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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PLANET POLYMER TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C>
CALIFORNIA 33-0502606
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
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9985 BUSINESSPARK AVE., SUITE A
SAN DIEGO, CALIFORNIA 92131
(619) 549-5130
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OR REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ROBERT J. PETCAVICH
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
PLANET POLYMER TECHNOLOGIES, INC.
9985 BUSINESSPARK AVE., SUITE A
SAN DIEGO, CALIFORNIA 92131
(619) 549-5130
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
Copies to:
LANCE W. BRIDGES, ESQ.
COOLEY GODWARD LLP
4365 EXECUTIVE DRIVE, SUITE 1100
SAN DIEGO, CALIFORNIA 92121
(619) 550-6000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
- ------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE PER AGGREGATE AMOUNT OF
REGISTERED REGISTERED SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
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Common Stock, no par value............. 890,080 $2.375 2,113,940 $624.00
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933 based upon the average
of the high and low prices of the Registrant's Common Stock as reported on
the Nasdaq SmallCap Market on November 5, 1997.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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PROSPECTUS
890,080 SHARES
PLANET POLYMER TECHNOLOGIES, INC.
COMMON STOCK
------------------------
This Prospectus relates to the offering of up to an aggregate of 890,080
shares (the "Shares") of Common Stock, no par value (the "Common Stock"), of
Planet Polymer Technologies, Inc., a California corporation ("Planet" or the
"Company"), which may be offered from time to time by certain shareholders of
the Company (the "Selling Shareholders"). The Shares may be offered from time to
time by each Selling Shareholder in transactions on the Nasdaq SmallCap Market,
in privately negotiated transactions or a combination of such methods of sale,
at fixed prices that may be changed, at prevailing market prices at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. The Selling Shareholders may effect such transactions by selling the
Shares to or through broker-dealers, and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Shareholders or the purchasers of the Shares for whom such
broker-dealers may act as agent or to whom they sell as principal or both (which
compensation to a particular broker-dealer might be in excess of customary
commissions). See "Selling Shareholders" and "Plan of Distribution." No
representation is made that any Shares will or will not be offered for sale. The
Shares are being offered for the accounts of the Selling Shareholders. It is not
possible at the present time to determine the price to the public in any sale of
the Shares by the Selling Shareholder and each Selling Shareholder reserves the
right to accept or reject, in whole or in part, any proposed purchase of Shares.
Accordingly, the public offering price and the amount of any applicable
underwriting discounts and commissions will be determined at the time of such
sale by each Selling Shareholder.
None of the proceeds from the sale of the Shares by the Selling
Shareholders will be received by the Company. The Company has agreed to bear
certain expenses in connection with the registration and sale of the Shares
being offered by the Selling Shareholders. The Company has agreed to indemnify
the Selling Shareholders against certain liabilities, including certain
liabilities under the Securities Act of 1933, as amended (the "Securities Act").
See "Plan of Distribution."
The Common Stock of the Company is traded on the Nasdaq SmallCap Market
under the symbol "POLY." The last sales price of the Company's Common Stock as
reported by the Nasdaq SmallCap Market on November 5, 1997 was $2.25 per share.
------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 5.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS NOVEMBER 7, 1997
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NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS, AND ANY INFORMATION OR REPRESENTATION NOT
CONTAINED OR INCORPORATED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, BY ANY PERSON IN ANY JURISDICTION IN WHICH
IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS AT ANY TIME NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at
the Commission's following Regional Offices: Chicago Regional Office, Suite
1400, 500 West Madison Street, Chicago, Illinois 60661; and New York Regional
Office, Seven World Trade Center, Suite 1300, New York, New York 10048. Copies
of such material can also be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. The Commission also maintains a site on the World Wide
Web that contains reports, proxy and information statements and other
information regarding the Company. The address for such site is
http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act with respect to the Common Stock offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain portions of which are omitted in accordance with
the rules and regulations of the Commission. For further information with
respect to the Company and the Common Stock offered hereby, reference is made to
the Registration Statement and the exhibits and schedules thereto, which may be
inspected without charge at, and copies thereof may be obtained at prescribed
rates from, the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549. The Common Stock is listed on the
Nasdaq SmallCap Market and reports and other information concerning the Company
may be inspected at the offices of Nasdaq Operations, 1735 K Street, N.W.,
Washington D.C. 20006.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1996, the Company's Quarterly Reports on Form 10-QSB for the
quarters ended March 31, 1997 and June 30, 1997, the Company's Proxy Statement
for the 1997 Annual Meeting of Shareholders filed pursuant to Rule 14a-6 of the
Exchange Act, and the description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed on September 19, 1995, each as filed
with the Commission, are hereby incorporated by reference in this Prospectus
except as superseded or modified herein.
All documents filed with the Commission pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to
the termination of the offering shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in any document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any and all of the documents that have been or
may be incorporated by reference herein (other than exhibits to such documents
which are not specifically incorporated by reference into such documents). Such
requests should be directed to the Chief Executive Officer at the Company's
principal executive offices: 9985 Businesspark Ave., Suite A, San Diego,
California 92131, telephone number (619) 549-5130.
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THE COMPANY
Except for the historical information contained herein or incorporated by
reference, this Prospectus (and the information incorporated herein by
reference) contains forward-looking statements that involve certain risks and
uncertainties. The Company's actual results could differ materially from those
discussed herein or incorporated by reference. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
in the following section, those discussed elsewhere in this Prospectus,
including the section herein entitled "Risk Factors," and those discussed in any
other documents incorporated herein by reference.
Planet Polymer Technologies, Inc. ("Planet" or the "Company") is a
specialty chemical Company that designs, develops, manufactures and markets
degradable and recycled polymer materials. The Company's proprietary polymer
materials, which are marketed under the trademarks EnviroPlastic(R) and
Aquadro(TM), can be used to produce film and injection molded products that
serve as environmentally-compatible alternatives to conventional plastics.
Planet emerged from the development stage as a result of its acquisition of
Deltco of Wisconsin, Inc., a Wisconsin corporation ("Deltco"), effective January
1, 1996. Prior to this acquisition, substantially all of the Company's resources
had been devoted to the development and commercialization of its seven
Enviroplastic technologies and products.
Deltco is a manufacturer and reprocessor of thermoplastic scrap resins
located in Ashland, Wisconsin. The Company maintains Deltco as a wholly owned
subsidiary, and uses its plant, equipment and other physical property in the
manner in which it was used prior to the acquisition. The Company continues to
focus on commercializing its Enviroplastic technologies and growing Deltco's
manufacturing business.
Since December 31, 1996, the Company has initiated various cost reduction
programs resulting in reductions in the costs of outside services, international
travel and personnel. With the completion of a private financing in September
1997, however, the Company expects that research and development expenses may
increase significantly as the Company continues its efforts to commercialize its
products and focus on Deltco's resins.
During 1997, the Company expanded its existing patent portfolio with the
issuance of a patent for the Company's Aquadro(TM) technology. In addition, a
patent for EnviroPlastic(R) CRT, which was developed for Agrium, Inc., has been
approved and is expected to be issued by the end of 1997.
The Company was incorporated in California in 1991. The Company's principal
executive offices are located at 9985 Businesspark Ave., Suite A, San Diego,
California 92131 and its telephone number is (619) 549-5130.
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RISK FACTORS
An investment in the Shares being offered hereby involves a high degree of
risk. Prospective investors should carefully consider the following risk
factors, in addition to other information contained in this Prospectus and in
any other documents incorporated herein by reference in evaluating an investment
in the shares of Common Stock offered hereby.
History of Operating Losses. The Company's revenues to date have consisted
primarily of revenues generated by Deltco and contract research and development
revenues. For the years ended December 31, 1995 and 1996, the Company had net
losses of approximately $2.01 million and $2.83 million, respectively. As of
June 30, 1997, the Company had an accumulated deficit of approximately $7.7
million. The Company's product shipments to date have related primarily to the
Company's research and development efforts and customer pilot trials. Planet has
generated minimal revenues from product sales. Due to lengthy customer
evaluation and acceptance periods, the Company expects that negative cash flow
from operations will continue and increase for the foreseeable future. The
Company has not received significant commitments beyond the research,
development and testing stage from any customer regarding purchases of the
Company's products or technologies. Full-scale commercial use of any of the
Company's products will require additional development and testing. There can be
no assurance as to the timing of the commercial deployment of the Company's
products or that the Company's products and technology will ever receive
widespread market acceptance.
Future Capital Needs. The Company's future capital requirements will depend
on many factors, including the cost of manufacturing scale-up, the timing of
market acceptance of the Company's products, competing technological and market
developments and the costs involved in filing, prosecuting and enforcing patent
claims. The Company anticipates that its existing resources will enable the
Company to maintain its current and planned operations through at least the next
twelve months. There can be no assurance that changes in the Company's plans or
other events affecting the Company's operating expenses will not result in the
expenditure of such resources before such time.
The Company intends to seek additional funding through partnership
arrangements or the extension of existing arrangements or through public or
private equity or debt financing. There can be no assurance that additional
financing will be available on acceptable terms, or at all. If the Company is
required to sell equity to raise additional funds, the Company's existing
shareholders may incur substantial dilution and any shares so issued may have
rights, preferences and privileges superior to the rights, preferences and
privileges of the Company's outstanding Common Stock. Insufficient funds may
require the Company to delay, scale back or eliminate some or all of its
activities or to obtain fund through arrangements with third parties that may
require the Company to relinquish rights to certain of its technologies, product
candidates or products that the Company would otherwise seek to develop or
commercialize itself.
Uncertainty of Market Acceptance. The Company's success is dependent on the
commercial acceptance of its technologies by the various industries targeted by
the Company's products. Although the Company's products have undergone numerous
product trials with customers, to date no customer has made a significant
commitment to purchase any of the Company's products. There can be no certainty
as to the amount of time required to achieve full-scale commercialization, and
the commercialization process of any new product could take several years. There
can be no assurance that any customer will adopt the Company's technology or
that the Company's products will receive broad market acceptance as an
economically acceptable alternative to conventional plastics. Broad market
acceptance of the Company's products will depend upon the Company's ability to
demonstrate to potential customers that its products can compete favorably with
conventional plastic products. There can be no assurance that any of the
Company's targeted markets will result in a significant commercial opportunity
for the Company, that unforeseen problems will not develop with respect to the
Company's technology or products or that the Company will be successful in
completing the commercial implementation of its technology. A significant risk
remains as to the timing of commercial implementation and the prospects of
commercial success for the Company's technology and products. In addition,
Planet will need to achieve further product cost reductions to compete
successfully in the future. Although Planet intends to achieve such reductions
through a combination of engineering and process improvements and economies of
scale, there can be no assurance that Planet will achieve its cost objectives.
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Technological Uncertainty. The Company is developing an innovative approach
to address the solid waste disposal concerns of many industries. There can be no
assurance that unforeseen problems will not develop with respect to the
Company's technology or products or that the Company will be successful in
completing the development or the commercial implementation of its technology.
In order to be successful, the Company must be able to provide its products with
a price-value relationship that is competitive with alternative solutions. A
significant risk remains as to the technological performance, the implementation
schedule and the prospects of commercial success of the Company's technology and
products.
Limited Manufacturing Experience and Capability. Planet's facility in San
Diego, California is a pilot production facility with limited manufacturing
capability. Deltco's facility is in Ashland, Wisconsin. In the event that
production at either facility were interrupted by fire, earthquakes, floods or
other acts of God, regulatory actions or other causes, the Company would be
unable to continue to develop and manufacture its products. Such an interruption
would materially and adversely affect the Company's business and results of
operations. To date the Company has manufactured and sold only small quantities
of its EnviroPlastic(R) products for commercial use. Planet's San Diego facility
is inadequate to handle higher commercial volume manufacturing, and in order to
increase production capability Planet will need to either expand the production
capabilities of Deltco or seek additional facilities, either of which would
require significant expenditures and additional personnel. Although the Company
plans to establish manufacturing relationships with contract manufacturers, no
manufacturer has produced significant volumes of Planet's products to date. To
be successful, the Company's products must be manufactured in commercial
quantities at competitive costs. If the Company is unable to develop or contract
for manufacturing capabilities on acceptable terms, the Company's competitive
position and its ability to achieve profitability could be materially impaired.
Reliance on Strategic Relationships. Planet's technologies are designed to
serve multiple industries affected by the problem of solid waste disposal. An
important part of the Company's strategy is to promote acceptance of its
products through technology and product alliances with certain customers. The
Company's dependence on these customers raises certain risks with respect to the
future success of the Company and its business. The Company has focused its
product development efforts by working in close collaboration with its
customers. Certain of the Company's customers are concurrently engaged in
similar development and testing programs with other companies involving
competing products and technologies. The Company's success is dependent on the
successful completion and commercial deployment of its products and on the
future commitment of its customers to the Company's products and technology.
There can be no assurance that the Company's collaboration with its customers
will result in products that are accepted by its customers or widely accepted in
the marketplace. In addition, the Company's reliance on collaborations with
third parties may require the Company to relinquish rights to certain of its
technologies, product candidates or products that the Company would otherwise
seek to develop or commercialize itself. For example, pursuant to the Company's
Technology Development and License Agreement with Cominco Fertilizers Ltd. (now
named "Agrium Inc.") (the "Agrium Agreement"), Agrium Inc. has certain rights to
the Company's technologies, including the Company's patent application for
Enviroplastic CRT that was allowed in 1997. In addition, the Agrium Agreement
places certain limitations on the Company with respect to the use of its
technologies in certain areas of business. There can be no assurance that the
Company will not enter into similar collaborations in the future.
Management of Growth. Future Company growth may challenge the Company's
management, operational and financial resources. The Company may experience
problems associated with the design, engineering and manufacturing scale-up of
its products. The Company's ability to manage growth effectively will require it
to continue to implement and improve its management, operational and financial
systems and to expand, train and manage its employees.
Management of growth is especially challenging for a Company with a short
operating history and limited financial resources, and the failure to
effectively manage growth could have a material adverse effect on the Company's
results of operations. In addition, Planet has no experience in the operation of
a large-scale production facility and there can be no assurance that the Company
will not encounter unforeseen difficulties in the operation of a production
facility that would adversely affect the Company's results of operations in
future periods. Failure to upgrade operating and financial control systems or
difficulties encountered during
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such upgrades could adversely affect the Company's business and results of
operations. Although the Company believes that its systems and controls are
adequate to address its current needs, there can be no assurance that such
systems and controls will be adequate to address future changes in the Company's
business.
Competition. The primary source of competition for the Company's products
currently comes from suppliers of conventional non-degradable plastic products.
The use of non-degradable products and the current methods of solid waste
disposal are well-established and accepted by both consumers and the industry,
many of whom may be indifferent to the benefits offered by the Company's
products. Many of the Company's competitors who provide these non-degradable
products have significantly greater financial, technical and human resources
than the Company. Changes in political and consumer emphasis on environmental
factors in waste disposal could significantly harm the Company's competitive
position relative to these established solutions with respect to certain of the
Company's products whose principal advantage is degradability. Such changes may
be imminent in light of the current political climate, the unlikelihood of
increased environmental regulation and the possibility of a reduction in
environmental regulation. In addition, the Company is subject to competition
from other specialty chemical companies offering alternative solutions to solid
waste disposal problems. There can be no assurance that the Company's
competitors will not succeed in developing products or technologies that are
more effective than any which have been or are being developed by the Company or
which would render the Company's technology and products obsolete and
noncompetitive. Many of the Company's potential competitors have substantially
greater financial, technical and human resources than the Company. Accordingly,
the Company's competitors may succeed in obtaining market acceptance for
products more rapidly than the Company. Furthermore, if the Company obtains
market acceptance of its products, it will also be competing with respect to
volume manufacturing efficiency and marketing capabilities, areas in which the
Company has limited or no experience.
Dependence on Key Personnel. The Company's success depends to a significant
extent upon the continued service of Robert J. Petcavich, the Company's
Chairman, Chief Executive Officer and President, and the loss of such key
executive could have a material adverse effect on the Company's business or
results of operations. The Company is also dependent on other key personnel, and
on its ability to continue to attract, retain and motivate highly skilled
personnel. The competition for such employees is intense, and there can be no
assurance that the Company will be successful in attracting, retaining or
motivating key personnel. The Company does maintain "key-man" life insurance
policies with respect to such persons to compensate the Company in the event of
their deaths.
Uncertainty of Protection of Patents and Proprietary Rights. The Company
relies on a combination of patent and trade secret protection, non-disclosure
agreements and licensing arrangements to establish and protect its proprietary
rights. The Company has filed and intends to file applications as appropriate
for patents covering its products. There can be no assurance that patents will
issue from any of the pending applications or, if patents do issue, that claims
allowed will be sufficiently broad to protect the Company's technology. In
addition, there can be no assurance that any issued patents will not be
challenged, invalidated or circumvented, or that the rights granted thereunder
will provide proprietary protection to the Company. Since U.S. patent
applications are maintained in secrecy until patents issue, and since
publication of inventions in the technical or patent literature tend to lag
behind such inventions by several months, Planet cannot be certain that it was
the first creator of inventions covered by its issued patents or pending patent
applications or that it was the first to file patent applications for such
inventions. Despite the Company's efforts to safeguard and maintain its
proprietary rights, there can be no assurance that the Company will be
successful in doing so or that the Company's competitors will not independently
develop or patent technologies that are substantially equivalent or superior to
the Company's technologies.
Shares Eligible for Future Sale. Sales of substantial amounts of the
Company's Common Stock in the public market or the prospect of such sales by
existing shareholders and warrantholders could materially adversely affect the
market price of the Company's Common Stock. As of November 5, 1997 the Company
had outstanding 5,771,269 shares of Common Stock (assuming the conversion of all
outstanding shares of Preferred Stock into shares of Common Stock). Virtually
all of the Company's outstanding shares of Common Stock are either registered
and therefore freely tradable or may be transferred pursuant to Rule 144(k)
under
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the Securities Act, unless held by "affiliates" of the Company as that term is
defined in Rule 144 under the Securities Act. The Company has also filed a
Registration Statement on Form S-8 under the Securities Act covering 500,000
shares of Common Stock reserved for issuance under its 1995 Stock Plan. Upon
issuance, shares registered under such Registration Statement will be, subject
to Rule 144 volume limitations applicable to affiliates of the Company,
available for sale in the open market.
Availability of Raw Materials. Although certain raw materials used in
Planet's products are available from several sources, should supply problems
arise, the inability of the Company to develop alternative sources of supply
quickly and on a cost-effective basis could materially impair the Company's
ability to manufacture and deliver its products. In addition, Deltco purchases
the majority of its scrap resins from 3M. Should demand for Planet's products
substantially exceed current expectations, or if supply problems should arise
with current vendors, there can be no assurance that the Company would be able
to obtain sufficient quantities of raw materials from its current sources, or
that alternate sources could be found without disrupting the manufacturing
process.
Government Regulation. Certain end products into which the Company's
products are expected to be incorporated are subject to extensive government
regulation in the United States by federal, state and local agencies including
the EPA and the Food and Drug Administration (the "FDA"). Similar regulatory
agencies exist worldwide. The Company's customers who incorporate the Company's
products into consumer products will bear primary responsibility for obtaining
any required regulatory approvals. The process of obtaining and maintaining FDA
and any other required regulatory approvals for products is lengthy, expensive
and uncertain, and regulatory authorities may delay or prevent product
introductions or require additional tests prior to introduction. There can be no
assurance that changes in existing regulations or the adoption of new
regulations will not occur, which could prevent the Company or its customers
from obtaining approval (or delay the approval of) various products or could
adversely affect market demand for the Company's products.
Product Liability. Product liability claims may be asserted against the
Company in the event that the use of the Company's products or products which
incorporate the Company's products are alleged to have caused injury or other
adverse effects, and such claims may involve large amounts of alleged damages
and significant defense costs. The Company does not maintain product liability
insurance. If the Company does obtain product liability insurance in the future,
there can be no assurance that the liability limits or the scope of the
Company's insurance policy would be adequate to protect against such potential
claims. Additionally, the Company may not be able to obtain product liability
insurance. Whether or not the Company obtains such insurance, a successful claim
against the Company could have a material adverse effect on the Company. In
addition, the Company's business reputation could be adversely affected by
product liability claims, regardless of their merit or eventual outcome.
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SELLING SHAREHOLDERS
The following table sets forth the names of each of the Selling
Shareholders, the number of shares of Common Stock beneficially owned by such
Selling Shareholders as of November 5, 1997 and the number of shares of Common
Stock which may be offered by each of them pursuant to this Prospectus. This
information is based upon information provided by each respective Selling
Shareholder. Because the Selling Shareholders may offer all, some or none of
their respective Shares, no definitive estimate can be provided as to the number
of shares or percentage of outstanding Common Stock that will be held by the
Selling Shareholders after such offering.
Each Selling Shareholder represented in the respective agreement under
which he, she or it acquired the Shares (the "Purchase Agreements") that he, she
or it was acquiring the Shares for investment and not with a view to, or for a
sale in connection with, any distributions within the meaning of the Securities
Act. The Purchasers may require the Company, under certain circumstances, to
register the Shares. Accordingly, the Company has filed with the Commission a
Registration Statement on Form S-3, of which this Prospectus forms a part, with
respect to, among other things, the resale of the Shares from time to time on
the Nasdaq SmallCap Market, in privately negotiated transactions or a
combination of such methods of sale, at fixed prices that may be changed, at
prevailing market prices at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Company has agreed to
prepare and file such amendments and supplements to the Registration Statement
as may be necessary to keep the Registration Statement effective until the
earlier to occur of (i) five years from the date on which the Registration
Statement becomes effective, (ii) all Shares offered hereby have been sold
pursuant thereto or (iii) until such Shares are no longer, by reason of Rule 144
under the Securities Act or any other rule of similar effect, required to be
registered for the sale thereof by the Selling Shareholders.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED OWNED AFTER
BEFORE OFFERING(1) NUMBER OF OFFERING(1)(3)
----------------------- SHARES ----------------------
SELLING SHAREHOLDER NUMBER PERCENT (2) BEING OFFERED NUMBER PERCENT (2)
- ---------------------------------- -------- ----------- ------------- ------- -----------
<S> <C> <C> <C> <C> <C>
Special Situations Private Equity
Fund, L.P.(4)................... 875,000 14.24% 875,000 0 0
AM-RE Services, Inc.(5)........... 35,716 * 7,937 27,779 *
Harold H. LeVay(5)................ 3,572 * 3,572 0 0
Michael J. Porter(5).............. 3,571 * 3,571 0 0
</TABLE>
- ---------------
* Less than 1%
(1) To the Company's knowledge, the persons named in the table have sole voting
and investment power with respect to all shares of the Common Stock shown as
beneficially owned by them, subject to community property laws where
applicable and the information contained in the footnotes to this table.
(2) Percentage ownership is based on: (i) 5,771,269 shares of Common Stock
outstanding as of November 5, 1997, assuming conversion of all outstanding
shares of Series A Convertible Preferred Stock into Common Stock. The
percentages shown for each Selling Shareholder include shares of Common
Stock that such Selling Shareholder has the right to acquire pursuant to the
exercise of warrants held by such Selling Shareholder.
(3) Assumes the sale of all Shares offered hereby, should each respective
Selling Shareholder elect to do so.
(4) Represents (i) 500,000 shares of Common Stock issuable upon conversion of
shares of Series A Convertible Preferred Stock and (ii) 375,000 shares of
Common Stock issuable upon exercise of a warrant to purchase Common Stock.
(5) Represents shares of Common Stock issuable upon exercise of warrants to
purchase Common Stock.
9
<PAGE> 11
PLAN OF DISTRIBUTION
The Selling Shareholders will act independently of the Company in making
decisions with respect to the timing, manner and size of each sale of the
Shares. The Company has been advised that the Selling Shareholders may sell the
Shares from time to time in transactions on the Nasdaq SmallCap Market, in
privately negotiated transactions or a combination of such methods of sale, at
fixed prices that may be changed, at prevailing market prices at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. The Selling Shareholders may effect such transactions by selling the
Shares to or through broker-dealers, and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Shareholders or the purchasers of the Shares for whom such brokerdealers
may act as agent or to whom they sell as principal or both (which compensation
to a particular broker-dealer might be in excess of customary commissions). The
Selling Shareholders and any broker-dealers who act in connection with the sale
of the Shares hereunder may be deemed to be "underwriters" as that term is
defined in the Securities Act, and any discount, commission or concession
received by such persons and any profit on any resale of the Shares as principal
might be deemed to be an underwriting discounts or commissions under the
Securities Act.
In order to comply with the securities laws of certain states, if
applicable, the Common Stock will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states, the
Common Stock may not be sold unless such shares have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
All costs associated with the registration of the Shares being offered
hereunder will be paid by the Company. The Company has agreed to indemnify the
Selling Shareholders against certain liabilities, including liabilities under
the Securities Act.
There can be no assurance that the Selling Shareholders will sell all or
any of the shares of Common Stock offered hereunder.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Cooley Godward LLP, San Diego, California.
EXPERTS
The consolidated financial statements of Planet Polymer Technologies, Inc.
at December 31, 1996 and for each of the two years in the period ended December
31, 1996 incorporated herein by reference and included in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1996, have been audited by
Coopers & Lybrand L.L.P., independent accountants, as set forth in their report
dated April 8, 1997, accompanying such financial statements, and incorporated
herein by reference. The financial statements referred to above have been so
incorporated in reliance upon the report of such firm, which report is given
upon their authority as experts in accounting and auditing.
10
<PAGE> 12
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
The Company's Bylaws provide that the Company will indemnify its directors
and executive officers, and may indemnify its other officers, employees and
other agents, to the fullest extent not prohibited by California law. The
Company is also empowered under its Articles of Incorporation (the "Articles")
and Bylaws to enter into indemnification agreements with its directors,
officers, employees and other agents and to purchase insurance on behalf of any
person whom it is required or permitted to indemnify. Pursuant to this
provision, the Company has entered into indemnity agreements with each of its
directors and executive officers.
In addition, the Company's Articles provide that, to the fullest extent
permitted by California law, the Company's directors will not be liable for
monetary damages for breach of the director's fiduciary duty of care to the
Company and its shareholders. This provision in the Articles does not eliminate
the duty of care, and in appropriate circumstances, equitable remedies such as
an injunction or other forms of non-monetary relief would remain available under
California law. Each director will continue to be subject to liability for
breach of
11
<PAGE> 13
the director's duty of loyalty to the Company, for acts or omissions not in good
faith or involving intentional misconduct or knowing or culpable violations of
law that the director believes to be contrary to the best interests of the
Company or its shareholders, for acts or omissions involving a reckless
disregard for the director's duty to the Company or its shareholders, or an
unexcused pattern of inattention that amounts to an abdication of the director's
duty to the Company or its shareholders, for improper transactions between the
director and the Company or for improper distributions to shareholders and loans
to directors and officers, or for acts or omissions by the director as an
officer. This provision also does not affect a director's responsibilities under
any other laws, such as federal securities laws or state or federal
environmental laws.
Insofar as indemnification by the Company for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the provisions referenced above or otherwise, the
Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act, and
is, therefore unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered hereunder, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
12
<PAGE> 14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the fees and expenses payable by the Company
in connection with the sale of the shares of Common Stock being registered. All
amounts shown are estimates except for the SEC registration fee.
<TABLE>
<S> <C>
SEC Registration Fee....................................... $ 624
Legal Fees and expenses.................................... $ 5,000
Blue sky qualification fees and expenses................... $ 1,000
Accounting fees and expenses............................... $ 3,000
Printing and engraving..................................... $ 500
Miscellaneous.............................................. $ 1,376
-------
Total............................................ $11,500
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Bylaws provide that the Company will indemnify its directors
and executive officers, and may indemnify its other officers, employees and
other agents, to the fullest extent not prohibited by California law. The
Company is also empowered under its Articles of Incorporation (the "Articles")
and Bylaws to enter into indemnification agreements with its directors,
officers, employees and other agents and to purchase insurance on behalf of any
person whom it is required or permitted to indemnify. Pursuant to this
provision, the Company has entered into indemnity agreements with each of its
directors and executive officers.
In addition, the Company's Articles provide that, to the fullest extent
permitted by California law, the Company's directors will not be liable for
monetary damages for breach of the director's fiduciary duty of care to the
Company and its shareholders. This provision in the Articles does not eliminate
the duty of care, and in appropriate circumstances, equitable remedies such as
an injunction or other forms of non-monetary relief would remain available under
California law. Each director will continue to be subject to liability for
breach of the director's duty of loyalty to the Company, for acts or omissions
not in good faith or involving intentional misconduct or knowing or culpable
violations of law that the director believes to be contrary to the best
interests of the Company or its shareholders, for acts or omissions involving a
reckless disregard for the director's duty to the Company or its shareholders,
or an unexcused pattern of inattention that amounts to an abdication of the
director's duty to the Company or its shareholders, for improper transactions
between the director and the Company or for improper distributions to
shareholders and loans to directors and officers, or for acts or omissions by
the director as an officer. This provision also does not affect a director's
responsibilities under any other laws, such as federal securities laws or state
or federal environmental laws.
There is no pending litigation or proceeding involving a director, officer,
employee or other agent of the Company as to which indemnification is being
sought, nor is the Company aware of any pending or threatened litigation that
may result in claims for indemnification by any director, officer, employee or
other agent.
II-1
<PAGE> 15
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------ ----------------------------------------------------------------------------
<C> <S>
3.1 Amended and Restated Certificate of Determination of Preferences of Series A
Convertible Preferred Stock
5.1 Opinion of Cooley Godward LLP
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1
24.1 Power of Attorney. Reference is made to page II-3.
99.1 Securities Purchase Agreement, dated as of September 19, 1997, between the
Registrant and Special Situations Private Equity Fund, L.P.
99.2 Warrant to Purchase Common Stock, dated September 24, 1997, issued by the
Registrant to Special Situations Private Equity Fund, L.P.
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
PROVIDED, HOWEVER, that subparagraphs (i) and (ii) shall not apply if
the information required to be included in a post-effective amendment by
those subparagraphs is contained in periodic reports filed with or
furnished to the Securities and Exchange Commission by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the Registration Statement.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of this offering.
Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions referenced in Item 15 of
this Registration Statement or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered hereunder, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-2
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Diego, State of California, on the 6th day of
November, 1997.
PLANET POLYMER TECHNOLOGIES, INC.
By: /s/ ROBERT J. PETCAVICH
------------------------------------
Robert J. Petcavich
President, Chief Executive Officer
and
Chairman of the Board
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Robert J. Petcavich as his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for the undersigned and in his name, place and stead, in any and
all capacities, to sign any or all amendments (including post-effective
amendments) to the Registration Statement and to file the same, with exhibits
thereto and all documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, full power
and authority to perform each and every act and thing requisite and necessary to
be done in connection therewith, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and conforming all that such
attorney-in-fact and agent, or his substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- --------------------------- ------------------
<S> <C> <C>
/s/ ROBERT J. PETCAVICH President, Chief Executive November 6, 1997
- --------------------------------------------- Officer, Chairman of the
Robert J. Petcavich Board and Director
(Principal Executive
Officer)
(Principal Financial and
Accounting Officer)
/s/ MICHAEL M. COLEMAN Director November 6, 1997
- ---------------------------------------------
Michael M. Coleman
/s/ THOMAS M. CONNELLY Director November 6, 1997
- ---------------------------------------------
Thomas M. Connelly
/s/ H.M. BUSBY Director November 6, 1997
- ---------------------------------------------
H.M. Busby
</TABLE>
II-3
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF DOCUMENT PAGES
------- --------------------------------------------------------------------- ------------
<C> <S> <C>
3.1 Amended and Restated Certificate of Determination of Preferences of
Series A Convertible Preferred Stock.................................
5.1 Opinion of Cooley Godward LLP........................................
23.1 Consent of Coopers & Lybrand L.L.P...................................
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1......
24.1 Power of Attorney. Reference is made to page II-3....................
99.1 Securities Purchase Agreement, dated as of September 19, 1997,
between the Registrant and Special Situations Private Equity Fund,
L.P..................................................................
99.2 Warrant to Purchase Common Stock, dated September 24, 1997, issued by
the Registrant to Special Situations Private Equity Fund, L.P........
</TABLE>
<PAGE> 1
EXHIBIT 3.1
PLANET POLYMER TECHNOLOGIES, INC.
AMENDED AND RESTATED
CERTIFICATE OF DETERMINATION OF PREFERENCES OF
SERIES A CONVERTIBLE PREFERRED STOCK
The undersigned, Robert J. Petcavich and Rebecca A. Petcavich, hereby
certify that:
A. They are the duly elected and acting President and Secretary,
respectively of PLANET POLYMER TECHNOLOGIES, INC., a California corporation (the
"Company").
B. Pursuant to Section 401(b) of the California Corporations Code, the
Board of Directors of the Company (the "Board of Directors") has duly adopted
the following recitals and resolutions:
WHEREAS, the Articles of Incorporation of the Company authorize a class
of shares of stock known as "Preferred Stock" comprising 5,000,000 shares,
issuable from time to time in one or more series;
WHEREAS, the Board of Directors is authorized to fix the number of
shares of any series of Preferred Stock and to determine the designation of any
such series and to determine or alter the rights, preferences, privileges, and
restrictions granted to or imposed upon any wholly unissued series of Preferred
Stock and, within the limits and restrictions stated in any resolution of the
Board of Directors originally fixing the number of shares constituting any
series, to increase or decrease (but not below the number of shares of such
series then outstanding) the number of shares of any such series subsequent to
the issuance of shares of that series;
WHEREAS, the Board of Directors has previously (i) designated seven
hundred fifty thousand (750,000) shares of Preferred Stock as Series A
Convertible Preferred Stock, (ii) determined the rights preferences, privileges
and restrictions of and other matters relating to such Series A Convertible
Preferred Stock, and (iii) filed with the Secretary of State of the State of
California a Certificate of Determination with respect to such Series A
Convertible Preferred Stock;
1
<PAGE> 2
WHEREAS, no shares of Series A Convertible Preferred Stock have been
issued; and
WHEREAS, the Board of Directors desires to alter and amend the rights,
preferences, privileges, and restrictions of the Series A Convertible Preferred
Stock and file with the Secretary of State of the State of California an Amended
and Restated Certificate of Determination with respect to the Series A
Convertible Preferred Stock.
NOW, THEREFORE, BE IT RESOLVED, that the rights, preferences,
privileges, restrictions, and other matters relating to said Series A
Convertible Preferred Stock previously fixed and determined by the Board of
Directors be, and they hereby are, amended and restated in their entirety to
read as follows:
1. Designation of Series A Convertible Preferred Stock. Seven Hundred
Fifty Thousand (750,000) shares of Preferred Stock are designated Series A
Convertible Preferred Stock (the "Series A Preferred Stock") with the rights,
preferences, privileges and restrictions specified herein.
2. Voting Rights.
(a) Each holder of shares of the Series A Preferred Stock shall have
such number of votes on all matters submitted to the shareholders that shall be
equal to the number of shares of the Corporation's common stock, without par
value (the "Common Stock"), into which such holder's shares of the Series A
Preferred Stock shall then be convertible (determined without regard to the time
limitations contained in Section 5(h) hereof) as hereinafter provided. Except as
provided herein or as otherwise required by agreement or law, all shares of
capital stock of the Corporation shall vote as a single class on all matters
submitted to the shareholders.
(b) Without the affirmative vote or consent of the holders of a majority
of the shares of the Series A Preferred Stock, voting as a separate class, the
Corporation shall not create any class of equity security having liquidation
rights senior to, or pari passu with, the Series A Preferred Stock.
3. Dividends. On each Dividend Payment Date (as hereinafter defined),
the Corporation shall distribute, as a dividend to the holders of each
outstanding share of the Series A Preferred Stock, a number of shares of Common
Stock (or, if the Corporation shall be unable, for any reason, to distribute
shares of Common Stock, the Corporation shall distribute an amount of cash)
equal to (a) one and one-half percent (1.5%) multiplied by the liquidation
preference (as determined pursuant to Section 4 hereof) of such share of Series
A Preferred Stock, divided by (b) the Market Price (as defined in Section 5(i)
hereof) on such Date.
2
<PAGE> 3
For purposes hereof, a "Dividend Payment Date" shall mean each December 15,
March 15, June 15 and September 15 beginning December 15, 1997. No fractional
shares of Common Stock shall be distributed pursuant to this Section 3. The
Corporation shall make a cash payment in lieu of any such fractional shares at
the Market Price. Unless permitted by the applicable rules and regulations of
The Nasdaq SmallCap Market (or the principal securities exchange on which the
Common Stock shall be listed or traded if changed from The Nasdaq SmallCap
Market), the Company shall pay any dividends required hereunder in cash, rather
than in shares of Common Stock, if the payment of such dividends in shares of
Common Stock, at the Dividend Payment Date, would cause the aggregate number of
shares of Common Stock (i) issued or issuable upon conversion of the Preferred
Shares, (ii) issued as dividends on the Preferred Shares, (iii) issued as
Default Shares under Section 4(g) of the Purchase Agreement (as defined in
Section 5(d)(v)(D) hereof), (iv) issued or issuable upon exercise of the
Warrants (as defined in Section 5(d)(v)(D) hereof) and (v) issued or issuable
upon exercise of up to 100,000 of the warrants described in Section 5(d)(v)(E)
hereof, to exceed the number of shares of Common Stock that the Company can
issue pursuant to Nasdaq Marketplace Rule 4310(c)(25)(H) (as amended as set
forth in SEC Release No. 34-38469).
4. Liquidation Preference. In the event of a liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the holders of
the Series A Preferred Stock shall be entitled to receive out of the assets of
the Corporation legally available for distribution to its shareholders, whether
such assets shall be stated capital or surplus of any nature, an amount equal to
all dividends accrued and unpaid thereon (whether or not declared) as of the
date of final distribution to such holders, and a sum equal to two dollars
($2.00) per share (appropriately adjusted to reflect any stock splits, stock
dividends (other than stock dividends paid in shares of Common Stock),
reorganizations or consolidations hereafter effected involving the Series A
Preferred Stock) (such sum, together with such dividends, collectively, the
"Series A Preference Amount"), before any payment shall be made or any assets
distributed to the holders of Common Stock or any other class or series of the
Corporation's capital stock ranking junior as to liquidation rights to the
Series A Preferred Stock. Neither a consolidation or merger of the Corporation
with another corporation or entity nor a sale or transfer of all or part of the
Corporation's assets for cash, securities or other property shall be considered
a liquidation, dissolution or winding up of the Corporation for purposes of this
Section 4. If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation available for distribution to its
shareholders shall be insufficient to pay the holders of shares of Series A
Preferred Stock the full Series A Preference Amount, then such holders shall
share ratably in any distribution of assets in proportion to the respective
amounts which would be payable on the shares held by them if the Series A
3
<PAGE> 4
Preference Amount shall have been paid in full. After payment has been made to
holders of the Series A Preferred Stock of the full Series A Preference Amount,
any remaining assets or surplus funds of the Corporation shall be distributed
pro rata to holders of Common Stock.
5. Conversion.
(a) Subject to Section 5(h) and Section 5(k), all or any portion of the
shares of the Series A Preferred Stock shall be convertible, at the option of a
holder thereof, into shares of Common Stock as set forth herein, at the office
of the Corporation (or at such other office or offices, if any, as may be
designated by the Board of Directors). Upon any such conversion, each share of
the Series A Preferred Stock shall be converted into a number of fully paid and
non-assessable shares (calculated as to each conversion to the nearest 1/100th
of a share) of Common Stock determined by dividing (x) the Series A Preference
Amount by (y) the Conversion Price (as defined in Section 5(b) hereof) in effect
on the date on which the Corporation shall receive the shares of Series A
Preferred Stock to be surrendered for conversion. Upon such conversion, each
holder of shares of the Series A Preferred Stock shall receive all dividends
accrued and unpaid thereon (whether or not declared) as of the effective date of
such conversion. In order to convert shares of the Series A Preferred Stock, the
holder thereof shall give written notice to the Corporation, at the office of
the Corporation specified above, as to the number of shares to be converted and
shall surrender at such office the certificate or certificates therefor, duly
endorsed to the Corporation or in blank. Shares of the Series A Preferred Stock
shall be deemed to have been converted immediately prior to the close of
business on the date of the surrender of such shares for conversion as herein
provided, and the person entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record holder of
such shares of Common Stock on such date. Within two (2) business days after
delivery of a conversion notice, the Corporation shall issue and deliver or
cause to be issued and delivered to the holder a certificate or certificates for
the number of shares of Common Stock of the Corporation issuable upon such
conversion together with cash in lieu of any fraction of a share. In the event
that a holder shall elect to convert only a portion of the shares of Series A
Preferred Stock represented by a certificate, the Corporation shall deliver,
along with any shares of Common Stock, a new stock certificate representing the
balance of the shares of Series A Preferred Stock represented by the surrendered
certificate which shall not have been converted.
(b) For purposes of this Section 5, the "Conversion Price" shall
initially be $2.00. The Conversion Price shall be adjusted in the manner set
forth in Section 5(d) hereof for events described therein.
4
<PAGE> 5
(c) In the event that (i)(A) the Corporation shall fail for any reason
to deliver shares of Common Stock to a holder (other than for reasons within the
control of such holder) upon conversion of the Series A Preferred Stock within
the time period specified in this Section 5, or (B) the Corporation shall fail
to remove any restrictive legend on any certificates evidencing such Common
Stock as and when required under Section 5(i) of the Purchase Agreement, and
(ii) thereafter, such holder shall purchase (in an open market transaction or
otherwise) shares of Common Stock to make delivery in satisfaction of a sale by
such holder of (A) the shares of Common Stock which such holder anticipated
receiving upon such conversion, or (B) such unlegended shares of Common Stock,
as the case may be (in each case, the "Sold Shares"), then the Corporation shall
pay to such holder (in addition to any other remedies available to the holder)
the amount by which (x) such holder's total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased shall exceed
(y) the net proceeds received by such holder from the sale of the Sold Shares.
The Corporation shall make any payments required pursuant to this Section 5(c)
within five (5) days after receipt of written notice from a holder setting forth
the calculation of the amount due hereunder.
(d) The Conversion Price shall be subject to adjustment from time to
time after the first date of issuance of shares of the Series A Preferred Stock
(the "Issue Date") as follows:
(i) In case, at any time or from time to time, the Corporation
shall issue or sell any shares of Common Stock (except as provided in
Section 5(d)(v) hereof) for a consideration per share less than the
greater of (A) the Conversion Price in effect immediately prior to the
issue or sale and (B) eighty-five percent (85%) of the Market Price on
the date of such issue or sale, then the Conversion 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 Conversion 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 greater of the
Conversion Price then in effect or, if such shares of Common Stock shall
have been issued for a consideration per share less than eighty-five
percent (85%) of the Market Price on the date of issue or sale, the
current Market Price, 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 the purposes of this Section 5(d),
all shares of Common Stock issuable upon
5
<PAGE> 6
exercise of outstanding options and warrants, and all shares of Common
Stock issuable upon conversion of the Series A Preferred Stock, shall be
deemed to be outstanding.
(ii) For the purposes of Section 5(d)(i) above, the following
paragraphs (A) to (F), inclusive, shall be applicable:
(A) If at any time the Corporation 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 Corporation as consideration for
the granting of such rights or options, plus the minimum
aggregate amount of additional consideration payable to the
Corporation upon the exercise of such rights or options, plus, in
the case of any such rights or options which 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 greater of (x) the Conversion Price in
effect immediately prior to the time of the issue or sale of such
rights or options and (y) eighty-five percent (85%) of the Market
Price at the time of such issue or sale, 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 5(d)(iv), no further adjustments of the Conversion 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
6
<PAGE> 7
upon conversion or exchange of such Convertible Securities.
(B) If at any time the Corporation shall issue or sell any
Convertible Securities, whether or not the rights to exchange or
convert thereunder shall be immediately exercisable, and the
price per share for which Common Stock shall be issuable upon
such conversion or exchange (determined by dividing (1) the total
amount received or receivable by the Corporation as consideration
for the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any,
payable to the Corporation upon the conversion or exchange
thereof, by (2) the total number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible
Securities) shall be less than the greater of (x) the Conversion
Price in effect immediately prior to the time of such issue or
sale and (y) eighty-five percent (85%) of the Market Price at the
time of such issue or sale, then the total number of shares of
Common Stock issuable upon conversion or exchange of all such
Convertible Securities shall (as of the date of the issue or sale
of such Convertible Securities) be deemed to be outstanding and
to have been issued for such price per share, and, except as
provided in Section 5(d)(iv) no further adjustments of the
Conversion Price shall be made upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible
Securities. In addition, if any issue or sale of such Convertible
Securities shall be made upon exercise of any rights to subscribe
for or to purchase or any option to purchase any such Convertible
Securities for which adjustments of the Conversion Price shall
have been or shall be made pursuant to other provisions of this
Section 5(d)(ii), no further adjustment of the Conversion Price
shall be made by reason of such issue or sale.
(C) If at any time the Corporation shall declare and pay a
dividend or make any other distribution upon the Common Stock
payable in Common Stock or Convertible Securities, any such
Common Stock or Convertible Securities, as the case may be,
issuable in payment of such dividend or distribution shall be
deemed to have been issued or sold without consideration.
(D) 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 received by the Corporation therefor,
without deduction
7
<PAGE> 8
therefrom of any expenses incurred or any underwriting
commissions or concessions or discounts paid or allowed by the
Corporation in connection therewith. In case any shares of Common
Stock or Convertible Securities or any rights or options to
purchase any Common Stock or Convertible Securities shall be
issued or sold for a consideration other than cash, the amount of
the consideration other than cash received by the Corporation
shall be deemed to be the fair value of such consideration as
determined by the Board of Directors, without deduction therefrom
of any expenses incurred or any underwriting commissions or
concessions or discounts paid or allowed by the Corporation 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
Corporation, the amount of consideration therefor shall be deemed
to be 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 Corporation
in connection with such merger.
(E) If at any time the Corporation shall take a record of
the holders of Common Stock for the purpose of entitling them (1)
to receive a dividend or other distribution payable in Common
Stock or in Convertible Securities or (2) to subscribe for or
purchase Common Stock or Convertible Securities, then such record
date shall be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon
the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(F) 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 Corporation, provided that such shares are
neither issued, sold or otherwise distributed by the Corporation.
(iii) In case at any time the Corporation shall subdivide its
outstanding shares of Common Stock into a greater number of shares, the
Conversion Price in effect immediately prior to such subdivision shall
be proportionately reduced. In case at any time the outstanding shares
of Common Stock of the Corporation shall be combined into a smaller
number of shares, the Conversion Price in effect immediately prior to
such combination shall be proportionately increased. Any adjustment
under this Section 5(d)(iii) shall become effective
8
<PAGE> 9
at the close of business on the date the subdivision or combination
shall become effective.
(iv) If the purchase or exercise price provided for in any right or
option referred to in Section 5(d)(ii)(A), or the rate at which any
Convertible Securities referred to in Section 5(d)(ii)(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 security, then, upon such change
becoming effective, the Conversion Price then in effect hereunder shall
forthwith be increased or decreased to such Conversion Price as would
have 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
and the total 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 Corporation therefor and to be received on the
basis of such changed price.
(v) The Corporation shall not be required to make any adjustment
to the Conversion Price in the case of:
(A) the issuance of shares of Common Stock upon conversion
of the Series A Preferred Stock;
(B) the granting, after the Issue Date, by the Corporation
of stock options under the Corporation'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 the date hereof;
(C) the issuance of shares of Common Stock, pursuant to
the exercise of the options referred to in Section 5(d)(v)(B)
above or the exercise of any other options or warrants
outstanding as of the Issue Date;
(D) the issuance of shares of Common Stock upon the
exercise of any of the warrants (the "Warrants") sold pursuant to
the Purchase Agreement, dated as of September 19, 1997 (the
"Purchase Agreement"), between the Corporation and the Investor
named therein; or
(E) the issuance of warrants to purchase up to 100,000
shares of Common Stock to LBC Capital Resources,
9
<PAGE> 10
Inc. ("LBC") as a portion of its finder's fee pursuant to that
certain letter agreement, dated May 9, 1997, between LBC and the
Company, and the issuance of shares of Common Stock upon the
exercise thereof.
(e) No fractional shares of Common Stock shall be issued upon
conversion of the Series A Preferred Stock. The Corporation shall make a cash
payment in lieu of any such fractional shares at the Market Price.
(f) The Corporation shall at all times reserve and keep available
out of the authorized Common Stock the total number of shares of Common Stock
issuable upon the conversion of all outstanding shares of the Series A Preferred
Stock and issuable as dividends pursuant to Section 3.
(g) The Corporation shall give written notice to each record
holder of the Series A Preferred Stock of any event or transaction that shall
result in an adjustment to the Conversion Price, within five (5) business days
thereof, at such holder's address appearing on the books of the Corporation,
including a computation of such adjustment and such information as shall be
necessary to confirm the computation of such adjustment. In addition, if (i) the
Company shall pay any dividend or make any distribution upon the Common Stock,
(ii) the Company shall offer to the holders of the Common Stock for subscription
or purchase by them any share of any class or any other rights or (iii) any
capital reorganization of the Company, reclassification of the capital stock of
the Company, consolidation, merger or other business combination of the Company
with or into another corporation, sale, lease or transfer of all or
substantially all of the assets of the Company to another corporation, or
voluntary or involuntary dissolution, liquidation or winding up of the Company
shall be effected, then in any such case, the Company shall cause to be mailed
by certified mail to the Holder, at least 20 days prior to the date specified in
(x) or (y) below, as the case may be, a notice containing a brief description of
the proposed action and stating the date on which (x) a record date shall be
established for the purpose of such dividend, distribution or rights or (y) such
reclassification, reorganization, consolidation, merger, conveyance, lease,
dissolution, liquidation or winding up shall take place and the date, if any to
be fixed, as of which the holders of Common Stock or other securities shall
receive cash or other property deliverable upon such reclassification,
reorganization, consolidation, merger, conveyance, dissolution, liquidation or
winding up.
(h) The Series A Preferred Stock may not be converted into shares
of Common Stock at any time prior to the ninetieth (90th) day following the
Issue Date.
10
<PAGE> 11
(i) For purposes hereof, the "Market Price" on any date shall
mean the closing bid price of the Common Stock on The Nasdaq SmallCap Market,
The Nasdaq National Market or the principal national securities exchange upon
which the Common Stock may be listed, or, if the Common Stock shall not then be
quoted on The Nasdaq SmallCap Market or the Nasdaq National Market or listed on
a national securities exchange, but shall be otherwise traded in the
over-the-counter market, on such over-the-counter market, in each case averaged
over a period of 5 consecutive trading days prior to the date of determination
of such "Market Price." If at any time the Common Stock shall not be quoted on
The Nasdaq SmallCap Market or The Nasdaq National Market, listed on a national
securities exchange, or otherwise traded in the over-the-counter market, the
"Market Price" of a share of Common Stock shall be deemed to be the higher of
(x) the book value thereof (as determined by any firm of independent public
accountants of nationally recognized standing selected by the Board of
Directors) as of the last day of any month ending within 60 days preceding the
date of determination and (y) the fair value thereof (as determined in good
faith by the Board of Directors) as of a date which shall be within 15 days of
the date of determination.
(j) The Series A Preferred Stock shall be automatically converted
into shares of Common Stock if, at any time after the six month anniversary of
the Issue Date: (i) the Market Price (determined, for purposes of this Section
5(j), without regard to the provision in Section 5(i) hereof requiring such
Market Price to be averaged over a five consecutive business day period) shall
have been at least $6.00 (which amount shall be adjusted in the manner set forth
in Section 5(d)(iii) hereof) on each of ten consecutive business days, (ii) the
registration statement required to be filed under Section 5(b) of the Purchase
Agreement shall be effective during such 10-day period and permit the sale of
all shares of Common Stock into which shares of Series A Preferred Stock may
then be converted and (iii) the Common Stock shall be listed and trading on The
Nasdaq SmallCap Market, The Nasdaq National Market or a national securities
exchange during such 10-day period. Any outstanding shares of the Series A
Preferred Stock shall automatically be converted into shares of Common Stock
immediately prior to the close of business on the business day immediately
following such 10-day period, provided, that, as of such date, the conditions
set forth in clauses (ii) and (iii) above shall continue to be satisfied. Any
such conversion shall be effected in accordance with the conversion formulas set
forth in Section 5(a) hereof, and such conversion shall be subject to all of the
terms and conditions of this Section 5 (other than the requirements that the
holders of shares of the Series A Preferred Stock give written notice of such
conversion to the Corporation or deliver their shares of the Series A Preferred
Stock to the Corporation prior to such conversion; provided, however, that
before the Corporation shall be obligated to issue certificates for shares of
Common Stock upon the conversion of the Series A Preferred Stock as set forth in
11
<PAGE> 12
this Section 5(j), each holder shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the Corporation or of any transfer
agent for the Series A Preferred Stock). The Corporation shall give written
notice to each record holder of the Series A Preferred Stock of any conversion
pursuant to this Section 5(j), within two (2) business days thereof, at such
holder's address appearing on the books of the Corporation.
(k) Unless permitted by the applicable rules and regulations of
The Nasdaq SmallCap Market (or the principal securities exchange on which the
Common Stock shall be listed or traded if changed from The Nasdaq SmallCap
Market), the aggregate number of shares of Common Stock (i) issued or issuable
upon conversion of the Preferred Shares, (ii) issued as dividends under Section
3 hereof, (iii) issued as Default Shares under Section 4(g) of the Purchase
Agreement, (iv) issued or issuable upon exercise of the Warrants (as defined in
Section 5(d)(v)(D) hereof) and (v) issued or issuable upon exercise of up to
100,000 of the warrants described in Section 5(d)(v)(E) hereof shall not exceed
the number of shares of Common Stock that the Company can issue pursuant to
Nasdaq Marketplace Rule 4310(c)(25)(H) (as amended as set forth in SEC Release
No. 34-38469).
6. Redemption.
(a) At any time after one year following the Issue Date, the
Corporation, upon written notice given to each holder of shares of the Series A
Preferred Stock, may elect to redeem all of the outstanding shares of the Series
A Preferred Stock at a price per share equal to the Series A Preference Amount
if, and only if: (i) the Market Price (determined, for purposes of this Section
6, without regard to the provision in Section 5(i) hereof requiring such Market
Price to be averaged over a five consecutive business day period) shall have
been at least $5.00 (which amount shall be adjusted in the manner set forth in
Section 5(d)(iii) hereof) on each of the ten business days immediately preceding
such notice, (ii) the registration statement required to be filed under Section
5(b) of the Purchase Agreement shall be effective and permit the sale of all
shares of Common Stock into which shares of Series A Preferred Stock may then be
converted and (iii) the Common Stock shall be listed and trading on The Nasdaq
SmallCap Market, The Nasdaq National Market or a national securities exchange.
Any such redemption shall be effective on the thirtieth day following the date
of such notice; provided, however, that a holder of shares of the Series A
Preferred Stock may elect at any time prior to such effective date of redemption
to convert all or any portion of its shares of the Series A Preferred Stock into
shares of the Common Stock in accordance with Section 5 hereof; and provided,
further, that the Corporation's right to redeem shall be suspended during such
thirty day period for the number of days that the shares of Common Stock
issuable upon any such conversion may not be sold pursuant to an effective
registration statement for any reason
12
<PAGE> 13
whatsoever or the Common Stock shall not be listed and trading on The Nasdaq
SmallCap Market, The Nasdaq National Market or a national securities exchange.
The notice period shall then be extended for a period of time equal to the
number of days during the notice period in which a registration statement shall
not have permitted the sale of all of such shares or the Common Stock shall not
have been so listed and trading. The redemption price shall be payable in full,
in cash, on the effective date of any redemption pursuant to this Section 6.
Upon any such redemption, each holder of shares of the Series A Preferred Stock
shall receive a cash amount equal to all dividends accrued and unpaid thereon
(whether or not declared) as of the effective date of such redemption. A
redemption notice delivered by the Corporation pursuant to this Section 6 shall
be irrevocable.
RESOLVED FURTHER, that the President or any Vice President and the
Secretary or any Assistant Secretary of the Company are hereby authorized and
directed to prepare and file an Amended and Restated Certificate of
Determination of Preferences of Series A Convertible Preferred Stock in
accordance with the foregoing resolutions and the provisions of California law.
C. The authorized number of shares of Preferred Stock of the Company is
Five Million (5,000,000) shares and the number of shares constituting Series A
Convertible Preferred, none of which have been issued, is Seven Hundred Fifty
Thousand (750,000).
IN WITNESS WHEREOF, the undersigned have executed this Certificate as of
September , 1997.
------------------------------------------
Robert J. Petcavich
President
------------------------------------------
Rebecca A. Petcavich
Secretary
The undersigned, Robert J. Petcavich and Rebecca A. Petcavich, the
President and Secretary, respectively, of Planet Polymer Technologies, Inc.,
declare under penalty of
13
<PAGE> 14
perjury that the matters set out in the foregoing Certificate are true of their
own knowledge.
Executed at San Diego, California on September , 1997.
------------------------------------------
Robert J. Petcavich
------------------------------------------
Rebecca A. Petcavich
14
<PAGE> 1
EXHIBIT 5.1
[COOLEY GODWARD LLP LETTERHEAD]
OPINION OF COOLEY GODWARD LLP
November 6, 1997
Planet Polymer Technologies, Inc.
9985 Businesspark Avenue
San Diego, CA 92131
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Planet Polymer Technologies, Inc. (the "Company") of a
Registration Statement on Form S-3 (the "Registration Statement") with the
Securities and Exchange Commission (the "Commission") covering the offering of
890,080 shares on the Company's Common Stock to be sold by certain shareholders,
as described in the Registration Statement (the "Shares").
In connection with this opinion, we have examined relied upon the Registration
Statement, the Company's Amended and Restated Articles of Incorporation and
Amended and Restated Bylaws and the originals or copies certified to our
satisfaction, of such records, documents, certificates, memoranda and other
instruments as in our judgment are necessary or appropriate to enable us to
render the opinion expressed below.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold in accordance with the Registration Statement, will
be validly issued, fully paid and nonassessable.
We consent to the reference to our firm under the caption "Legal Matters" in the
Prospectus included in the Registration Statement and to the filing of this
opinion as an exhibit to the Registration Statement.
Very truly yours,
COOLEY GODWARD LLP
/s/ LANCE W. BRIDGES
- ----------------------
Lance W. Bridges, Esq.
<PAGE> 1
EXHIBIT 23.1
Consent of Coopers & Lybrand L.L.P.
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement on
Form S-3 of our report dated April 8, 1997 on our audits of the financial
statements of Planet Polymer Technologies, Inc. We also consent to the reference
to our Firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
San Diego, California
November 5, 1997
<PAGE> 1
EXHIBIT 99.1
SECURITIES PURCHASE AGREEMENT
Securities Purchase Agreement (the "AGREEMENT"), dated as of
September 19, 1997, between Planet Polymer Technologies, Inc., a California
corporation (the "COMPANY"), and Special Situations Private Equity Fund, L.P., a
Delaware limited partnership (the "INVESTOR").
In consideration of the mutual covenants set forth herein, the
parties hereto agree as follows:
1. Sale of Stock and Warrant; Closing.
(a) Purchase and Sale. Subject to the terms and conditions
hereof, the Company shall issue and sell to the Investor, and the Investor shall
purchase from the Company, 500,000 shares (individually, a "PREFERRED SHARE"
and, collectively, the "PREFERRED SHARES") of Series A Convertible Preferred
Stock, without par value, of the Company, and a warrant, substantially in the
form of Exhibit A hereto (the "WARRANT"), to purchase up to 375,000 shares (the
"WARRANT SHARES") of common stock, without par value, of the Company (the
"COMMON STOCK"). The rights, preferences and privileges of the Preferred Shares
shall be set forth in the form of the Amended and Restated Certificate of
Determination (the "CERTIFICATE OF DETERMINATION") in the form annexed hereto as
Exhibit B. The purchase price per Preferred Share shall be $1.85, for an
aggregate purchase price of $925,000. The purchase price of the Warrant shall be
$75,000. The shares of Common Stock issuable upon conversion of the Preferred
Shares shall be hereinafter referred to as the "CONVERSION SHARES".
(b) Closing. The closing of the purchase and sale of the
Preferred Shares and the Warrant (the "CLOSING") shall take place at the offices
of Hertzog, Calamari & Gleason, 100 Park Avenue, New York, New York, at 10:00
A.M. on September 22, 1997, or such later date on which the conditions set forth
in Sections 6 and 7 hereof shall have been satisfied or waived; provided,
however, that the Closing, in no event, shall occur later than
<PAGE> 2
2
October 6, 1997. The date of the Closing shall be hereinafter referred to as the
"CLOSING DATE."
(c) Delivery. At the Closing, the Company shall deliver to the
Investor a stock certificate representing the Preferred Shares and the Warrant
against payment of the purchase price therefor by wire transfer of immediately
available funds to the account of the Company. In addition, the Company shall
deliver to the Investor such other agreements, documents, certificates and
opinions as specified in this Agreement or as may reasonably be requested by the
Investor.
2. Representations and Warranties of Investor. The Investor
represents and warrants to the Company as follows:
(a) Authorization. The Investor has the necessary power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution and delivery of, and the performance under, this
Agreement by the Investor will not conflict with any rule, regulation, judgment
or agreement applicable to the Investor. All actions on the Investor's part
required for lawful execution and delivery of this Agreement have been or will
be effectively taken prior to the Closing.
(b) Purchase for Investment. The Investor is purchasing the
Preferred Shares and the Warrant, and will purchase the Conversion Shares and
the Warrant Shares (together with the Preferred Shares, the Warrant and the
Conversion Shares, the "SECURITIES"), for investment purposes only and not with
a view to, or for sale in connection with, a distribution thereof within the
meaning of the Securities Act of 1933 (the "SECURITIES Act"). The Investor
understands that it must bear the economic risk of this investment indefinitely,
unless the Securities are registered pursuant to the Securities Act and any
applicable state securities or blue sky laws or an exemption from such
registration is available. Notwithstanding anything in this Section 2(b) to the
contrary, the Investor, by making the representations herein, does not agree to
hold the Securities for any minimum or other specific term and reserves the
right to dispose of such Securities at any
<PAGE> 3
3
time in accordance with or pursuant to registration or an exemption therefrom
under the Securities Act.
(c) Reliance On Exemptions. The Investor understands that the
Securities are being offered and sold in reliance upon specific exemptions from
the registration requirements of Federal and state securities laws and that the
Company is relying upon the truth and accuracy of the representations and
warranties of the Investor set forth herein in order to determine the
availability of such exemptions and the eligibility of the Investor to acquire
the Securities.
(d) Access to Information. The Investor has been afforded an
opportunity to ask questions of the Company's representatives concerning the
Company in making the decision to purchase the Preferred Shares and the Warrant,
and such questions have been answered to its satisfaction. However, neither the
foregoing nor any other due diligence investigation conducted by the Investor or
on its behalf shall limit, modify or affect the representations and warranties
of the Company in Section 3 of this Agreement or the right of the Investor to
rely thereon.
(e) Governmental Review. The Investor understands that no Federal
or state agency or any other government or governmental agency has passed upon
or made any recommendation or endorsement of the Securities.
(f) Investor's Qualifications. The Investor is an "accredited
investor" as defined in Rule 501 under Regulation D of the Securities Act
("REGULATION D"). The Investor is capable of evaluating the merits and risks of
an investment in the Securities and is financially capable of bearing a total
loss of this investment.
(g) Location. The office or offices of the Investor in which its
investment decision was made is located at the address of Investor set forth on
the signature page hereto.
(h) Restrictions on Transfer. The Investor understands that it
may not transfer any of the Securities unless
<PAGE> 4
4
such Securities are registered under the Securities Act or unless an exemption
from registration and qualification requirements are available under the
Securities Act and applicable state securities laws. The Investor understands
that the Securities shall bear the following legend until such time as they have
been registered under the Securities Act or have been sold under Rule 144 under
the Securities Act ("RULE 144"):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") OR UNDER ANY STATE SECURITIES LAWS.
THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED EXCEPT AS
PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. UNLESS THE SECURITIES ARE SOLD
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR
RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.
3. Representations and Warranties of the Company. Except as set
forth in the Schedule of Exceptions attached hereto as Exhibit C, the Company
represents and warrants to the Investor as follows:
(a) Organization and Good Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California, and has all necessary corporate power and authority to own
or lease its assets and to carry on its business as now being conducted and
presently proposed to be conducted. The Company is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction in which
its ownership or leasing of assets, or the conduct of its business, makes such
qualification necessary. Except for Deltco of Wisconsin, Inc., a Wisconsin
corporation (the "SUBSIDIARY"), the Company has no subsidiaries and no equity
interests in any corporation, partnership, joint venture or other entity.
<PAGE> 5
5
(b) Subsidiary. The Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the state of Wisconsin,
and has all necessary corporate power and authority to own or lease its assets
and to carry on its business as now being conducted and presently proposed to be
conducted. The Subsidiary is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which its ownership
or leasing of assets, or the conduct of its business, makes such qualification
necessary. The Company owns all of the capital stock of the Subsidiary.
(c) Requisite Power and Authorization. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder, including without limitation the
issuance of the Securities. All corporate action of the Company required for the
execution and delivery of this Agreement and issuance and delivery of the
Securities has been duly and effectively taken, and no further actions,
authorizations or consents, including without limitation any of the shareholders
of the Company, are required. Each of this Agreement and the Warrant constitutes
the valid and binding obligation of the Company, enforceable against the Company
in accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditor's rights, (ii) as limited by general
principles of equity that restrict the availability of equitable remedies and
(iii) as the indemnity provisions of Section 4(e) of this Agreement may be
limited by law. The Preferred Shares, when issued and delivered in compliance
with the provisions of this Agreement, will be validly issued, fully paid and
non-assessable, free and clear of any and all liens, charges, claims or
encumbrances. The Conversion Shares and the Warrant Shares, if and when issued
and delivered in compliance with the provisions of this Agreement, the
Certificate of Determination or the Warrant, as the case may be, will be validly
issued, fully paid and non-assessable, free and clear of any and all liens,
charges, claims or encumbrances. Assuming the truth and accuracy of the
representations and warranties of the Investor contained in Section 2 hereof at
the time of each respective issuance, all the Securities will be issued in
<PAGE> 6
6
compliance with Federal and state securities laws. The Company has reserved a
sufficient number of shares of Common Stock necessary for issuance of the
Conversion Shares and the Warrant Shares.
(d) SEC Documents. Since August 2, 1995, the Company has timely
filed with the Securities and Exchange Commission (the "SEC") all reports,
statements, schedules and other documents (collectively, the "SEC DOCUMENTS")
required to be filed by it pursuant to the Securities Exchange Act of 1934 (the
"EXCHANGE ACT"). As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Exchange Act, and the rules and
regulations of the SEC promulgated thereunder, 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 included in the SEC Documents (the "FINANCIAL
STATEMENTS") complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Except (i) as may be indicated in the notes to the Financial
Statements or (ii) in the case of the unaudited interim statements, as permitted
by Form 10-QSB under the Exchange Act, the Financial Statements have been
prepared in accordance with U.S. generally accepted accounting principles
consistently applied and fairly present in all material respects the financial
position of the Company as of the dates thereof and the consolidated results of
operations and consolidated cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal recurring year-end adjustments).
Other than liabilities incurred in the ordinary course of business subsequent to
the date of such Financial Statements, there are no liabilities of the Company
or the Subsidiary, whether absolute, contingent or otherwise, which have not
been reflected in the Financial Statements, which liabilities, individually or
in the aggregate, are material to the financial condition or operating results
of the Company.
<PAGE> 7
7
(e) Capitalization. The capitalization of the Company as of the
date hereof, including (i) the authorized capital stock, (ii) the number of
shares issued and outstanding and in treasury, (iii) the number of shares
reserved for issuance pursuant to stock option, employee benefit or other plans,
(iv) the number of shares reserved for issuance and/or issuable pursuant to
securities exercisable for, or convertible into or exchangeable for any shares
of Common Stock, (v) the number of outstanding securities convertible into or
exchangeable for any shares of the Company's capital stock and (vi) the number
of shares to be reserved for issuance upon conversion of the Preferred Shares
and exercise of the Warrant, is set forth on Schedule 3(e). All outstanding
shares of capital stock have been duly authorized and validly issued and are
fully paid and non-assessable. Except as set forth on Schedule 3(e), the Company
has (i) no outstanding securities convertible into or exchangeable for any
shares of capital stock of the Company, (ii) no contracts, rights, options,
warrants, rights to subscribe to, calls or other agreements or commitments of
any nature whatsoever relating to the purchase or other acquisition of any
shares of its capital stock or securities convertible into or exchangeable for
any shares of it capital stock or (iii) any shares reserved for issuance.
(f) No Conflicts. Neither the execution, delivery and performance
by the Company of this Agreement nor the consummation of the transactions
contemplated hereby has constituted or resulted in, or will constitute or result
in, a default under or breach or violation of any term or provision of the
Articles of Incorporation or bylaws of the Company or material contracts to
which the Company is a party or Federal or state laws, rules or regulations,
writs, orders, judgments or decrees which are applicable to the Company or the
Subsidiary or their respective assets.
(g) Consents. No approval, consent, order, authorization or other
action by, or notice to or filing with, any governmental authority or regulatory
or self regulatory agency, or any other person or entity, and no lapse of a
waiting period, is required in connection with the execution, delivery or
performance by the Company, or enforcement against the Company, of this
<PAGE> 8
8
Agreement, the issue and delivery of any of the Securities or any other
transactions contemplated hereby except for (i) the filing of the Certificate of
Determination which shall be duly filed and effective prior to the Closing, (ii)
the filing of a Form D with the SEC and the California Department of
Corporations, (iii) filings required under state "blue sky" laws, (iv) the
filing of a Notice of Listing of Additional Shares with The Nasdaq Stock Market
in connection with the issuance of the Conversion Shares and the Warrant Shares,
and (v) the filing of a registration statement on Form S-3 with the SEC and the
receipt of an order declaring effectiveness from the SEC with respect thereto.
(h) No Material Adverse Change. Since June 30, 1997, the business
of the Company and the Subsidiary has been operated in the ordinary course and
substantially consistent with past practice, and there has not been any material
adverse change in the business, assets, financial condition, results of
operations, affairs or prospects of the Company and the Subsidiary (a "MATERIAL
ADVERSE CHANGE"). Since June 30, 1997, the Company has not (i) paid any
obligation or liability other than, or discharged or satisfied any liens or
encumbrances other than those securing, current liabilities, in each case in the
ordinary course of business; (ii) declared or made any payment or distribution
to its stockholders as such, or purchased or redeemed any of its shares of
capital stock or other securities, or obligated itself to do so: (iii)
mortgaged, pledged or subjected to any lien, charge, security interest or other
encumbrance any of its assets, tangible or intangible, except in the ordinary
course; (iv) sold, transferred or leased any of its assets except for fair value
in the ordinary course; (v) increased the compensation payable to any of its
officers or other employees, consultants or representatives by greater than
$10,000; (vi) cancelled or compromised any debt or claim, or waived or released
any right of material value; (vii) entered into any transaction other than in
the ordinary course; (viii) issued or sold any shares of capital stock or other
securities or granted any options, warrants or other purchase rights with
respect thereto; or (ix) agreed to do any of the foregoing (other than pursuant
hereto).
<PAGE> 9
9
(i) Litigation. There is no action, suit, proceeding or
investigation pending or, to the Company's knowledge, currently threatened
against the Company or the Subsidiary, or any of their respective directors or
officers in their capacities as such, that questions the validity of this
Agreement or the issuance of the Securities, or the right of the Company to
enter into this Agreement or to consummate the transactions contemplated hereby,
or that might result, either individually or in the aggregate, in any Material
Adverse Change or in any change in the current equity ownership of the Company.
Neither the Company nor the Subsidiary is a party to or has had entered against
it any order, writ, injunction, judgment, stipulation or decree of any court,
administrative agency, commission, regulatory authority, other government agency
or instrumentality or self-regulatory agency.
(j) No Default. Neither the Company nor the Subsidiary is in
violation of or default under any provision of its Articles of Incorporation or
by-laws or in default under (and no event has occurred which, with notice or
lapse of time or both, would put the Company or the Subsidiary in default
under), nor has there occurred any event giving others (with notice or lapse of
time of both) any rights of termination, amendment, acceleration or cancellation
of, any contract, commitment, indenture or instrument to which it is a party or
by which it or its properties or assets is bound or affected except for possible
defaults or rights which would not, individually or in the aggregate, result in
a Material Adverse Change. To the best of the Company's knowledge, no other
party is in material default under or in material breach or violation of any
material contract, commitment or instrument to which the Company or the
Subsidiary is a party or by which any of their properties or assets are bound or
affected.
(k) Compliance with Laws. Each of the Company and the Subsidiary
is in compliance and has conducted its business and operations so as to comply
with all laws (including without limitation environmental laws), ordinances,
rules and regulations, judgments, decrees or orders of any court, administrative
agency, commission, regulatory authority or other governmental or administrative
body or instrumentality, whether domestic or foreign. The Company has not during
the past three years received
<PAGE> 10
10
any notice relating to any violation or potential violation of applicable law or
regulations.
(l) Title. The Company and the Subsidiary have good and
marketable title to all real and personal property owned by them which is
material to the business of the Company and the Subsidiary, in each case free
and clear of all liens, encumbrances and defects. Any property, real or
personal, held under lease by the Company or the Subsidiary is held by them
under valid and enforceable leases.
(m) Intellectual Property. Each of the Company and the Subsidiary
owns, or possesses adequate and enforceable rights to use, all trademarks,
trademark applications, trade names, service marks, copyrights, copyright
applications, licenses, permits, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures) and other similar rights and proprietary knowledge and, to its
knowledge, all patents and patent applications (collectively, the "INTANGIBLES")
necessary for the conduct of its business. To the knowledge of the Company,
neither the Company nor the Subsidiary has infringed or currently infringes or
is in conflict with any right of any other person with respect to any
Intangibles. To the knowledge of the Company, no person is infringing on or
violating the Intangibles owned or used by the Company or the Subsidiary.
(n) Registration Rights. The Company has not granted or agreed to
grant any registration rights, including piggyback rights, to any person or
entity other than the Investor. None of the registration rights disclosed on the
Schedule of Exceptions is senior in priority to the registration rights granted
in this Agreement.
(o) Nasdaq Requirements. The Common Stock has been designated for
inclusion in The Nasdaq SmallCap Market upon prior application and meets all
applicable requirements of the Nasdaq Stock Market ("NASDAQ") Marketplace Rule
4300 Series and any other applicable requirements for such listing. The issuance
and sale of the Securities will not, when issued and sold in accordance
<PAGE> 11
11
with this Agreement, violate any applicable Rule of Nasdaq. The Company has not
received notification, written or oral, that (i) the termination of the
inclusion of the Common Stock on The Nasdaq SmallCap Market is pending or under
consideration or (ii) the Company has failed to satisfy any requirement of the
Rule 4300 Series or any other applicable requirement of Nasdaq. The Company does
not reasonably anticipate that the Common Stock will be delisted from Nasdaq for
the foreseeable future.
(p) Registration Statement. The Company is currently eligible to
register the resale of its Common Stock under the Securities Act under a
registration statement on Form S-3. To the best of the Company's knowledge,
there exist no facts or circumstances that would inhibit or delay the
preparation and filing of a registration statement on Form S-3 with respect to
the Conversion Shares and the Warrant Shares.
(q) No Misrepresentation. No representation or warranty by the
Company in this Agreement and no statements of the Company contained in any
document (including without limitation any SEC Document), certificate, schedule
or other information furnished or to be furnished by or on behalf of the Company
pursuant to this Agreement or in connection with the transactions contemplated
hereby contains or shall contain any untrue statement of material fact or omits
or shall omit to state a material fact required to be stated therein or
necessary in order to make such statements, in light of the circumstances under
which they were made, not misleading. No event or circumstance has occurred or
exists with respect to the Company or the Subsidiary or their respective
businesses, affairs, assets, properties, prospects, operations or financial
conditions which has not been publicly disclosed, but which, under applicable
law, rule or regulation, would be required to be disclosed by the Company in a
registration statement filed on the date hereof by the Company under the
Securities Act with respect to the primary issuance of the Company's securities.
The Company has delivered true and complete copies of all documents requested by
the Investor.
(r) Anti-Dilution and Other Shares. No shareholder of the Company
or other person or entity has any preemptive right of
<PAGE> 12
12
subscription or purchase or contractual right of first refusal or similar right
with respect to the Securities. Issuance of the Securities will not result in
the issuance of any additional shares of Common Stock or the triggering of other
anti-dilution or similar rights contained in any options, warrants, debentures
or other agreements or commitments of the Company.
(s) No Brokers or Finders. No person or entity has or will have,
as a result of any act or omission by the Company, any right, interest or valid
claim against the Investor for any commission, fee or other compensation as a
finder or broker, or in any similar capacity, in connection with the
transactions contemplated by this Agreement.
(t) Option Plan. The Company represents and warrants that (i) its
Board of Directors had intended that the maximum number of shares of Common
Stock which could be sold pursuant to Options (as defined in the Company's 1995
Stock Option Plan) under the Company's 1995 Stock Option Plan was to remain,
following a reverse stock split effected by the Company on July 18, 1995,
500,000 shares and (ii) that the number of shares of Common Stock currently
reserved for issuance by the Board of Directors under such Plan is 500,000
shares.
4. Registration Rights.
(a) Definitions. For purposes of this Section 4:
(i) "Register", "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement
in compliance with the Securities Act and pursuant to Rule 415 under
such Act (or any successor rule providing for the offering of
securities on a continuous basis), and the declaration or ordering of
effectiveness of such registration statement by the SEC.
(ii) "Registrable Securities" means all shares of Common Stock of
the Company issued and issuable as Conversion Shares or Warrant
Shares, and any shares of Common Stock issued or issuable, from time
to time (with any adjustments), as a
<PAGE> 13
13
distribution on, in exchange for or otherwise with respect to the
foregoing.
(iii) "Holder" means any person owning of record Registrable
Securities or any assignee of record of such Registrable Securities to
whom rights under this Section 4 have been assigned in accordance with
this Agreement and, as the case may be, the terms of the Warrant.
(b) Shelf Registration.
(i) The Company, within 45 days following the Closing Date, shall
file a registration statement under the Securities Act on Form S-3
(or, if not available, on such Form as is then available to effect a
registration of all Registrable Securities, subject to the consent of
the Investor) for, and shall obtain all such qualifications and
compliances as may be required and as would permit the sale and
distribution of, all Registrable Securities, and shall use its best
efforts to secure the effectiveness of such registration statement no
later than 90 days following the Closing Date.
(ii) The Company shall pay all expenses incurred in connection
with any registration, qualification and compliance (excluding
underwriters' and brokers' discounts and commissions), including,
without limitation, all filing, registration and qualification fees,
printer and accounting fees and reasonable fees and disbursements of
counsel for the selling Holder or Holders and counsel for the Company;
provided, however, that the Company shall be required to pay expenses
incurred in connection with the qualification of the Registrable
Securities under blue sky laws only in California, New York and such
other states as the Holders shall reasonably request.
(iii) The Company shall use its best efforts to cause the
registration statement filed pursuant to this Section 4(b) to remain
effective until the earliest of (A) the date on which all Registrable
Securities shall have been sold, (B) the date
<PAGE> 14
14
on which all Registrable Securities, in the opinion of counsel to the
Holder may be sold immediately to the public in any single three-month
period pursuant to Rule 144 or (C) the fifth anniversary of the
Closing.
(c) Obligations of the Company. Whenever required to effect the
registration of any Registrable Securities under this Agreement, the Company
shall, as expeditiously as possible:
(i) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to
cause such registration statement to become effective.
(ii) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus included
therein as may be necessary to keep the registration statement
effective for the period set forth in Section 4(b)(iii) hereof.
(iii) Furnish to each Holder and its legal counsel (A) promptly
after filing with the SEC, one copy of such registration statement and
any amendment thereto, each preliminary prospectus and final
prospectus and each amendment or supplement thereto and each letter
written by or on behalf of the Company to the SEC or the staff of the
SEC and each correspondence therefrom, (B) on the date of
effectiveness of such registration statement or amendment, a notice
that such registration statement or amendment has been declared
effective, and (C) such number of copies of a prospectus, including a
preliminary prospectus, in conformity with the requirements of the
Securities Act, and all amendments thereto and such other documents as
any Holder may reasonably request, in order to facilitate the
disposition of the Registrable Securities owned by such Holder that
are included in such registration statement.
(iv) Use its best efforts to register and qualify the Registrable
Securities covered by such registration statement under such other
securities or "blue sky" laws of
<PAGE> 15
15
such states and jurisdictions as shall be reasonably requested by any
Holder, and maintain the effectiveness of such registrations and
qualifications, provided, that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any
such states or jurisdictions.
(v) Use its best efforts promptly to secure the designation and
quotation of all Registrable Securities covered by a registration
statement on Nasdaq.
(vi) Notify each Holder of Registrable Securities included in
such registration statement, at any time when a prospectus relating
thereto shall be required to be delivered under the Securities Act, of
the happening of any event as a result of which the prospectus
included in such registration statement shall include an 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 not
misleading in the light of the circumstances then existing, and upon
such notice the Company shall promptly correct such misstatement or
omission and deliver to each Holder copies of the corrected
prospectus.
(vii) Take all reasonable actions required to prevent the entry
of any stop order issued or threatened by the SEC or any state
regulatory authority with respect to any registration statement
covering Registrable Securities, and notify each Holder of any such
stop order or take all reasonable actions to remove it if entered.
(viii) Permit one counsel designated by the Holders to review
such registration statement and all amendments and supplements thereto
in a reasonable period of time prior to their filing with the SEC, and
not file any document in a form to which such counsel shall reasonably
object.
(d) Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action
<PAGE> 16
16
pursuant to Section 4(b) that a selling Holder shall furnish to the Company such
information regarding such Holder, the Registrable Securities held by such
Holder, and the intended method of disposition of such Securities as reasonably
shall be required to effect the registration of the Registrable Securities.
(e) Indemnification. In the event that any Registrable Securities
shall be included in a registration statement under this Agreement:
(i) To the extent permitted by law, the Company shall indemnify
and hold harmless each Holder, the partners, shareholders, officers and
directors of each Holder, any underwriter (as defined in the Securities
Act) for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Securities Act or the Exchange Act
against any joint or several losses, claims, damages, liabilities or
expenses (together with actions, proceedings or inquiries by any regulatory
or self-regulatory organization, whether commenced or threatened, in
respect thereof, "CLAIMS") to which any of them may become subject insofar
as such Claims arise out of or are based upon: (i) any untrue statement or
alleged untrue statement of a material fact contained in a registration
statement or the omission or alleged omission to state therein a material
fact required to be stated therein, or necessary to make the statements
therein 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 shall file 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
Securities Act, the Exchange Act, any state securities law or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to such
<PAGE> 17
17
registration statement (the matters in the foregoing clauses (i) through
(iii) being, collectively, "VIOLATIONS"). The Company shall reimburse the
indemnified party promptly, as such expenses shall be incurred and shall be
due and payable, for any reasonable legal fees or other reasonable expenses
incurred by them in connection with investigating or defending any such
Claim. The indemnification agreement contained in this Section 4(e)(i): (i)
shall not apply to a Claim arising out of or based upon a Violation which
shall occur in reliance upon and in conformity with information furnished
in writing to the Company by such indemnified party expressly for use in
connection with such registration statement or any such amendment or
supplement thereto; (ii) shall not apply to amounts paid in settlement of
any Claim if such settlement shall be effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld;
and (iii) 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 in any prospectus shall have been corrected on a timely basis
and the indemnified party shall have failed to utilize such corrected
prospectus. This indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the indemnified party and
shall survive the transfer of the Registrable Securities by the Investor
pursuant to Section 8.
(ii) In connection with any registration statement in which a
Holder shall participate, such Holder, severally and not jointly, shall
indemnify and hold harmless the Company, each of its directors, each of its
officers who signs the registration statement, its employees, agents,
attorneys and each person, if any, who controls the Company within the
meaning of the Securities Act or the Exchange Act, any underwriter and any
other shareholder selling securities pursuant to such registration
statement or any of its directors or officers or any person who controls
such underwriter or shareholder within the meaning of the Securities Act or
the Exchange Act, against any Claim to which any of them may become
subject, under the Securities
<PAGE> 18
18
Act, the Exchange Act or otherwise, insofar as such Claim shall arise out
of or shall be based upon any Violation, in each case to the extent (and
only to the extent) that such Violation shall occur in reliance upon and in
conformity with written information furnished to the Company by such Holder
expressly for use in connection with such registration statement. Such
Holder shall reimburse the indemnified party for any reasonable legal or
other reasonable expenses (promptly as such expenses shall be incurred and
shall be due and payable) incurred in connection with investigating or
defending any such Claim. The indemnity agreement contained in this Section
4(e)(ii) shall not apply to amounts paid in settlement of any Claim if such
settlement shall be effected without the prior written consent of such
Holder, which consent shall not be unreasonably withheld and; provided,
further, that the total amounts payable by a Holder under this Section
4(e)(ii) shall not exceed the aggregate proceeds (net of discounts or
commissions) received by such Holder upon the sale of such Holder's
Registrable Securities included in such registration statement.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 4(e)(ii) shall not
inure to the benefit of any other shareholder selling securities pursuant
to the registration statement if the untrue statement or omission of
material fact in any prospectus shall have been corrected on a timely basis
in the prospectus and such shareholder shall have failed to utilize such
corrected prospectus.
(iii) Promptly after receipt by an indemnified party under this
Section 4(e) of notice of the commencement of any action (including,
without limitation, any governmental action), such indemnified party, if a
claim in respect thereof shall be made against any indemnifying party under
this Section 4(e), shall deliver to the indemnifying party a written notice
of the commencement thereof, and the indemnifying party shall be entitled
to participate therein, and, to the extent it desires, to assume the
defense thereof, with counsel mutually satisfactory to the indemnified
person, after which the indemnifying person shall not be liable to
<PAGE> 19
19
such indemnified person for any legal expenses subsequently incurred by
such indemnified person in connection with the defense thereof. An
indemnified party shall have the right to retain its own counsel, with fees
and expenses to be paid by the indemnifying party, if the indemnifying
party shall have failed to assume the defense of any such action or if, in
the reasonable opinion of counsel retained by the indemnifying party,
representation of such indemnified party by the counsel retained would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
action. No indemnifying person shall be responsible for paying the fees and
expenses of more than one separate counsel for all indemnified parties.
Failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any action, if the indemnifying
party shall be materially prejudiced thereby, shall relieve such
indemnifying party of liability, but only to the extent that such
indemnifying party shall be prejudiced with respect to a specific claim. An
indemnified party shall not, without the prior written consent of the
indemnifying party, settle or compromise or consent to the entry of a
judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder unless such
settlement, compromise or consent shall include an unconditional release of
such indemnifying party from all liability arising out of such claim,
action, suit or proceeding.
(iv) If the indemnification provided for in Sections 4(e)(i) or
4(e)(ii) hereof is held by a court of competent jurisdiction to be
unavailable to an indemnified party in respect of any liability under the
Securities Act, then, and in each such case, the indemnifying party, in
lieu of indemnifying such indemnified party hereunder, shall to the extent
permitted by applicable law contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage
or expense in such proportion as shall be appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the
<PAGE> 20
20
indemnified party on the other in connection with the Violation that
resulted in such loss, liability, claim, damage or expense as well as any
other relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by a
court of law by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact shall have related to information
supplied by the indemnifying party or by the indemnified party and the
parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement, alleged statement, omission or
alleged omission; provided, that, in no event, shall any contribution under
this Section (iv) by any Holder exceed the proceeds from the offering
received by such Holder. No person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11 of the Securities Act)
shall be entitled to contribution from any person or entity who shall not
have been guilty of such fraudulent misrepresentation.
(f) Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the SEC which may at any time
permit the sale of the Registrable Securities to the public without
registration, while a public market shall exist for the Common Stock of the
Company, the Company shall:
(i) Make and keep public information available, as those terms
are understood and defined in Rule 144, at all times while the Company
shall be reporting under the Exchange Act;
(ii) Use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act; and
(iii) So long as a Holder shall own any Registrable Securities,
furnish to the Holder forthwith upon request a
<PAGE> 21
21
written statement by the Company as to its compliance with the
reporting requirements of Rule 144, the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly report of
the Company and such other reports and documents of the Company as a
Holder may reasonably request in availing itself of any rule or
regulation of the SEC allowing a Holder to sell any such Securities
without registration.
(g) Default Shares. In the event that the registration statement
to be filed pursuant to Section 4(b) shall not be declared effective by the SEC
within 135 days from the Closing Date (the "DEFAULT DATE"), regardless of
whether or not such registration statement shall have been filed, the Company
shall issue and deliver, free of charge and without cost, to the Investor (i)
within 10 days of the Default Date, certificates representing a number of fully
paid, non-assessable shares of Common Stock equal to 5% of the Conversion Shares
and the Warrant Shares and (ii) within 10 days of the last date of each
additional 30-day period in which such registration statement shall not have
been declared effective by the SEC, additional certificates representing a
number of fully paid, non-assessable shares of Common Stock equal to 5% of the
Conversion Shares, the Warrant Shares and any issued Default Shares.
Notwithstanding anything to the contrary contained in this Section 4(g), the
135-day period preceding the Default Date or an additional 30-day period
referred to above shall be extended for a period of time equal to the number of
days in which an act of God, earthquake, fire, other natural disaster, shut-down
of the United States government, strike or act of war occurring during such
period continues and reasonably prevents action from being taken to achieve
effectiveness of the registration statement. Any and all shares of Common Stock
issued and delivered by the Company pursuant to this Section 4(g) shall
constitute "Registrable Securities," and the Company shall be required to
register them under the Securities Act in accordance with the provisions of this
Agreement.
(h) Holder Delivery Obligations. A Holder shall comply with
applicable provisions of the Securities Act and state
<PAGE> 22
22
securities or "blue sky" laws in connection with the use or delivery of any
preliminary or final prospectus.
5. Covenants of the Company. The Company hereby covenants that:
(a) Exchange Act Filings. The Company shall use its best efforts
to file in a timely manner all reports required to be filed by it under the
Exchange Act, and, promptly upon filing, deliver copies of such reports to the
Investor.
(b) Authorized Shares. The Company shall, from and at all times
after the Closing, maintain a reserve of authorized shares of Common Stock
sufficient to cover the issuance of the Conversion Shares and the Warrant
Shares.
(c) Use of Proceeds. The Company shall use the proceeds from the
sale of the Securities as set forth on Schedule 5(c).
(d) Nasdaq Requirements. The Company shall use its best efforts
to continue to meet all requirements necessary for inclusion of the Common Stock
in The Nasdaq SmallCap Market, including, without limitation, those set forth in
the Nasdaq Marketplace Rule 4300 Series. The Company shall use its best efforts,
including, without limitation, promptly filing any notification, application,
form or other information and paying any fees, to list on The Nasdaq SmallCap
Market all of the Conversion Shares and Warrant Shares.
(e) Nasdaq Cap. Unless permitted by the applicable rules and
regulations of Nasdaq (or the principal exchange on which the Common Stock shall
be listed or traded), the Company shall not grant or issue any additional
shares, or options, warrants, securities or other rights exercisable for,
convertible into or exchangeable for shares, of Common Stock, or enter into any
other commitments or agreements which call for the grant or issuance thereof,
if, following such grant or issue, the aggregate maximum number of shares of
Common Stock (i) issued or issuable upon conversion of the Preferred Shares,
(ii) issued under the
<PAGE> 23
23
Certificate of Determination as dividends, (iii) issued as Default Shares under
Section 4(g) hereof, (iv) issued or issuable upon exercise of the Warrant and
(v) issued or issuable upon exercise of up to 100,000 warrants issued to LBC
Capital Resources, Inc. ("LBC") pursuant to that certain letter agreement, dated
May 9, 1997, between the Company and LBC would equal or exceed 20% of the total
shares of Common Stock outstanding on the Closing Date. Unless permitted by the
applicable rules and regulations of Nasdaq (or the principal securities exchange
on which the Common Stock shall be listed or traded), the aggregate number of
shares of Common Stock (i) issued or issuable upon conversion of the Preferred
Shares, (ii) issued under the Certificate of Determination as dividends, (iii)
issued as Default Shares under Section 4(g) hereof, (iv) issued or issuable upon
exercise of the Warrant and (v) issued or issuable upon exercise of up to
100,000 warrants issued to LBC pursuant to that certain letter agreement, dated
May 9, 1997, between the Company and LBC shall not exceed the number of shares
of Common Stock that the Company can issue pursuant to Nasdaq Marketplace Rule
4310(c)(25)(H) (as amended as set forth in SEC Release No. 34-38469). (a)
(f) Management and Other Rights. At no time shall the Company
have outstanding more than an aggregate of 925,000 (i) shares of Common Stock
and/or (ii) options, warrants, securities or other rights to acquire,
exercisable for, convertible into or exchangeable therefor (or enter into any
other commitments or agreements which call for the grant or issuance thereof)
which were issued or granted to management, other employees, directors or
consultants as compensation. For purposes of this Section 5(f), Common Stock
shall not include any shares outstanding as of the date hereof and "warrants"
shall include any warrants issued to LBC pursuant to that certain letter
agreement, dated May 9, 1997, between the Company and LBC. The provisions of
this Section 5(f) shall cease to apply at such time as there shall be less than
100,000 Preferred Shares outstanding.
(g) Grant of Registration Rights. Prior to the date on which the
Conversion Shares shall have been issued, the Company shall not grant or issue
to any person or entity any registration
<PAGE> 24
24
rights senior in priority to the rights granted under this Agreement.
(h) Certain Legal Expenses. The Company shall pay to Hertzog,
Calamari and Gleason, counsel to the Investor, at the Closing, its fees and
expenses with respect to this Agreement and the transactions contemplated hereby
in an amount not to exceed $15,000.
(i) Removal of Legends. Any legend endorsed on a certificate
pursuant to Section 2(h) and any related stop transfer instructions with respect
to such Securities shall be removed, and the Company shall issue promptly a
certificate without such legend to the holder thereof, if (i) such Securities
have been transferred pursuant to a registration statement declared effective
under the Securities Act, (ii) such legend may be properly removed under the
terms of Rule 144 or (iii) such holder shall provide the Company with an opinion
of counsel, reasonably satisfactory to the Company, to the effect that a sale,
transfer or assignment of such Securities may be made without registration.
(j) Board Representation. So long as the Investor owns at least
200,000 Preferred Shares or at least 10% of the outstanding Common Stock, the
Investor shall have the right to appoint one person, reasonably acceptable to
the Company, as a director on the Board of Directors of the Company.
(k) Amendments to the Certificate of Determination. On or before
September 22, 1997, the Company shall duly file with the appropriate regulatory
agencies in California an amendment to the original certificate of determination
of the Series A Convertible Preferred Stock filed and effective on September 9,
1997, in such form that after such amendment shall have been accepted for filing
and become effective, the certificate of determination of the Series A
Convertible Preferred Stock shall be in the form of the Certificate of
Determination annexed hereto as Exhibit B. The Company shall use its best
efforts to cause the Certificate of Determination to be accepted for filing and
become effective.
<PAGE> 25
25
6. Conditions to Obligations of the Investor. The obligation of
the Investor to purchase the Preferred Shares and the Warrant at the Closing
shall be subject to the fulfillment on or prior to the Closing Date of the
following conditions, any of which may be waived by the Investor:
(yy) Representations and Warranties; Performance of Obligations.
The representations and warranties of the Company set forth in this Agreement
shall have been true and correct when made, and shall be true and correct in all
material respects on the Closing Date with the same force and effect as if they
had been made on and as of said date, except for representations and warranties
made as of a specific date which shall be true and correct as of such date. The
Company shall have performed, satisfied and complied with all obligations and
conditions required to be performed or observed by it under this Agreement on or
prior to the Closing Date.
(a) Consents and Waivers. The Company shall have made all filings
and obtained any and all consents (including, without limitation, all
governmental or regulatory consents, approvals or authorizations required in
connection with the valid execution and delivery of this Agreement), permits and
waivers necessary or appropriate for consummation of the transactions
contemplated by this Agreement, including, without limitation, a waiver relating
to Section 6.13 of that certain warrant to purchase shares of Common Stock,
dated June 8, 1995, issued to AM-RE Services, Inc.
(b) No Litigation or Legislation. No Federal, state or local
statute, rule or regulation shall have been enacted prior to the Closing, and no
litigation, proceeding, government inquiry or investigation shall be pending,
which prohibits or seeks to prohibit or materially restricts the consummation of
the transactions contemplated by this Agreement or the other agreements referred
to herein, or materially restricts or impairs the ability of the Investor to own
an equity interest in the Company.
(c) Compliance Certificate. The Company shall have delivered to
the Investor a certificate, executed by the Chairman of the Board and Chief
Executive Officer of the Company, dated the
<PAGE> 26
26
Closing Date, certifying to the fulfillment of the conditions specified in
Section 6(a).
(d) Opinion of Counsel. The Investor shall have received from
Cooley Godward LLP, counsel to the Company, an opinion addressed to the
Investors, dated the Closing Date, in substantially the form attached hereto as
Exhibit D.
(e) Certificate of Determination. The Company shall have duly
filed with the Secretary of State of the State of California the Certificate of
Determination and such Certificate of Determination shall have been accepted for
filing and become effective.
7. Conditions to Obligation of the Company. The obligation of the
Company to sell and issue the Preferred Shares and the Warrant to the Investor
at the Closing shall be subject to the fulfillment on or prior to the Closing
Date of the following conditions, any of which may be waived by the Company:
(a) Representations and Warranties. The representations and
warranties made by the Investor in this Agreement shall have been true and
correct when made, and shall be true and correct on the Closing Date with the
same force and effect as if they had been made on and as of said date.
(b) No Litigation or Legislation. No Federal, state or local
statute, rule or regulation shall have been enacted after the date hereof, and
no litigation, proceeding, government inquiry or investigation shall be pending,
which prohibits or seeks to prohibit or materially restricts the consummation of
the transactions contemplated by this Agreement or the other agreements referred
to herein, or materially restricts or impairs the ability of the Investor to own
an equity interest in the Company.
(c) Certificate of Determination. The Certificate of
Determination shall have been accepted for filing and become effective.
8. Miscellaneous.
<PAGE> 27
27
(a) Survival. All representations, warranties and covenants of
the parties contained herein shall survive the Closing. All statements as to
factual matters contained in any certificate or other instrument delivered by or
on behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.
(b) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. Each of the
Company and the Investor irrevocably consent to the exclusive jurisdiction of
the United States Federal courts located in New York County, New York, in any
suit or proceeding based on or arising under this Agreement and irrevocably
agree that all claims in respect of such suit or proceeding may be determined in
such courts. The Company irrevocably waives the defense of an inconvenient forum
to the maintenance of such suit or proceeding. Service of process on the Company
mailed by first class mail shall be deemed in every respect effective service of
process upon the Company in any such suit or proceeding. Nothing herein shall
affect the right of the Investor to serve process in any manner permitted by
law.
(c) Finder's Fee. Each party agrees to indemnify and hold the
other harmless from any liability for any commission or compensation in the
nature of a finders' fee (and the costs and expenses of defending against such
liability or asserted liability) for which such party or any of its officers,
partners, employees or representatives shall be responsible.
(d) Further Assurances. Each party, whether prior to or after the
Closing, shall execute, acknowledge and deliver all such other instruments and
documents, and shall take all such other actions, as may be reasonably requested
by the other party for the purpose of effecting and evidencing the consummation
of the transactions contemplated by this Agreement.
(e) Successors. This Agreement shall be binding upon and inure to
the benefit of the successors and permitted assigns
<PAGE> 28
28
of the parties hereto; provided, however, that the rights of the Investor
hereunder may be transferred in connection with a transfer by such Investor of
all or part of the Securities in accordance with the terms of this Agreement or
the terms of the Warrant, as applicable. Any transferee of any of the Securities
to whom rights are so transferred, other than an affiliate of the Investor,
shall be required, as a condition precedent to acquiring such Securities, to
agree in writing to be bound by all the terms and conditions of this Agreement.
(f) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(g) Entire Agreement. This Agreement, including and incorporating
all Schedules and all Exhibits hereto and referred to herein, constitutes and
contains the entire agreement and understanding of the parties regarding the
subject matter of this Agreement and supersedes any and all prior negotiations,
correspondence, understandings and agreements, written or oral, among the
parties with respect to the subject matter hereof.
Notices. All notices required to be given hereunder shall be in writing
and shall be given by personal delivery, facsimile transmission, nationally
recognized overnight carrier (prepaid) or registered or certified mail, postage
prepaid with return receipt requested. Notices shall be addressed, if to the
Company, at its principal corporate offices located at 9985 Businesspark Avenue,
Suite A, San Diego, California, 92131, facsimile No.: (619) 549-5133, Attention:
David P. Kern and, if to the Investor, at 153 E. 53rd Street, 51st Floor, New
York, New York 10022, facsimile No.: (212) 832-6141, Attention: Austin W. Marxe.
Notices delivered personally shall be deemed given as of actual receipt; notices
sent via facsimile transmission shall be deemed given as of one business day
following receipt by the sender of written confirmation of transmission thereof;
notices sent via overnight courier shall be deemed given as of one business day
following sending; and notices mailed shall be deemed given as of five business
days after proper mailing. A party may change his or its address by written
notice in accordance with this Section 8(h).
<PAGE> 29
29
(h) Amendments and Waivers. Except as otherwise provided herein,
this Agreement may not be amended, and no term of the Agreement may be waived,
except pursuant to the written consent of the Company and the Investor.
(i) Severability. If one or more provisions of this Agreement
shall be held to be unenforceable under applicable law, such provisions shall be
excluded from this Agreement to the extent unenforceable and the balance of this
Agreement shall be unaffected thereby and shall remain in full force and effect
to the fullest extent permitted by law.
(j) Expenses. Except as otherwise provided herein, the parties
hereto shall pay their own costs and expenses.
(k) Publicity. The parties shall consult with each other, to the
extent practicable, as to the form and content of any press releases and other
third party communications or disclosures relating to this Agreement or the
transactions contemplated hereby, and shall use reasonable efforts, acting in
good faith, to agree upon disclosure which shall be satisfactory to both
parties.
(l) Headings. The headings of this Agreement are for convenience
of reference and shall not form a part of, or affect the interpretation of, this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
PLANET POLYMER TECHNOLOGIES, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
<PAGE> 30
30
SPECIAL SITUATIONS PRIVATE EQUITY FUND, L.P.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address: 153 E. 53rd Street
51st Floor
New York, New York 10022
<PAGE> 31
EXHIBIT A
FORM OF WARRANT
<PAGE> 32
EXHIBIT B
CERTIFICATE OF DETERMINATION
<PAGE> 33
EXHIBIT C
SCHEDULE OF EXCEPTIONS
<PAGE> 34
EXHIBIT D
OPINION OF COUNSEL TO THE COMPANY
<PAGE> 35
SCHEDULE 3(e)
Capitalization
<PAGE> 36
SCHEDULE 5(c)
Use of Proceeds
<PAGE> 1
EXHIBIT 99.2
------------------------------
WARRANT TO PURCHASE COMMON STOCK
OF
PLANET POLYMER TECHNOLOGIES, INC.
------------------------------
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") OR UNDER ANY STATE SECURITIES LAWS.
THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED EXCEPT AS
PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. UNLESS THE SECURITIES ARE SOLD
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR
RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.
FOR VALUE RECEIVED, SPECIAL SITUATIONS PRIVATE EQUITY FUND, L.P.,
or assigns (the "Holder"), is entitled to purchase, subject to the provisions of
this Warrant, from PLANET POLYMER TECHNOLOGIES, INC., a California corporation
(the "Company"), up to 375,000 shares of Common Stock, without par value, of the
Company ("Common Stock") at any time or from time to time during the period
commencing on the date hereof through and including September __, 2002 (the
"Termination Date"), at a price per share equal to $2.75 (the "Exercise Price").
The number of shares of Common Stock to be received upon the exercise of this
Warrant and the Exercise Price may be adjusted from time to time as hereinafter
set forth. The shares of Common Stock deliverable upon any exercise of this
Warrant are hereinafter sometimes referred to as "Warrant Shares". This Warrant
is issued by the Company pursuant to the Securities Purchase Agreement of even
date
<PAGE> 2
2
herewith (the "Purchase Agreement") between the Company and Holder and shall be
entitled to the rights set forth therein, including certain registration rights
relating to the Warrant Shares.
(a) EXERCISE OF WARRANT. Subject to paragraph (l) hereof, this Warrant
may be exercised in whole or in part at any time or from time to time until the
Termination Date; provided, however, that if the date of exercise shall be a day
on which banking institutions in the State of New York shall be authorized by
law to close, then the Warrant shall be exercisable on the next succeeding day
which shall not be such a day. This Warrant may be exercised by presentation and
surrender hereof to the Company at its principal office, or at the office of its
stock transfer agent, if any, with the Purchase Form annexed hereto duly
executed and accompanied by payment of the Exercise Price for the number of
Warrant Shares specified in such Form. As soon as practicable after each such
exercise, but not later than two (2) days following the date of such exercise,
the Company shall issue and deliver to the Holder a certificate or certificates
for the Warrant Shares issuable upon such exercise, registered in the name of
the Holder or its designee. If this Warrant shall be exercised in part, the
Company shall, upon surrender of the Warrant for cancellation, execute and
deliver a new Warrant evidencing the rights of the Holder thereof to purchase
the balance of the Warrant Shares purchasable hereunder. Upon receipt by the
Company of the Warrant at its office, or by the stock transfer agent of the
Company at its office, in proper form for exercise and accompanied by proper
payment, the Holder shall be deemed to be the holder of record of the Warrant
Shares issuable upon such exercise, notwithstanding that the stock transfer
books of the Company shall then be closed or that certificates representing such
shares of Common Stock shall not then have been physically delivered to the
Holder.
(b) RESERVATION OF SHARES. The Company covenants and agrees that it
shall at all times reserve for issuance and delivery upon exercise of the
Warrant such number of shares of Common Stock as shall be required for issuance
and delivery upon exercise of the Warrant. In addition, the Company further
covenants and agrees that all Warrant Shares, upon issuance, shall
<PAGE> 3
3
be duly and validly issued, fully paid and non-assessable and no personal
liability shall attach to the holder thereof.
(c) FRACTIONAL SHARES. No fractional shares of Common Stock shall be
issued upon exercise of this Warrant. All fractional shares shall be eliminated
by rounding any fraction to the nearest whole number of shares of Common Stock.
(d) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant
shall be exchangeable, without expense, at the option of the Holder, upon
presentation and surrender hereof to the Company or at the office of its stock
transfer agent, if any, for other Warrants of different denominations entitling
the Holder thereof to purchase in the aggregate the same number of shares of
Common Stock purchasable hereunder. Upon surrender of this Warrant to the
Company at its principal office or at the office of its stock transfer agent, if
any, with the Assignment Form annexed hereto duly executed and funds sufficient
to pay any transfer tax, the Company, without charge, shall execute and deliver
new Warrants in the name of the assignee named in such instrument of assignment
and this Warrant shall be cancelled promptly, provided that the Company shall
receive from the Holder an opinion of counsel that such assignment, as
contemplated by the Holder, shall not violate applicable Federal or state
securities laws. Such opinion (in form and substance) shall be reasonably
satisfactory to the Company. This Warrant may be divided or combined with other
Warrants which carry the same rights upon presentation hereof at the principal
office of the Company or at the office of its stock transfer agent, if any,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued and signed by the Holder hereof. The term
"Warrants" as used herein shall include any warrants into which this Warrant may
be divided or exchanged. Upon receipt by the Company of evidence satisfactory to
it of the loss, theft, destruction or mutilation of this Warrant, and (in the
case of loss, theft or destruction) of reasonably satisfactory indemnification,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
shall execute and deliver a new Warrant of like tenor and date.
<PAGE> 4
4
(e) RIGHTS OF HOLDER. The Holder shall not, until exercise hereof, be
entitled to any rights of a shareholder in the Company, either at law or equity,
and the rights of the Holder shall be limited to those expressed herein and
shall not be enforceable against the Company except to the extent set forth
herein.
(f) ANTI-DILUTION PROVISIONS. The Exercise Price in effect at any time
and the number and kind of securities purchasable upon the exercise of this
Warrant shall be subject to adjustment from time to time upon the happening of
any of the following events:
(i) In the event the Company shall issue or sell any shares of
Common Stock (except as provided in paragraph (f)(v) hereof) for a
consideration per share less than the greater of (A) the Exercise Price
in effect immediately prior to such issue or sale and (B) eighty-five
percent (85%) of the Market Price (as defined in paragraph (f)(ii)(G)
hereof) on the date of 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 greater of the
Exercise Price then in effect or, if such shares of Common Stock shall
have been issued for a consideration per share less than eighty-five
percent (85%) of the Market Price on the date of issuance or sale, the
current Market Price, 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 paragraph (f)(i),
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.
<PAGE> 5
5
(ii) For the purposes of paragraph (f)(i) above, the following
subparagraphs (A) to (G), 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 greater of (x) the Exercise Price in effect
immediately prior to the time of the issue or sale of such rights
or options and (y) eighty-five percent (85%) of the Market Price
at the time of such issue or sale, 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
<PAGE> 6
6
options) be deemed to be outstanding and to have been issued for
such price per share, and except as provided in paragraph
(f)(iv), 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.
(B) If at any time the Company shall issue or sell any
Convertible Securities, whether or not the rights to exchange or
convert thereunder shall be immediately exercisable, and the
price per share for which Common Stock shall be issuable upon
such conversion or exchange (determined by dividing (1) the total
amount received or receivable by the Company as consideration for
the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any,
payable to the Company upon the conversion or exchange thereof,
by (2) the total number of shares of Common Stock issuable upon
the conversion or exchange of all such Convertible Securities)
shall be less than the greater of (x) the Exercise Price in
effect immediately prior to the time of such issue or sale and
(y) eighty-five percent (85%) of the Market Price at the time of
such issue or sale, then the total number of shares of Common
Stock issuable upon conversion or exchange of all such
Convertible Securities shall (as of the date of the issue or sale
of such Convertible Securities) be deemed to be outstanding and
to have been issued for such price per share, and, except as
provided in paragraph (f)(iv) no further adjustments of the
Exercise Price shall be made upon the actual issue of such Common
Stock upon conversion or exchange of such Convertible Securities.
In addition, if any issue or sale of such Convertible Securities
shall be made upon exercise of any rights to subscribe for or to
purchase or any option to purchase any such Convertible
Securities for which adjustments of the Exercise Price shall have
been or shall be made pursuant to other provisions of this
<PAGE> 7
7
paragraph (f)(ii), no further adjustment of the Exercise Price
shall be made by reason of such issue or sale.
(C) If at any time the Company shall declare and pay a
dividend or make any other distribution upon the Common Stock
payable in Common Stock or Convertible Securities, any such
Common Stock or Convertible Securities, as the case may be,
issuable in payment of such dividend or distribution shall be
deemed to have been issued or sold without consideration.
(D) 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 received by the Company therefor, without
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 received by the Company shall
be deemed to be the fair value of such consideration as
determined by the Board of Directors, without 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 fair value of the net assets of such merged corporation as
determined by the Board of Directors after deducting therefrom
all cash and other
<PAGE> 8
8
consideration (if any) paid by the Company in connection with
such merger.
(E) If at any time the Company shall take a record of the
holders of Common Stock for the purpose of entitling them (1) to
receive a dividend or other distribution payable in Common Stock
or in Convertible Securities, or (2) to subscribe for or purchase
Common Stock or Convertible Securities, then such record date
shall be deemed to be the date of the issue or sale of the shares
of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other
distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(F) 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.
(G) For purposes hereof, the "Market Price" shall mean the
closing bid price of the Common Stock on The Nasdaq SmallCap
Market, The Nasdaq National Market or the principal exchange upon
which the Common Stock may be listed, or, if the Common Stock
shall not then be quoted on The Nasdaq SmallCap Market or The
Nasdaq National Market or listed on a national securities
exchange, but shall otherwise be traded in the over-the-counter
market, on such over-the-counter market, in each case on the day
prior to the date of determination of such "Market Price." If at
any time the Common Stock shall not be quoted on The Nasdaq
SmallCap Market or the Nasdaq National Market, listed on a
national securities exchange, or otherwise traded in the
over-the-counter market, the "Market Price" of a share of Common
Stock shall be deemed to be the higher of (x) the book value
thereof (as determined by any firm of independent public
accountants of nationally recognized standing selected by the
Board of Directors) as of the
<PAGE> 9
9
last day of any month ending within 60 days preceding the date of
determination, or (y) the fair value thereof (as determined in
good faith by the Board of Directors) as of a date which shall be
within 15 days of the date of determination.
(iii) In case at any time the Company shall subdivide its
outstanding shares of Common Stock into a greater number of shares, the
Exercise Price in effect immediately prior to such subdivision shall be
proportionately reduced. In case at any time the outstanding shares of
Common Stock of the Company shall be combined into a smaller number of
shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased. Any adjustment under
this paragraph (f)(iii) shall become effective at the close of business
on the date the subdivision or combination shall become effective.
(iv) If the purchase or exercise price provided for in any right
or option referred to in paragraph (f)(ii)(A), or the rate at which any
Convertible Securities referred to in paragraph (f)(ii)(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 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.
<PAGE> 10
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(v) 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 the date hereof;
(B) the issuance of shares of Common Stock, pursuant to
the exercise of the options referred to in paragraph (f)(v)(A)
above or the exercise of any other options or warrants
outstanding as of the date hereof;
(C) the issuance of shares of the Company's Series A
Convertible Preferred Stock (the "Preferred Shares") under the
Purchase Agreement or of shares of Common Stock upon the
conversion of any such shares of the Company's Series A
Convertible Preferred Stock or upon the exercise of any of the
Warrants; or
(D) the issuance of warrants to purchase up to 100,000
shares of Common Stock to LBC Capital Resources, Inc. ("LBC") as
a portion of its finder's fee pursuant to that certain letter
agreement, dated May 9, 1997, between LBC and the Company and the
issuance of shares of Common Stock upon the exercise thereof.
(vi) Whenever the Exercise Price payable upon exercise of this
Warrant shall be adjusted pursuant to this paragraph (f), the number of
Warrant Shares purchasable upon exercise hereof simultaneously shall be
adjusted by multiplying the number of Warrant Shares issuable
immediately prior to such adjustment by the Exercise Price in effect
immediately prior to such adjustment and dividing the product so
obtained by the Exercise Price, as adjusted.
(g) OFFICER'S CERTIFICATE. The Company shall give notice to each
record holder of the Warrants of any event or
<PAGE> 11
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transaction that shall result in an adjustment in the Exercise Price, within
five (5) business days thereof, at such Holder's address as the same appears on
the books of the Company, including a computation of such adjustment and any
adjustment in the number of Warrant Shares for which such Holder may exercise
such Holder's Warrant and any further information as shall be necessary to
confirm the computation of such adjustments.
(h) CERTAIN NOTICES TO HOLDERS. So long as this Warrant shall be
outstanding, if (i) the Company shall pay any dividend or make any distribution
upon the Common Stock, (ii) the Company shall offer to the holders of the Common
Stock for subscription or purchase by them any share of any class or any other
rights or (iii) any capital reorganization of the Company, reclassification of
the capital stock of the Company, consolidation, merger or other business
combination of the Company with or into another corporation, sale, lease or
transfer of all or substantially all of the assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then in any such case, the Company shall cause
to be mailed by certified mail to the Holder, at least 20 days prior to the date
specified in (x) or (y) below, as the case may be, a notice containing a brief
description of the proposed action and stating the date on which (x) a record
date shall be established for the purpose of such dividend, distribution or
rights or (y) such reclassification, reorganization, consolidation, merger,
conveyance, lease, dissolution, liquidation or winding up shall take place and
the date, if any to be fixed, as of which the holders of Common Stock or other
securities shall receive cash or other property deliverable upon such
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation or winding up.
(i) RECLASSIFICATION, REORGANIZATION, MERGER OR OTHER BUSINESS
COMBINATION. In case of any reclassification, capital reorganization or other
change of outstanding shares of Common Stock, or in case of any consolidation,
merger or other business combination of the Company with or into another
corporation or other entity (other than a merger with a subsidiary in which
merger the Company is the continuing corporation and which shall
<PAGE> 12
12
not result in any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the class issuable upon exercise of this
Warrant) or in case of any sale, lease or conveyance to another corporation or
other entity of all or substantially all of the assets of the Company (other
than a sale of all or substantially all of the assets of Deltco of Wisconsin,
Inc., a Wisconsin corporation), the Company shall cause effective provisions to
be made so that the Holder, by exercising this Warrant at any time after the
consummation of such reclassification, change, consolidation, merger, sale or
conveyance, shall be entitled to receive the stock or other securities or
property to which such Holder would have been entitled upon such consummation if
such Holder shall have exercised this Warrant immediately prior to such
consummation. Any such provision shall include provisions for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Warrant. The foregoing provisions of this paragraph (i) shall
similarly apply to successive reclassifications, capital reorganizations and
changes of shares of Common Stock and to successive consolidations, mergers,
sales or conveyances. In the event that, in connection with any such capital
reorganization or reclassification, consolidation, merger, sale or conveyance,
additional shares of Common Stock shall be issued in exchange, conversion,
substitution or payment, in whole or in part, for a security of the Company
other than Common Stock, any such issue shall be treated as an issue of Common
Stock subject to the provisions of paragraph (f) hereof.
(j) BUY-IN RIGHTS. In the event that (i)(A) the Company shall fail for
any reason to deliver shares of Common Stock to a Holder (other than for reasons
within the control of such Holder) upon any exercise of this Warrant within the
period specified in paragraph (a) hereof or (B) the Company shall fail to remove
any restrictive legend on any certificates evidencing such shares of the Common
Stock as and when required under Section 5(i) of the Purchase Agreement and (ii)
thereafter, such Holder shall purchase (in an open market transaction or
otherwise) shares of Common Stock to make delivery in satisfaction of a sale by
such Holder of (A) the shares of Common Stock which such Holder anticipated
receiving upon such exercise, or (B) such unlegended
<PAGE> 13
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shares of Common Stock, as the case may be (in each case, the "Sold Shares"),
then the Company shall pay to such Holder (in addition to any other remedies
available to the Holder) the amount by which (x) such Holder's total purchase
price (including brokerage commissions, if any) for the shares of Common Stock
so purchased shall exceed (y) the net proceeds received by such Holder from the
sale of the Sold Shares. The Company shall make any payments required pursuant
to this paragraph (j) within five days after receipt of written notice from the
Holder setting forth the calculation of the amount due hereunder. The provisions
of this paragraph (j) shall not apply with respect to any exercise of this
Warrant prior to December __, 1997.
(k) REDEMPTION. At any time after six months following the date
hereof, the Company, upon notice given to each Holder, may elect to redeem all
of the outstanding Warrants at a price per Warrant equal to $0.10 for each
Warrant Share for which each such Holder's Warrants may then be exercised, if,
but only if: (i) the Market Price shall have been at least $6.00 (which amount
shall be adjusted in the manner set forth in paragraph (f)(iii) hereof) on each
of the ten business days immediately preceding such notice, (ii) the
registration statement required to be filed under Section 4(b) of the Purchase
Agreement (the "Shelf Registration Statement") shall be effective and permit the
sale of all Warrant Shares for which such Warrants may then be exercised and
(iii) the Common Stock shall be listed and trading on The Nasdaq SmallCap
Market, The Nasdaq National Market or a national securities exchange. Any such
redemption shall be effective on the thirtieth day following the date of such
notice; provided, however, that a Holder of Warrants may elect at any time prior
to the effective date of redemption to exercise all or any portion of its
Warrants in accordance with the terms hereof; and provided, further, that the
Company's right to redeem shall be suspended during such thirty day period for
the number of days that all Warrant Shares may not be sold pursuant to an
effective registration statement for any reason whatsoever or the Common Stock
shall not be listed and trading on The Nasdaq SmallCap Market, The Nasdaq
National Market or a national securities exchange. The notice period shall then
be extended for a period of time equal to the number of days during the notice
period during which the Shelf Registration Statement shall not have
<PAGE> 14
14
permitted the sale of all Warrant Shares or the Common Stock shall not have been
so listed and trading. The redemption price shall be payable in full, in cash,
on the effective date of any redemption pursuant to this paragraph (k). A
redemption notice delivered by the Company pursuant to this paragraph (k) shall
be irrevocable.
(l) NASDAQ LIMITATIONS. Unless permitted by the applicable rules and
regulations of The Nasdaq SmallCap Market (or the principal securities exchange
on which the Common Stock shall be listed or traded if changed from The Nasdaq
SmallCap Market), the aggregate number of shares of Common Stock (i) issued or
issuable upon conversion of the Preferred Shares, (ii) issued as dividends on
the Preferred Shares under Section 2 of the Certificate of Determination
relating thereto, (iii) issued as Default Shares under Section 4(g) of the
Purchase Agreement, (iv) issued or issuable upon exercise of this Warrant and
(v) issued or issuable upon exercise of up to 100,000 of the warrants described
in paragraph (f)(v)(D) hereof shall not exceed the number of shares of Common
Stock that the Company can issue pursuant to Nasdaq Marketplace Rule
4310(c)(25)(H) (as amended as set forth in SEC Release No. 34-38469).
(m) GOVERNING LAW. This Warrant shall be governed by and construed in accordance
with the laws of the State of New York.
(n) NOTICES. Any notice required to be given or delivered to the
Company under the terms of this Warrant shall be in writing and addressed to the
Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to the Holder shall be in writing and
addressed to the Holder at the address indicated in the Purchase Agreement or to
such other address as such party may designate in writing from time to time to
the Company. All notices shall be deemed to have been given or delivered upon:
personal delivery; five (5) days after deposit in the United States mail by
certified or registered mail (return receipt requested); one (1) business day
after deposit with any nationally recognized overnight courier (prepaid); or one
(1) business day after transmission by facsimile and receipt by the sender of
facsimile confirmation.
<PAGE> 15
15
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed and attested by the undersigned, each being duly authorized, as of the
date below.
Dated: September __, 1997
PLANET POLYMER TECHNOLOGIES, INC.
By
------------------------------------------------
Name:
Title:
Attest:
- ------------------------------------------
, Secretary
<PAGE> 16
PURCHASE FORM
The undersigned hereby irrevocably elects to exercise the Warrant
to the extent of purchasing _______ shares of Common Stock and hereby makes
payment of $____________ in payment of the Exercise Price.
--------------
ASSIGNMENT FORM
FOR VALUE RECEIVED, _____________ hereby sells, assigns and
transfers unto
Name:_______________________ Social Security No.
(print in block letters) or Federal Taxpayer Identification
No.:_________
Address:__________________________________________________
the right to purchase Common Stock represented by this Warrant to the extent of
______ shares of Common Stock as to which such right is exercisable and does
hereby irrevocably constitute and appoint ________________, as Attorney, to
transfer the same on the books of the Company with full power of substitution.
Date ________________, 19__ Signature__________________
Name:
Title:
