<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Planet Polymer Technologies, Inc.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box)
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2. Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
4. Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
5. Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
6. Amount Previously Paid:
- --------------------------------------------------------------------------------
7. Form, Schedule or Registration Statement No.:
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8. Filing Party:
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9. Date Filed:
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<PAGE> 2
PLANET POLYMER TECHNOLOGIES, INC.
9985 BUSINESSPARK AVENUE, SUITE A
SAN DIEGO, CALIFORNIA 92131
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 6, 1999
Dear Shareholders:
NOTICE IS HEREBY GIVEN that a Special Meeting (the "Special Meeting") of
Shareholders of Planet Polymer Technologies, Inc., a California corporation (the
"Company"), will be held on January 6, 1999 at the offices of the Company
located at 9985 Businesspark Avenue, Suite A, San Diego, California, 92131 at
10:00 a.m. local time for the following purpose:
1. To approve the issuance of securities of the Company exceeding
twenty percent of the outstanding Common Stock of the Company.
The foregoing item of business is more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on December 9, 1998,
as the record date for the determination of shareholders entitled to notice of
and to vote at the Special Meeting and at any adjournment or postponement
thereof.
By Order of the Board of Directors
/s/ ROBERT J. PETCAVICH
------------------------------------
Robert J. Petcavich
Chairman and Chief Executive Officer
San Diego, California
December 14, 1998
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE> 3
PLANET POLYMER TECHNOLOGIES, INC.
9985 BUSINESSPARK AVENUE, SUITE A
SAN DIEGO, CALIFORNIA 92131
------------------------
PROXY STATEMENT
------------------------
FOR SPECIAL MEETING OF SHAREHOLDERS
JANUARY 6, 1999
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
Planet Polymer Technologies, Inc., a California corporation (the "Company"), for
use at a Special Meeting of Shareholders to be held on January 6, 1999, at 10:00
a.m. local time (the "Special Meeting"), or at any adjournment, continuation or
postponement thereof, for the purposes set forth herein and in the accompanying
Notice of Special Meeting. The Special Meeting will be held at the offices of
the Company located at 9985 Businesspark Avenue, Suite A, San Diego, California
92131. The Company intends to mail this proxy statement and accompanying proxy
card on or about December 14, 1998, to all shareholders entitled to vote at the
Special Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to shareholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of Common Stock beneficially owned by
others to forward to such beneficial owners. The Company may reimburse persons
representing beneficial owners of Common Stock for their costs of forwarding
solicitation materials to such beneficial owners. Original solicitation of
proxies by mail may be supplemented by telephone, telegram or personal
solicitation by directors, officers or other regular employees of the Company.
No additional compensation will be paid to directors, officers or other regular
employees for such services.
QUORUM REQUIREMENT
Only holders of record of Common Stock at the close of business on December
9, 1998 will be entitled to notice of and to vote at the Special Meeting. At the
close of business on December 9, 1998 the Company had outstanding and entitled
to vote 5,332,491 shares of Common Stock (the "Common Stock") and 500,000 shares
of Series A Preferred Stock (the "Series A Stock"), constituting all of the
outstanding voting stock of the Company.
The holders of a majority of the votes represented by the shares of Common
Stock and Series A Stock outstanding and entitled to vote at the Special Meeting
shall constitute a quorum for the transaction of business at the Special
Meeting. Shares of Common Stock and Series A Stock represented in person or by
proxy (including shares which abstain or otherwise do not vote with respect to
the matters presented for shareholder approval) will be counted for purposes of
determining whether a quorum is present at the Special Meeting.
VOTES REQUIRED
Each holder of record of Common Stock and Series A Stock on such date will
be entitled to one vote for each share held on all matters to be voted upon at
the Special Meeting.
<PAGE> 4
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. The affirmative vote of the holders of shares
representing a majority of the votes represented by the holders of the Common
Stock and Series A Stock, voting together as a single class, present and
entitled to vote at the meeting on the matter is required for the approval of
the issuance of securities of the Company exceeding twenty percent of the
outstanding Common Stock of the Company, as described herein (the "Proposal").
Shares which abstain from voting as to the Proposal, and shares held in "street
name" by a broker or nominee who indicates on a proxy that it does not have
discretionary authority to vote as to the Proposal, will not be voted in favor
of the Proposal, and also will not be counted as votes cast on the Proposal.
Accordingly, abstentions and "broker non-votes" are not counted for any purpose
in determining whether the Proposal is approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 9985
Businesspark Avenue, Suite A, San Diego, California, 92131, a written notice of
revocation or a duly executed proxy bearing a later date, or it may be revoked
by attending the meeting and voting in person. Attendance at the meeting will
not, by itself, revoke a proxy.
SHAREHOLDER PROPOSALS
The deadline for submitting a shareholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 1999 Annual
Meeting of Shareholders (the "Annual Meeting") pursuant to Rule 14a-8,
"Shareholder Proposals," of the Securities and Exchange Commission is December
18, 1998. The deadline for submitting a shareholder proposal or a nomination for
director to be voted upon at the Annual Meeting, but that will not be included
in such proxy statement and proxy is March 2, 1999.
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<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of December 9, 1998 by: (i) each executive
officer and director; (ii) all executive officers and directors of the Company
as a group; and (iii) all those known by the Company to be beneficial owners of
more than five percent of its Common Stock.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
----------------------------
NUMBER OF PERCENTAGE OF
TITLE OF CLASS BENEFICIAL OWNER SHARES(1) CLASS OWNED(2)
-------------- ---------------- ---------- --------------
<S> <C> <C> <C>
Common Special Situations Private Equity Fund, L.P.(3) 909,184 17.05%
153 East 53rd Street, 51st Floor
New York, NY 10022
Common Robert J. Petcavich, Ph.D.(4) 693,206 12.78%
9985 Businesspark Avenue, Suite A
San Diego, CA 92131
Common Rebecca A. Petcavich(5) 573,593 10.71%
6832 Town View Lane
San Diego, CA 92120
Common Brian To(6) 646,111 11.82%
Tarrenz, Inc.
201 Harrison St., #607
San Francisco, CA 94105
Common H.M. Busby(7) 242,592 4.54%
Common Thomas M. Connelly(8) 28,700 *
Common Michael M. Coleman, Ph.D.(9) 16,200 *
Common Thomas A. Landshof(10) 9,000 *
Common All executive officers and directors as a group(11) 989,698 18.05%
Series A Special Situations Private Equity Fund, L.P. 500,000 100.00%
153 East 53rd Street, 51st Floor
New York, NY 10022
</TABLE>
- ---------------
* Less than one percent.
(1) This table is based upon information supplied by officers and directors and
with respect to the principal shareholders, information supplied by the
Company's transfer agent Oxford Transfer & Registrar and Schedules 13D and
13G filed with the Securities and Exchange Commission (the "SEC"). Unless
otherwise indicated in the footnotes to this table and subject to community
property laws where applicable, the Company believes that each of the
shareholders named in this table has sole voting and investment power with
respect to the shares indicated as beneficially owned.
(2) Percentage ownership of Common Stock is based upon 5,332,491 shares
outstanding on December 9, 1998, and any shares issuable pursuant to
securities convertible into or exchangeable for shares of Common Stock by
the person or group in question on December 9, 1998 or within 60 days
thereafter. Percentage of Series A Convertible Preferred Stock is based
upon 500,000 shares of Series A Convertible Preferred Stock outstanding as
of December 9, 1998.
(3) Includes 500,000 shares of Common Stock issuable upon conversion of the
500,000 shares of Series A Convertible Preferred Stock and 375,000 shares
issuable within 60 days of December 9, 1998.
(4) Includes 93,607 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days of December 9, 1998.
(5) Includes 21,694 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days of December 9, 1998.
(6) Includes 66,137 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days of December 9, 1998. Also included are
66,120 shares of Common Stock issuable upon exercise of options that are
exercisable by Tarrenz, Inc. within 60 days of December 9, 1998, and 72,124
shares
3
<PAGE> 6
held in the name of Tarrenz, Inc. Mr. To is the Managing Director and a
principal shareholder of Tarrenz, Inc..
(7) Includes 12,200 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days of December 9, 1998.
(8) Includes 2,000 shares held by Mr. Connelly's wife and 22,200 shares of
Common Stock issuable upon exercise of options that are exercisable within
60 days of December 9, 1998.
(9) Includes 12,200 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days of December 9, 1998.
(10) Includes 9,000 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days of December 9, 1998.
(11) Includes 149,207 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days of December 9, 1998.
PROPOSAL
THE APPROVAL OF THE ISSUANCE OF SECURITIES
EXCEEDING 20% OF THE OUTSTANDING COMMON STOCK OF THE COMPANY
The By-laws of the National Association of Securities Dealers, Inc. (the
"NASD") require the Company to obtain shareholder approval (i) in connection
with a transaction other than a public offering involving the sale or issuance
by the Company of Common Stock (or securities convertible into or exercisable
for Common Stock) equal to 20 percent or more of the Common Stock (or securities
convertible or exercisable for Common Stock) or 20 percent or more of the voting
power outstanding before the issuance for less than the greater of book value or
market value of the Common Stock and (ii) in connection with a transaction
involving the issuance of securities of the Company when such issuance will
result in a change of control of the Company.
On November 12, 1998, the Company entered into a Stock Purchase Agreement
(the "Agreement") with Agway Holdings, Inc., a Delaware corporation ("Agway").
Upon satisfaction of the conditions set forth in the Agreement (including
shareholder approval of the Proposal) Agway will purchase, pursuant to the
Agreement, an aggregate of 1,000,000 shares of the Company's Common Stock at a
price of $1.00 per share for an aggregate purchase price of $1,000,000. Upon the
sale and issuance of the 1,000,000 shares of Common Stock to Agway, Agway will
own approximately 15.79% of the issued and outstanding shares of the Company's
Common Stock, which is equal to approximately 14.56% of the issued and
outstanding shares of Common Stock including shares of Series A Stock on an as
converted basis, and approximately 12.30% of the issued and outstanding shares
of Common Stock including shares of Series A Stock on an as converted basis and
assuming the exercise of all issued and outstanding options and warrants.
On the closing date of the Agreement (the "Closing Date"), the Company will
issue to Agway warrants to purchase an aggregate of up to an additional
2,000,000 shares of its Common Stock at an exercise price of $1.00 per share
(collectively, the "Warrants"), for an aggregate purchase price of $2,000,000 if
exercised in full. Upon the sale and issuance of the 1,000,000 shares of Common
Stock to Agway, and upon Agway's exercise of the Warrants in full, Agway will
own approximately 36% of the issued and outstanding shares of Common Stock,
which is equal to approximately 33.63% of the issued and outstanding shares of
Common Stock including shares of Series A Stock on an as converted basis, and
approximately 28.94% of the issued and outstanding shares of Common Stock
including shares of Series A Stock on an as converted basis and assuming the
exercise of all issued and outstanding options and warrants.
The Warrants may be exercised at any time after the Closing Date and until
the date which is twenty-four (24) months after the Closing Date as to all or
any part of the 2,000,000 shares of Common Stock subject to the Warrant.
Notwithstanding this fact, the holder of the Warrants must exercise at least
1,000,000 of the shares of Common Stock subject to the Warrant prior to the date
which is twelve (12) months after the Closing Date or else the remaining
Warrants available for purchase, but not acquired by the holder of the
4
<PAGE> 7
Warrant, will be terminated. In addition, Agway has been granted certain
"anti-dilution" rights in order to allow it, through the purchase of additional
shares of Common Stock at the then current market price, to maintain its
percentage voting power with respect to the Company. Moreover, the Warrant
provides for an adjustment to the number and/or exercise price of the shares of
Common Stock issuable upon exercise of the Warrant in certain events.
In connection with the proposed purchase by Agway of the Common Stock as
described above, the Company has granted Agway registration rights and has
agreed to register for resale under the Securities Act of 1993, as amended (the
"Act") the shares of Common Stock that will be issued pursuant to the Agreement
and the shares of Common Stock issuable upon exercise of the Warrant.
Contemporaneously with the execution and delivery of the Agreement, the
Company and Agway entered into an agreement relating to the funding by Agway of
an evaluation of the feasibility (the "Feasibility Agreement") of the Company's
polymer coating technology for use in agricultural products (other than
fertilizers and certain biological products) and food products and a license
agreement (the "License Agreement," and, together with the Feasibility Agreement
are referred to hereafter as the "Ancillary Agreements") pursuant to which Agway
obtained an exclusive worldwide license to distribute all current and future
products that utilize the Company's polymer coating technology for use in
agricultural products (other than fertilizers and certain biological products)
and food products. In the event that (i) the shareholders do not approve this
Proposal or (ii) the Closing Date of the Agreement does not occur on or before
January 31, 1999 (or such other date as the parties shall mutually agree), the
Agreement and, at the option of Agway in its sole discretion, the Ancillary
Agreements, shall terminate at the close of business on such date without
liability of any party to any other party. The transactions contemplated by the
Agreement, the Warrants, the Registration Rights Agreement and the Ancillary
Agreements have been approved by the Board of Directors of the Company.
In the event that Agway does not purchase the Common Stock as of December
31, 1998, Agway has agreed to provide a line of credit to the Company of up to
an aggregate of $480,000. Should the Company draw upon such line of credit, all
outstanding principal plus accrued interest will be due upon the earlier of (i)
the Closing Date or (ii) after April 30, 1999, on demand by Agway.
The Company's authorized capital stock currently consists of 20,000,000
shares of Common Stock, of which 5,332,491 shares are issued and outstanding as
of December 9, 1998, and 5,000,000 shares of Preferred Stock, of which 750,000
shares have been designated Series A Preferred Stock, of which 500,000 are
issued and outstanding on the date of this Proxy Statement. All outstanding
shares of Common Stock and Series A Stock are fully paid and nonassessable. The
holders of Common Stock and Series A Stock are entitled to one vote for each
share held of record on all matters voted upon by shareholders and may cumulate
votes for the election of directors. Subject to the rights of the Series A Stock
and any other future series or class of Preferred Stock, each share of
outstanding Common Stock is entitled to participate equally in any distribution
of net assets made to the shareholders in liquidation, dissolution, or winding
up of the Company and is entitled to participate equally in dividends as and
when declared by the Board of Directors. There are no redemption, sinking fund,
conversion or preemptive rights with respect to the shares of Common Stock. All
shares of Common Stock have equal rights and preferences.
The descriptions of the terms of the Agreement and the Warrant are
qualified in their entirety by the express provisions of such documents which
are hereby incorporated by reference. The Agreement is attached hereto as Annex
A and the Warrant Agreement is attached hereto as Annex B.
The proceeds from the sale of capital stock of the Company pursuant to the
Agreement will be used by the Company for working capital purposes.
As noted above, the NASD requires shareholder approval in a transaction
where the issuance of securities will result in a change of control of the
Company. The NASD deems the issuance of securities equal to or exceeding 30% of
the issued and outstanding Common Stock (including securities convertible or
exercisable for Common Stock) to be a change of control of the Company. Upon the
purchase of the shares of Common Stock pursuant to the Agreement, Agway will be
able to vote equally with the other shareholders of
5
<PAGE> 8
the Company on all matters voted upon by shareholders and may cumulate votes for
the election of directors. Accordingly, Agway will be able to effectively
exercise significant influence, as the Company's largest shareholder, over the
Company's Board of Directors (the "Board") and management. If Agway were to
exercise the Warrants in full and cumulate its votes for the election of
directors at the next Annual Meeting of Shareholders, Agway would be able to
elect up to two (2) directors to the Board, assuming that there are five (5)
directors elected at the next annual meeting and based upon the number of shares
of capital stock that are issued and outstanding as of the date hereof after
taking account of shares to be issued to Agway on the Closing Date.
The Company is required to make anti-dilution adjustments to certain of its
outstanding warrants and the Series A Stock in the event the Company issues
additional securities below the exercise price of such outstanding warrants or
the issue price of the Series A Stock. Such anti-dilution adjustments include
adjusting the exercise price or the conversion price, as applicable, of the
outstanding warrants and the Series A Stock, respectively. If the shareholders
approve this Proposal, and Agway purchases the Common Stock and exercises the
Warrants in full, the Company will be required to issue approximately 322,466
shares of Common Stock upon the exercise of certain of its outstanding warrants
and approximately 87,639 shares of Common Stock upon the conversion of the
Series A Stock.
The Company was required to make such anti-dilution adjustments to one of
its largest shareholders. On September 24, 1997, the Company entered into that
certain Securities Purchase Agreement (the "Purchase Agreement") with Special
Situations Private Equity Fund, L.P. ("Special Situations") pursuant to which
the Company sold and issued 500,000 shares of Series A Stock and a warrant to
purchase up to 375,000 shares of Common Stock. Under the terms of the Purchase
Agreement, Special Situations is entitled to receive, quarterly, a dividend in
Common Stock or cash, equal to an amount tied to the liquidation preference of
the Series A Stock and the average trading price of the Company's Common Stock
prior to the distribution date. As a result, as a condition to consenting to the
Agreement, certain changes were made to the Purchase Agreement. In the event
Agway purchases the Common Stock and exercises the Warrants in full, the shares
of Common Stock issuable to Special Situations upon conversion of its Series A
Stock and upon exercise of its warrant, together with shares of Common Stock
issued as dividends pursuant to the Purchase Agreement may exceed twenty percent
(20%) of the issued and outstanding shares of the Company's Common Stock as of
September 24, 1997. Shareholders are being asked to approve the change to the
Purchase Agreement which would allow the Company to potentially issue to Special
Situations over twenty percent (20%) of the issued and outstanding shares of the
Company's Common Stock as of September 24, 1997 as a result of the anti-
dilution adjustments as described herein.
On August 3, 1998, the last full trading day prior to the date on which
representatives of the Company and Agway reached tentative agreement on the
terms of the Agreement, the closing sale price of the Company's Common Stock, as
reported by the Nasdaq National Market, was $1.00 per share. On November 11,
1998, the last full trading day prior to the execution and delivery of the
Agreement, the closing sale price of the Company's Common Stock, as reported by
the Nasdaq National Market, was $0.8125 per share. Upon the Closing Date or the
date upon which the Warrants may be exercised, the price per share of Common
Stock may be greater than $1.00 per share.
6
<PAGE> 9
IF THE SHAREHOLDERS APPROVE THIS PROPOSAL, THE SHAREHOLDERS WILL BE
APPROVING THE SALE AND ISSUANCE OF 1,000,000 SHARES OF COMMON STOCK AND A
WARRANT TO PURCHASE UP TO AN ADDITIONAL 2,000,000 SHARES OF COMMON STOCK TO
AGWAY. AS A RESULT OF SUCH APPROVAL, THE SHAREHOLDERS WILL THEREBY APPROVE (I)
THE ISSUANCE OF SECURITIES OF THE COMPANY EXCEEDING TWENTY (20%) OF THE
OUTSTANDING COMMON STOCK OF THE COMPANY FOR LESS THAN THE GREATER OF BOOK VALUE
OR MARKET VALUE OF THE COMMON STOCK, (II) THE ISSUANCE OF SECURITIES OF THE
COMPANY WHICH RESULTS IN A CHANGE OF CONTROL OF THE COMPANY FOR PURPOSES OF THE
NASD, AND (III) THE POTENTIAL ISSUANCE TO SPECIAL SITUATIONS OF OVER TWENTY
PERCENT (20%) OF THE ISSUED AND OUTSTANDING SHARES OF THE COMPANY'S COMMON STOCK
AS OF SEPTEMBER 24, 1997, AS A RESULT OF ANTI-DILUTION ADJUSTMENTS AS DESCRIBED
ABOVE, FOR LESS THAN THE GREATER OF BOOK VALUE OR MARKET VALUE OF THE COMMON
STOCK.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THIS PROPOSAL.
CERTAIN TRANSACTIONS
Upon satisfaction of the conditions set forth in the Agreement (including
shareholder approval of the Proposal), the Company anticipates that one director
will be nominated as a representative of Agway for election to the Company's
Board of Directors at the 1999 Annual Meeting of Shareholders, and for
re-election to the Board of Directors on each proxy statement filed for each
subsequent meeting of the shareholders as his term expires.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Special Meeting.
By Order of the Board of Directors
/s/ ROBERT J. PETCAVICH
----------------------------
Robert J. Petcavich
Chairman and Chief Executive Officer
December 14, 1998
7
<PAGE> 10
ANNEX A
PLANET POLYMER TECHNOLOGIES, INC.
------------------------
STOCK PURCHASE AGREEMENT
------------------------
DATED AS OF NOVEMBER 12, 1998
<PAGE> 11
SUBSCRIPTION INSTRUCTIONS -- PLEASE READ CAREFULLY
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND HAVE NOT BEEN QUALIFIED UNDER THE SECURITIES LAWS OF
ANY STATE. THE SECURITIES CANNOT BE SOLD OR TRANSFERRED WITHOUT SUCH
REGISTRATION OR QUALIFICATION UNLESS AN EXEMPTION FROM SUCH REGISTRATION OR
QUALIFICATION IS THEN AVAILABLE.
PLANET POLYMER TECHNOLOGIES, INC.
------------------------
STOCK PURCHASE AGREEMENT
------------------------
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of November 12, 1998
by and among Planet Polymer Technologies, Inc., a California corporation with
headquarters located at 9985 Business Park Avenue, Suite A, San Diego,
California 92131 (the "Company") and Agway Holdings Inc., a Delaware corporation
("Buyer").
WHEREAS:
A. The Company and Buyer are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Rule 506 of
Regulation D ("Regulation D") as promulgated by the United States Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 Act");
B. Buyer wishes to purchase, upon the terms and conditions stated in this
Agreement, 1,000,000 newly issued shares (the "Shares") of the Company's common
stock (the "Common Stock"), no par value;
C. Buyer shall receive upon issuance of the Shares a warrant (the
"Warrant") to acquire up to 2,000,000 shares of Common Stock (the "Warrant
Shares" and, together with the Shares and the Warrant, the "Securities") at the
Per Share Price (defined below) during the one-and two-year periods immediately
following the closing date of the initial sale of Shares (the "Initial Closing
Date"), on the terms described below and as set forth more fully in the form of
Warrant attached hereto as Exhibit A; and
D. The Company will, in connection with the issuance of the Shares and the
Warrant Shares and pursuant to the terms of the Registration Rights Agreement
substantially in the form of Exhibit B attached hereto (the "Registration Rights
Agreement"), grant to Buyer certain rights to register for resale by Buyer the
Shares and the Warrant Shares under the 1933 Act and the rules and regulations
promulgated thereunder, and applicable state securities laws; and
E. Contemporaneously with the execution and delivery of this Agreement, the
parties hereto are executing and delivering an agreement relating to the funding
by Buyer of an evaluation of the feasibility of the Company's polymer coating
technology (the "Feasibility Agreement") and a license agreement (the "License
Agreement" and, together with the Feasibility Agreement and the Registration
Rights Agreement, the "Ancillary Agreements") pursuant to which Buyer will
obtain an exclusive worldwide license to distribute all current and future
products that utilize the Company's polymer coating technology for agricultural
and food-related purposes;
NOW THEREFORE, the Company and Buyer hereby agree as follows:
1. PURCHASE AND SALE OF SHARES.
a. Purchase of Shares. At the Initial Closing (defined below), the
Company shall issue and sell to Buyer, and Buyer shall purchase from the
Company, the Shares. The per share purchase price (the "Per
A-1
<PAGE> 12
Share Price") of the Shares shall be $1.00. The total purchase price (the
"Purchase Price") for Buyer's Shares shall be $1,000,000 (i.e., the number
of Shares to be purchased by Buyer multiplied by the Per Share Price). The
Shares shall be sold at the Initial Closing as hereinafter provided.
b. Closing. The initial closing (the "Initial Closing") of the
issuance and sale of the Shares shall occur on a date that is within three
(3) business days of the satisfaction (or waiver) of all conditions to
closing set forth in Sections 8 and 9 hereof (but in no event shall the
Initial Closing occur later than January 31, 1999). The date of the
occurrence of the Initial Closing shall be referred to herein as the
"Initial Closing Date."
c. Form of Payment. Buyer shall pay the Purchase Price by wire
transfer of immediately available United States Dollars on the Initial
Closing Date to:
<TABLE>
<S> <C>
Bank: Citibank New York
111 Wall Street, New York, NY 10005
ABA: 021000089
FBO: Morgan Stanley Dean Witter
Beneficiary Account: 40611172
For Further CR to: 212-032582-001
Account Name: Planet Polymer Technologies, Inc.
TIN: 33-0502606
Account Broker: KD Shanley #001
Branch Address: Morgan Stanley Dean Witter
1131 Monterey St., San Luis Obispo, CA 93401
ABA: 021000089
Attention:
</TABLE>
At the Initial Closing, the Company shall deliver one or more stock
certificates, duly executed on behalf of the Company, representing the
Shares (the "Stock Certificates"), together with the Warrants described
below.
d. Warrant Issuances. At the Initial Closing, the Company will issue
to Buyer a Warrant duly executed on behalf of the Company, substantially in
the form of Exhibit A attached hereto, to acquire the Warrant Shares at an
exercise price per Warrant Share equal to the per share price for the
Shares (subject to adjustment in the manner set forth in the Warrant),
which Warrant may be exercised as follows: (i) during the twelve (12) month
period commencing on the Initial Closing Date and ending on the date which
is twelve (12) months after the Initial Closing Date (the "First Warrant
Period"), Buyer shall be entitled to purchase up to the full amount of the
Warrant Shares (i.e., 2,000,000 shares) at the Per Share Price; and (ii)
during the period commencing twelve (12) months after the Initial Closing
Date and ending twenty-four (24) months after the Initial Closing Date (the
"Second Warrant Period"), and provided that Buyer acquired at least
1,000,000 of the Warrant Shares during the First Warrant Period, Buyer
shall be entitled to purchase all Warrant Shares not purchased during the
First Warrant Period.
2. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
Buyer represents and warrants to the Company as of the date hereof and as
of the date of the Initial Closing that:
a. Investment Purpose. Buyer is purchasing the Shares and the Warrants
and will acquire the Warrant Shares for its own account for investment only
and not with a view towards, or for resale in connection with, the
distribution thereof except pursuant to sales registered under the 1933 Act
or exempt from the registration requirements thereof. Buyer is not
purchasing the Shares, the Warrants or the Warrant Shares for the purpose
of covering short sale positions in the Common Stock established on or
prior to the date of the Initial Closing.
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b. Accredited Investor Status. Buyer hereby represents and warrants to
the Company as follows:
(i) Buyer is an "Accredited Investor," as such term is defined in
Regulation D under the 1933 Act in that the undersigned is a corporation
having total assets in excess of $5,000,000 not formed for the specific
purpose of acquiring the Securities (as defined below).
(ii) Buyer is in a financial position to hold the Securities for an
indefinite period of time, is able to bear the economic risk of an
investment in the Securities and can withstand a complete loss of the
Buyer's investment in the Securities.
(iii) Buyer either alone or together with the assistance of its own
professional advisor or advisors, has the knowledge and experience in
business and financial matters to read and interpret financial
statements of and concerning the Company and to evaluate the merits and
risks of an investment in the Securities.
c. Reliance on Exemptions. Buyer understands that the Securities are
being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities
laws and that the Company is relying upon the truth and accuracy of, and
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of Buyer
to acquire the Securities.
d. Information. Buyer and its advisors, if any, have been furnished
with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Securities
which have been requested by Buyer. Buyer and its advisors, if any, have
been afforded the opportunity to ask questions of the Company and have
received answers to such inquiries. Buyer understands that its investment
in Securities involves a high degree of risk. Buyer nevertheless believes
that an investment in the Securities is suitable for Buyer based upon
Buyer's investment objectives and financial needs. Buyer has adequate means
for providing for its current financial needs and contingencies and has no
need for liquidity of its investment in the Securities. Buyer has sought
such accounting, legal and tax advice as it has considered necessary to
make an informed investment decision with respect to its acquisition of the
Securities.
e. No Governmental Review. Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or
the fairness or suitability of the investment in the Securities nor have
such authorities passed upon or endorsed the merits of the offering of the
Securities.
f. Transfer or Resale. Buyer understands that (i) except as
contemplated in the Registration Rights Agreement, the Securities have not
been and are not being registered under the 1933 Act or any state
securities laws, and may not be offered for sale, sold, assigned or
transferred unless (a) subsequently registered thereunder, (b) Buyer shall
have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company, to the effect
that the securities to be sold, assigned or transferred may be sold,
assigned or transferred pursuant to an exemption from such registration, or
(c) Buyer shall provide the Company with reasonable assurances that the
Securities can be sold pursuant to Rule 144 under the 1933 Act (or a
successor rule thereto); (ii) any sale of such securities made in reliance
on Rule 144 promulgated under the 1933 Act may be made only in accordance
with the terms of said Rule and further, if said Rule is not applicable,
any resale of such securities under circumstances in which the seller (or
the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 1933 Act) may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any
other person is under any obligation to register such securities (other
than pursuant to the Registration Rights Agreement) under the 1933 Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder.
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g. Legends. Buyer understands that subject to the removal provisions
set forth below, the certificates representing the Securities shall bear a
restrictive legend in substantially the following form (and, subject to
Section 6 hereof and only so long as the Securities have the legend set
forth below in accordance with this paragraph, a stop-transfer order may be
placed against transfer of such Securities certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE REASONABLY
ACCEPTABLE TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE
144 UNDER SAID ACT. ANY SUCH OFFER, SALE, ASSIGNMENT OR TRANSFER MUST
ALSO COMPLY WITH APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THE
SECURITIES MAY ALSO BE SUBJECT TO RESTRICTIONS UNDER A STOCK PURCHASE
AGREEMENT BETWEEN THE ISSUER AND AGWAY HOLDINGS INC., DATED AS OF
NOVEMBER 12, 1998.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Securities upon which
such legend is stamped, unless otherwise required by state securities laws
(1)(a) in the case of any Shares or Warrant Shares, upon the sale of such
Shares or Warrant Shares pursuant to an effective registration statement
under the 1933 Act in connection with the Registration Rights Agreement,
(b) in connection with any other sale, assignment or transfer transaction,
such holder provides the Company with an opinion of counsel, in form,
substance, scope and as, to the counsel delivering such opinion, reasonably
acceptable to the Company, to the effect that the sale, assignment or other
transfer of the Securities may be made without registration under the 1933
Act, or (c) such holder provides the Company with reasonable assurances
that the Securities can be sold pursuant to Rule 144 under the 1933 Act (or
a successor rule thereto); and (2) if the limits imposed by this Agreement
do not apply to the Securities being sold. Such Buyer agrees to sell the
Securities, including those represented by certificate(s) from which the
legend has been removed, only in compliance with all applicable securities
laws.
h. Authorization; Enforcement. This Agreement has been duly and
validly authorized, executed and delivered by Buyer and (assuming due
execution and delivery by the Company) is a valid and binding agreement of
Buyer enforceable against Buyer in accordance with its terms, subject as to
enforceability to general principles of equity and to bankruptcy,
insolvency, moratorium, and other similar laws affecting the enforcement of
creditors' rights generally.
i. Residency. Buyer is a resident of that country and state specified
in its address set forth below.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth on a Schedule of Exceptions provided to Buyer five (5)
days prior to the execution of this Agreement, the Company represents and
warrants to Buyer as of the date hereof and as of the Initial Closing that:
a. Organization and Qualification. The Company and its subsidiaries
are corporations duly organized and validly existing in good standing under
the laws of the jurisdiction in which they are incorporated, and have the
requisite corporate power to own their properties and to carry on their
business as now being conducted and presently proposed to be conducted.
Each of the Company and its subsidiaries is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which the nature of the business conducted by it makes such qualification
necessary except
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where the failure to be so qualified would not have a Material Adverse
Effect. "Material Adverse Effect" means any material adverse effect on the
business, operations, properties, prospects, condition (financial or
otherwise) or results of operation of the Company and its subsidiaries
taken as a whole.
b. Authorization; Enforcement; Compliance with Other Instruments. (i)
The Company has the requisite corporate power and authority to enter into
and perform this Agreement and the Ancillary Agreements, and to issue the
Securities in accordance with the terms hereof and thereof; (ii) the
execution and delivery of this Agreement and the Ancillary Agreements by
the Company and the consummation by it of the transactions contemplated
hereby and thereby, including the issuance of the Securities, have been
duly authorized by the Company's Board of Directors and, except as required
by the rules of the NASDAQ SmallCap Market System, no further consent or
corporate authorization is required therefor; (iii) this Agreement and the
Ancillary Agreements have been duly executed and delivered by the Company;
and (iv) this Agreement and the Ancillary Agreements (assuming due
execution and delivery by the other parties thereto) constitute the valid
and binding obligations of the Company enforceable against the Company in
accordance with their respective terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting
generally, the enforcement of creditors' rights and remedies or by other
equitable principles of general application or by the public policy
provisions of federal securities laws.
c. Capitalization. As of the date hereof, the authorized capital stock
of the Company consists of (i) twenty million (20,000,000) shares of Common
Stock of which, as of November 10, 1998, five million three hundred
thirty-two thousand four hundred ninety one (5,332,491) shares were issued
and outstanding, and (ii) seven hundred fifty thousand (750,000) shares of
Series A Convertible Preferred Stock, no par value, of which, as of
November 10, 1998, five hundred thousand(500,000) shares were issued and
outstanding and since that date, there have been no material changes to
such number. All of such outstanding shares have been validly issued and
are fully paid and nonassessable. No shares of Common Stock or preferred
stock are subject to preemptive rights or any other similar rights or any
liens or encumbrances suffered or permitted by the Company. Except as
disclosed in the Schedule of Exceptions, (i) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities or rights convertible
into or exchangeable for, any shares of capital stock of the Company or any
of its subsidiaries, or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of capital
stock of the Company or any of its subsidiaries, and (ii) there are no
outstanding debt securities of the Company. The Company has furnished the
Buyer with true and correct copies of the Company's Articles of
Incorporation, as amended, as in effect on the date hereof ("Articles of
Incorporation"), and the Company's By-laws, as in effect on the date hereof
(the "Bylaws").
d. Issuance of Securities. The Securities have been duly authorized
and, upon issuance in accordance with the terms hereof and thereof, shall
be validly issued, fully paid and non-assessable, and free from all taxes,
liens and charges with respect to the issue thereof.
e. No Conflicts. The execution, delivery and performance of this
Agreement and the Ancillary Agreements by the Company and the consummation
by the Company of the transactions contemplated hereby and thereby will not
(i) result in a violation of the Certificate of Incorporation or Bylaws or
(ii) conflict with, or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state
securities laws and regulations) applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or any of its
subsidiaries is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as
would not, individually or in the aggregate, have a Material Adverse
Effect). Neither the Company nor its subsidiaries is in violation of any
term of or in default under its Articles of Incorporation or Bylaws or, in
any material respect, any contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment,
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decree or order or any statute, rule or regulation applicable to the
Company or its subsidiaries. The business of the Company and its
subsidiaries is not being conducted in violation of any law, ordinance,
regulation or rule of any governmental entity, except for possible
violations which either singly or in the aggregate do not and will not have
a Material Adverse Effect. Except as required under the 1933 Act, any
applicable state securities laws, or the rules of the NASDAQ SmallCap
Market System the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with any
court or governmental agency or third party in order for it to execute,
deliver or perform any of its obligations under or contemplated by this
Agreement and the Ancillary Agreements in accordance with the terms hereof.
f. SEC Documents, Financial Statements. Since August 2, 1995, the
Company has timely filed all reports, schedules, forms, statements and
other documents required to be filed by it with the SEC pursuant to Section
13, 14 and 15(d) of the Securities Exchange Act of 1934, as amended (the
"1934 Act"), including all exhibits included therein and financial
statements and schedules thereto and documents incorporated by reference
therein (other than exhibits to incorporated documents). The Buyer has been
provided with true and complete copies of all reports on Forms 10-KSB,
10-QSB and 8-K and proxy statements (or their equivalents under the rules
of the SEC applicable to small business issuers) filed by the Company with
the SEC since December 31, 1997 (such reports, including the financial
statements and related schedules being referred to hereinafter as the "SEC
Documents"). As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the 1934 Act and the rules
and regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with
the SEC, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they were made, not misleading. As of their respective dates, the financial
statements of the Company included in the SEC Documents complied as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto. Such
financial statements have been prepared in accordance with generally
accepted accounting principles, consistently applied during the periods
involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the
financial position of the Company as of the dates thereof and the results
of its operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit adjustments).
None of the information provided by the Company or its representatives to
Buyer contained any untrue statement of a material fact or omitted to state
any material fact necessary in order to make the statements therein, in the
light of the circumstance under which they were made, not misleading. Prior
to the date hereof, the Company has corrected all statements in the SEC
Documents which have required correction and has filed all necessary
amendments to the SEC Documents, in each case as required by applicable
law.
g. Absence of Certain Changes. Since December 31, 1997, except as
disclosed in the SEC Documents, there has been no material adverse change
and no material adverse development in the business, properties,
operations, prospects, condition (financial or otherwise), or results of
operations of the Company. Since December 31, 1997, except as disclosed in
the SEC Documents, neither the Company nor any of its subsidiaries has (i)
incurred or become subject to any material liabilities (absolute or
continent) except liabilities incurred in the ordinary course of business
consistent with past practices; (ii) discharged or satisfied any material
obligation or liability (absolute or contingent), other than current
liabilities paid in the ordinary course of business consistent with past
practices; (iii) declared or made any payment or distribution of cash or
other property to stockholders with respect to its capital stock, or
purchased or redeemed, or made agreements to purchase or redeem, any shares
of its capital stock; (iv) sold, assigned or transferred any other tangible
assets, or canceled any debts or claims, except in the ordinary course of
business consistent with past practices; (v) suffered any substantial
losses or waived any rights of material value, whether or not in the
ordinary course of business, or suffered the loss of any material amount of
existing business; (vi) made any changes in employee compensation except in
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the ordinary course of business consisted with past practices; or (vii)
experienced any material problems with labor or management in connection
with the terms and conditions of their employment. The Company has not
taken any steps, and does not currently expect to take any steps, to seek
protection pursuant to any bankruptcy law nor does the Company have any
knowledge that its creditors intend to initiate involuntary bankruptcy
proceedings against the Company.
h. Absence of Litigation. Except as expressly set forth in its SEC
Documents, there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board or body pending or, to the knowledge
of the Company, overtly threatened against or affecting the Company,
wherein an unfavorable decision, ruling or finding would have a Material
Adverse Effect or which would adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform
its obligations under, this Agreement, the Ancillary Agreements or any of
the other agreements contemplated herein. There are no material outstanding
orders, judgments, injunctions, awards or decrees of any court, public
board or body against the Company or any of its subsidiaries.
i. Purpose of Investment. The Company recognizes that Buyer's
investment in the Company is being made, and shall use the proceeds
therefrom, in order to provide financing for the Company's ongoing
operations and especially for the funding of research and development,
feasibility funding projects and for project and licensing arrangements;
costs of patent prosecution; and working capital and general corporate
purposes, including the possible acquisitions of rights in new technologies
in the Company's ordinary course of business.
j. Acknowledgment Regarding Buyer's Purchase of the Shares. The
Company acknowledges and agrees that Buyer is acting solely in the capacity
of an arm's length purchaser with respect to this Agreement and the
Ancillary Agreements and the transactions contemplated hereby and thereby.
The Company further acknowledges that Buyer is not acting as a financial
advisor or fiduciary of the Company (or in any similar capacity) with
respect to this Agreement and the Ancillary Agreements and the transactions
contemplated hereby and thereby and any advice given by Buyer or any of its
representatives or agents in connection with this Agreement, the Ancillary
Agreements and the transactions contemplated hereby and thereby is merely
incidental to Buyer's purchase of the Securities. The Company further
represents to Buyer that the Company's decision to enter into this
Agreement and the Ancillary Agreements has been based solely on the
independent evaluation by the Company and its representatives.
k. No Undisclosed Events or Circumstances. No material event or
circumstances has occurred or exists with respect to the Company or its
subsidiaries or their respective business, properties, prospects,
operations or financial condition which has not been publicly announced or
disclosed.
l. No General Solicitation. Neither the Company, any of its
affiliates, nor, to its knowledge, any person acting on its or their
behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the 1933 Act), in
connection with the offer or sale of the Securities.
m. No Registration Required. Except as provided herein, neither the
Company, nor to its knowledge, any of its affiliates, nor any person acting
on its or their behalf has, directly or indirectly, made any offers or
sales of any securities or solicited any offers to buy any security, under
circumstances that would require registration of the Securities under the
1933 Act.
n. Employee Relations. Neither the Company nor any of its subsidiaries
is involved in any union labor dispute nor, to the knowledge of the
Company, is any such dispute threatened. None of the Company's or its
subsidiaries' employees is a member of a union and the Company believes
that its relations with its employees for the most part are good.
o. Intellectual Property Rights. The Company and its subsidiaries own,
have obtained or possess rights to use the trademarks, trade names, service
marks, service mark registrations, patents, copyrights, licenses,
approvals, governmental authorizations, trade secrets and other rights
necessary to conduct their respective businesses as now conducted, the
Company does not have any knowledge of any material infringement by the
Company or its subsidiaries of any trademark, trade name rights, patent
rights,
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copyrights, licenses, service marks, service mark registrations, trade
secrets or other similar rights of others and there is no claim being made
against the Company or its subsidiaries regarding trademark, trade name,
patent, copyright, license, service marks, service mark registrations,
trade secret or other infringement which could have a Material Adverse
Effect. The Company and its subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of their
intellectual properties, whether currently owned or acquired in the future,
and the Company has entered into agreements with all current officers and
employees, and will enter into agreements with all future officers and
employees, which provide or will provide that all legal rights concerning
newly developed technologies by such officers or employees shall be the
sole property of the Company.
p. Dilutive Effect. The Company understands and acknowledges the
potentially dilutive effect to the Common Stock of the issuance of the
Securities.
4. COVENANTS.
a. Best Efforts. Each party shall use its best efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary to consummate the transactions contemplated hereby, including
without limitation, timely satisfaction of the conditions set forth in
Sections 8 and 9 of this Agreement.
b. Form D. The Company agrees to file a Form D with respect to the
Shares and Warrants as required under Regulation D and to provide a copy
thereof to Buyer promptly after such filing.
c. Reporting Status. Until the date on which Buyer has sold all the
Shares and Warrant Shares held by it, the Company shall use its best
efforts to file all reports required to be filed with the SEC pursuant to
the 1934 Act, and the Company shall not voluntarily terminate its status as
an issuer required to file reports under the 1934 Act even if the 1934 Act
or the rules and regulations thereunder would permit such termination.
d. Use of Proceeds. The Company will use the proceeds from the sale of
the Securities to provide financing for the Company's ongoing operations
and principally for the funding of research and development, feasibility
funding projects and for project and licensing arrangements; costs of
patent prosecution; and working capital and general corporate purposes,
including the possible acquisitions of rights in new technologies in the
Company's ordinary course of business.
e. Financial Information.
(i) The Company will deliver to Buyer as soon as practicable after
the end of each fiscal quarter or fiscal year of the Company, as
appropriate, and in no event later than twenty (20) days following the
end of the relevant period, one copy of an unaudited consolidated
balance sheet of the Company and its subsidiaries as at the end of such
quarter, and unaudited consolidated statements of income, retained
earnings and changes in financial position of the Company and its
subsidiaries for such quarter; setting forth in each case in comparative
form the figures for the corresponding periods in the previous fiscal
year; all prepared in accordance with GAAP except that the financial
statements referred to in this Section 4(e)(i) do not contain footnotes
and are subject to normal year-end audit adjustments, which will not,
individually or in the aggregate, be material in magnitude.
(ii) In addition, the Company will deliver to Buyer (x) no later
than forty (40) days after the end of the relevant period, any and all
information necessary for the Buyer to fulfill its reporting obligations
with the SEC; (y) within five (5) days after the filing thereof with the
SEC, a copy of each filing made by the Company with the SEC; and (z)
within two (2) days after release thereof, copies of all press releases
issued by the Company or any of its subsidiaries.
(iii) With respect to annual information, the Company will deliver
to Buyer, no later than sixty (60) days after year end, one copy of an
audited consolidated balance sheet of the Company and its subsidiaries
as at the end of such year, and audited consolidated statements of
income,
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retained earnings and changes in financial position of the Company and
its subsidiaries for such year; setting forth in each case in
comparative form the figures for the corresponding periods in the
previous fiscal year; all prepared in accordance with GAAP, and which
audited financial statements shall be accompanied by (A) an opinion
thereon of the independent certified public accountants regularly
retained by the Company, or any other form of independent certified
public accountants of recognized national standing selected by the
Company and (B) a report of such independent certified public
accountants confirming any calculation or adjustment made pursuant to
Section 5 herein, Section 6 of the Form of Warrant attached hereto as
Exhibit A, and any other adjustments relating to securities authorized
by the Company during such year.
f. Reservation of Shares. The Company shall at all times have
authorized and reserved for the purpose of issuance, a sufficient number of
shares of Common Stock to provide for the issuance of the Warrant Shares
and any other shares of Common Stock issuable upon the conversion, exercise
or exchange of the Company's outstanding securities.
g. Listing. The Company shall use its best efforts to promptly secure
the listing of the Shares and the Warrant Shares upon each national
securities exchange or automated quotation system, if any, upon which
shares of Common Stock are now or may in the future be listed or quoted,
including without limitation the NASDAQ SmallCap Market System
(collectively, the "Exchange") (subject to official notice of issuance) and
shall use its best efforts to maintain, so long as any other shares of
Common Stock shall be so listed, such listing of all Warrant Shares from
time to time issuable under the terms of this Agreement and the Warrant.
During the Registration Period, the Company shall use its best efforts to
maintain the Common Stock's authorization for listing on the Exchange. The
Company shall promptly provide to Buyer copies of any notices it receives
from the Exchange regarding the continued eligibility of the Common Stock
for listing on the relevant Exchange.
5. RIGHTS OF FIRST REFUSAL.
a. Subsequent Offerings. Buyer shall have a right of first refusal to
purchase its pro rata share of all Equity Securities, as defined below,
that the Company may, from time to time, propose to sell and issue after
the date of this Agreement, other than the Equity Securities excluded by
Section 5(e) hereof. Buyer's pro rata share is equal to the ratio of (a)
the number of shares of the Company's Common Stock (including all shares of
Common Stock issued or issuable upon conversion of the Shares) which Buyer
is deemed to be a holder immediately prior to the issuance of such Equity
Securities to (b) the total number of shares of the Company's outstanding
Common Stock (including all shares of Common Stock issued or issuable upon
conversion of the Warrant Shares or upon the exercise of any outstanding
warrants or options) immediately prior to the issuance of the Equity
Securities. The term "Equity Securities" shall mean (i) any Common Stock,
Preferred Stock or other security of the Company, (ii) any security
convertible, with or without consideration, into any Common Stock,
Preferred Stock or other security (including any option to purchase such a
convertible security), (iii) any security carrying any warrant or right to
subscribe to or purchase any Common Stock, Preferred Stock or other
security or (iv) any such warrant or right.
b. Exercise of Rights. If the company proposes to issue any Equity
Securities, it shall give Buyer written notice of its intention, describing
the Equity Securities, the price and the terms and conditions upon which
the Company proposes to issue the same. Buyer shall have twenty (20) days
from the giving of such notice to agree to purchase its pro rata share of
the Equity Securities for the price and upon the terms and conditions
specified in the notice by giving written notice to the Company and stating
therein the quantity of Equity Securities to be purchased.
c. Issuance of Equity Securities to Other Persons. If Buyer fails to
exercise in full the rights of first refusal, the Company shall have ninety
(90) days thereafter to sell the Equity Securities in respect of which the
Buyer's rights were not exercised, at a price and upon general terms and
conditions materially no more favorable to the purchasers thereof than
specified in the Company's notice to the Buyer pursuant to Section 5(b)
hereof. If the company has not sold such Equity Securities within ninety
(90) days of the
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notice provided pursuant to Section 5(b), the Company shall not thereafter
issue or sell any Equity Securities, without first offering such securities
to the Buyer in the manner provided above.
d. Waiver of Rights of First Refusal. The rights of first refusal
established by this Section 5 may be amended, or any provision waived with
the written consent of Buyer.
e. Excluded Securities. The rights of first refusal established by
this Section 5 shall have no application to any of the following Equity
Securities:
(i) up to an aggregate amount of 500,000 shares of Common Stock
issued pursuant to stock options under the Company's 1995 Stock Option
Plan;
(ii) shares of Common Stock issued upon the exercise or conversion,
as the case may be, or the dividend or antidilution provisions thereof,
if any, of options, warrants, preferred stock, convertible securities or
other rights to purchase Common Stock which options, warrants, preferred
stock, convertible securities or other rights are issued and outstanding
on the date hereof;
(iii) shares of Common Stock issued pursuant to any rights or
agreements granted after the date of this Agreement; provided that the
rights of first refusal established by this Section 5 did apply with
respect to the initial sale or grant by the Company of such rights or
agreements;
(iv) any Equity Securities issued for consideration other than cash
pursuant to a merger, consolidation, acquisition or similar business
combination;
(v) shares of Common Stock issued in connection with any Common
Stock split or Common Stock dividend by the Company.
6. TRANSFER AGENT INSTRUCTIONS.
The Company shall instruct its transfer agent to issue certificates,
registered in the name of the Buyer or its nominee, for the Shares and Warrant
Shares in such amounts as specified from time to time by the Buyer to the
Company. All such certificates shall bear the restrictive legend specified in
Section 2(g) of this Agreement but only to the extent provided in such Section.
The Company shall provide instructions and opinions of counsel to its transfer
agent in accordance with the Registration Rights Agreement. The Company warrants
and covenants that no instruction other than such instructions referred to in
this Section 6, and stop transfer instructions to give effect to Section 2(f)
hereof, in the case of the Shares or Warrants, will be given by the Company to
its transfer agent and that the Securities shall otherwise be freely
transferable on the books and records of the Company as and to the extent
provided in this Agreement and the Warrants. Nothing in this Section 6 shall
affect in any way Buyer's obligations and agreement to comply with all
applicable securities laws upon the sale, assignment or other transfer of the
Securities. If Buyer provides the Company with an opinion of counsel, reasonably
satisfactory in form, scope, substance and as to the counsel delivering such
opinion to the Company, that registration of the sale, assignment or other
transfer by Buyer of any of the Securities is not required under the 1933 Act,
the Company shall permit the transfer, and promptly instruct its transfer agent
to issue one or more certificates in such name and in such denominations as
specified by Buyer.
7. STANDSTILL AND NO-SALE.
From the period beginning on the Initial Closing until the earlier of (i)
thirty (30) months after the Initial Closing, or (ii) the cessation of all
business activity between the Company and the Buyer (the "Standstill Period"):
a. Standstill Provision. Buyer will not, nor will it permit any of its
affiliates (including parents, subsidiaries or other related entities) to,
in any manner, singly or as part of a partnership, limited partnership,
syndicate or other "Group" (within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Securities Exchange
Act")), directly or indirectly, acquire, or offer or agree to acquire,
record ownership or beneficial ownership of any shares of capital stock of
the Company, any securities convertible into or exchangeable for capital
stock of the Company or any other right to acquire capital stock of the
Company, without the prior written consent of the Company to the
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extent such acquisition, offer or agreement would result in the Buyer
owning more than forty-five percent (45%) of the Common Stock outstanding
at the time of such acquisition, offer or agreement; provided, however,
that this clause shall not apply to (i) increases in percentage ownership
due to the buy-back of Common Stock by the Company; (ii) Common Stock
purchases precipitated by an unaffiliated third party attempt to acquire
control of the Company; or (iii) other Company securities purchased with
the consent of the Company.
b. Agreement Not to Sell. During the twelve (12) month period
following the execution of this Agreement, Buyer will not, nor will it
permit any of its corporate affiliates (including parents, subsidiaries or
other related entities) to, directly or indirectly sell, contract to sell
(including, without limitation, any short sale), grant any option to
purchase or otherwise transfer or dispose of any of the Shares or Warrant
Shares or other securities of the Company. In any twelve (12) month period,
beginning with the anniversary of this Agreement and each anniversary
thereafter, Buyer will not, nor will it permit any of its corporate
affiliates (including parents, subsidiaries or other related entities) to,
directly or indirectly sell, contract to sell (including, without
limitation, any short sale), grant any option to purchase or otherwise
transfer or dispose of any of the Shares or Warrant Shares or other
securities of the Company in excess of one-third of such Shares, Warrant
Shares or other securities held by the Buyer on the first day of the
relevant twelve (12) month period without the prior written consent of the
Company. Notwithstanding the foregoing in the event the business activity
between the Company and the Buyer is terminated other than pursuant to a
breach by or the insolvency of the Company then, following such
termination, Buyer may sell the Shares or the Warrant Shares in accordance
with the volume and other limitations under applicable securities laws.
Buyer will notify the Company prior to any such sale and work with the
Company to effect such sales in an orderly manner. In order to enforce the
foregoing covenant, the Company may impose stop-transfer instructions with
respect to the securities held by Buyer and its affiliates that are subject
to the foregoing restriction until the end of such period.
8. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to sell the Shares and the Warrants
is subject to the satisfaction, at or before the date of the Initial Closing, of
each of the following conditions, provided that these conditions are for the
Company's sole benefit and may be waived by the Company at any time in its sole
discretion.
a. The parties shall have executed this Agreement and the Ancillary
Agreements, and delivered the same to each other.
b. The shareholders of the Company shall have approved the issuance of
Shares contemplated hereunder in accordance with applicable rules of the
NASDAQ SmallCap Market System;
c. Pursuant to Section 1(d) of this Agreement, Buyer shall have
delivered to Company the Purchase Price for all Shares being purchased by
Buyer by certified check or wire transfer of immediately available funds.
d. The representations and warranties of Buyer contained herein shall
be true and correct in all material respects as of the date when made and
as of the date of the Initial Closing as though made at that time (except
for representations and warranties that speak as of a specific date), and
Buyer shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this Agreement to
be performed, satisfied or complied with by Buyer at or prior to the date
of the Initial Closing.
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<PAGE> 22
9. CONDITIONS TO BUYER'S OBLIGATION TO PURCHASE.
The obligation of Buyer to purchase the Shares and the Warrants at the
Initial Closing is subject to the satisfaction, at or before the Initial Closing
Date of each of the following conditions, provided that these conditions are for
Buyer's sole benefit and may be waived by Buyer at any time in its sole
discretion.
a. The parties shall have executed this Agreement and the Ancillary
Agreements, and delivered the same to the other parties.
b. From the date hereof, until the date of the Initial Closing, the
Common Stock shall be authorized for quotation on the Exchange and trading
in the Common Stock on the Exchange shall not have been suspended by the
SEC or the Exchange and trading in securities generally on the Exchange
shall have not been suspended or limited nor shall minimum prices have been
established for securities traded on the Exchange nor shall a banking
moratorium have been declared nor shall there be any material adverse
change in any financial market that in the reasonable judgment of the Buyer
makes it impracticable or inadvisable to purchase the Shares and the
Warrants.
c. The shareholders of the Company shall have approved the issuance of
the Shares, the Warrant, and the Warrant Shares contemplated hereunder, and
such approval shall have been obtained in accordance with applicable rules
of the NASDAQ SmallCap Market System as if such rules required approval of
such issuance(s), regardless of whether approval thereunder is, in fact,
required, and such shareholder approval shall have occurred following the
filing of the form 10-QSB for the period ended September 30, 1998.
d. The Company shall have entered into an employment agreement (the
"Employment Agreement") with Robert Petcavich in the form attached as
Exhibit 9(d).
e. The Company shall have provided to the Buyer any changes to the
Schedule of Exceptions delivered in accordance with Section 3 within five
(5) days prior to the Initial Closing Date.
f. The representations and warranties of the Company contained herein
and not qualified by a materiality standard shall be true and correct in
all respects as of the date when made, and shall be true and correct in all
material respects as of the date of the Initial Closing, as though made at
that time (except for representations and warranties that speak as of a
specific date); the representations and warranties of the Company contained
herein and qualified by a materiality standard shall be true and correct in
all respects as of the date when made and as of the date of the Initial
Closing, as though made at that time (except for representations and
warranties that speak as of a specific date); and the Company shall have
performed, satisfied and complied in all respects with the covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to the date of the
Initial Closing, as applicable. Buyer shall have received a certificate,
executed by the Chief Executive Officer of the Company, dated as of the
date of the Initial Closing to the foregoing effect. Changes to the
Schedule of Exceptions to be delivered in accordance with Section 9(e) will
not qualify the representations and warranties made upon execution of this
Agreement or at the date of the Initial Closing; provided, however, that in
the event that Buyer determines to proceed with the Initial Closing
following the receipt of an updated Schedule of Exceptions, then these
representations and warranties will be so qualified.
g. Buyer shall have received the opinion of the Company's counsel
dated as of the date of the Initial Closing in substantially the form
attached hereto as Exhibit 9(e).
h. The Company shall have executed and delivered to Buyer the Stock
Certificate(s) for the Shares being purchased by Buyer and the Certificates
representing the Warrants.
i. No action, suit, investigation or proceeding before or by any
governmental authority shall have been commenced or threatened against the
Company or any of the officers, directors or affiliates of the Company,
which seeks to restrain, prevent or change the transactions contemplated by
this Agreement or the Registration Rights Agreement or which seeks damages
in connection with such transactions.
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10. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law. This Agreement shall be governed by and interpreted
in accordance with, the laws of the State of New York without regard to the
principles of conflict of laws.
b. Counterparts. This Agreement may be executed in two or more
identical counterparts, including, without limitation, by facsimile
transmission (with copies sent by United States mail to the other parties),
all of which counterparts shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party
and delivered to the other party. In the event any signature page is
delivered by facsimile transmission, the party using such means of delivery
shall cause four (4) additional original executed signature pages to be
physically delivered to the other party within five (5) days of the
execution and delivery hereof.
c. Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretations of,
this Agreement.
d. Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability
shall not affect the validity or enforceability of the remainder of this
Agreement.
e. Entire Agreement; Amendments. This Agreement (together with the
Schedules and Exhibits hereto), the Ancillary Agreements, the Warrant and
the other agreements and instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither
the Company nor Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this Agreement
may be waived or amended other than by an instrument in writing signed by
the party to be charged with enforcement.
f. Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by mail or delivered personally, by
courier or by facsimile (with a copy by U.S. mail) and shall be effective
five days after being placed in the mail, if mailed, certified or
registered, return receipt requested, or upon receipt, if delivered
personally or by courier or by facsimile (with a copy by U.S. mail), in
each case properly addressed to the party to receive the same. The
addresses for such communications shall be:
If to the Company:
9985 Business Park Avenue
Suite A
San Diego, California 92131
Telephone: 619-549-5130
Facsimile: 619-549-5133
Attention: Robert Petcavich, Ph.D.
With Copy to:
Lance W. Bridges, Esq.
Cooley Godward, LLP
4365 Executive Drive
Suite 1100
San Diego, CA 92121-2128
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<PAGE> 24
If to the Buyer:
Agway Holdings Inc.
P.O. Box 4933
Syracuse, NY 13221-4933
Telephone: 315-449-6568
Facsimile: 315-449-7451
Attention: Peter J. O'Neill, V.P.
With a copy to: David M. Hayes, Esq., General Counsel
Each party hereto shall provide notice to the other party of any
change in address.
g. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties. The Company shall not assign this
Agreement or any rights or obligations hereunder without the prior written
consent the Buyer. Buyer may assign its rights hereunder without the
consent of the Company, provided, however, that any assignment of Buyer's
obligations under the Ancillary Agreements may be made only in accordance
with the terms thereof.
h. No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
i. Survival. All representations and warranties made by the Company
and the Buyer in this Agreement (including the Schedules and Exhibits
hereto), the Ancillary Agreements, the Warrant or otherwise pursuant hereto
shall survive the issuance of the Shares and the Warrants to the Buyer for
a period of two (2) years following such issuance. Buyer shall be
responsible only for its own representations, warranties, agreements and
covenants hereunder.
j. Publicity. The Company and Buyer shall have the right to approve
before issuance any press releases or any other public statements with
respect to the transactions contemplated hereby that identifies the Buyer;
provided, however, that the Company shall be entitled without the prior
approval of Buyer, to make any press release or other public disclosure
with respect to such transactions as is required by applicable law and
regulations (although the Buyer shall be consulted by the Company in
connection with any such press release or other public disclosure prior to
its release and shall be provided with a copy thereof).
k. Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents,
as the other party may reasonably request in order to carry out the intent
and accomplish the purpose of this Agreement and the consummation of the
transactions contemplated hereby.
l. Termination. In the event that (i) approval by the Company's
shareholders of the acquisition by Agway of the Shares, the Warrant, and
the Warrant Shares, and the other transactions contemplated hereby
(including without limitation the transactions contemplated by the
Ancillary Agreements) is not obtained at a special meeting of the Company's
shareholders called for that purpose, or (ii) the Initial Closing shall not
have occurred on or before January 31, 1999 (or such other date as the
parties shall mutually agree), this Agreement and, at the option of Buyer
in its sole discretion, the Ancillary Agreements, shall terminate at the
close of business on such date without liability of any party to any other
party; provided, however, that Agway shall be entitled to a return of all
amounts paid by it or its subsidiaries to the Company under the Ancillary
Agreements if so terminated; and provided further, that in the event the
Initial Closing has not occurred due to a material breach of a
representation or warranty by a party, the other party shall be entitled to
receive from such breaching party the out-of-pocket expenses (including
legal fees) incurred by the non-breaching party in connection with this
Agreement. Subject to the assignment or transfer of rights set forth herein
with respect to the Agreement and the Securities, and subject to the
Company's obligations to comply with the Agreement prior to any sale, the
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<PAGE> 25
obligations of the Company and the Buyer (or any permitted assignees of
Buyer) under this Agreement shall otherwise terminate upon the sale or
other transfer by Buyer (or any permitted assignees of Buyer) of all Shares
and Warrants acquired by Buyer hereunder and all and Warrant Shares
acquired by Buyer (or any permitted assignees of Buyer) upon exercise of
the Warrants.
m. Indemnification. The Company agrees to indemnify, defend and hold
harmless the Buyer and its affiliates and their respective directors,
officers, employees and agents from and against any and all losses, claims,
damages, fees, fines and expenses (including without limitation reasonable
attorneys' fees) due to or arising out of a breach of any representation or
warranty or covenant of the Company contained in this Agreement (including
the Schedules and Exhibits hereto) and in the other agreements and
instruments referenced herein.
n. No Waiver. Notwithstanding any of the representations, warranties,
acknowledgments or agreements made herein by the undersigned, the Buyer
does not thereby or in any manner waive any rights granted to him or it
under U.S. Federal or state securities laws.
Dated: November 12, 1998:
AGWAY HOLDINGS INC.
By: /s/ Dennis LaHood
----------------------------------
its:
----------------------------------
PLANET POLYMER TECHNOLOGIES, INC.
By: /s/ Robert J. Petcavich
----------------------------------
its:
----------------------------------
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<PAGE> 26
ANNEX B
FORM OF WARRANT
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE SECURITIES
MAY NOT BE OFFERED, SOLD OR TRANSFERRED ABSENT SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT.
PLANET POLYMER TECHNOLOGIES, INC.
WARRANT TO PURCHASE UP TO A MAXIMUM OF
2,000,000 SHARES OF COMMON STOCK
In consideration of the sum of good and valuable consideration, the receipt
of which is hereby acknowledged by PLANET POLYMER TECHNOLOGIES, INC., a
California corporation (the "Company"), AGWAY HOLDINGS INC. (the "Holder"), is
hereby granted the right to purchase (i) at any time from the date hereof until
5:00 P.M., Pacific Standard Time, on [INITIAL CLOSING DATE PLUS TWELVE (12)
MONTHS], 1999 (the "First Expiration Date") up to all or any part of Two Million
(2,000,000) fully paid and non-assessable shares of the Company's common stock,
without par value ("Common Stock"); and, at any time during the period
commencing on the First Expiration Date and ending on [INITIAL CLOSING DATE PLUS
TWENTY-FOUR (24) MONTHS], 2000 (the "Second Expiration Date"), and provided that
Holder acquired at least One Million (1,000,000) shares of Common Stock pursuant
to the Warrant prior to the First Expiration Date, up to all or any part of the
number of shares of common stock available for purchase, but not acquired, by
Holder prior to the First Expiration Date.
1. EXERCISE OF WARRANT. This Warrant is exercisable at a price of $1.00 per
share of Common Stock issuable hereunder (the "Exercise Price") payable in cash
or by certified or official bank check. Upon surrender of this Warrant together
with a subscription form substantially in the form of Annex A hereto duly
executed, together with payment of the Exercise Price for the shares of Common
Stock purchased, at the principal executive offices of the Company, 9985
Business Park Avenue, Suite A, San Diego, California, 92131, or at such other
office as the Company may designate by notice in writing, the Holder shall be
entitled to receive, as promptly as practicable after surrender of the Warrant,
a certificate or certificates for the shares of Common Stock so purchased. Upon
exercise of this Warrant as set forth in the preceding sentence, the Holder
shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise.
The purchase rights represented by this Warrant are exercisable at the
option of the Holder hereof, in whole or in part (but not as to fractional
shares of the Common Stock), during any period in which this Warrant may be
exercised as set forth above. In the case of the purchase of less than all the
shares of Common Stock purchasable under this Warrant, the Company shall cancel
this Warrant upon the surrender hereof and shall execute and deliver a new
Warrant of like kind for the balance of the shares of Common Stock purchasable
hereunder.
2. ISSUANCE OF STOCK CERTIFICATES. The issuance of certificates for shares
of Common Stock upon the exercise of this Warrant shall be made without charge
to the Holder hereof of any tax which may be payable in respect to the issuance
thereof, and such certificates shall (subject to the provisions of Sections 3
and 5 hereof) be issued in the name of, or in such names as may be directed by,
the Holder hereof; provided, however, that the Company shall not be required to
pay any tax which may be payable in respect to any transfer involved in the
issuance and delivery of any such certificate in a name other than that of the
Holder and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid, and
provided that the issuance of certificates for such shares of Common Stock shall
not violate the securities laws.
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<PAGE> 27
3. TRANSFER, DIVISION AND COMBINATION.
3.1 Transfer. Subject to compliance with Section 8, the Holder of this
Warrant may transfer this Warrant at any time to any subsidiary or
affiliate of the Holder. Transfer of this Warrant and all rights hereunder,
in whole or in part, shall be registered on the books of the Company to be
maintained for such purpose, upon surrender of this Warrant at the
principal office of the Company or the office or agency designated by the
Company, together with a written assignment of this Warrant substantially
in the form of Annex B hereto duly executed by Holder or its agent or
attorney and funds sufficient to pay any transfer taxes payable upon the
making of such transfer. Upon such surrender and, if required, such
payment, the Company shall, subject to Section 8, execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination specified in such instrument of assignment, and shall issue to
the assignor a new Warrant evidencing the portion of this Warrant not so
assigned, and this Warrant shall promptly be canceled. A Warrant, if
properly assigned in compliance with Section 8, may be exercised by a new
Holder for the purchase of shares of Common Stock without having a new
Warrant issued.
3.2 Division and Combination. Subject to Section 8, this Warrant may
be divided or combined with other Warrants upon presentation hereof at the
aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be
issued, signed by Holder or its agent or attorney. Subject to compliance
with Section 3.1 and with Section 8, as to any transfer which may be
involved in such division or combination, the Company shall execute and
deliver a new Warrant or Warrants in exchange for the Warrant or Warrants
to be divided or combined in accordance with such notice.
3.3 Expenses. The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 3.
3.4 Maintenance of Books. The Company agrees to maintain, at its
aforesaid office or agency, books for the registration and the registration
of transfer of the Warrants.
4. EXERCISE PRICE. The exercise price of this Warrant shall be $1.00 per
share of Common Stock.
5. REGISTRATION AND REGISTRATION RIGHTS. The shares of Common Stock
issuable upon exercise of this Warrant (the "Warrant Shares") have not been
registered under the Securities Act of 1933, as amended ("the Securities Act").
Holder shall have such registration rights as are set forth in the Registration
Rights Agreement attached as Exhibit B to the Stock Purchase Agreement with
respect to the Warrant Shares issuable upon exercise of this Warrant.
Except as otherwise provided in this Section 5, upon exercise, in part or
in whole, of this Warrant, the Warrant Shares shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE REASONABLY
ACCEPTABLE TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE
144 UNDER SAID ACT. ANY SUCH OFFER, SALE, ASSIGNMENT OR TRANSFER MUST
ALSO COMPLY WITH APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THE
SECURITIES MAY ALSO BE SUBJECT TO RESTRICTIONS UNDER A STOCK PURCHASE
AGREEMENT BETWEEN THE ISSUER AND AGWAY HOLDINGS INC., DATED AS OF
NOVEMBER 12, 1998.
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<PAGE> 28
6. ADJUSTMENTS OF PURCHASE PRICE AND NUMBER OF SHARES.
6.1 Subdivision and Combination. In case the Company shall at any time
subdivide or combine the outstanding shares of Common Stock, the Exercise
Price shall forthwith be proportionately decreased in the case of
subdivision or increased in the case of combination.
6.2 Adjustment in Number of Shares. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section 6 (including
Sections 6.4 through 6.7 below), the number of shares of Common Stock
issuable upon the exercise of each Warrant shall be adjusted to the nearest
full share by multiplying the Exercise Price in effect immediately prior to
such adjustment by the number of shares of Common Stock issuable upon
exercise of the Warrant immediately prior to such adjustment and dividing
the product so obtained by the adjusted Exercise Price.
6.3 Anti-Dilution Provisions. The Exercise Price in effect at any time
and the number and kind of securities purchasable upon the exercise of this
Warrant shall also be subject to adjustment from time to time upon the
happening of any of the events set forth in Sections 6.4 through 6.7.
6.4 In the event the Company shall issue or sell any shares of Common
Stock (except as provided in Section 6.7) for a consideration per share
less than the Exercise Price in effect immediately prior to such issue or
sale, then the Exercise Price in effect immediately prior to such issue or
sale shall be reduced to such lesser price (calculated to the nearest cent)
as shall be determined by multiplying the Exercise Price in effect
immediately prior thereto by a fraction, the numerator of which shall be
the sum of (i) the number of shares of Common Stock outstanding immediately
prior to the issuance or sale of such additional shares and (ii) the number
of shares of Common Stock which the aggregate consideration received for
the issuance or sale of such additional shares would purchase at the
Exercise Price then in effect, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately after the issuance
or sale of such additional shares. For purposes of this Section 6.4, all
shares of Common Stock issuable upon exercise of outstanding options and
warrants, and all shares of Common Stock issuable upon exercise of this
Warrant, shall be deemed to be outstanding.
6.5 For the purposes of Section 6.4 above, the following subparagraphs
(a) to (c), inclusive, shall be applicable:
(a) If at any time the Company shall issue or sell any rights to
subscribe for, or any rights or options to purchase, Common Stock or any
stock or other securities convertible into or exchangeable for Common
Stock (such convertible or exchangeable stock or securities being
hereinafter called "Convertible Securities"), whether or not such rights
or options or the right to convert or exchange any such Convertible
Securities shall be immediately exercisable, and the price per share for
which Common Stock shall be issuable upon the exercise of such rights or
options or upon conversion or exchange of such Convertible Securities
(determined by dividing (1) the total amount, if any, received or
receivable by the Company as consideration for the granting of such
rights or options, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of such rights or
options, plus, in the case of any such rights or options which shall
relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable upon the issue or sale of such
Convertible Securities and upon the conversion or exchange thereof, by
(2) the total number of shares of Common Stock issuable upon the
exercise of such rights or options or upon the conversion or exchange of
all such Convertible Securities issuable upon the exercise of such
rights or options) shall be less than the Exercise Price in effect
immediately prior to the time of the issue or sale of such rights or
options, then the total number of shares of Common Stock issuable upon
the exercise of such rights or options or upon conversion or exchange of
the total amount of such Convertible Securities issuable upon the
exercise of such rights or options shall (as of the date of granting of
such rights or options) be deemed to be outstanding and to have been
issued for such price per share, and except as provided in Section 6.6,
no further adjustments of the Exercise Price shall be made upon the
actual issue of such Common Stock or of such Convertible Securities,
upon the exercise of such rights or options or upon the actual issue of
such Common Stock upon conversion or exchange of such Convertible
Securities.
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(b) If at any time any shares of Common Stock or Convertible
Securities or any rights or options to purchase any such Common Stock or
Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount
actually received by the Company therefor, after deduction therefrom of
any expenses incurred or any underwriting commissions or concessions or
discounts paid or allowed by the Company in connection therewith. In
case any shares of Common Stock or Convertible Securities or any rights
or options to purchase any such Common Stock or Convertible Securities
shall be issued or sold for a consideration other than cash, the amount
of the consideration other than cash actually received by the Company
shall be deemed to be the fair value of such consideration as determined
by the Board of Directors, after deduction therefrom of any expenses
incurred or any underwriting commissions or concessions or discounts
paid or allowed by the Company in connection therewith. In case any
shares of Common Stock or Convertible Securities or any rights or
options to purchase any such Common Stock or Convertible Securities
shall be issued in connection with any merger of another corporation
into the Company, the amount of consideration therefor shall be deemed
to be the greater of the fair market value of the shares issued in
connection with the merger after taking into account the effects of the
merger or the fair value of the net assets of such merged corporation as
determined by the Board of Directors after deducting therefrom all cash
and other consideration (if any) paid by the Company in connection with
such merger.
(c) The number of shares of Common Stock outstanding at any given
time shall not include shares owned or held by or for the account of the
Company, provided that such shares are neither issued, sold or otherwise
distributed by the Company.
6.6 If the purchase or exercise price provided for in any right or
option referred to in Section 6.5, or the rate at which any Convertible
Securities referred to in Section 6.5 (a) or (b) shall be convertible into
or exchangeable for Common Stock, shall change or a different purchase or
exercise price or rate shall become effective at any time or from time to
time (including any change resulting from termination of such right, option
or convertible security), then, upon such change becoming effective, the
Exercise Price then in effect hereunder shall forthwith be increased or
decreased to such Exercise Price as would have been obtained had the
adjustments made upon the granting or issuance of such rights or options or
Convertible Securities been made upon the basis of (a) the issuance of the
number of shares of Common Stock theretofore actually delivered upon the
exercise of such options or rights or upon the conversion or exchange of
such Convertible Securities for the consideration received therefor and (b)
the granting or issuance at the time of such change of any such options,
rights or Convertible Securities then still outstanding for the
consideration, if any, received by the Company therefor and to be received
on the basis of such changed price.
6.7 The Company shall not be required to make any adjustment to the
Exercise Price in the case of:
(a) the granting, after the date hereof, by the Company of stock
options under the Company's 1995 Stock Option Plan, so long as the
shares of Common Stock underlying such options are covered by the
500,000 shares currently reserved for issuance under such Plan as of the
date hereof; or
(b) the issuance of shares of Common Stock, pursuant to the
exercise of the options referred to in Section 6.7(a) above;
(c) shares of Common Stock issued upon the exercise or conversion,
as the case may be, or under the dividend provisions thereof, if any, of
options, warrants, preferred stock, convertible securities or other
rights to purchase Common Stock which options, warrants, preferred
stock, convertible securities or other rights are issued and outstanding
on the date hereof; and
(d) shares of Common Stock issued pursuant to any rights or
agreements granted after the date of this Agreement; provided that the
rights of first refusal granted by Section 5 of the Stock Purchase
agreement were exercised with respect to the initial sale or grant by
the Company of such rights or agreements.
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6.8 Reclassification, Consolidation, Merger, Etc. In case of any
reclassification or change of the outstanding shares of Common Stock (other
than a change in par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination), or in the case of
any consolidation of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger in which the
Company is the surviving corporation and which does not result in any
reclassification or change of the outstanding shares of Common Stock,
except a change as a result of a subdivision or combination of such shares
or conveyance to another corporation of the property of the Company as an
entirety), the Holder of this Warrant shall thereafter have the right to
purchase the kind and number of shares of stock and other securities and
property receivable upon such reclassification, change, consolidation,
merger, sale or conveyance at an aggregate price equal to the product of
(x) the number of shares issuable upon exercise of this Warrant and (y) the
Exercise Price in effect immediately prior to the record date for such
reclassification, change, consolidation, merger, sale or conveyance as if
such Holder had exercised this Warrant prior to such record date.
6.9 Approval and Notice of Adjustment in Exercise Price. Any
adjustment of the Exercise Price made pursuant to this Section 6 shall be
made or approved by the Company's independent public accountants at the
time of such adjustment.
7. FINANCIAL AND BUSINESS INFORMATION.
7.1 Quarterly and Annual Information.
(a) The Company will deliver to each Holder as soon as practicable
after the end of each fiscal quarter or fiscal year of the Company, as
appropriate, and in no event later than twenty (20) days following the
end of the relevant period, one copy of an unaudited consolidated
balance sheet of the Company and its subsidiaries as at the end of such
quarter, and unaudited consolidated statements of income, retained
earnings and changes in financial position of the Company and its
subsidiaries for such quarter; setting forth in each case in comparative
form the figures for the corresponding periods in the previous fiscal
year; all prepared in accordance with GAAP except that the financial
statements referred to in Section 7.1(a) do not contain footnotes and
are subject to normal year-end audit adjustments, which will not,
individually or in the aggregate, be material in magnitude.
(b) In addition, the Company will deliver to each Holder (x) no
later than forty (40) days after the end of the relevant period, any and
all information necessary for the Buyer to fulfill its reporting
obligations with the SEC; (y) within five (5) days after the filing
thereof with the SEC, a copy of each filing made by the Company with the
SEC; and (z) within two (2) days after release thereof, copies of all
press releases issued by the Company or any of its subsidiaries.
(c) With respect to annual information, the Company will deliver to
each Holder, no later than sixty (60) days after year end, an audited
consolidated balance sheet of the Company and its subsidiaries as at the
end of such year, and audited consolidated statements of income,
retained earnings and changes in financial position of the Company and
its subsidiaries for such year; setting forth in each case in
comparative form the figures for the corresponding periods in the
previous fiscal year; all prepared in accordance with GAAP, and which
audited financial statements shall be accompanied by (i) an opinion
thereon of the independent certified public accountants regularly
retained by the Company, or any other form of independent certified
public accountants of recognized national standing selected by the
Company and (ii) a report of such independent certified public
accountants confirming any adjustment made pursuant to Section 6 during
such year.
8. DISPOSITION OF WARRANT AND WARRANT SHARES. The Holder further agrees not
to make any disposition of all or any part of this Warrant or the Warrant Shares
in any event unless and until:
(a) The Company shall have received a letter secured by the Holder
from the Securities and Exchange Commission stating that no action will be
recommended to the Commission with respect to the proposed proposition; or
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(b) There is then in effect a registration statement under the Act
covering such proposed disposition and such disposition is made in
accordance with said registration statement; or
(c) The Holder shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement
of the circumstances surrounding the proposed disposition, the Holder shall
have furnished the Company with an opinion of counsel for the Holder to the
effect that such disposition will not require registration of such Warrant
or shares under the Act, and such opinion of counsel for the Holder shall
have been concurred in by the Company's counsel and the Company shall
advise the Holder of such concurrence.
(d) Notwithstanding the provisions of paragraphs (a), (b) and (c)
above, no such Securities and Exchange Commission letter, registration
statement or opinion of counsel shall be required (i) for any transfer of
this Warrant or any shares issuable upon exercise of this Warrant in
compliance with SEC Rule 144 or 144A, or (ii) for any transfer of this
Warrant or shares issuable upon exercise of this Warrant by a Holder that
is a partnership or a corporation to (A) a partner of such partnership or
corporation, (B) a retired partner or shareholder, or (iii) the transfer by
gift, will or intestate succession by any Holder to his or her spouse or
lineal descendants or ancestors or any trust for any of the foregoing.
9. EXCHANGE AND REPLACEMENT OF WARRANT. This Warrant is exchangeable
without expense, upon the surrender hereof by the registered Holder at the
principal executive office of the Company, for a new Warrant of like kind and
date representing in the aggregate the right to purchase the same number of
shares as are purchasable hereunder in such denominations and in the name(s) of
such assignee(s) as shall be designated by the registered Holder hereof at the
time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft or destruction of this Warrant, of indemnity or security
reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will make and deliver a new Warrant of
like kind, in lieu of this Warrant.
10. FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Holder an amount in cash equal to such fraction
multiplied by the current market value of a share of Common Stock, as determined
in good faith by the Board of Directors of the Company.
11. RESERVATION AND LISTING OF SHARES. The Company shall at all times
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issuance upon the exercise of this Warrant, such number of
shares of Common Stock as shall be issuable upon the exercise hereof. The
Company covenants and agrees that, upon exercise of this Warrant and payment of
the Exercise Price therefor, all shares of Common Stock issuable upon such
exercise shall be duly and validly issued, fully paid and non-assessable,
provided that the Exercise Price per share shall equal or exceed the par value
of the Common Stock. As long as the Warrant shall be outstanding, the Company
shall use its best efforts to cause all shares of Common Stock issuable upon the
exercise of the Warrant to be listed (subject to official notice of issuance) on
all securities exchanges on which the Common Stock may then be listed.
12. CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each adjustment
or re adjustment of the Exercise Price, the Company, at its expense, shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and prepare and furnish to the Holder a certificate of the chief
financial officer of the Company setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is
based. The Company shall, upon the written request at any time of the Holder,
furnish to the Holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Exercise Price at the time in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the exercise of this Warrant.
13. RIGHTS OF WARRANT HOLDERS. Nothing contained in this Warrant shall be
construed as conferring upon the Holder hereof the right to vote or to consent
or to receive notice as a shareholder in respect of any meetings or shareholders
for the election of directors or any other matter, or as having any rights
whatsoever as a shareholder of the Company.
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<PAGE> 32
14. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made when
delivered in person, or mailed by registered or certified mail, return receipt
requested:
(a) If to the registered Holder or Holders of this Warrant, to the
address of such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth on the first page of
this Warrant or to such other address as the Company may designate by
notice to the Holders.
15. REMEDIES. Each holder of Warrant and Warrant Shares, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under Section 5
of this Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of Section 5 of this Warrant and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
16. AMENDMENT. This Warrant and all other Warrants may be modified or
amended or the provisions hereof waived with the written consent of the Company
and the Holder or Holders, provided that no such Warrant may be modified or
amended to reduce the number of shares of Common Stock for which such Warrant is
exercisable or to increase the price at which such shares may be purchased upon
exercise of such Warrant (before giving effect to any adjustment as provided
therein) without the prior written consent of the Holder thereof.
17. SEVERABILITY. Wherever possible, each provision of this Warrant shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Warrant.
18. SUCCESSORS. All the covenants, agreements, representations and
warranties contained in this Warrant shall bind the parties hereto and their
respective heirs, executors, administrators, distributes, successors and
assigns.
19. HEADINGS. The Section headings in this Warrant are inserted for
purposes of convenience only and shall have no substantive effect.
20. LAW GOVERNING. This Warrant shall be construed and enforced in
accordance with, and governed by, the laws of the State of New York.
WITNESS the seal of the Company and the signature of its duly authorized
officer.
Dated: , 1998
PLANET POLYMER TECHNOLOGIES, INC.
By:
------------------------------------
Robert J. Petcavich,
Chief Executive Officer
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PROXY PLANET POLYMER TECHNOLOGIES, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF THE SHAREHOLDERS
TO BE HELD ON JANUARY 6, 1999
The undersigned hereby appoints Robert J. Petcavich and H.M. Busby, and each
of them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of Planet Polymer Technologies,
Inc. which the undersigned may be entitled to vote at the Special Meeting of
Shareholders of Planet Polymer Technologies, Inc. to be held at the offices of
the Company, located at 9985 Businesspark Avenue, Suite A, San Diego, California
92131, on January 6, 1999, at 10:00 a.m., local time and at any and all
postponements, continuations and adjournments thereof, with all powers that the
undersigned would possess if personally present, upon and in respect of the
following matters and in accordance with the following instructions, with
discretionary authority as to any and all other matters that may properly come
before the meeting.
IN THEIR DISCRETION, THE NAMED PROXIES ARE AUTHORIZED TO VOTE UPON SUCH MATTERS
AS MAY PROPERLY COME BEFORE THE MEETING, OR ANY ADJOURNMENT THEREOF.
MANAGEMENT AND THE BOARD OF DIRECTORS RECOMMEND A VOTE FOR PROPOSAL 1.
PROPOSAL 1:To approve the issuances of securities of the Company exceeding
twenty percent of the outstanding Common Stock of the Company as
described in the Proxy Statement dated as of December 14, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 34
(CONTINUED FROM OTHER SIDE)
DATED: , 199
-------------------------------------------
-------------------------------------------
Signature(s)
Please sign exactly as your name appears
hereon. If the stock is registered in the
names of two or more persons, each should
sign. Executors, administrators, trustees,
guardians and attorneys-in-fact should add
their titles. If signer is a corporation,
please give full corporate name and have a
duly authorized officer sign, stating
title. If signer is a partnership, please
sign in partnership name by authorized
person.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
