<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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] 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)
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(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:
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2. Aggregate number of securities to which transaction applies:
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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):
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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:
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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
PRELIMINARY PROXY MATERIALS
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
Robert J. Petcavich
Chairman and Chief Executive Officer
San Diego, California
December ___, 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 11, 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.
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
<PAGE> 4
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.
2.
<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 November 10, 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
--------------------------------------
PERCENTAGE OF
TITLE OF CLASS BENEFICIAL OWNER NUMBER OF 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) 668,206 12.37%
9985 Businesspark Avenue, Suite A
San Diego, CA 92131
Common Rebecca A. Petcavich (5) 602,193 11.25%
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) 964,698 17.68%
Series A Special Situations Private Equity Fund, L.P. 500,000 100.00%
153 East 53rd Street, 51st Floor
New York, NY 10022
</TABLE>
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* 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 and Registration Agency,
Inc. 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 November 10, 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 November 10, 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 November 10, 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 November 10, 1998.
3.
<PAGE> 6
(4) Includes 68,607 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days of November 10, 1998.
(5) Includes 21,694 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days of November 10, 1998.
(6) Includes 66,137 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days of November 10, 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 November 10, 1998,
and 72,124 shares 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 November 10, 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 November 10, 1998.
(9) Includes 12,200 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days of November 10, 1998.
(10) Includes 9,000 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days of November 10, 1998.
(11) Includes 124,207 shares of Common Stock issuable upon exercise of
options that are exercisable within 60 days of November 10, 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
4.
<PAGE> 7
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 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 November 10, 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
5.
<PAGE> 8
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 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-dilutions 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-dilutions 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.
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
6.
<PAGE> 9
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
Robert J. Petcavich
Chairman and Chief Executive Officer
December ___, 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
0
<PAGE> 12
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 Share
Price") of the Shares shall be $1.00. The total purchase price (the
"Purchase Price") for Buyer's Shares shall be $1,000,000 (i.e., the
number of Shares to be purchased by Buyer multiplied by the Per Share
Price). The Shares shall be sold at the Initial Closing as hereinafter
provided.
b. Closing. The initial closing (the "Initial Closing") of the
issuance and sale of the Shares shall occur on a date that is within
three (3) business days of the satisfaction (or waiver) of all
conditions to closing set forth in Sections 8 and 9 hereof (but in no
event shall the Initial Closing occur later than January 31, 1999). The
date of the occurrence of the Initial Closing shall be referred to
herein as the "Initial Closing Date."
c. Form of Payment. Buyer shall pay the Purchase Price by wire
transfer of immediately available United States Dollars on the Initial
Closing Date to:
Bank: Citibank New York
111 Wall Street, New York, NY 10005
ABA: 021000089
FBO: Morgan Stanley Dean Witter
Beneficiary Account: 40611172
For Further CR to: 212-032582-001
Account Name: Planet Polymer Technologies, Inc.
TIN: 33-0502606
1
<PAGE> 13
Account Broker: KD Shanley #001
Branch Address: Morgan Stanley Dean Witter
1131 Monterey St., San Luis Obispo, CA 93401
(ABA# 021000089, Attention _______________________. At the Initial Closing, the
Company shall deliver one or more stock certificates, duly executed on behalf of
the Company, representing the Shares (the "Stock Certificates"), together with
the Warrants described below.
d. Warrant Issuances. At the Initial Closing, the Company will
issue to Buyer a Warrant duly executed on behalf of the Company,
substantially in the form of Exhibit A attached hereto, to acquire the
Warrant Shares at an exercise price per Warrant Share equal to the per
share price for the Shares (subject to adjustment in the manner set
forth in the Warrant), which Warrant may be exercised as follows: (i)
during the twelve (12) month period commencing on the Initial Closing
Date and ending on the date which is twelve (12) months after the
Initial Closing Date (the "First Warrant Period"), Buyer shall be
entitled to purchase up to the full amount of the Warrant Shares (i.e.,
2,000,000 shares) at the Per Share Price; and (ii) during the period
commencing twelve (12) months after the Initial Closing Date and ending
twenty-four (24) months after the Initial Closing Date (the "Second
Warrant Period"), and provided that Buyer acquired at least 1,000,000 of
the Warrant Shares during the First Warrant Period, Buyer shall be
entitled to purchase all Warrant Shares not purchased during the First
Warrant Period.
2. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
Buyer represents and warrants to the Company as of the date hereof and
as of the date of the Initial Closing that:
a. Investment Purpose. Buyer is purchasing the Shares and the
Warrants and will acquire the Warrant Shares for its own account for
investment only and not with a view towards, or for resale in connection
with, the distribution thereof except pursuant to sales registered under
the 1933 Act or exempt from the registration requirements thereof. Buyer
is not purchasing the Shares, the Warrants or the Warrant Shares for the
purpose of covering short sale positions in the Common Stock established
on or prior to the date of the Initial Closing.
b. Accredited Investor Status. Buyer hereby represents and
warrants to the Company as follows:
(i) Buyer is an "Accredited Investor," as such term is
defined in Regulation D under the 1933 Act in that the
undersigned is a corporation having total assets in excess of
$5,000,000 not formed for the specific purpose of acquiring the
Securities (as defined below) .
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(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
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<PAGE> 15
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.
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,
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<PAGE> 16
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 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.
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<PAGE> 17
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.
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<PAGE> 18
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, 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
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<PAGE> 19
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 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.
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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.
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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, 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.
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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, 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
11
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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
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<PAGE> 24
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 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;
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<PAGE> 25
(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 extent such acquisition, offer or agreement would
result in the Buyer
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<PAGE> 26
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;
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<PAGE> 27
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> 28
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,
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<PAGE> 29
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.
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.
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<PAGE> 30
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
If to the Buyer:
Agway Holdings Inc.
P.O. Box 4933
Syracuse, NY 13221-4933
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<PAGE> 31
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
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<PAGE> 32
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 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: __________________________________
its: __________________________________
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<PAGE> 33
PLANET POLYMER TECHNOLOGIES, INC.
BY: ___________________________________
its: _________________________________
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<PAGE> 34
ANNEX A
FORM OF WARRANT
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE SECURITIES
MAY NOT BE OFFERED, SOLD OR TRANSFERRED ABSENT SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT.
PLANET POLYMER TECHNOLOGIES, INC.
WARRANT TO PURCHASE UP TO A MAXIMUM OF
2,000,000 SHARES OF COMMON STOCK
In consideration of the sum of good and valuable consideration, the
receipt of which is hereby acknowledged by PLANET POLYMER TECHNOLOGIES, INC., a
California corporation (the "Company"), AGWAY HOLDINGS INC. (the "Holder"), is
hereby granted the right to purchase (i) at any time from the date hereof until
5:00 P.M., Pacific Standard Time, on [INITIAL CLOSING DATE PLUS TWELVE (12)
MONTHS], 1999 (the "First Expiration Date") up to all or any part of Two Million
(2,000,000) fully paid and non-assessable shares of the Company's common stock,
without par value ("Common Stock"); and, at any time during the period
commencing on the First Expiration Date and ending on [INITIAL CLOSING DATE PLUS
TWENTY-FOUR (24) MONTHS], 2000 (the "Second Expiration Date"), and provided that
Holder acquired at least One Million (1,000,000) shares of Common Stock pursuant
to the Warrant prior to the First Expiration Date, up to all or any part of the
number of shares of common stock available for purchase, but not acquired, by
Holder prior to the First Expiration Date.
1. EXERCISE OF WARRANT. This Warrant is exercisable at a price of $1.00 per
share of Common Stock issuable hereunder (the "Exercise Price") payable in cash
or by certified or official bank check. Upon surrender of this Warrant together
with a subscription form substantially in the form of Annex A hereto duly
executed, together with payment of the Exercise Price for the shares of Common
Stock purchased, at the principal executive offices of the Company, 9985
Business Park Avenue, Suite A, San Diego, California, 92131, or at such other
office as the Company may designate by notice in writing, the Holder shall be
entitled to receive, as promptly as practicable after surrender of the Warrant,
a certificate or certificates for the shares of Common Stock so purchased. Upon
exercise of this Warrant as set forth in the preceding sentence, the Holder
shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise.
The purchase rights represented by this Warrant are exercisable at the option of
the Holder hereof, in whole or in part (but not as to fractional shares of the
Common Stock), during any period in which this Warrant may be exercised as set
forth above. In the case of the purchase of less than all the shares of Common
Stock purchasable under this Warrant, the Company shall cancel this Warrant upon
the surrender hereof and shall execute and deliver a new Warrant of like kind
for the balance of the shares of Common Stock purchasable hereunder.
<PAGE> 35
2. ISSUANCE OF STOCK CERTIFICATES. The issuance of certificates for shares
of Common Stock upon the exercise of this Warrant shall be made without charge
to the Holder hereof of any tax which may be payable in respect to the issuance
thereof, and such certificates shall (subject to the provisions of Sections 3
and 5 hereof) be issued in the name of, or in such names as may be directed by,
the Holder hereof; provided, however, that the Company shall not be required to
pay any tax which may be payable in respect to any transfer involved in the
issuance and delivery of any such certificate in a name other than that of the
Holder and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid, and
provided that the issuance of certificates for such shares of Common Stock shall
not violate the securities laws.
3. TRANSFER, DIVISION AND COMBINATION.
3.1 TRANSFER. Subject to compliance with Section 8, the Holder of this
Warrant may transfer this Warrant at any time to any subsidiary or affiliate of
the Holder. Transfer of this Warrant and all rights hereunder, in whole or in
part, shall be registered on the books of the Company to be maintained for such
purpose, upon surrender of this Warrant at the principal office of the Company
or the office or agency designated by the Company, together with a written
assignment of this Warrant substantially in the form of Annex B hereto duly
executed by Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall, subject to Section 8, execute
and deliver a new Warrant or Warrants in the name of the assignee or assignees
and in the denomination specified in such instrument of assignment, and shall
issue to the assignor a new Warrant evidencing the portion of this Warrant not
so assigned, and this Warrant shall promptly be canceled. A Warrant, if properly
assigned in compliance with Section 8, may be exercised by a new Holder for the
purchase of shares of Common Stock without having a new Warrant issued.
3.2 DIVISION AND COMBINATION. Subject to Section 8, this Warrant may be
divided or combined with other Warrants upon presentation hereof at the
aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by Holder or its agent or attorney. Subject to compliance with Section
3.1 and with Section 8, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
3.3 EXPENSES. The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 3.
3.4 MAINTENANCE OF BOOKS. The Company agrees to maintain, at its
aforesaid office or agency, books for the registration and the registration of
transfer of the Warrants.
4. EXERCISE PRICE. The exercise price of this Warrant shall be $1.00 per
share of Common Stock.
<PAGE> 36
5. REGISTRATION AND REGISTRATION RIGHTS. The shares of Common Stock
issuable upon exercise of this Warrant (the "Warrant Shares") have not been
registered under the Securities Act of 1933, as amended ("the Securities Act").
Holder shall have such registration rights as are set forth in the Registration
Rights Agreement attached as Exhibit B to the Stock Purchase Agreement with
respect to the Warrant Shares issuable upon exercise of this Warrant.
Except as otherwise provided in this Section 5, upon exercise, in part
or in whole, of this Warrant, the Warrant Shares shall bear the following
legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR
AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE REASONABLY
ACCEPTABLE TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD
PURSUANT TO RULE 144 UNDER SAID ACT. ANY SUCH OFFER, SALE,
ASSIGNMENT OR TRANSFER MUST ALSO COMPLY WITH APPLICABLE STATE
SECURITIES LAWS. THE HOLDER OF THE SECURITIES MAY ALSO BE SUBJECT
TO RESTRICTIONS UNDER A STOCK PURCHASE AGREEMENT BETWEEN THE
ISSUER AND AGWAY HOLDINGS INC., DATED AS OF NOVEMBER 12, 1998.
6. ADJUSTMENTS OF PURCHASE PRICE AND NUMBER OF SHARES.
6.1 SUBDIVISION AND COMBINATION. In case the Company shall at any time
subdivide or combine the outstanding shares of Common Stock, the Exercise Price
shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
6.2 ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of the Exercise
Price pursuant to the provisions of this Section 6 (including Sections 6.4
through 6.7 below), the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted to the nearest full share by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of shares of Common Stock issuable upon exercise of the Warrant
immediately prior to such adjustment and dividing the product so obtained by the
adjusted Exercise Price.
6.3 ANTI-DILUTION PROVISIONS. The Exercise Price in effect at any time
and the
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<PAGE> 37
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
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issue of such Common Stock or of such Convertible Securities, upon the exercise
of such rights or options or upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities.
(b) If at any time 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
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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.
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
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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
(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
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<PAGE> 41
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
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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.
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
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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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<PAGE> 44
ANNEX C
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 Thomas M.
Connelly, 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 RECOMMENDS 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.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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.
1.
