Initial Closing
Date of each of the following conditions, provided that these conditions are for
Buyer's sole benefit and may be waived by Buyer at any time in its sole
discretion.
a. The parties shall have executed this Agreement and the
Ancillary Agreements, and delivered the same to the other parties.
b. From the date hereof, until the date of the Initial
Closing, the Common Stock shall be authorized for quotation on the
Exchange and trading in the Common Stock on the Exchange shall not have
been suspended by the SEC or the Exchange and trading in securities
generally on the Exchange shall have not been suspended or limited nor
shall minimum prices have been established for securities traded on the
Exchange nor shall a banking moratorium have been declared nor shall
there be any material adverse change in any financial market that in
the reasonable judgment of the Buyer makes it impracticable or
inadvisable to purchase the Shares and the Warrants.
c. The shareholders of the Company shall have approved the
issuance of the Shares, the Warrant, and the Warrant Shares
contemplated hereunder, and such approval shall have been obtained in
accordance with applicable rules of the NASDAQ SmallCap Market System
as if such rules required approval of such issuance(s), regardless of
whether approval thereunder is, in fact, required, and such shareholder
approval shall have occurred following the filing of the form 10-QSB
for the period ended September 30, 1998.
d. The Company shall have entered into an employment agreement
(the "Employment Agreement") with Robert Petcavich in the form attached
as Exhibit 9(d).
e. The Company shall have provided to the Buyer any changes to
the Schedule of Exceptions delivered in accordance with Section 3
within five (5) days prior to the Initial Closing Date.
f. The representations and warranties of the Company contained
herein and not qualified by a materiality standard shall be true and
correct in all respects as of the date when made, and shall be true and
correct in all material respects as of the date of the Initial Closing,
as though made at that time (except for representations and warranties
that speak as of a specific date); the representations and warranties
of the Company contained herein and qualified by a materiality standard
shall be true and correct in all respects as of the date when made and
as of the date of the Initial Closing, as though made at that time
(except for representations and warranties that speak as of a specific
date); and the Company shall have performed, satisfied and complied in
all respects with the covenants, agreements and conditions required by
this Agreement to be performed,
<PAGE>
satisfied or complied with by the Company at or prior to the date of
the Initial Closing, as applicable. Buyer shall have received a
certificate, executed by the Chief Executive Officer of the Company,
dated as of the date of the Initial Closing to the foregoing effect.
Changes to the Schedule of Exceptions to be delivered in accordance
with Section 9(e) will not qualify the representations and warranties
made upon execution of this Agreement or at the date of the Initial
Closing; provided, however, that in the event that Buyer determines to
proceed with the Initial Closing following the receipt of an updated
Schedule of Exceptions, then these representations and warranties will
be so qualified.
g. Buyer shall have received the opinion of the Company's
counsel dated as of the date of the Initial Closing in substantially
the form attached hereto as Exhibit 9(e).
h. The Company shall have executed and delivered to Buyer the
Stock Certificate(s) for the Shares being purchased by Buyer and the
Certificates representing the Warrants.
i. No action, suit, investigation or proceeding before or by
any governmental authority shall have been commenced or threatened
against the Company or any of the officers, directors or affiliates of
the Company, which seeks to restrain, prevent or change the
transactions contemplated by this Agreement or the Registration Rights
Agreement or which seeks damages in connection with such transactions.
10. GOVERNING LAW; MISCELLANEOUS.
a. GOVERNING LAW. This Agreement shall be governed by
and interpreted in accordance with, the laws of the State of New York
without regard to the principles of conflict of laws.
b. COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, including, without limitation, by facsimile
transmission (with copies sent by United States mail to the other
parties), all of which counterparts shall be considered one and the
same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party. In the event any
signature page is delivered by facsimile transmission, the party using
such means of delivery shall cause four (4) additional original
executed signature pages to be physically delivered to the other party
within five (5) days of the execution and delivery hereof.
c. HEADINGS. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretations of, this Agreement.
d. SEVERABILITY. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement.
<PAGE>
e. ENTIRE AGREEMENT; AMENDMENTS. This Agreement (together with
the Schedules and Exhibits hereto), the Ancillary Agreements, the
Warrant and the other agreements and instruments referenced herein
contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set
forth herein or therein, neither the Company nor Buyer makes any
representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other
than by an instrument in writing signed by the party to be charged with
enforcement.
f. NOTICES. Any notices required or permitted to be given
under the terms of this Agreement shall be sent by mail or delivered
personally, by courier or by facsimile (with a copy by U.S. mail) and
shall be effective five days after being placed in the mail, if mailed,
certified or registered, return receipt requested, or upon receipt, if
delivered personally or by courier or by facsimile (with a copy by U.S.
mail), in each case properly addressed to the party to receive the
same. The addresses for such communications shall be:
If to the Company:
9985 Business Park Avenue
Suite A
San Diego, California 92131
Telephone: 619-549-5130
Facsimile: 619-549-5133
Attention: Robert Petcavich, Ph.D.
With Copy to:
Lance W. Bridges, Esq.
Cooley Godward, LLP
4365 Executive Drive
Suite 1100
San Diego, CA 92121-2128
If to the Buyer:
Agway Holdings Inc.
P.O. Box 4933
Syracuse, NY 13221-4933
Telephone: 315-449-6568
Facsimile: 315-449-7451
Attention: Peter J. O'Neill, V.P.
With a copy to: David M. Hayes, Esq., General Counsel
<PAGE>
Each party hereto shall provide notice to the other party of
any change in address.
g. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties. The Company shall not
assign this Agreement or any rights or obligations hereunder without
the prior written consent the Buyer. Buyer may assign its rights
hereunder without the consent of the Company, provided, however, that
any assignment of Buyer's obligations under the Ancillary Agreements
may be made only in accordance with the terms thereof.
h. NO THIRD PARTY BENEFICIARIES. This Agreement is intended
for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
i. SURVIVAL. All representations and warranties made by the
Company and the Buyer in this Agreement (including the Schedules and
Exhibits hereto), the Ancillary Agreements, the Warrant or otherwise
pursuant hereto shall survive the issuance of the Shares and the
Warrants to the Buyer for a period of two (2) years following such
issuance. Buyer shall be responsible only for its own representations,
warranties, agreements and covenants hereunder.
j. PUBLICITY. The Company and Buyer shall have the right to
approve before issuance any press releases or any other public
statements with respect to the transactions contemplated hereby that
identifies the Buyer; provided, however, that the Company shall be
entitled without the prior approval of Buyer, to make any press release
or other public disclosure with respect to such transactions as is
required by applicable law and regulations (although the Buyer shall be
consulted by the Company in connection with any such press release or
other public disclosure prior to its release and shall be provided with
a copy thereof).
k. FURTHER ASSURANCES. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and
shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in
order to carry out the intent and accomplish the purpose of this
Agreement and the consummation of the transactions contemplated hereby.
l. TERMINATION. In the event that (i) approval by the
Company's shareholders of the acquisition by Agway of the Shares, the
Warrant, and the Warrant Shares, and the other transactions
contemplated hereby (including without limitation the transactions
contemplated by the Ancillary Agreements) is not obtained at a special
meeting of the Company's shareholders called for that purpose, or (ii)
the Initial Closing shall not have occurred on or before January 31,
1999 (or such other date as the parties shall mutually agree), this
Agreement and, at the option of Buyer in its sole discretion, the
Ancillary Agreements, shall terminate at the close of business on such
date without liability of any party to any other party; provided,
however, that Agway shall be entitled to a return of all
<PAGE>
amounts paid by it or its subsidiaries to the Company under the
Ancillary Agreements if so terminated; and provided further, that in
the event the Initial Closing has not occurred due to a material breach
of a representation or warranty by a party, the other party shall be
entitled to receive from such breaching party the out-of-pocket
expenses (including legal fees) incurred by the non-breaching party in
connection with this Agreement. Subject to the assignment or transfer
of rights set forth herein with respect to the Agreement and the
Securities, and subject to the Company's obligations to comply with the
Agreement prior to any sale, the obligations of the Company and the
Buyer (or any permitted assignees of Buyer) under this Agreement shall
otherwise terminate upon the sale or other transfer by Buyer (or any
permitted assignees of Buyer) of all Shares and Warrants acquired by
Buyer hereunder and all and Warrant Shares acquired by Buyer (or any
permitted assignees of Buyer) upon exercise of the Warrants.
m. INDEMNIFICATION. The Company agrees to indemnify, defend
and hold harmless the Buyer and its affiliates and their respective
directors, officers, employees and agents from and against any and all
losses, claims, damages, fees, fines and expenses (including without
limitation reasonable attorneys' fees) due to or arising out of a
breach of any representation or warranty or covenant of the Company
contained in this Agreement (including the Schedules and Exhibits
hereto) and in the other agreements and instruments referenced herein.
n. NO WAIVER. Notwithstanding any of the representations,
warranties, acknowledgments or agreements made herein by the
undersigned, the Buyer does not thereby or in any manner waive any
rights granted to him or it under U.S. Federal or state securities
laws.
Dated: November 12, 1998:
AGWAY HOLDINGS INC.
BY: /s/ Dennis J. LaHood
----------------------------------
its: VP
----------------------------------
PLANET POLYMER TECHNOLOGIES, INC.
BY: /s/ Robert J. Petcavich
---------------------------------
its:
---------------------------------
EXHIBIT B
<PAGE>
EXHIBIT A
FORM OF WARRANT
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. THESE SECURITIES MAY NOT BE OFFERED, SOLD
OR TRANSFERRED ABSENT SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT.
PLANET POLYMER TECHNOLOGIES, INC.
WARRANT TO PURCHASE UP TO A MAXIMUM OF
2,000,000 SHARES OF COMMON STOCK
In consideration of the sum of good and valuable consideration, the
receipt of which is hereby acknowledged by PLANET POLYMER TECHNOLOGIES, INC., a
California corporation (the "Company"), AGWAY HOLDINGS INC. (the "Holder"), is
hereby granted the right to purchase (i) at any time from the date hereof until
5:00 P.M., Pacific Standard Time, on [INITIAL CLOSING DATE PLUS TWELVE (12)
MONTHS], 1999 (the "First Expiration Date") up to all or any part of Two Million
(2,000,000) fully paid and non-assessable shares of the Company's common stock,
without par value ("Common Stock"); and, at any time during the period
commencing on the First Expiration Date and ending on [INITIAL CLOSING DATE PLUS
TWENTY-FOUR (24) MONTHS], 2000 (the "Second Expiration Date"), and provided that
Holder acquired at least One Million (1,000,000) shares of Common Stock pursuant
to the Warrant prior to the First Expiration Date, up to all or any part of the
number of shares of common stock available for purchase, but not acquired, by
Holder prior to the First Expiration Date.
1. EXERCISE OF WARRANT. This Warrant is exercisable at a price of $1.00 per
share of Common Stock issuable hereunder (the "Exercise Price") payable in cash
or by certified or official bank check. Upon surrender of this Warrant together
with a subscription form substantially in the form of Annex A hereto duly
executed, together with payment of the Exercise Price for the shares of Common
Stock purchased, at the principal executive offices of the Company, 9985
Business Park Avenue, Suite A, San Diego, California, 92131, or at such other
office as the Company may designate by notice in writing, the Holder shall be
entitled to receive, as promptly as practicable after surrender of the Warrant,
a certificate or certificates for the shares of Common Stock so purchased. Upon
exercise of this Warrant as set forth in the preceding sentence, the Holder
shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise.
The purchase rights represented by this Warrant are exercisable at the option of
the Holder hereof, in whole or in part (but not as to fractional shares of the
Common Stock), during any period in which this Warrant may be exercised as set
forth above. In the case of the purchase of less than all the shares of Common
Stock purchasable under this Warrant, the Company shall cancel this Warrant upon
the surrender hereof and shall execute and deliver a new Warrant of like kind
for the balance of the shares of Common Stock purchasable hereunder.
<PAGE>
2. ISSUANCE OF STOCK CERTIFICATES. The issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the Holder hereof of any tax which may be payable in respect to the issuance
thereof, and such certificates shall (subject to the provisions of Sections 3
and 5 hereof) be issued in the name of, or in such names as may be directed by,
the Holder hereof; provided, however, that the Company shall not be required to
pay any tax which may be payable in respect to any transfer involved in the
issuance and delivery of any such certificate in a name other than that of the
Holder and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid, and
provided that the issuance of certificates for such shares of Common Stock shall
not violate the securities laws.
3. TRANSFER, DIVISION AND COMBINATION.
3.1 TRANSFER. Subject to compliance with Section 8, the Holder of this
Warrant may transfer this Warrant at any time to any subsidiary or affiliate of
the Holder. Transfer of this Warrant and all rights hereunder, in whole or in
part, shall be registered on the books of the Company to be maintained for such
purpose, upon surrender of this Warrant at the principal office of the Company
or the office or agency designated by the Company, together with a written
assignment of this Warrant substantially in the form of Annex B hereto duly
executed by Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall, subject to Section 8, execute
and deliver a new Warrant or Warrants in the name of the assignee or assignees
and in the denomination specified in such instrument of assignment, and shall
issue to the assignor a new Warrant evidencing the portion of this Warrant not
so assigned, and this Warrant shall promptly be canceled. A Warrant, if properly
assigned in compliance with Section 8, may be exercised by a new Holder for the
purchase of shares of Common Stock without having a new Warrant issued.
3.2 DIVISION AND COMBINATION. Subject to Section 8, this Warrant may be
divided or combined with other Warrants upon presentation hereof at the
aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by Holder or its agent or attorney. Subject to compliance with Section
3.1 and with Section 8, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
3.3 EXPENSES. The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 3.
3.4 MAINTENANCE OF BOOKS. The Company agrees to maintain, at its
aforesaid office or agency, books for the registration and the registration of
transfer of the Warrants.
4. EXERCISE PRICE. The exercise price of this Warrant shall be $1.00 per share
of Common Stock.
<PAGE>
5. REGISTRATION AND REGISTRATION RIGHTS. The shares of Common Stock issuable
upon exercise of this Warrant (the "Warrant Shares") have not been registered
under the Securities Act of 1933, as amended ("the Securities Act"). Holder
shall have such registration rights as are set forth in the Registration Rights
Agreement attached as Exhibit B to the Stock Purchase Agreement with respect to
the Warrant Shares issuable upon exercise of this Warrant.
Except as otherwise provided in this Section 5, upon exercise, in part
or in whole, of this Warrant, the Warrant Shares shall bear the following
legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS,
OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE
REASONABLY ACCEPTABLE TO THE ISSUER THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR
UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. ANY SUCH
OFFER, SALE, ASSIGNMENT OR TRANSFER MUST ALSO COMPLY WITH
APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THE SECURITIES
MAY ALSO BE SUBJECT TO RESTRICTIONS UNDER A STOCK PURCHASE
AGREEMENT BETWEEN THE ISSUER AND AGWAY HOLDINGS INC., DATED AS
OF NOVEMBER 12, 1998.
6. ADJUSTMENTS OF PURCHASE PRICE AND NUMBER OF SHARES.
6.1 SUBDIVISION AND COMBINATION. In case the Company shall at any time
subdivide or combine the outstanding shares of Common Stock, the Exercise Price
shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
6.2 ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section 6 (including Sections
6.4 through 6.7 below), the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted to the nearest full share by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of shares of Common Stock issuable upon exercise of the Warrant
immediately prior to such adjustment and dividing the product so obtained by the
adjusted Exercise Price.
6.3 ANTI-DILUTION PROVISIONS. The Exercise Price in effect at any
time and the
<PAGE>
number and kind of securities purchasable upon the exercise of this Warrant
shall also be subject to adjustment from time to time upon the happening of any
of the events set forth in Sections 6.4 through 6.7.
6.4 In the event the Company shall issue or sell any shares of Common
Stock (except as provided in Section 6.7) for a consideration per share less
than the Exercise Price in effect immediately prior to such issue or sale, then
the Exercise Price in effect immediately prior to such issue or sale shall be
reduced to such lesser price (calculated to the nearest cent) as shall be
determined by multiplying the Exercise Price in effect immediately prior thereto
by a fraction, the numerator of which shall be the sum of (i) the number of
shares of Common Stock outstanding immediately prior to the issuance or sale of
such additional shares and (ii) the number of shares of Common Stock which the
aggregate consideration received for the issuance or sale of such additional
shares would purchase at the Exercise Price then in effect, and the denominator
of which shall be the number of shares of Common Stock outstanding immediately
after the issuance or sale of such additional shares. For purposes of this
Section 6.4, all shares of Common Stock issuable upon exercise of outstanding
options and warrants, and all shares of Common Stock issuable upon exercise of
this Warrant, shall be deemed to be outstanding.
6.5 For the purposes of Section 6.4 above, the following subparagraphs
(a) to (c), inclusive, shall be applicable:
(a) If at any time the Company shall issue or sell any rights
to subscribe for, or any rights or options to purchase, Common Stock or any
stock or other securities convertible into or exchangeable for Common Stock
(such convertible or exchangeable stock or securities being hereinafter called
"Convertible Securities"), whether or not such rights or options or the right to
convert or exchange any such Convertible Securities shall be immediately
exercisable, and the price per share for which Common Stock shall be issuable
upon the exercise of such rights or options or upon conversion or exchange of
such Convertible Securities (determined by dividing (1) the total amount, if
any, received or receivable by the Company as consideration for the granting of
such rights or options, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of such rights or
options, plus, in the case of any such rights or options which shall relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the issue or sale of such Convertible
Securities and upon the conversion or exchange thereof, by (2) the total number
of shares of Common Stock issuable upon the exercise of such rights or options
or upon the conversion or exchange of all such Convertible Securities issuable
upon the exercise of such rights or options) shall be less than the Exercise
Price in effect immediately prior to the time of the issue or sale of such
rights or options, then the total number of shares of Common Stock issuable upon
the exercise of such rights or options or upon conversion or exchange of the
total amount of such Convertible Securities issuable upon the exercise of such
rights or options shall (as of the date of granting of such rights or options)
be deemed to be outstanding and to have been issued for such price per share,
and except as provided in Section 6.6, no further adjustments of the Exercise
Price shall be made upon the actual issue of such Common Stock or of such
Convertible Securities, upon the exercise of such rights or options or upon the
actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities.
<PAGE>
(b) If at any time any shares of Common Stock or Convertible
Securities or any rights or options to purchase any such Common Stock or
Convertible Securities shall be issued or sold for cash, the consideration
received therefor shall be deemed to be the amount actually received by the
Company therefor, after deduction therefrom of any expenses incurred or any
underwriting commissions or concessions or discounts paid or allowed by the
Company in connection therewith. In case any shares of Common Stock or
Convertible Securities or any rights or options to purchase any such Common
Stock or Convertible Securities shall be issued or sold for a consideration
other than cash, the amount of the consideration other than cash actually
received by the Company shall be deemed to be the fair value of such
consideration as determined by the Board of Directors, after deduction therefrom
of any expenses incurred or any underwriting commissions or concessions or
discounts paid or allowed by the Company in connection therewith. In case any
shares of Common Stock or Convertible Securities or any rights or options to
purchase any such Common Stock or Convertible Securities shall be issued in
connection with any merger of another corporation into the Company, the amount
of consideration therefor shall be deemed to be the greater of the fair market
value of the shares issued in connection with the merger after taking into
account the effects of the merger or the fair value of the net assets of such
merged corporation as determined by the Board of Directors after deducting
therefrom all cash and other consideration (if any) paid by the Company in
connection with such merger.
(c) The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the account of the
Company, provided that such shares are neither issued, sold or otherwise
distributed by the Company.
6.6 If the purchase or exercise price provided for in any right or
option referred to in Section 6.5, or the rate at which any Convertible
Securities referred to in Section 6.5 (a) or (b) shall be convertible into or
exchangeable for Common Stock, shall change or a different purchase or exercise
price or rate shall become effective at any time or from time to time (including
any change resulting from termination of such right, option or convertible
security), then, upon such change becoming effective, the Exercise Price then in
effect hereunder shall forthwith be increased or decreased to such Exercise
Price as would have been obtained had the adjustments made upon the granting or
issuance of such rights or options or Convertible Securities been made upon the
basis of (a) the issuance of the number of shares of Common Stock theretofore
actually delivered upon the exercise of such options or rights or upon the
conversion or exchange of such Convertible Securities for the consideration
received therefor and (b) the granting or issuance at the time of such change of
any such options, rights or Convertible Securities then still outstanding for
the consideration, if any, received by the Company therefor and to be received
on the basis of such changed price.
6.7 The Company shall not be required to make any adjustment to the
Exercise Price in the case of:
(a) the granting, after the date hereof, by the Company of
stock options under the Company's 1995 Stock Option Plan, so long as the shares
of Common Stock underlying such options are covered by the 500,000 shares
currently reserved for issuance under such Plan as of
<PAGE>
the date hereof; or
(b) the issuance of shares of Common Stock, pursuant to the
exercise of the options referred to in Section 6.7(a) above;
(c) shares of Common Stock issued upon the exercise or
conversion, as the case may be, or under the dividend provisions thereof, if
any, of options, warrants, preferred stock, convertible securities or other
rights to purchase Common Stock which options, warrants, preferred stock,
convertible securities or other rights are issued and outstanding on the date
hereof; and
(d) shares of Common Stock issued pursuant to any rights or
agreements granted after the date of this Agreement; provided that the rights of
first refusal granted by Section 5 of the Stock Purchase agreement were
exercised with respect to the initial sale or grant by the Company of such
rights or agreements.
6.8 RECLASSIFICATION, CONSOLIDATION, MERGER, ETC. In case of any
reclassification or change of the outstanding shares of Common Stock (other than
a change in par value to no par value, or from no par value to par value, or as
a result of a subdivision or combination), or in the case of any consolidation
of the Company with, or merger of the Company into, another corporation (other
than a consolidation or merger in which the Company is the surviving corporation
and which does not result in any reclassification or change of the outstanding
shares of Common Stock, except a change as a result of a subdivision or
combination of such shares or conveyance to another corporation of the property
of the Company as an entirety), the Holder of this Warrant shall thereafter have
the right to purchase the kind and number of shares of stock and other
securities and property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance at an aggregate price equal to the
product of (x) the number of shares issuable upon exercise of this Warrant and
(y) the Exercise Price in effect immediately prior to the record date for such
reclassification, change, consolidation, merger, sale or conveyance as if such
Holder had exercised this Warrant prior to such record date.
6.9 APPROVAL AND NOTICE OF ADJUSTMENT IN EXERCISE PRICE. Any adjustment
of the Exercise Price made pursuant to this Section 6 shall be made or approved
by the Company's independent public accountants at the time of such adjustment.
7. FINANCIAL AND BUSINESS INFORMATION.
7.1 QUARTERLY AND ANNUAL INFORMATION.
(a) The Company will deliver to each Holder as soon as
practicable after the end of each fiscal quarter or fiscal year of the Company,
as appropriate, and in no event later than twenty (20) days following the end of
the relevant period, one copy of an unaudited consolidated balance sheet of the
Company and its subsidiaries as at the end of such quarter, and unaudited
consolidated statements of income, retained earnings and changes in financial
position of the Company and its subsidiaries for such quarter; setting forth in
each case in comparative
<PAGE>
form the figures for the corresponding periods in the previous fiscal year; all
prepared in accordance with GAAP except that the financial statements referred
to in Section 7.1(a) do not contain footnotes and are subject to normal year-end
audit adjustments, which will not, individually or in the aggregate, be material
in magnitude.
(b) In addition, the Company will deliver to each Holder (x)
no later than forty (40) days after the end of the relevant period, any and all
information necessary for the Buyer to fulfill its reporting obligations with
the SEC; (y) within five (5) days after the filing thereof with the SEC, a copy
of each filing made by the Company with the SEC; and (z) within two (2) days
after release thereof, copies of all press releases issued by the Company or any
of its subsidiaries.
(c) With respect to annual information, the Company will
deliver to each Holder, no later than sixty (60) days after year end, an audited
consolidated balance sheet of the Company and its subsidiaries as at the end of
such year, and audited consolidated statements of income, retained earnings and
changes in financial position of the Company and its subsidiaries for such year;
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year; all prepared in accordance with GAAP, and
which audited financial statements shall be accompanied by (i) an opinion
thereon of the independent certified public accountants regularly retained by
the Company, or any other form of independent certified public accountants of
recognized national standing selected by the Company and (ii) a report of such
independent certified public accountants confirming any adjustment made pursuant
to Section 6 during such year.
8. DISPOSITION OF WARRANT AND WARRANT SHARES. The Holder further agrees not to
make any disposition of all or any part of this Warrant or the Warrant Shares in
any event unless and until:
(a) The Company shall have received a letter secured by the
Holder from the Securities and Exchange Commission stating that no action will
be recommended to the Commission with respect to the proposed proposition; or
(b) There is then in effect a registration statement under the
Act covering such proposed disposition and such disposition is made in
accordance with said registration statement; or
(c) The Holder shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, the Holder shall have
furnished the Company with an opinion of counsel for the Holder to the effect
that such disposition will not require registration of such Warrant or shares
under the Act, and such opinion of counsel for the Holder shall have been
concurred in by the Company's counsel and the Company shall advise the Holder of
such concurrence.
(d) Notwithstanding the provisions of paragraphs (a), (b)
and (c) above, no
<PAGE>
such Securities and Exchange Commission letter, registration statement or
opinion of counsel shall be required (i) for any transfer of this Warrant or any
shares issuable upon exercise of this Warrant in compliance with SEC Rule 144 or
144A, or (ii) for any transfer of this Warrant or shares issuable upon exercise
of this Warrant by a Holder that is a partnership or a corporation to (A) a
partner of such partnership or corporation, (B) a retired partner or
shareholder, or (iii) the transfer by gift, will or intestate succession by any
Holder to his or her spouse or lineal descendants or ancestors or any trust for
any of the foregoing.
9. EXCHANGE AND REPLACEMENT OF WARRANT. This Warrant is exchangeable without
expense, upon the surrender hereof by the registered Holder at the principal
executive office of the Company, for a new Warrant of like kind and date
representing in the aggregate the right to purchase the same number of shares as
are purchasable hereunder in such denominations and in the name(s) of such
assignee(s) as shall be designated by the registered Holder hereof at the time
of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft or destruction of this Warrant, of indemnity or security
reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will make and deliver a new Warrant of
like kind, in lieu of this Warrant.
10. FRACTIONAL SHARES. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant. With respect to any
fraction of a share called for upon any exercise hereof, the Company shall pay
to the Holder an amount in cash equal to such fraction multiplied by the current
market value of a share of Common Stock, as determined in good faith by the
Board of Directors of the Company.
11. RESERVATION AND LISTING OF SHARES. The Company shall at all times reserve
and keep available out of its authorized shares of Common Stock, solely for the
purpose of issuance upon the exercise of this Warrant, such number of shares of
Common Stock as shall be issuable upon the exercise hereof. The Company
covenants and agrees that, upon exercise of this Warrant and payment of the
Exercise Price therefor, all shares of Common Stock issuable upon such exercise
shall be duly and validly issued, fully paid and non-assessable, provided that
the Exercise Price per share shall equal or exceed the par value of the Common
Stock. As long as the Warrant shall be outstanding, the Company shall use its
best efforts to cause all shares of Common Stock issuable upon the exercise of
the Warrant to be listed (subject to official notice of issuance) on all
securities exchanges on which the Common Stock may then be listed.
12. CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each adjustment or
readjustment of the Exercise Price, the Company, at its expense, shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
prepare and furnish to the Holder a certificate of the chief financial officer
of the Company setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. The
Company shall, upon the written request at any time of the Holder, furnish to
the Holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Exercise
<PAGE>
Price at the time in effect, and (iii) the number of shares of Common Stock and
the amount, if any, of other property which at the time would be received upon
the exercise of this Warrant.
13. RIGHTS OF WARRANT HOLDERS. Nothing contained in this Warrant shall be
construed as conferring upon the Holder hereof the right to vote or to consent
or to receive notice as a shareholder in respect of any meetings or shareholders
for the election of directors or any other matter, or as having any rights
whatsoever as a shareholder of the Company.
14. NOTICES. All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made when delivered in
person, or mailed by registered or certified mail, return receipt requested:
(a) If to the registered Holder or Holders of this Warrant, to
the address of such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth on the first
page of this Warrant or to such other address as the Company may designate by
notice to the Holders.
15. REMEDIES. Each holder of Warrant and Warrant Shares, in addition to being
entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under Section 5 of this
Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of Section 5 of this Warrant and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
16. AMENDMENT. This Warrant and all other Warrants may be modified or amended or
the provisions hereof waived with the written consent of the Company and the
Holder or Holders, provided that no such Warrant may be modified or amended to
reduce the number of shares of Common Stock for which such Warrant is
exercisable or to increase the price at which such shares may be purchased upon
exercise of such Warrant (before giving effect to any adjustment as provided
therein) without the prior written consent of the Holder thereof.
17. SEVERABILITY. Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Warrant.
18. SUCCESSORS. All the covenants, agreements, representations and warranties
contained in this Warrant shall bind the parties hereto and their respective
heirs, executors, administrators, distributes, successors and assigns.
19. HEADINGS. The Section headings in this Warrant are inserted for purposes of
convenience only and shall have no substantive effect.
<PAGE>
20. LAW GOVERNING. This Warrant shall be construed and enforced in accordance
with, and governed by, the laws of the State of New York.
WITNESS the seal of the Company and the signature of its duly
authorized officer.
Dated: , 1998
---------------
PLANET POLYMER TECHNOLOGIES, INC.
By: /s/
---------------------------------
Robert J. Petcavich,
Chief Executive Officer
EXHIBIT C
<PAGE>
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
- ----------------- , 1998, by and among Planet Polymer Technologies, Inc., a
California corporation, with headquarters located at 9985 Business Park Avenue,
Suite A, San Diego, California 92131 (the "Company"), and the undersigned buyer
("Buyer").
WHEREAS:
A. In connection with the Stock Purchase Agreement of even date
herewith entered into between the Company and the Buyer (the "Stock Purchase
Agreement"), the Company has agreed, upon the terms and subject to the
conditions of the Stock Purchase Agreement to issue and sell to the Buyers (i)
shares (the "Shares") of the Company's common stock, no par value (the "Common
Stock"), and (ii) warrants (the "Warrants"), which are exercisable for shares of
the Company's common stock, no par value (such shares issued upon exercise of
the Warrants to be referred to herein as the "Warrant Shares"); and
B. To induce the Buyers to execute and deliver the Stock Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "1933 Act"), and
applicable state securities laws:
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and Buyer
hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
a. "business day" means any day on which banks are not
required or authorized to close in New York City, New York.
b. "Investor" means Buyer and any permitted transferee or
assignee thereof to whom the Buyer assigns this Agreement and who
agrees to become bound by the provisions of this Agreement in
accordance with Section 9 hereof.
c. "Register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement
or Statements in compliance with the 1933 Act and pursuant to Rule 415
under the 1933 Act or any successor rule providing for offering
securities on a continuous basis ("Rule 415"), and the declaration or
ordering
<PAGE>
of effectiveness of such Registration Statement by the United States
Securities and Exchange Commission (the "SEC").
d. "Registrable Securities" means the Shares and the Warrant
Shares and any shares of Common Stock issued in respect of the Shares
or Warrant Shares as a result of any stock split, stock dividend,
recapitalization or similar event, including without limitation the
issuance of shares of common stock in satisfaction of the undersigned's
rights of first refusal under Section 5 of the Stock Purchase
Agreement.
e. "Registration Statement" or "Registration Statements" means
a registration statement or statements of the Company filed under the
1933 Act.
Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Stock Purchase Agreement.
2. REGISTRATION.
a. MANDATORY REGISTRATION. The Company shall use its best
efforts to prepare, and, on or before April 1, 1999 (such date of
filing, the "Initial Filing Date"), file with the SEC a Registration
Statement or Registration Statements (as is necessary) on Form S-3 (or,
if such form is unavailable for such a registration, on such other form
as is available for such a registration), covering the resale of the
amount of Registrable Securities identified below, which Registration
Statement(s), to the extent allowable under the 1933 Act and the rules
promulgated thereunder (including Rule 416), shall state that such
Registration Statement(s) also covers such indeterminate number of
additional shares of Common Stock as may become issuable (i) upon
conversion of the Shares or exercise of the Warrants to prevent
dilution resulting from stock splits, stock dividends or similar
transactions, (ii) by reason of changes in the exercise price of the
Warrants in accordance with the terms thereof, and (iii) by reason of
the exercise by Buyer of its right of first refusal as set forth in
Section 5 of the Stock Purchase Agreement. The number of shares of
Common Stock initially included in such Registration Statement(s) shall
be no less than 3,000,000 shares of Common Stock that are issuable upon
the Initial Filing Date and the exercise of Warrants in accordance with
their terms. The Company shall use its best efforts to have such
Registration Statement(s) declared effective by the SEC within ninety
(90) days after the filing of the Registration Statement. The Company
further undertakes to take all steps necessary to ensure that a
Registration Statement is or Registration Statements are effective
during the Registration Period (as defined below) with respect to all
Registrable Securities and the resale thereof at all times during the
Registration Period. Any Registration Statement(s) referred to in this
Section 2(a) (and each amendment or supplement thereto, and each
request for acceleration of effectiveness thereof) shall be provided to
and approved by Buyer and its legal counsel prior to the Company's
filing or other submission (such approval not to be unreasonably
withheld)
<PAGE>
and the Company will not file any document in a form to which such
counsel reasonably objects.
b. PIGGY-BACK REGISTRATIONS. If at any time prior to the
expiration of the Registration Period (as hereinafter defined) the
Company determines to file with the SEC a Registration Statement
relating to an offering for its own account or the account of others
under the 1933 Act of any of its Common Stock (other than on Form S-4
or Form S-8 or their then-equivalents relating to equity securities to
be issued solely in connection with any acquisition of any entity or
business or equity securities issuable in connection with employee
stock option or other employee benefit plans), the Company shall send
to each Investor who is entitled to registration rights under Section
2(a) written notice of such determination. If within twenty (20) days
after receipt of such notice, such Investor shall so request in
writing, the Company shall include in such Registration Statement all
or any part of the Registrable Securities such Investor requests to be
registered, except that if, in connection with any underwritten public
offering for the account of the Company, the managing underwriter(s)
thereof shall impose a limitation on the number of shares of Common
Stock which may be included in the Registration Statement because, in
such underwriter(s)' reasonable good faith judgment, marketing or other
factors dictate such limitation is necessary to facilitate public
distribution, then the Company shall be obligated to include in such
Registration Statement only such limited portion of the Registrable
Securities with respect to which such Investor has requested inclusion
hereunder as may be determined by such managing underwriter(s);
provided that no portion of the Common Stock which the Company is
offering for its own account shall be excluded; provided, further that
the Company shall be entitled to exclude Registrable Securities to the
extent necessary to avoid breaching obligations existing prior to the
date hereof to other stockholders of the Company. Any exclusion of
Registrable Securities shall be made pro rata among the Investors
seeking to include Registrable Securities, in proportion to the number
of Registrable Securities sought to be included by such Investors;
provided, however, that the Company shall not exclude any Registrable
Securities unless the Company has first excluded all outstanding
securities, the holders of which are not entitled to pro rata inclusion
of such securities in such Registration Statement or are not entitled
to pro rata inclusion with the Registrable Securities; and provided
further, however, that, after giving effect to the immediately
preceding proviso, any exclusion of Registrable Securities shall be
made pro rata with holders of other securities having the right to
include such securities in the Registration Statement other than
holders of securities entitled to inclusion of their securities in such
Registration Statement by reason of demand or similar registration
rights or whose registration rights existed prior to the date hereof.
No right to registration of Registrable Securities under this Section
2(b) shall be construed to limit any registration required under
Section 2(a) hereof.
c. ELIGIBILITY FOR FORM S-3. The Company represents and
warrants that it meets the requirements for the use of Form S-3 for
registration of the sale by the Buyers
<PAGE>
and any other Investor of the Registrable Securities and the Company
shall use its best efforts to file all reports required to be filed by
the Company with the SEC in a timely manner so as to maintain such
eligibility for the use of Form S-3. In the event that Form S-3 is not
available for sale by the Investors of the Registrable Securities, the
Company shall register the sale on another appropriate form.
3. RELATED OBLIGATIONS.
a. The Company shall use its best efforts to cause the
Registration Statement(s) relating to Registrable Securities referred
to in Section 2(a) to become effective as soon as possible after such
filing, and keep the Registration Statement(s) effective pursuant to
Rule 415 at all times until the earlier of (i) the date as of which the
Investors may sell all of the Registrable Securities without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or
successor thereto), or (ii) the date on which (A) the Investors shall
have sold all the Registrable Securities and (B) none of the Warrants
is outstanding (the "Registration Period"), which Registration
Statement(s) (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein, in light
of the circumstances in which they were made, not misleading.
b. In the event that the Registration Statement referred to in
Section 2(a) has not been declared effective by the 90th day following
the Initial Filing Date for failure by the Company to exercise its best
efforts in pursuing such registration, for each successive 30 day
period thereafter and until such Registration Statement is declared
effective, the Company agrees to pay to each Buyer, as liquidated
damages and not as a penalty, an amount equal to three percent (3%) of
the aggregate original purchase price of the Shares purchased by such
Buyer, payable in cash commencing on the 120th day following the
Initial Filing Date and on every 30th day thereafter (or sooner, as
provided in the next sentence) (any such payment referred to as an
"Additional Payment"). On the date that such Registration Statement is
declared effective, the Company shall pay to each Buyer all Additional
Payments due to such Buyer, in cash, pro rata according to the number
of days since the last Additional Payment (or, if no Additional Payment
has been paid, since the 90th day following the Initial Closing Date).
c. The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the
Registration Statement(s) referred to in Section 2(a) and the related
prospectus(es) used in connection with such Registration Statement(s)
as may be necessary to keep the Registration Statement(s) effective at
all times during the Registration Period, and, during such period, and
the Company and the Investors shall comply with the provisions of the
1933 Act with respect to the disposition of all Registrable Securities
of the Company covered by such Registration Statement(s) until such
time as all such Registrable Securities shall have
<PAGE>
been disposed of in accordance with the intended methods of disposition
by the seller or sellers thereof as set forth in such Registration
Statement(s).
d. The Company shall furnish to each Investor whose
Registrable Securities are included in the Registration Statement(s)
referred to in Sections 2(a) and 2(b) (i) promptly after the same as
prepared and publicly distributed, filed with the SEC, or received by
the Company, one copy of such Registration Statement and any amendment
thereto, and (ii) such number of copies of a prospectus, including a
preliminary prospectus, and all amendments and supplements thereto and
such other documents as such Investor may reasonably request in order
to facilitate the disposition of the Registrable Securities owned by
such Investor pursuant to such Registration Statement(s).
e. The Company shall use its best efforts to (i) register and
qualify the Registrable Securities covered by the Registration
Statement(s) referred to in Section 2(a) under such other securities or
"blue sky" laws of such jurisdictions in the United States as the
Investors who hold a majority of the Registrable Securities being
offered in connection therewith reasonably request, (ii) prepare and
file in those jurisdictions such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as
may be necessary to maintain the effectiveness thereof during the
Registration Period, (iii) take such other actions as may be necessary
to maintain such registrations and qualifications in effect at all
times during the Registration Period, and (iv) take all other actions
reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company
shall not be required in connection therewith or as a condition thereto
to (a) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(e), (b) subject
itself to general taxation in any such jurisdiction, (c) file a general
consent to service of process in any such jurisdiction, or (d) make any
change in its charter or bylaws, which in each case the Board of
Directors of the Company determines to be contrary to the best
interests of the Company and its stockholders. The Company shall
promptly notify each Investor who holds Registrable Securities of the
receipt by the Company of any notification with respect to the
suspension of such registration or qualification of any of the
Registrable Securities for sale under the securities or "blue sky" laws
of any jurisdiction in the United States or its receipt of actual
notice of the initiation or threatening of any proceeding for such
purpose.
f. As promptly as practicable after becoming aware of such
event, the Company shall notify each Investor of the happening of any
event, of which the Company has knowledge, as a result of which the
prospectus included in a Registration Statement, as then in effect,
includes an untrue statement of material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, and use its best efforts promptly to prepare and
file a supplement or amendment to the Registration Statement to correct
such untrue statement or omission, and deliver at least one copy and
<PAGE>
such number of additional copies of such supplement or amendment to
each Investor as such Investor may reasonably request. The Company
shall also, within five (5) days after its release, provide to each
Investor (other than Buyer and its affiliates, whose rights to receive
financial and related information concerning the Company are set forth
in the Stock Purchase Agreement and Warrant) a copy of the Company's
Annual Report and Form 10-KSB and quarterly report on Form 10-QSB, as
filed with the SEC.
g. The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, and, if such an order is issued, to obtain the
withdrawal of such order at the earliest possible moment and to notify
each Investor who holds Registrable Securities being sold (and, in the
event of an underwritten offering, the managing underwriters) of the
issuance of such order and the resolution thereof or its receipt of
actual notice of the initiation or threat of any proceeding for such
purpose.
h. The Company shall furnish, on the date that Registrable
Securities are delivered to an underwriter, if any, for sale in
connection with a Registration Statement referred to in Section 2(b) if
and only if required by an underwriter, a letter, dated such date, from
the Company's independent certified public accountants in form and
substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering
("Accountant's Comfort Letter"), addressed to the underwriters, and the
Investors, and (ii) an opinion, dated as of such date, of counsel
representing the Company for purposes of such Registration Statement,
in form, scope and substance as is customarily given in an underwritten
public offering, addressed to the underwriters and the Investors. If,
in the opinion of counsel to any Investor, such Investor could
reasonably be deemed to be an underwriter (as defined in the 1933 Act)
in connection with its resale of the securities under Section 2(a)
hereof, such Investor may require that the Company deliver to the
Investor an Accountant's Comfort Letter addressed to such Investor;
provided, however, that any request by an Investor for such an
Accountant's Comfort Letter may be made not more than once during any
given six month period, and the Company shall not be required to expend
in excess of $10,000 in accountant fees in respect of any such comfort
letter.
i. To the extent reasonably required to satisfy their
obligations, if any, as sellers of Common Stock, the Company shall make
available for inspection by (i) any Investor, and (ii) one firm of
attorneys and one firm of accountants or other agents retained by the
Investors (collectively, the "Inspectors") all pertinent financial and
other records, and pertinent corporate documents and properties of the
Company (collectively, the "Records"), as shall be reasonably deemed
necessary by each Inspector to enable each Inspector to exercise its
due diligence responsibility, if any, and cause the Company's officers,
directors and employees to supply all such information which any
Inspector may reasonably request; provided, however, that each
Inspector shall hold in strict confidence and shall not make any
disclosure (except to an Investor) or use of any Record or other
<PAGE>
information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so
notified, unless (a) the disclosure of such Records is necessary to
avoid or correct a misstatement or omission in any Registration
Statement, (b) the release of such Records is, in the opinion of
counsel of recognized status, required by law, regulation or
administrative authority or such release is ordered pursuant to a
final, non-appealable subpoena or order from a court or government body
of competent jurisdiction, or (c) the information in such Records has
been made generally available to the public other than by disclosure in
violation of this or any other agreement. The Company shall not be
required to disclose any confidential information in such Records to
any Inspector until and unless such Inspector shall have entered into
confidentiality agreements (in form and substance satisfactory to the
Company) with the Company with respect thereto, substantially in form
and substance reasonably requested by the Company. Each Investor agrees
that it shall, upon learning that disclosure of such Records is sought
in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to the Company and allow the
Company, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential. Nothing herein shall be deemed to limit the Investor's
ability to sell Registrable Securities in a manner which is otherwise
consistent with applicable laws and regulations.
j. The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the
Company unless (i) disclosure of such information is necessary to
comply with federal or state securities laws, (ii) the disclosure of
such information is necessary to avoid or correct a misstatement or
omission in any Registration Statement, (iii) the release of such
information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of this
or any other agreement. The Company agrees that it shall, upon learning
that disclosure of such information concerning an Investor is sought in
or by a court or governmental body of competent jurisdiction or through
other means, give prompt notice to such Investor and allow such
Investor, at the Investor"s expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, such
information.
k. The Company shall use its best efforts either to (i) cause
all the Registrable Securities covered by a Registration Statement to
be listed on each national securities exchange on which securities of
the same class or series issued by the Company are then listed, if any,
if the listing of such Registrable Securities is then permitted under
the rules of such exchange, or (ii) secure designation and quotation of
all the Registrable Securities covered by the Registration Statement on
the Nasdaq SmallCap Market system and, without limiting the generality
of the foregoing, to arrange for at least two market makers to register
with the National Association of Securities Dealers, Inc. ("NASD") as
such with respect to such Registrable Securities.
<PAGE>
l. The Company shall cooperate with the Investors who hold
Registrable Securities being offered to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive
legend) representing the Registrable Securities sold pursuant to a
Registration Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as the managing
underwriter or underwriters, if any, or, if there is no managing
underwriter or underwriters, the Investors may reasonably request and
registered in such names as the managing underwriter or underwriters,
if any, or the Investors may request. Not later than the date on which
any Registration Statement registering the resale of Registrable
Securities is declared effective, the Company shall deliver to its
transfer agent instructions authorizing the removal of any legends on
the Registrable Securities upon the sale thereof pursuant to such
Registration Statement, accompanied by any reasonably required opinion
of counsel, to permit sales thereof in a timely fashion that complies
with applicable securities laws and then mandated securities settlement
procedures for regular way market transactions.
m. The Company shall take all other reasonable actions
necessary to expedite and facilitate disposition by the Investors of
Registrable Securities pursuant to a Registration Statement.
n. The Company and the Investors shall otherwise use its best
efforts to comply with all applicable rules and regulations of the SEC
in connection with any registration hereunder.
4. OTHER OBLIGATIONS.
a. At least five (5) business days prior to the first
anticipated filing date of the Registration Statement referred to in
Section 2, the Company shall notify each Investor of the information
the Company requires from each such Investor if such Investor elects to
have any of such Investor's Registrable Securities included in the
Registration Statement. It shall be a condition precedent to the
obligations of the Company to complete any registration pursuant to
this Agreement with respect to the Registrable Securities of a
particular Investor that such Investor shall furnish to the Company
such information regarding itself, the Registrable Securities held by
it and the intended method of disposition of the Registrable Securities
held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably
request.
b. Each Investor by such Investor's acceptance of the
Registrable Securities agrees to cooperate with the Company as
reasonably requested by the Company in connection with the preparation
and filing of the Registration Statement(s) hereunder, unless such
Investor has notified the Company in writing of such Investor's
election to exclude all of such Investor's Registerable Securities from
the Registration Statement.
<PAGE>
c. Each Investor agrees that, upon receipt of any notice from
the Company or the happening of any event of the kind described in
Section 3(f), such Investor will immediately discontinue disposition of
Registrable Securities pursuant to the applicable Registration
Statement(s) covering such Registrable Securities until such Investor's
receipt of copies of the supplemented or amended prospectus
contemplated by Section 3(f), and, if so directed by the Company, such
Investor shall deliver to the Company (at the expense of the Company)
or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the prospectus covering
such Registrable Securities current at the time of receipt of such
notice.
d. No Investor may participate in any underwritten
registration hereunder unless such Investor (i) agrees to sell such
Investor's Registrable Securities on the basis provided in any
underwriting arrangements established by the Company, (ii) completes
and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under
the terms of such underwriting arrangements, and (iii) agrees to pay
its pro rata share of all underwriting discounts and commissions.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions and fees and disbursements of Investors' counsel, accountants,
investment bankers or other advisors or agents, incurred in connection with
registrations, filings or qualifications pursuant to Sections 2 and 3,
including, without limitation, all registration, listing and qualifications
fees, printers and accounting fees, and fees and disbursements of counsel for
the Company shall be borne by the Company.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the extent permitted by law, the Company will indemnify,
hold harmless and defend each Investor who holds such Registrable
Securities, the partners, directors, officers, employees and agents of,
and each person who controls, any Investor within the meaning of the
1933 Act or the Securities Exchange Act of 1934, as amended (the "1934
Act"), if any, and any underwriter (as defined in the 1933 Act) for the
Investors, and the partners, directors, officers, employees and agents
of, and each person, if any, who controls, any such underwriter within
the meaning of the 1933 Act or the 1934 Act (each, an "Indemnified
Person"), against any losses, claims, damages, liabilities, attorneys'
fees and expenses, amounts paid in settlement or expenses
(collectively, "Claims") to which any of them may become subject
insofar as such Claims (or actions or proceedings in respect thereof,
whether or not commenced or threatened by
<PAGE>
or before the date the Registration Statement is declared effective and
whether or not an Indemnified Person is party thereto) arise out of or
are based upon: (i) any untrue statement or alleged untrue statement of
a material fact in a Registration Statement or in any filing made in
connection with the qualification of the offering under the securities
or other "blue sky" laws of any jurisdiction in which Registrable
Securities are offered ("Blue Sky Filing"), or the omission or alleged
omission to state a material fact therein required to be stated or
necessary to make the statements therein, in light of the circumstances
in which such statements were made, not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in
any preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as
amended or supplemented, if the Company files any amendment thereof or
supplement thereto with the SEC) or the omission or alleged omission to
state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements
therein were made, not misleading, or (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in the
foregoing clauses (i) through (iii) being, collectively, "Violations").
Subject to the restrictions set forth in Section 6(d) with respect to
the number of legal counsel, the Company shall reimburse the
Indemnified Persons promptly as such expenses are incurred and are due
and payable, for any legal fees or other reasonable expenses incurred
by them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a): (i) shall not
apply to a Claim arising out of or based upon a Violation which occurs
in reliance upon and in conformity with information furnished in
writing to the Company by any Indemnified Person expressly for use in
connection with the preparation of the Registration Statement, any
related prospectus or any such amendment thereof or supplement thereto,
if such Registration Statement or prospectus was timely made available
by the Company pursuant to Section 3(d) hereof; (ii) with respect to
any preliminary prospectus, shall not inure to the benefit of any such
person from whom the person asserting any such Claim purchased the
Registrable Securities that are the subject thereof (or to the benefit
of any person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was
corrected on a timely basis in the prospectus, as then amended or
supplemented, if such prospectus was timely made available by the
Company pursuant to Section 3(d) hereof; (iii) shall not be available
to the extent such Claim is based on a failure of the Investor to
deliver or cause to be delivered a preliminary or final prospectus made
available on a timely basis by the Company; and (iv) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected
without prior written consent of the Company, which consent shall not
be unreasonably withheld or delayed. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on
behalf of the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9.
<PAGE>
b. In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to indemnify, hold
harmless and defend, to the same extent and in the same manner as is
set forth in Section 6(a), the Company, each of its directors, each of
its officers who signs the Registration Statement, each person, if any,
who controls the Company within the meaning of the 1933 Act or the 1934
Act, any underwriter and any other stockholder selling securities
pursuant to the Registration Statement or any of its directors or
officers or any person who controls such stockholder or underwriter
within the meaning of the 1933 Act or the 1934 Act (collectively and
together with an Indemnified Person, an "Indemnified Party"), against
any Claim to which any of them may become subject, under the 1933 Act,
the 1934 Act or otherwise, insofar as such Claims arise out of or are
based upon any Violation, in each case to the extent (and only to the
extent) that such violation occurs in reliance upon and in conformity
with written information furnished to the Company by such Investor
expressly for use in connection with such Registration Statement; and
such Investor will reimburse any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such
Claim; provided, however, that the indemnity agreement contained in
this Section 6(b) shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent
of such Investor, which consent shall not be unreasonably withheld;
provided, further, however, that the Investor shall be liable under
this Section 6(b) for only that amount of Claims as does not exceed the
net proceeds to such Investor as a result of the sale of Registrable
Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive the
transfer of the Registrable Securities by the Investors pursuant to
Section 9. Notwithstanding anything to the contrary contained herein,
the indemnification agreement contained in this Section 6(b) with
respect to any preliminary prospectus shall not inure to the benefit of
any Indemnified Party if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected on a timely
basis in the related final prospectus, as then amended or supplemented.
c. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of
any action (including any governmental action), such Indemnified Person
or Indemnified Party shall, if a Claim in respect thereof is made
against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof, and
the indemnifying party shall have the right to assume control of the
defense thereof with counsel reasonably satisfactory to the Indemnified
Person or the Indemnified Party, as the case may be; provided, however,
that an Indemnified Person or Indemnified Party, as the case may be,
shall have the right to employ its own counsel in any such action, but
the fees, expenses and other charges of such counsel will be at the
expense of such Indemnified Person or Indemnified Party unless (1) the
employment of counsel by the Indemnified Person or Indemnified Party
has been authorized in writing by the indemnifying party, (2) the
Indemnified Person or Indemnified Party has reasonably concluded (based
on advice
<PAGE>
of counsel) that there may be legal defenses available to it or any
other Indemnified Person or Indemnified Parties that are different from
or in addition to those available to the indemnifying party, (3) a
conflict or potential conflict exists (based on advice of counsel to
the Indemnified Person or Indemnified Party) between the Indemnified
Person or Indemnified Party and the indemnifying party (in which case
the indemnifying party will not have the right to direct the defense of
such action on behalf of the Indemnified Person or Indemnified Party)
or (4) the indemnifying party has not in fact employed counsel to
assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel
will be at the expense of the indemnifying party or parties. It is
understood that the indemnifying party or parties shall not, in
connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm admitted to practice in
such jurisdiction at any one time for all such Indemnified Persons or
Indemnified Party or parties. An indemnifying party will not be liable
for any settlement of any action or claim effected without its written
consent (which consent will not be unreasonably withheld). The failure
to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or
Indemnified Party under this Section 6, except to the extent that the
indemnifying party is prejudiced in its ability to defend such action.
The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the
investigation or defense, as such Claims are incurred or bills therefor
are received and are due and payable.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, each indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 in such proportions as shall be appropriate to reflect all
equitable principles, including without limitation the relative benefits
received by the relevant parties; provided, however, that (i) no contribution
shall be made under circumstances where the maker would not have been liable for
indemnification under the fault standards set forth in Section 6, (ii) no seller
of Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
the Company or any seller of Registrable Securities who was not guilty of
fraudulent misrepresentation, and (iii) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.
<PAGE>
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investors the benefits of Rule
144 promulgated under the 1933 Act or any other similar rule or regulation of
the SEC that may at any time permit the investors to sell securities of the
Company to the public without registration ("Rule 144"), the Company agrees to
use its best efforts to:
a. make and keep public information available as those
terms are used in paragraph (a) of Rule 144;
b. file with the SEC in a timely manner all reports and other
documents required of the Company under Section 13 or 15(d) of the 1934
Act so long as the Company remains subject to such requirements (it
being understood that nothing herein shall limit the Company's
obligations under Section 4(c) of the Stock Purchase Agreement).
c. furnish to each Investor so long as such Investor owns
Registrable Securities promptly upon request, (i) a written statement
by the Company that it has complied with the reporting requirements
referred to in Section 8(b) above, (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and
documents so filed by the Company and (iii) such other information as
may be reasonably requested to permit the investors to sell such
securities pursuant to Rule 144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights to have the Company register Registrable Securities pursuant
to this Agreement shall be assignable by the Investors to any transferee of all
or any portion of Registrable Securities if: (i) the Investor agrees in writing
with the transferee or assignee to assign the related rights and obligations,
and a copy of such agreement is furnished to the Company within a reasonable
time after such assignment, (ii) the Company is, within a reasonable time after
such transfer or assignment, furnished with written notice of (a) the name and
address of such transferee or assignee, and (b) the securities with respect to
which such registration rights are being transferred or assigned, (iii)
immediately following such transfer or assignment the further disposition of
such securities by the transferee or assignee is restricted under the 1933 Act
and applicable state securities laws, (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence, the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein and to reimburse the Company for any expenses
that may be incurred by the Company as a result of such assignment and transfer
that would not otherwise have been incurred by the Company, including any costs
associated with the amendment of any Registration Statement or prospectus, (v)
such transfer shall have been made in accordance with the applicable
requirements of the
<PAGE>
Stock Purchase Agreement, and (vi) such transferee shall be an "accredited
investor" as that term defined in Rule 501 of Regulation D promulgated under the
1933 Act.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Investors who hold two-thirds of the Registrable Securities. Any amendment
or waiver effected in accordance with this Section 10 shall be binding upon each
Investor and the Company. Notwithstanding the foregoing: (i) no amendment or
waiver of this Agreement with respect to shares of Common Stock which have been
previously sold under a Registration Statement contemplated by this Agreement
shall be effective with respect to the holder of such shares who participated in
such registration unless consented to this writing by such holder; and (ii) no
amendment or waiver which adversely affects any holder of Registrable Securities
in a manner which does not adversely affect the other holders of Registrable
Securities shall be effective with respect to such holder unless consented to in
writing by such holder.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons or entities
with respect to the same Registrable Securities, the Company shall act
upon the basis of instructions, notice or election received from the
registered owner of such Registrable Securities.
b. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by registered or certified mail,
return receipt requested, or delivered personally or by courier and
shall be effective three days after being place in the mail if mailed,
or upon receipt, if delivered personally or by courier or facsimile
(with a copy by U.S. mail), in each case properly addressed to the
party to receive such notice. The addresses for such communications
shall be:
If to the Company:
9985 Business Park Avenue
Suite A
San Diego, California 92131
Telephone: 619 549-5130
Facsimile: 619 549-5133
Attention: Robert J. Petcavich
<PAGE>
With Copy to:
Lance W. Bridges, Esq.
Cooley Godward, LLP
4365 Executive Drive
Suite 1100
San Diego, CA 92121-2128
If to the Buyer:
Agway Holdings Inc.
P.O. Box 4933
Syracuse, NY 13227-4933
Telephone: 315 449-6568
Facsimile: 315 449-7451
Attention: Peter J. O'Neill, V.P.
With a copy to: David M. Hayes, Esq., General Counsel
Each party shall provide notice to the other party of any
change in address in the manner provided herein.
c. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such
right or remedy, shall not operate as a waiver thereof.
d. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York without regard to the
principles of conflict of laws. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of
the remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.
e. This Agreement and the Stock Purchase Agreement (together
with the Schedules and Exhibits thereto), the Warrant and the other
agreements and instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein
and therein and, except as specifically set forth herein or therein,
neither the Company nor Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument in
writing signed by the party to be charged with enforcement.
<PAGE>
f. Subject to the requirements of Section 9 hereof, this
Agreement shall inure to the benefit of and be binding upon the
permitted successors and assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
hereof.
h. This Agreement may be executed in two or more identical
counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same agreement. This Agreement, once
executed by a party, may be delivered to the other party hereto by
facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
i. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
Dated:
AGWAY HOLDINGS INC.
By: /s/
------------------------
NAME:
TITLE :
ACCEPTED AND AGREED:
PLANET POLYMER TECHNOLOGIES, INC.
By: /s/
-----------------------
NAME:
TITLE:
EXHIBIT D
<PAGE>
LICENSE AGREEMENT
This Agreement is made effective the 12th day of November,
1998 (the "Effective Date"), by and between Agway Consumer Products, Inc., a
Delaware corporation with offices at 333 Butternut Drive, Dewitt, New York 13214
(hereinafter "Agway"), and Planet Polymer Technologies, Inc., a California
corporation with offices at 9985 Businesspark Avenue, Suite A, San Diego,
California 92131 (hereinafter "Planet").
WHEREAS, Planet ha develope technology relating to time-
release coatings and protective coatings; and
WHEREAS, Agway wishes to receive an exclusive, worldwide
license from Planet in connection with time-release coatings for a variety of
Agricultural Products (as hereafter defined) and in connection with protective
coatings for a variety of Food Products (as hereafter defined).
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS:
1.1 "Agricultural Products" shall mean products for use in Agriculture,
including, but not be limited to, animal feeds and other products
intended for animal consumption, but shall exclude Fertilizer Products,
as defined in 1.4 below, and Biological Products as defined in the
agreement between Planet and Agrium, Inc. dated January 30, 1995.
Agriculture shall mean the production of crops, livestock, dairy
products, poultry products, meats, and other products produced for
and/or produced from a farm operation.
1.2 "Food Products" shall mean products intended for human dietary
consumption, including, but not be limited to, dairy products, poultry
products, meat products, fruits and vegetables.
1.3 "Other Products" shall mean coated urea for melting ice at airports,
and packaging for Agricultural Products and Food Products.
1.4 "Fertilizer Products" shall mean plant nutrients and other products
intended for use in fertilizers, including the specific urea fertilizer
coating ("Enviroplastic CRT") developed by Planet for Agrium, Inc., as
covered by U.S. Patent no. 5,803,946.
1.5 "Agway's Field of Business" shall mean the production, distribution
and/or marketing of Agricultural Products, Food Products, Other
Products and any other products as
<PAGE>
may be mutually agreed upon in writing by Agway and Planet
(individually a "Product", and collectively the "Products").
1.6 "Affiliate" shall mean any company which, directly or indirectly, is
controlled by, or controls, a party to this Agreement, or is under
common control with a party to this Agreement. Ownership of 50% or more
of the voting stock of, or membership interest in a company shall be
regarded as control.
1.7 "Control" shall mean possession of the ability to grant a license or
sublicense as provided for herein without violating the terms of any
agreement or other arrangement with any third party.
1.8 "Know-How" shall mean all know-how, trade secrets, inventions, data,
processes, techniques, procedures, compositions, devices, methods,
formulas, protocols and information, whether or not patentable, which
are not generally publicly known, including, without limitation, all
chemical, biochemical, toxicological, and scientific research
information.
1.9 "Commercially Feasible" shall mean a product that will generate a
minimum of $500,000.00 in net profits annually to be shared between
Planet and Agway, beginning no later than the second year following
product introduction.
1.10 "Patent Rights" shall mean all rights under patents and patent
applications, and any and all patents issuing therefrom (including
utility, model and design patents and certificates of invention),
together with any and all substitutions, extensions (including
supplemental protection certificates), registrations, confirmations,
reissues, divisionals, continuations, continuations-in-part,
re-examinations, renewals and foreign counterparts of the foregoing.
1.11 "Agway Know-How" shall mean all Know-How necessary or appropriate to
develop and commercialize Products for use in Agway's Field of
Business, and which is under the Control of Agway.
1.12 "Products" shall mean Agricultural Products, Food Products, Other
Products and any other products as may be mutually agreed upon in
writing by Agway and Planet.
1.13 "Planet Know-How" shall mean all Know-How related to Planet's
proprietary coating technology, which is not covered by the Planet
Patent Rights, but is necessary or appropriate to develop and
commercialize Products for use in Agway's Field of Business, and which
is under the Control of Planet as of the Effective Date.
<PAGE>
1.14 "Planet Patent Rights" shall mean all Patent Rights that claim Planet's
proprietary coating technology, which are necessary or appropriate to
develop and commercialize Products for use in Agway's Field of
Business, and which are under the Control of Planet as of the Effective
Date.
1.15 "Planet Technology" shall mean the Planet Patent Rights and the Planet
Know-How.
1.16 "New Technology" shall mean Patent Rights and Know-How including, but
not limited to, new compositions of matter, new chemical complexes,
improved chemical complexes, association compounds, blends, mixtures or
compositions of coating materials, polymer materials and new products
or processes relating thereto, developed as a result of the Work
conducted under ARTICLE 2 of the Product Feasibility Agreement entered
into between the parties hereto as of the effective date hereof,
whether developed by Planet alone or jointly with Agway, or by Agway
alone as a result of disclosures made to it by Planet in connection
with such work.
ARTICLE 2
LICENSES; NON-COMPETITION; DUE DILIGENCE:
2.1 Subject to the terms and conditions of this Agreement, Planet hereby
grants to Agway an exclusive, worldwide license under the Planet
Technology to use and sell Products in Agway's Field of Business. The
license granted to Agway under this paragraph 2.1 shall include the
right to grant sublicenses to third parties covering Planet Technology
to the extent necessary to use or sell Products incorporating the New
Technology in Agway's Field of Business.
2.2 Subject to the terms and conditions of this Agreement, Planet hereby
grants to Agway an exclusive, worldwide license under the New
Technology to use and sell Products in Agway's Field of Business. The
license granted to Agway under this paragraph 2.2 shall include the
right to grant sublicenses to third parties, in Agway's sole
discretion. Agway shall notify any sublicensees hereunder of all rights
and obligations of Agway under this Agreement which are sublicensed to
such sublicensee and shall notify Planet within 30 days of the grant of
any sublicense hereunder.
2.3 Subject to the terms and conditions of this Agreement, with respect to
Products which revert to Planet pursuant to Section 2.4, or pursuant to
the terms of any sub-agreement contemplated by ARTICLE 4 hereof, Agway
hereby grants to Planet a non-exclusive, worldwide, fully-paid,
royalty-free license under the Agway Know-How to make, have made, use
and sell such Products in Agway's Field of Business.
<PAGE>
2.4 Agway shall not market, sell or distribute any polymer coated product
(either directly or indirectly) in Agway's Field of Business which is
directly competitive with any Product. In the event Agway markets,
sells or distributes any polymer coated product which is directly
competitive with a Product, all rights granted to Agway under this
Agreement with respect to such Product and any other license of any
Planet Technology or New Technology related thereto shall revert to
Planet and Agway shall have no further right to use, market, sell or
distribute such Product. Planet agrees that no products sold by Agway
either currently or within the immediately preceding 12 months shall be
considered to be "competitive" within the meaning of this Section 2.4.
Planet shall not market, sell or distribute any polymer coated product
(either directly or indirectly) in Agway's Field of Business which is
directly competitive with any Product.
2.5 Planet shall provide written notice to Agway in the event Planet
desires to develop a product with a third party, or is approached by a
third party to develop a product, for use in Agway's Field of Business.
Such notice shall include an outline of anticipated funding needs, the
anticipated length of the product feasibility study and Planet's
desired result from such study. Agway shall have 30 days following
receipt of such notice to advise Planet whether Agway considers the
product to be Commercially Feasible, and whether Agway is interested in
such a product. Agway shall have another 30 days thereafter to
negotiate a product feasibility study on terms and conditions
acceptable to Planet, including financial terms under which Agway will
fund such product feasibility study. If the parties cannot agree to
such terms and conditions within such 30 day period, or if the parties
cannot agree whether the product is or is not Commercially Feasible,
the parties agree to submit the matter to arbitration under ARTICLE 18
and Planet agrees to take no further action with respect to such
product and feasibility study during the arbitration proceeding. If the
product is considered to be Commercially Feasible, and if Agway does
not express interest in such a product within the initial 30 day
period, (i) Planet may proceed with such a third party product
feasibility study and Agway shall have no rights in connection with
such product feasibility study or with respect to any product developed
thereunder (hereinafter a "Developed Product"), and (ii) Planet shall
have the right to grant an exclusive license to a third party under the
Planet Technology and the New Technology to make, have made, use or
sell such Developed Product in Agway's Field of Business. Any such
third party license shall be limited to such Developed Product and
shall not otherwise diminish Agway's rights with respect to the Planet
Technology and to the New Technology under this Agreement. Planet
agrees that it will not, during the term of this Agreement, proceed
with such a third party feasibility study if the product is not
considered to be Commercially Feasible.
<PAGE>
2.6 Planet shall provide written notice to Agway in the event Planet
develops, totally independently of Agway, a product which demonstrates
efficacy for use in Agway's Field of Business. Agway shall have 90 days
following receipt of such notice from Planet to advise Planet whether
Agway considers the product to be Commercially Feasible, and to submit
a commercialization plan to Planet with respect to such product. Agway
shall have 60 days following Planet's receipt of such commercialization
plan to negotiate commercially reasonable license terms acceptable to
Planet with respect to such product. If the parties cannot agree to
license terms within the following 60-day period, or if the parties
cannot agree whether the product is or is not Commercially Feasible,
the parties agree to submit the matter to arbitration under ARTICLE 18
and Planet agrees to take no further action with respect to such
product during such arbitration proceeding. In the event (a) Agway
fails to provide a commercialization plan to Planet within such 90-day
period, and (b) the product is considered to be Commercially Feasible,
then (i) Agway shall have no rights to such product under this
Agreement and (ii) Planet shall have no further obligation to Agway
under this Agreement with respect to such product and shall have the
right to grant an exclusive license to a third party under the Planet
Technology and the New Technology to make, have made, use or sell such
product in Agway's Field of Business. Any such third party license
shall be limited to such product and shall not otherwise diminish
Agway's rights with respect to the Planet Technology and the New
Technology under this Agreement. Planet agrees that it will not, during
the term of this Agreement, commercialize such a product in Agway's
Field of Business if it is not considered to be Commercially Feasible.
Notwithstanding the foregoing, the notice set forth in this provision
shall not be required with respect to any product developed under a
product feasibility study, if Planet has complied with the procedures
set forth in Section 2.5.
2.7 If Planet is unwilling or unable to supply Agway's commercially
reasonable requirements of a Product which Agway has decided to market,
the licenses granted Agway under Sections 2.1 and 2.2 above shall be
extended to include a non-exclusive, worldwide license to make and have
made such Product, automatically without further action on the part of
either party to the extent necessary to compensate for Planet's
unwillingness or inability to supply Agway's requirements on
commercially reasonable terms including, without limitation, economies
of scale. If Planet subsequently becomes willing and able to supply all
or a portion of Agway's commercially reasonable requirements of such
Product, the parties agree that the transfer to Planet as supplier
shall take into account any contractual obligations of Agway to others.
<PAGE>
ARTICLE 3
CONFIDENTIALITY:
The terms of the Mutual Non-Disclosure Agreement between Agway and
Planet, made as of August 6, 1998 (the "NDA"), a copy of which is
attached hereto as Exhibit 1, is hereby incorporated herein and made a
part hereof. Neither party shall terminate the NDA during the term of
the Agreement. Each party may use Confidential Information (as defined
in NDA) of the other party only to the extent necessary to accomplish
the purposes of this Agreement.
ARTICLE 4
ROYALTY:
The parties agree that a reasonable royalty for the licenses granted
Agway under this Agreement will depend upon various factors, including
the nature of the particular Product being marketed and the particular
market area. Accordingly, when Agway decides, in its sole discretion,
to market a particular Product developed as a result of the Product
Feasibility Agreement entered into between the parties hereto as of the
effective date hereof, or otherwise involving Agway, in a particular
area, the parties shall enter into a sub-agreement on commercially
reasonable terms mutually acceptable to the parties covering such
Product and market area, in the form of the sub-agreement set forth in
Exhibit 2 attached hereto and hereby incorporated herein and made a
part hereof. Agway agrees that: (a) once such a Product has been
developed which the parties agree can be reasonably expected to
generate a minimum of $1,000,000.00 in net profits annually, shared
between Planet and Agway; it will, (b) upon written request by Planet,
present to Planet a Schedule for the marketing thereof, in the form of
Exhibit 2, within one year from the date of receiving such request. All
of the terms of this Agreement shall apply to each such sub-agreement,
to the extent they are not inconsistent therewith. Any dispute between
the parties with respect to the terms of any sub-agreement shall be
resolved by arbitration pursuant to ARTICLE 18.
<PAGE>
ARTICLE 5
TERM:
5.1 Except as otherwise provided herein, this Agreement shall commence as
of the date of its execution and shall continue until the expiration of
the last to expire of any patents covering the Planet Technology and/or
the New Technology.
5.2 This Agreement may be extended by mutual written agreement of the
parties.
ARTICLE 6
TERMINATION:
6.1 This Agreement may be terminated:
a) Upon mutual written agreement of the parties; or
b) By either party for material breach of any of the terms hereof
by the other party, if the breach is not corrected within
sixty (60) days after giving written notice of such breach to
the other party, it being understood and agreed that the
failure by Agway to meet performance standards in any
individual subagreement of Exhibit 2 shall not be considered a
material breach; or
c) By Agway on six months' prior written notice to Planet if, in
Agway's sole opinion, the continued marketing and sale of
Products under this Agreement is unprofitable or otherwise not
viable for Agway: provided, however, that Agway shall not have
the right to terminate the Agreement under this subparagraph
until the expiration of 3 years from the Effective Date first
above written; or
d) By Agway, forthwith, upon written notice to Planet if Planet
shall become insolvent or shall make an assignment for the
benefit of creditors, or shall be placed in receivership,
reorganization, liquidation or bankruptcy (voluntary or
involuntary); or
e) By Planet, forthwith, upon written notice to Agway if Agway
shall become insolvent or shall make an assignment for the
benefit of creditors, or shall be placed in receivership,
reorganization, liquidation or bankruptcy (voluntary or
involuntary); or
<PAGE>
f) By Planet, if the business of Agway, subject to the terms of
this Agreement, by law, decree, ordinance or other
governmental action, is vested in, or is made subject to, the
control or direction of any governmental agent, officer or
appointee, or of any other person or firm not a party or an
Affiliate of a party to this Agreement; or
g) By Agway, if the business of Planet, subject to the terms of
this Agreement, by law, decree, ordinance or other
governmental action, is vested in, or is made subject to, the
control or direction of any governmental agent, officer or
appointee, or of any other person or firm not a party or an
Affiliate of a party to this Agreement; or
h) By Agway, in Agway's sole discretion forthwith upon written
notice to Planet if the shareholders of Planet do not approve
at a special meeting of its shareholders called for such
purpose (A) the purchase by Agway Holdings, Inc. ("AHI") of
1,000,000 shares of Planet's common stock pursuant to a Stock
Purchase Agreement between AHI and Planet dated on or about
the date of this Agreement (the "Stock Agreement"), (B) the
Warrant and the Warrant Shares as such terms are defined in
the Stock Agreement) and (C) the other transactions provided
for in the Stock Agreement, or if the Initial Closing (as
defined in the Stock Agreement) shall not have occurred on or
before January 31, 1999 or such later date as the parties may
agree upon in writing ("Termination Date"). If this Agreement
is terminated as hereinabove provided, then Planet shall repay
to Agway all amounts paid by Agway or any Affiliate of Agway
under this Agreement on the Termination Date.
6.2 Any termination pursuant to ARTICLE 6.1 shall not relieve either party
of any obligation or liability accrued under this Agreement prior to
such termination, or rescind or give rise to any right to rescind
anything done or, except as provided for in Section 6.1 h), to recover
any payments made or other consideration given under this Agreement
prior to the time such termination becomes effective, and such
termination shall not affect in any manner any rights arising under
this Agreement prior to such termination.
6.3 The Mutual Non-Disclosure Agreement attached as Exhibit 1 shall remain
in effect following the termination of this Agreement, in accordance
with its terms.
6.4 In the event of termination of this Agreement for any reason, Agway
shall have three months following the date of termination within which
to dispose of inventory incorporating the Planet Technology and/or the
New Technology and to fulfill orders received therefor prior to the
termination date, subject to the payment of royalties as provided in
ARTICLE 5 above.
<PAGE>
6.5 The provisions of ARTICLES 1, 3, 6, 8.3, 8.4, 11, 12, 13, 14, 15, 16,
17, 18, 19, and 20 shall survive expiration or termination of this
Agreement.
ARTICLE 7
PATENT MARKING; INTELLECTUAL PROPERTY RIGHTS:
7.1 Agway and its Affiliates will use commercially reasonable efforts to
affix and/or to require its or their distributors to affix to
packaging, or in the case of bulk distribution to the accompanying
documents, for the Products a notice complying with all applicable
patent marking laws in the country or countries in which the Products
are made and the country or countries in which the Products are
distributed and sold. Planet shall from time to time inform Agway of
the appropriate patent marking in respect of Planet Technology and New
Technology.
7.2 With respect to any patent applications and patents covering the Planet
Technology and the New Technology, Planet shall be responsible for all
costs and expenses related to preparing, filing and prosecuting such
patent applications and paying all maintenance fees related to any such
issued patents. After any patents covering the Planet Technology and
the New Technology have issued, Planet and Agway shall share equally
all costs and expenses related to the further prosecution and any
defense and enforcement of such patents (including, if applicable,
opposition proceedings related to any European patents, re-examination
of issued patents, interference proceedings and declaratory judgements
regarding invalidity of any such issued patents). In the event that
Planet desires to abandon any patent application or patent covering the
Planet Technology or the New Technology, or if Planet later declines
responsibility for any such patent application or patent, Planet shall
provide reasonable prior written notice to Agway of such intention to
abandon or decline responsibility, and Agway shall have the right, at
its own expense, to file, prosecute and maintain such patent
application or patent. In addition, Agway shall have the right, at its
own expense, to file, prosecute and maintain such patent application or
patent upon or after the bankruptcy, dissolution or winding up of
Planet. Agway may offset its costs and expenses in connection with any
such patent application or patent against any royalties due Planet
thereunder, in an amount not to exceed 5% of such royalties, until the
total of such costs and expenses, plus accrued interest (at the rate of
1.5% per month, up to the maximum legal annual interest rate) on the
balance of such costs and expenses remaining after each such royalty
payment to Planet, has been recouped by Agway in this manner.
7.3 Each party agrees to cooperate fully in the preparation, filing, and
prosecution of any patent applications under this Agreement. Such
cooperation includes, but is not limited
<PAGE>
to: (a) executing all papers and instruments, or requiring its
employees or agents, to execute such papers and instruments, so as to
effectuate the ownership of such patent applications (and inventions
covered by such patent applications) and to enable the other party to
apply for and to prosecute patent applications in any country, and (b)
promptly informing the other party of any matters coming to such
party's attention that may affect the preparation, filing, or
prosecution of any such patent applications.
7.4 Planet and Agway shall promptly notify the other in writing of any
allegation by a third party that the activity of either of the parties
under this Agreement infringes or may infringe the intellectual
property rights of such third party. Planet shall have the right to
control the defense of any claims with respect to the Planet Technology
or the New Technology by counsel of its own choice. If Planet fails to
proceed in a timely fashion with regard to the defense of any claims
with respect to the Planet Technology or the New Technology, Agway
shall have the right to control any such defense of such claim by
counsel of its own choice, and Planet shall have the right to be
represented in any such action by counsel of its own choice. Neither
party shall have the right to settle any patent infringement litigation
under this Section 7.4 in a manner that diminishes the rights or
interests of the other party or obligates the other party to make any
payment or take any action without the consent of such other party.
7.5 Planet and Agway shall promptly notify the other in writing of any
alleged or threatened infringement of any patent included in the Planet
Technology or the New Technology of which they become aware. Both
parties shall use their best efforts in cooperating with each other to
terminate such infringement without litigation. Planet shall have the
right to bring and control any action or proceeding with respect to
infringement of any patent included in the Planet Technology or the New
Technology by counsel of its own choice. With respect to infringement
of any patent included in the Planet Technology or the New Technology,
if Planet fails to bring an action or proceeding within (a) 90 days
following the notice of alleged infringement or (b) 10 days before the
time limit, if any, set forth in the appropriate laws and regulations
for the filing of such actions, whichever comes first, Agway shall have
the right to bring and control any such action by counsel of its own
choice, and Planet shall have the right to be represented in any such
action by counsel of its own choice. In the event a party brings an
infringement action, the other party shall cooperate fully, including
if required to bring such action, the furnishing of a power of
attorney. Neither party shall have the right to settle any patent
infringement litigation under this Section 7.5 in a manner that
diminishes the rights or interests of the other party without the prior
written consent of such other party. Except as otherwise agreed to by
the parties as part of a cost sharing arrangement, any recovery
realized as a result of such litigation, after reimbursement of any
litigation expenses of Planet and Agway, shall belong to the party who
brought the action.
<PAGE>
ARTICLE 8
REPRESENTATIONS AND WARRANTIES:
8.1 Planet represents and warrants that:
a) It has authority to enter into this Agreement, and doing so
will not violate any agreements to which it is a party.
b) It has all necessary government licenses and approvals
required to conduct its business.
c) It has no knowledge of any impediment to its performance of
this Agreement.
8.2 Agway represents and warrants that:
a) It has authority to enter into this Agreement, and doing so
will not violate any agreements to which it is a party.
b) It has all necessary government licenses and approvals
required to conduct its business.
c) It has no knowledge of any impediment to its performance of
this Agreement.
8.3 EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES
ANY REPRESENTATION OR WARRANTY TO THE OTHER PARTY OF ANY KIND, EXPRESS
OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
8.4 NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY
SPECIAL, INDIRECT, INCIDENTAL, EXEMPLARY, CONSEQUENTIAL, OR PUNITIVE
DAMAGES IN CONNECTION WITH THIS AGREEMENT OR ANY WORK PERFORMED
HEREUNDER.
ARTICLE 9
NOTICES:
<PAGE>
All notices or other communications required or permitted to be given
under this Agreement shall be in writing and shall be deemed to have
been sufficiently given when delivered in person, or when deposited
with the United States Postal Service or Canada Post, first-class,
registered or certified mail, postage prepaid, or by fax (upon
confirmation of receipt), addressed as follows:
AGWAY:
Agway Consumer Products, Inc.
P.O. Box 4933
Syracuse, New York 13221-4933
FAX: (315) 449-6253
Attention: Dennis LaHood
PLANET:
Planet Polymer Technologies, Inc.
9985 Businesspark Avenue, Suite A
San Diego, California U.S. 92131
FAX: (619) 549-5133
Attention: Robert J. Petcavich
or to such other address or individual as either party may specify from
time to time in writing.
ARTICLE 10
ASSIGNMENT:
This Agreement shall be binding on and inure to the benefit of the
parties to this Agreement and their successors and permitted assigns,
provided no assignment shall relieve the assigning party of its
obligations under this Agreement. The rights, duties, privileges and
obligations of each party under this Agreement shall not be assigned or
delegated without the prior written consent of the other party (which
consent shall not be unreasonably withheld); provided, however, that
either party may assign this Agreement and its rights and obligations
hereunder without the other party's consent (a) in connection with the
transfer or sale of all or substantially all of the business of such
party to which this Agreement relates to another party, whether by
merger, sale of
<PAGE>
stock, sale of assets or otherwise, or (b) to any Affiliate. Any
assignment not in accordance with this Agreement shall be void.
ARTICLE 11
NO REFUND OR PAYMENTS:
Royalties and all other sums paid by Agway to Planet under this
Agreement shall not be refundable for any purpose, except for excess
payment made due to computational errors.
<PAGE>
ARTICLE 12
LITIGATION:
12.1 Planet shall have no obligation to enforce rights under its patents
and/or trade secrets for the benefit of Agway or otherwise; nor shall
Planet have any obligation to defend or indemnify Agway or its
Affiliates in respect of any activities of Agway and/or its Affiliates
under this Agreement.
12.2 Agway shall have no obligation to enforce rights under its patents
and/or trade secrets for the benefit of Planet or otherwise; nor shall
Agway have any obligation to defend or indemnify Planet or its
Affiliates in respect of any activities of Planet and/or its Affiliates
under this Agreement.
ARTICLE 13
PRODUCT LIABILITY:
13.1 Agway shall hold Planet and its Affiliates harmless, and shall defend
and indemnify Planet and its Affiliates against any product liability
claim made against Planet or its Affiliates arising out of the
activities of Agway and/or its Affiliates under this Agreement.
13.2 Planet shall hold Agway and its Affiliates harmless, and shall defend
and indemnify Agway and its Affiliates against any product liability
claim made against Agway or its Affiliates arising out of the
activities of Planet and/or its Affiliates under this Agreement.
13.3 In the event either party seeks indemnification under this ARTICLE 13,
it shall inform the other party of a claim as soon as reasonably
practicable after it receives notice of the claim, shall permit the
other party to assume direction and control of the defense of the claim
(including the right to settle the claim solely for monetary
consideration), and shall cooperate as requested (at the expense of the
other party) in the defense of the claim.
<PAGE>
ARTICLE 14
NON-WAIVER:
The failure by any party to this Agreement, at any time, to enforce or
to require strict compliance of performance by any other party of any
of the provisions of this Agreement shall not constitute a waiver of
such provisions and shall not affect or impair in any way its rights at
any time to enforce such provisions or to avail itself of such remedies
as it may have for any breach thereof.
ARTICLE 15
SEVERABILITY:
If any provision hereof is held invalid or unenforceable by a court of
competent jurisdiction, it shall be considered severed from this
Agreement and shall not serve to invalidate or render unenforceable the
remaining provisions hereof.
ARTICLE 16
ENTIRE AGREEMENT; AMENDMENT:
This Agreement constitutes the entire understanding between the parties
with respect to the subject matter hereof. No waiver, modification or
amendment of any terms of this Agreement shall be valid unless made in
writing specifying such waiver, modification, or amendment and signed
by the parties hereto.
ARTICLE 17
FORCE MAJEURE:
Neither party shall be held liable or responsible to the other party
nor be deemed to have defaulted under or breached this Agreement for
failure or delay in fulfilling or performing any term of this Agreement
(other than non-payment) when such failure or delay is caused by or
results from causes beyond the reasonable control of the affected
party, including, but not limited to, fire, floods, embargoes, war,
acts of war (whether war be declared or not), insurrections, riots,
civil commotions, strikes, lockouts or other labor disturbances, acts
of God or acts, omissions or delays in acting by any governmental
authority or the other party.
<PAGE>
ARTICLE 18
DISPUTE RESOLUTION AND CHOICE OF LAW:
18.1 This Agreement will be governed by, and interpreted and enforced in
accordance with the laws of the State of New York, U.S.A., without
regard to its choice of law provisions.
18.2 If any dispute arises between the parties relating to the
interpretation, breach or performance of this Agreement or the grounds
for the termination thereof, and the parties cannot resolve the dispute
within 30 days of a written request by either party to the other party,
the parties agree to hold a meeting, attended by a Vice President or
President of each party, to attempt in good faith to negotiate a
resolution of the dispute prior to pursuing other available remedies.
If, within 60 days after such written request, the parties have not
succeeded in negotiating a resolution of the dispute, such dispute
shall be submitted to final and binding arbitration under the then
current commercial rules and regulations of the American Arbitration
Association ("AAA") relating to voluntary arbitrations. The arbitration
proceedings shall be held in Buffalo, New York. The arbitration shall
be conducted by one arbitrator, who is knowledgeable in the subject
matter at issue in the dispute and who shall be selected by mutual
agreement of the parties or, failing such agreement, shall be selected
in accordance with the AAA rules. Each party shall initially bear its
own costs and legal fees associated with such arbitration. The
prevailing party in any such arbitration shall be entitled to recover
from the other party the reasonable attorneys' fees, costs, and
expenses incurred by such prevailing party in connection with such
arbitration. The decision of the arbitrator shall be final and binding
on the parties. The arbitrator shall prepare and deliver the parties a
written, reasoned opinion conferring its decision. Judgment on the
award so rendered may be entered in any court having competent
jurisdiction thereof.
ARTICLE 19
NO AGENCY:
It is expressly agreed that Planet and Agway shall be independent
contractors and that the relationship between the two parties shall not
constitute a partnership or agency of any kind. Neither Planet nor
Agway shall have the authority to make any statements, representations,
or commitments of any kind, or to take any action, which shall be
binding on the other party, without the prior written consent of the
other party.
<PAGE>
ARTICLE 20
COUNTERPARTS:
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the day
and year first set forth above.
AGWAY CONSUMER PRODUCTS, INC.
By: /s/ Dennis J. LaHood
--------------------------
Title: VP
PLANET POLYMER TECHNOLOGIES, INC.
By: /s/ Robert J. Petcavich
----------------------------
Title: Chairman & CEO
EXHIBIT E
<PAGE>
PRODUCT FEASIBILITY AGREEMENT
This Agreement is made effective the 12th day of November,
1998 (the "Effective Date"), by and between Agway Consumer Products, Inc., a
Delaware corporation with offices at 333 Butternut Drive, Dewitt, New York 13214
(hereinafter "Agway"), and Planet Polymer Technologies, Inc., a California
corporation with offices at 9985 Businesspark Avenue, Suite A, San Diego,
California 92131 (hereinafter "Planet").
WHEREAS, Planet has developed technology relating to time-
release coatings and protective coatings; and
WHEREAS, Agway wishes to have Planet conduct product
feasibility work in connection with time-release coatings for a variety of
Agricultural Products (as hereafter defined) and in connection with protective
coatings for a variety of Food Products (as hereafter defined).
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS:
1.1 "Agricultural Products" shall mean products for use in Agriculture,
including, but not be limited to, animal feeds and other products
intended for animal consumption, but shall exclude Fertilizer Products,
as defined in 1.4 below, and Biological Products as defined in the
agreement between Planet and Agrium, Inc. dated January 30, 1995.
Agriculture shall mean the production of crops, livestock, dairy
products, poultry products, meats, and other products produced for
and/or produced from a farm operation.
1.2 "Food Products" shall mean products intended for human dietary
consumption, including, but not be limited to, dairy products, poultry
products, meat products, fruits and vegetables.
1.3 "Other Products" shall mean coated urea for melting ice at airports,
and packaging for Agricultural Products and Food Products.
1.4 "Fertilizer Products" shall mean plant nutrients and other products
intended for use in fertilizers, including the specific urea fertilizer
coating ("Enviroplastic CRT) developed by Planet for Agrium, Inc., as
covered by U.S. patent no. 5,803,946.
1.5 "Agway's Field of Business" shall mean the production, distribution
and/or marketing of Agricultural Products, Food Products, Other
Products and any other products as
<PAGE>
may be mutually agreed upon in writing by Agway and Planet
(individually a "Product" and collectively the "Products").
1.6 "Affiliate" shall mean any company which, directly or indirectly is
controlled by, or controls, a party to this Agreement, or is under
common control with a party to this Agreement. Ownership of 50% or more
of the voting stock of, or membership interest in a company shall be
regarded as control.
1.7 "Control" shall mean possession of the ability to grant a license or
sublicense as provided for herein without violating the terms of any
agreement or other arrangement with any third party.
1.8 "Know-How" shall mean all know-how, trade secrets, inventions, data,
processes, techniques, procedures, compositions, devices, methods,
formulas, protocols and information, whether or not patentable, which
are not generally publicly known, including, without limitation, all
chemical, biochemical, toxicological, and scientific research
information.
1.9 "Commercially Feasible" shall mean a product that will generate a
minimum of $500,000.00 in net profits annually to be shared between
Planet and Agway, beginning no later than the second year following
product introduction.
1.10 "Patent Rights" shall mean all rights under patents and patent
applications, and any and all patents issuing therefrom (including
utility, model and design patents and certificates of invention),
together with any and all substitutions, extensions (including
supplemental protection certificates), registrations, confirmations,
reissues, divisionals, continuations, continuations-in-part,
re-examinations, renewals and foreign counterparts of the foregoing.
1.11 "Agway Know-How" shall mean all Know-How necessary or appropriate to
develop and commercialize Products for use in Agway's Field of
Business, and which is under the Control of Agway.
1.12 "Products" shall mean Agricultural Products, Food Products, Other
Products and any other products as may be mutually agreed upon in
writing by Agway and Planet.
1.13 "Planet Know-How" shall mean all Know-How related to Planet's
proprietary coating technology, which is not covered by the Planet
Patent Rights, but is necessary or appropriate to develop and
commercialize Products for use in Agway's Field of Business, and which
is under the Control of Planet as of the Effective Date.
<PAGE>
1.14 "Planet Patent Rights" shall mean all Patent Rights that claim Planet's
proprietary coating technology, which are necessary or appropriate to
develop and commercialize Products for use in Agway's Field of
Business, and which are under the Control of Planet as of the Effective
Date.
1.15 "Planet Technology" shall mean the Planet Patent Rights and the Planet
Know-How.
1.16 "New Technology" shall mean Patent Rights and Know-How including, but
not limited to, new compositions of matter, new chemical complexes,
improved chemical complexes, association compounds, blends, mixtures or
compositions of coating materials, polymer materials and new products
or processes relating thereto, developed as a result of the Work
conducted under ARTICLE 2 of this Agreement, whether developed by
Planet alone or jointly with Agway, or by Agway alone as a result of
disclosures made to it by Planet in connection with such work.
ARTICLE 2
WORK TO BE PERFORMED:
2.1 The product feasibility work to be conducted by Planet under this
Agreement (hereafter the Work) is set forth in Exhibit 1 attached
hereto and hereby made a part hereof. Exhibit 1 sets forth the Work
initially contemplated, and may be amended from time to time by mutual
written agreement of the parties to recite additional Work to be
conducted by Planet. The conduct of the Work shall include regular
meetings between representatives of Planet and representatives of
Agway, during which Agway will offer comments on samples made from
blends of materials to be supplied to Agway by Planet.
2.2 If the performance characteristics set forth in Exhibit 1 are not met
by Planet, or reasonable progress is not made by Planet toward
achieving such performance characteristics, or the work being conducted
by Planet is not performed to Agway's reasonable satisfaction, then
Agway, in its sole judgment, shall have the right to terminate the Work
pursuant to Section 9.1b) and shall have no further obligation to
Planet with respect to any fees for Work remaining to be performed, as
outlined in Exhibit 1, provided, however, that Agway shall reimburse
Planet for all reasonable costs incurred or committed to in connection
with the Work prior to receipt of such notice of termination.
<PAGE>
ARTICLE 3
WORK SCHEDULE:
The Work to be performed shall be conducted in accordance with the time
schedule set forth in Exhibit 1, attached hereto and hereby made a part
hereof. Planet will use reasonable commercial efforts to conduct the
Work set forth in Exhibit 1, and to complete the Work in accordance
with the time schedule set forth therein.
ARTICLE 4
PAYMENTS:
4.1 Agway agrees to pay the fees as set forth in Exhibit 1, for performance
of the Work.
4.2 Agway also agrees to reimburse Planet for its reasonable costs for
travel and lodging in connection with the meetings contemplated under
ARTICLE 2.1, when incurred at the written request of Agway, and for the
reasonable cost of the coating materials and coated Products supplied
by Planet to Agway for alpha and beta testing in accordance with
Exhibit 1, including reasonable shipping and processing costs, and for
the cost of such independent laboratory tests as may be mutually agreed
upon by the parties in writing.
ARTICLE 5
OWNERSHIP:
5.1 The New Technology, including all inventions, whether patentable or
not, arising from the Work performed and to be performed under this
Agreement, shall be owned by Planet, or by such of its Affiliates as it
may designate from time to time.
5.2 Planet agrees (a) to promptly execute and file, or to cause to be
executed and filed any and all patent applications covering any of the
New Technology and relating to any matter determined by Agway and
Planet to be feasible, and (b) to require the inventors of such New
Technology who are employees or representatives of Planet to assign
such patent applications and the inventions disclosed therein to
Planet, or as Planet may direct, and to execute all such other
documents as may be reasonably necessary to confirm the ownership
rights of Planet in the subject matter of this ARTICLE 5.Agway agrees
(a) to require the inventors of any New Technology who are employees or
<PAGE>
representatives of Agway to assign their rights to such New Technology to Agway,
and (b) to assign such New Technology to Planet.
5.3 With respect to any patent applications and patents covering the New
Technology, Planet shall be responsible for all costs and expenses
related to preparing, filing and prosecuting such patent applications
and paying all maintenance fees related to any such issued patents.
After any patents covering the New Technology have issued, Planet and
Agway shall share equally all costs and expenses related to the further
prosecution and any defense and enforcement of such patents (including,
if applicable, opposition proceedings related to any European patents,
re-examination of issued patents, interference proceedings and
declaratory judgements regarding invalidity of any such issued
patents). In the event that Planet desires to abandon any patent
application or patent covering the New Technology, or if Planet later
declines responsibility for any such patent application or patent,
Planet shall provide reasonable prior written notice to Agway of such
intention to abandon or decline responsibility, and Agway shall have
the right, at its own expense, to file, prosecute and maintain such
patent application or patent. In addition, Agway shall have the right,
at its own expense, to file, prosecute and maintain such patent
application or patent upon or after the bankruptcy, dissolution or
winding up of Planet. Agway may offset its costs and expenses in
connection with any such patent application or patent against any
royalties due Planet thereunder, in an amount not to exceed 5% of such
royalties, until the total of such costs and expenses, plus accrued
interest (at the rate of 1.5% per month, up to the maximum legal annual
interest rate) on the balance of such costs and expenses remaining
after each such royalty payment to Planet, has been recouped by Agway
in this manner.
5.4 If Agway and Planet mutually decide to protect some or all of the New
Technology under laws relating to trade secrets, the parties shall
cooperate with one another in achieving such trade secret protection.
ARTICLE 6
CONFIDENTIALITY:
The terms of the Mutual Non-Disclosure Agreement between Agway and
Planet, made as of August 6, 1998 (the "NDA"), a copy of which is
attached hereto as Exhibit 2, is hereby incorporated herein and made a
part hereof. Neither party shall terminate the NDA during the term of
the Agreement. Each party may use Confidential Information (as defined
in NDA) of the other party only to the extent necessary to accomplish
the purposes of this Agreement.
<PAGE>
ARTICLE 7
RIGHT OF FIRST NEGOTIATION:
Planet shall provide written notice to Agway in the event Planet
desires to develop a product with a third party, or is approached by a
third party to develop a product, for use in Agway's Field of Business.
Such notice shall include an outline of anticipated funding needs, the
anticipated length of the product feasibility study and Planet's
desired result from such study. Agway shall have 30 days following
receipt of such notice to advise Planet whether Agway considers the
product to be Commercially Feasible, and whether Agway is interested in
such a product. Agway shall have another 30 days thereafter to
negotiate a product feasibility study on terms and conditions
acceptable to Planet, including financial terms under which Agway will
fund such product feasibility study. If the parties cannot agree to
such terms and conditions within such 30 day period, or if the parties
cannot agree whether the product is or is not Commercially Feasible,
the parties agree to submit the matter to arbitration under ARTICLE 18
and Planet agrees to take no further action with respect to such
product and feasibility study during the arbitration proceeding. If the
product is considered to be Commercially Feasible, and if Agway does
not express interest in such a product within the initial 30 day
period, (i) Planet may proceed with such a third party product
feasibility study and Agway shall have no rights in connection with
such product feasibility study or with respect to any product developed
thereunder (hereinafter a "Developed Product"), and (ii) Planet shall
have the right to grant an exclusive license to a third party under the
Planet Technology and the New Technology to make, have made, use or
sell such Developed Product in Agway's Field of Business. Any such
third party license shall be limited to such Developed Product and
shall not otherwise diminish Agway's rights with respect to the Planet
Technology and to the New Technology under this Agreement. Planet
agrees that it will not, during the term of this Agreement, proceed
with such a third party feasibility study if the product is not
considered to be Commercially Feasible.
ARTICLE 8
TERM:
8.1 Except as otherwise provided herein, this Agreement shall commence as
of the date of its execution and shall continue for 5 years following
such date.
8.2 This Agreement may be extended by mutual written agreement of the
parties.
<PAGE>
ARTICLE 9
TERMINATION:
9.1 This Agreement may be terminated:
a) Upon mutual written agreement of the parties; or
b) By either party for breach of any of the material terms hereof
by the other party, if the breach is not corrected within
sixty (60) days after giving written notice of such breach to
the other party; or
c) By Agway on six months' prior written notice to Planet if, in
Agway's sole opinion, the continued conduct of the Work under
this Agreement is unprofitable or otherwise not viable for
Agway: provided, however, that Agway shall not have the right
to terminate the Agreement under this subparagraph c) until
the expiration of 3 years from the Effective Date; or
d) By Agway, forthwith, upon written notice to Planet if Planet
shall become insolvent or shall make an assignment for the
benefit of creditors, or shall be placed in receivership,
reorganization, liquidation or bankruptcy (voluntary or
involuntary); or
e) By Planet, forthwith, upon written notice to Agway if Agway
shall become insolvent or shall make an assignment for the
benefit of creditors, or shall be placed in receivership,
reorganization, liquidation or bankruptcy (voluntary or
involuntary); or
f) By Planet, if the business of Agway, subject to the terms of
this Agreement, by law, decree, ordinance or other
governmental action, is vested in, or is made subject to, the
control or direction of any governmental agent, officer or
appointee, or of any other person or firm not a party or an
Affiliate of a party to this agreement; or
g) By Agway, if the business of Planet, subject to the terms of
this Agreement, by law, decree, ordinance or other
governmental action, is vested in, or is made subject to, the
control or direction of any governmental agent, officer or
appointee, or of any other person or firm not a party or an
Affiliate of a party to this Agreement; or
h) By Agway, in Agway's sole discretion forthwith upon written
notice to Planet if the shareholders of Planet do not approve
at a special meeting of its
<PAGE>
shareholders called for such purpose (A) the purchase by Agway
Holdings, Inc. ("AHI") of 1,000,000 shares of Planet's common
stock pursuant to a Stock Purchase Agreement between AHI and
Planet dated on or about the date of this Agreement (the
"Stock Agreement"), (B) the Warrant and the Warrant Shares (as
such terms are defined in the Stock Agreement) and (C) the
other transactions provided for in the Stock Agreement, or if
the Initial Closing (as defined in the Stock Agreement) shall
not have occurred on or before January 31, 1999 or such later
date as the parties may agree upon in writing ("Termination
Date"). If this Agreement is terminated as hereinabove
provided, then Planet shall repay to Agway all amounts paid by
Agway or any Affiliate of Agway under this Agreement on the
Termination Date.
9.2 Any termination pursuant to ARTICLE 9 shall not relieve either party of
any obligation or liability accrued under this Agreement prior to such
termination, or rescind or give rise to any right to rescind anything
done or, except as provided for in Section 9.1 h), to recover any
payments made or other consideration given under this Agreement prior
to the time such termination becomes effective, and such termination
shall not affect in any manner any rights arising under this Agreement
prior to such termination.
9.3 The Mutual Non-Disclosure Agreement attached as Exhibit 2 shall remain
in effect following the termination of this Agreement, in accordance
with its terms.
9.4 The provisions of ARTICLES 1, 5, 6, 9, 10.3, 10.4, 13, 14, 18, 20, 21
and 22 shall survive termination of this Agreement.
ARTICLE 10
REPRESENTATIONS AND WARRANTIES:
10.1 Planet represents and warrants that:
a) It has authority to enter into this Agreement, and doing so
will not violate any agreements to which it is a party.
b) It has all necessary government licenses and approvals
required to conduct its business.
c) It has no knowledge of any impediment to its performance of
this Agreement.
<PAGE>
10.2 Agway represents and warrants that:
a) It has authority to enter into this Agreement, and doing so
will not violate any agreements to which it is a party.
b) It has all necessary government licenses and approvals
required to conduct its business.
c) It has no knowledge of any impediment to its performance of
this Agreement.
10.3 EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES
ANY REPRESENTATION OR WARRANTY TO THE OTHER PARTY OF ANY KIND, EXPRESS
OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
10.4 NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY
SPECIAL, INDIRECT, INCIDENTAL, EXEMPLARY, CONSEQUENTIAL, OR PUNITIVE
DAMAGES IN CONNECTION WITH THIS AGREEMENT OR ANY WORK PERFORMED
HEREUNDER.
ARTICLE 11
NOTICES:
All notices or other communications required or permitted to be given
under this Agreement shall be in writing and shall be deemed to have
been sufficiently given when delivered in person, or when deposited
with the United States Postal Service or Canada Post, first-class,
registered or certified mail, postage prepaid, or by fax (upon
confirmation of receipt) addressed as follows:
AGWAY:
Agway Consumer Products, Inc.
P.O. Box 4933
Syracuse, New York 13221-4933
FAX: (315) 449-6253
<PAGE>
Attention: Dennis LaHood
PLANET:
Planet Polymer Technologies, Inc.
9985 Businesspark Avenue, Suite A
San Diego, California U.S. 92131
FAX: (619) 549-5133
Attention: Robert J. Petcavich
or to such other address or individual as either party may
specify from time to time in writing.
ARTICLE 12
ASSIGNMENT:
This Agreement shall be binding on and inure to the benefit of the
parties to this Agreement and their successors and permitted assigns,
provided no assignment shall relieve the assigning party of its
obligations under this Agreement. The rights, duties, privileges and
obligations of each party under this Agreement shall not be assigned or
delegated without the prior written consent of the other party (which
consent shall not be unreasonably withheld); provided, however, that
either party may assign this Agreement and its rights and obligations
hereunder without the other party's consent (a) in connection with the
transfer or sale of all or substantially all of the business of such
party to which this Agreement relates to another party, whether by
merger, sale of stock, sale of assets or otherwise, or (b) to any
Affiliate. Any assignment not in accordance with this Agreement shall
be void.
ARTICLE 13
NO REFUND OR PAYMENTS:
All sums paid by Agway to Planet under this Agreement shall not be
refundable for any purpose, except for excess payment made due to
computational errors.
<PAGE>
ARTICLE 14
LITIGATION:
14.1 Planet shall have no obligation to enforce rights under its patents
and/or trade secrets for the benefit of Agway or otherwise; nor shall
Planet have any obligation to defend or indemnify Agway or its
Affiliates in respect of any activities of Agway and/or its Affiliates
under this Agreement.
14.2 Agway shall have no obligation to enforce rights under its patents
and/or trade secrets for the benefit of Planet or otherwise; nor shall
Agway have any obligation to defend or indemnify Planet or its
Affiliates in respect of any activities of Planet and/or its Affiliates
under this Agreement.
ARTICLE 15
PRODUCT LIABILITY:
15.1 Agway shall hold Planet and its Affiliates harmless, and shall defend
and indemnify Planet and its Affiliates against any product liability
claim made against Planet or its Affiliates arising out of the
activities of Agway and/or its Affiliates under this Agreement.
15.2 Planet shall hold Agway and its Affiliates harmless, and shall defend
and indemnify Agway and its Affiliates against any product liability
claim made against Agway or its Affiliates arising out of the
activities of Planet and/or its Affiliates under this Agreement.
15.3 In the event either party seeks indemnification under this ARTICLE 15,
it shall inform the other party of a claim as soon as reasonably
practicable after it receives notice of the claim, shall permit the
other party to assume direction and control of the defense of the claim
(including the right to settle the claim solely for monetary
consideration), and shall cooperate as requested (at the expense of the
other party) in the defense of the claim.
<PAGE>
ARTICLE 16
NON-WAIVER:
The failure by any party to this Agreement, at any time, to enforce or
to require strict compliance of performance by any other party of any
of the provisions of this Agreement shall not constitute a waiver of
such provisions and shall not affect or impair in any way its rights at
any time to enforce such provisions or to avail itself of such remedies
as it may have for any breach thereof.
ARTICLE 17
SEVERABILITY:
If any provision hereof is held invalid or unenforceable by a court of
competent jurisdiction, it shall be considered severed from this
Agreement and shall not serve to invalidate or render unenforceable the
remaining provisions hereof.
ARTICLE 18
ENTIRE AGREEMENT; AMENDMENT:
This Agreement constitutes the entire understanding between the parties
with respect to the subject matter hereof. No waiver, modification or
amendment of any terms of this Agreement shall be valid unless made in
writing specifying such waiver, modification, or amendment and signed
by the parties hereto.
ARTICLE 19
FORCE MAJEURE:
Neither party shall be held liable or responsible to the other party
nor be deemed to have defaulted under or breached this Agreement for
failure or delay in fulfilling or performing any term of this Agreement
(other than non-payment) when such failure or delay is caused by or
results from causes beyond the reasonable control of the affected
party, including, but not limited to, fire, floods, embargoes, war,
acts of war (whether war be declared or not), insurrections, riots,
civil commotions, strikes, lockouts or other labor disturbances, acts
of God or acts, omissions or delays in acting by any governmental
authority or the other party.
<PAGE>
ARTICLE 20
DISPUTE RESOLUTION AND CHOICE OF LAW:
20.1 This Agreement will be governed by and interpreted in accordance with
the laws of the State of New York, U.S.A., without regard to its choice
of law provisions.
20.2 If any dispute arises between the parties relating to the
interpretation, breach or performance of this Agreement or the grounds
for the termination thereof, and the parties cannot resolve the dispute
within 30 days of a written request by either party to the other party,
the parties agree to hold a meeting, attended by a Vice President or
President of each party, to attempt in good faith to negotiate a
resolution of the dispute prior to pursuing other available remedies.
If, within 60 days after such written request, the parties have not
succeeded in negotiating a resolution of the dispute, such dispute
shall be submitted to final and binding arbitration under the then
current commercial rules and regulations of the American Arbitration
Association ("AAA") relating to voluntary arbitrations. The arbitration
proceedings shall be held in Buffalo, New York. The arbitration shall
be conducted by one arbitrator, who is knowledgeable in the subject
matter at issue in the dispute and who shall be selected by mutual
agreement of the parties or, failing such agreement, shall be selected
in accordance with the AAA rules. Each party shall initially bear its
own costs and legal fees associated with such arbitration. The
prevailing party in any such arbitration shall be entitled to recover
from the other party the reasonable attorneys' fees, costs, and
expenses incurred by such prevailing party in connection with such
arbitration. The decision of the arbitrator shall be final and binding
on the parties. The arbitrator shall prepare and deliver the parties a
written, reasoned opinion conferring its decision. Judgment on the
award so rendered may be entered in any court having competent
jurisdiction thereof.
<PAGE>
ARTICLE 21
NO AGENCY:
It is expressly agreed that Planet and Agway shall be independent
contractors and that the relationship between the two parties shall not
constitute a partnership or agency of any kind. Neither Planet nor
Agway shall have the authority to make any statements, representations,
or commitments of any kind, or to take any action, which shall be
binding on the other party, without the prior written consent of the
other party.
ARTICLE 22
COUNTERPARTS:
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the day and year
first set forth above.
AGWAY CONSUMER PRODUCTS, INC.
By: /s/ Dennis J. LaHood
-------------------------
Title: VP
PLANET POLYMER TECHNOLOGIES INC.
By: /s/ Robert J. Petcavich
----------------------------
Title: Chairman & CEO
EXHIBIT F
<PAGE>
(logo)
AGWAY INC., PO BOX 4933, SYRACUSE, NEW YORK 13221-4933
November 12, 1998
Mr. Robert J. Petcavich
Planet Polymer Technologies Incorporated
9985 Business Park Avenue
Suite A
San Diego, California 92131
Dear Bob:
This letter constitutes a binding commitment to provide a line of credit to
Planet Polymer Technologies Incorporated ("Planet") on the terms attached to
this letter.
Agway, Inc., through one of its affiliates, Agway Holdings Inc., ("Agway") has
today entered into with Planet (i) an agreement to purchase Planet common stock
and warrants pursuant to a Stock Purchase Agreement; (ii) an Exclusive Licensing
Agreement with respect to the use of certain Planet technologies relating to
agricultural and food products; and (iii) a Product Feasibility Agreement with
respect to the development of agricultural and food polymer-coated products.
Agway is delivering this commitment in order to allow Planet access to working
capital in the event the purchase under the Stock Purchase Agreement does not
occur on or before December 31, 1998.
Agway's commitment is subject to the execution and delivery of definitive
agreements containing such terms and conditions as Agway deems necessary. Each
party will be responsible for its respective expenses, including attorney fees
with respect to the proposed agreements.
If this commitment is acceptable, please sign one copy in the space provided
below and return the signed copy to Agway by 5 p.m. November 20, 1998.
AGWAY, INC. PLANET POLYMER
TECHNOLOGIES, INC.
By: /s/ Dennis J. LaHood By:/s/ Robert J. Petcavich
----------------------------- ---------------------------
Dennis J. LaHood, President Robert J. Petcavich, CEO
Country Products Group
Agway, Inc.
Date: November 12, 1998 Date: November 19, 1998
--------------------------- -------------------------
333 BUTTERNUT DRIVE, DEWITT, NEW YORK 13214
<PAGE>
LINE OF CREDIT TERM SHEET
Creditor: Agway, Inc. or one of its designated affiliates ("Agway").
Debtor: Planet Polymer Technologies, Inc. ("Planet").
Maximum Amount: $480,000, to be drawn down in four installments of $120,000,
beginning on January 1, 1999 and thereafter on the first day
of each month until the earlier of the repayment of the line
of credit or April 30, 1999.
Interest: Prime rate as set forth in the Wall Street Journal,
reset on each day such rate is published in the Wall
Street Journal during the term of the line of credit,
plus one, compounding monthly, and accruing daily on
the outstanding principal based on the actual number
of days elapsed and a year of 360 days.
Term: In the event the purchase of Common Stock and Warrants under
the Stock Purchase Agreement between Planet and Agway Holdings
Inc.has not been completed, beginning on January 1, 1999 until
repayment.
Repayment: Full repayment of all outstanding principal plus accrued
interest will be due upon the earlier of (i) the closing under
the Stock Purchase Agreement or (ii) after April 30, 1999, on
demand by Agway.
EXHIBIT G
<PAGE>
EXHIBIT G
Information with Respect to Executive
Officers and Directors of the Undersigned
-----------------------------------------
The following sets forth as to each of the executive officers
and directors of the undersigned: his name; his business address; and his
present principal occupation or employment and the name, principal business and
address of any corporation or other organization in which such employment is
conducted. Unless otherwise specified, the principal employer of each officer is
Agway, AFC, or AHI, the business address of each of which is c/o Agway Inc.,
P.O. Box 4933, Syracuse, New York 13221-4933 (tel. 315-449-6436) and each such
individual identified below is a citizen of the United States. The principal
occupation of all directors of Agway is full-time farming. To the knowledge of
the Reporting Persons, during the last five years, no such person has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors), and no such person was a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction as a result of which
he was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities law or finding any violation with respect to such laws except
as reported in Item 2(d) of this Schedule 13D.
<TABLE>
<CAPTION>
Agway Inc. Officers
-------------------
Shares
Beneficially
Name Present Principal Occupation Owned
- ----------------------- ---------------------------------------------------- -------------
<S> <C> <C>
Donald P. Cardarelli President and Chief Executive Officer 0
Daniel J. Edinger President, Telmark LLC 0
John F. Feeney Corporate Controller 0
Robert A. Fischer, Jr. President, Agway Agricultural Products 0
Mark Goodman President, Agway Retail Services 0
David M. Hayes Senior Vice President, General Counsel and Secretary 0
Stephen H. Hoefer Senior Vice President, Public Affairs 0
Michael R. Hopsicker President, Agway Energy Products LLC 0
Karen A. Johnson Treasurer 0
Dennis J. LaHood President, Country Products Group 0
Peter J. O'Neill Senior Vice President, Finance & Control 0
William L. Parker Vice President and Chief Information Officer 0
Robert D. Sears Vice President, Membership 0
Gerald R. Seeber Senior Vice President, Administrative Services and 0
President, Agway Insurance Group
G. Leslie Smith Vice President and Chief Investment Officer 0
</TABLE>
<TABLE>
<CAPTION>
Agway Inc. Board of Directors
Shares
Beneficially
Name Business Name Business Address Owned
- ----------------- ----------------------- ----------------------- -------------
<S> <C> <C> <C>
Ralph H. Heffner Jersey Acres Farms Inc. RD2, Box 422 0
Panther Valley Road
Pine Grove, PA 17963
Gary K. Van Slyke Van Slyke's Dairy Farm 5633 Griffith Road 0
Portageville, NY 14536
Kevin B. Barrett Heavenly View Farm RD 4, Box 175 0
Barrett Road
Towanda, PA 18848
Keith H. Carlisle Carlisle Bros., Inc. RD 1, Box 72A 0
Rt. 36
Greenwood, DE 19950
D. Gilbert Couser Shawangunk View 426 Drexel Dr. 0
Farm Pine Bush, NY 12566
Andrew J. Gilbert Adon Farms Box 517 0
State Highway 72
Potsdam, NY 13676
Peter D. Hanks Big Green Farms, Inc. Star Route, Box 41 0
Hanks Road
Salem, NY 12865
Robert L. Marshman Marshman Farms RD 3, Box 116 (E. River Rd.) 0
Oxford, NY 13830
Jeffrey B. Martin Martin Farms RD #4, Ridge Road 0
Cazenovia, NY 13035
Samuel F. Minor The Spring House 1531 Rt. 136 0
Spring House
Washington, PA 15301
Carl D. Smith Hillacre Farms RD 1, Box 1335 0
Smith Road
Corinna, ME 04928
Thomas E. Smith Lazy Acres Dairy 180 Osborn Rd. 0
Greenville, PA 16125
Joel L. Wenger Weng-Lea Farms 8988 Hades Church Rd. 0
Greencastle, PA 17225
Edwin C. Whitehead White Ayr Farms 71 Popple Swamp Rd. 0
Washington Depot, CT 06794
William W. Young Will-O-Crest Farm 800 County Rd. 27 0
Clifton Springs, NY 14432
</TABLE>
<TABLE>
<CAPTION>
Agway Financial Corporation
Board of Directors and Officers
-------------------------------
Name Present Title Shares Beneficially Owned
- ----------------------- ------------------------- -------------------------
<S> <C> <C>
Donald P. Cardarelli Chairman of the Board, 0
President, & Director
Peter J. O'Neill Vice President & Director 0
David M. Hayes Director 0
Karen A. Johnson Treasurer 0
</TABLE>
<TABLE>
<CAPTION>
Agway Holdings Inc.
Board of Directors & Officers
------------------------------
Name Present Title Shares Beneficially Owned
- ------------------------- -------------------------- -------------------------
<S> <C> <C>
Donald P. Cardarelli Chairman of the Board, 0
President, & Director
Peter J. O'Neill Vice President & Director 0
Dennis J. LaHood Vice President 0
David M. Hayes Director 0
Karen A. Johnson Treasurer 0
</TABLE>
