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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 30, 1999
REGISTRATION NO.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PLANET POLYMER TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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CALIFORNIA 33-0502606
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
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9985 BUSINESSPARK AVENUE, SUITE A
SAN DIEGO, CALIFORNIA 92131
(619) 549-5130
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ROBERT J. PETCAVICH
CHAIRMAN, CHIEF EXECUTIVE OFFICER AND SECRETARY
PLANET POLYMER TECHNOLOGIES, INC.
9985 BUSINESSPARK AVENUE, SUITE A
SAN DIEGO, CALIFORNIA 92131
(619) 549-5130
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
LANCE W. BRIDGES, ESQ.
COOLEY GODWARD LLP
4365 EXECUTIVE DRIVE, SUITE 1100
SAN DIEGO, CA 92121
(619) 550-6000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
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Common Stock...................... 3,353,479 $2.00 $6,706,958 $1,864
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(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c) of the Securities Act of 1933. The
price per share and aggregate offering price are based upon the average of
the high and low sales price of Planet Polymer Technologies, Inc.'s common
stock on March 23, 1999 as reported in the Nasdaq SmallCap Market. It is not
known how many shares will be purchased under this registration statement or
at what price such shares will be purchased.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
SUBJECT TO COMPLETION, DATED MARCH 30, 1999
PROSPECTUS
3,353,479 SHARES
PLANET POLYMER TECHNOLOGIES, INC.
COMMON STOCK
-------------------------
Selling shareholders identified in this prospectus are selling 3,353,479
shares of Planet Polymer Technologies, Inc. common stock. Planet will not
receive any of the proceeds from the sale of shares by the selling shareholders.
Our common stock is listed in the Nasdaq SmallCap Market under the symbol
"POLY." The closing sale price of the common stock, as reported on the Nasdaq
SmallCap Market on March 26, 1999, was $2.0625 per share.
The selling shareholders may sell the shares of common stock described in
this prospectus in public or private transactions, on or off the Nasdaq SmallCap
Market, at prevailing market prices, or at privately negotiated prices. The
selling shareholders may sell shares directly to purchasers or through brokers
or dealers. Brokers or dealers may receive compensation in the form of
discounts, concessions or commissions from the selling shareholders. More
information is provided in the section entitled "Plan of Distribution."
INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS," BEGINNING ON PAGE 4.
Neither the Securities Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is April , 1999.
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THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD TO YOU UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.
THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.
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<PAGE> 3
WHERE YOU CAN GET MORE INFORMATION
We are a reporting company and file annual, quarterly and current reports,
proxy statements and other information with the SEC. You may read and copy these
reports, proxy statements and other information at the SEC's public reference
rooms in Washington, D.C., New York, NY and Chicago, IL. You can request copies
of these documents by writing to the SEC and paying a fee for the copying cost.
Please call the SEC at 1-800-SEC-0330 for more information about the operation
of the public reference rooms. Our SEC Filings are also available at the SEC's
Web site at "http://www.sec.gov". In addition, you can read and copy our SEC
filings at the office of the National Association of Securities Dealers, Inc. at
1735 K Street, Washington, D.C. 20006.
The SEC allows us to "incorporate by reference" information that we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings we will make with
the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934:
- Annual Report on Form 10-KSB for the year ended December 31, 1998;
- Proxy Statement for the 1999 Annual Meeting of Shareholders;
- Current Report on Form 8-K filed March 15, 1999; and
- Our registration statement on Form 8-A filed on September 19, 1995 which
includes a description of our common stock.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address or telephone number:
Planet Polymer Technologies, Inc.
9985 Businesspark Avenue, Suite A
San Diego, CA 92131
Attn: Secretary
(619) 549-5130
This prospectus is part of a larger registration statement we filed with
the SEC. You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone else to provide you
with different information. We are not making an offer of these securities in
any state where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other than the date on
the front of the document.
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THE COMPANY
Except for historical information, the information contained in this
prospectus and in our SEC reports includes "forward looking" statements about
our expected future business and performance. Our actual operating results and
financial performance may prove to be very different from what we might have
predicted as of the date of this prospectus. The risks described below address
some of the factors that may affect our future operating results and financial
performance.
Planet is a specialty chemical company that designs, develops, manufactures
and markets degradable and recycled polymer materials. Planet's proprietary
materials are marketed under the trademarks EnviroPlastic(R), Aquadro(TM) and
AQUAMIM(TM). Enviroplastic and Aquadro can be used to produce films, coatings
and injection molded parts that serve as environmentally-compatible alternatives
to conventional plastics. AQUAMIM, developed by Planet in 1998, can be used to
manufacture complex metal parts using conventional plastics molding equipment.
Our executive offices are located at 9985 Businesspark Avenue, Suite A, San
Diego, CA 92131, telephone number (619) 549-5130.
USE OF PROCEEDS
Planet Polymer Technologies, Inc. will not receive any proceeds from the
sale of the shares of common stock offered by the selling shareholders.
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RISK FACTORS
An investment in the shares being offered by means of this prospectus
involves a high degree of risk. In deciding whether to purchase shares of our
common stock, you should carefully consider the following risk factors, in
addition to other information contained in this prospectus, in our most recent
annual report on Form 10-KSB and in any other documents incorporated by
reference into this prospectus from our other SEC filings.
WE HAVE A HISTORY OF OPERATING LOSSES.
Our revenues to date have consisted primarily of revenues generated by
Deltco, Inc. (our wholly owned-subsidiary) and contract research and development
revenues. We have incurred losses since inception. For the years ended December
31, 1998 and 1997, we had net losses of approximately $1,629,000 and $975,000,
respectively. As of December 31, 1998, we had an accumulated deficit of
approximately $9.9 million. Our product shipments to date have related primarily
to our research and development efforts and customer pilot trials. We have
generated minimal revenues from product sales. Due to lengthy customer
evaluation and acceptance periods, we expect that negative cash flow from our
operations will continue for the foreseeable future. Other than the Feasibility
Agreement with Agway Consumer Products Inc. (recently assigned to its parent,
Agway Inc.), we have not received significant commitments beyond the research,
development and testing stage from any customer regarding purchases of our
products or technologies. Full-scale commercial use of any of our products will
require additional development and testing. We cannot guarantee the timing of
the commercial deployment of our products or that our products and technology
will ever receive widespread market acceptance. As a result of our operating
history, we have not paid any cash dividends on our common stock since our
inception and do not anticipate paying cash dividends in the foreseeable future.
SEASONALITY AND FLUCTUATIONS IN OUR QUARTERLY RESULTS MAY CAUSE VOLATILITY IN
OUR STOCK PRICE.
Deltco has experienced seasonal fluctuations in quarterly revenues and
operating results and we cannot guarantee that Deltco will be profitable in any
particular period. Seasonal fluctuations at Deltco may cause volatility in the
price of our common stock. Deltco's sales and income have historically been
lower in the first and fourth quarters and higher in the second and third
quarters of each year, reflecting the general pattern associated with much of
the manufacturing industry. In addition, announcements by us or our competitors
of new products and technologies could cause customers to defer or cancel
purchases of Deltco's products, which could adversely affect our business,
financial condition and results of operations. Additional factors that may cause
our revenues, gross margins and results of operations to vary significantly from
period to period include:
- mix of products sold;
- availability of inventory;
- costs;
- price discounts;
- market acceptance and the time and availability of new products by us or
our customers;
- usage of different distribution and sales channels;
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- customization of products; and
- general economic and political conditions.
We cannot guarantee that we will realize positive operating results in the
future, and even if we become profitable, we cannot guarantee what revenue or
profit levels we will achieve or whether they will be sustainable.
WE MAY REQUIRE ADDITIONAL CAPITAL IN THE FUTURE.
Our future capital requirements will depend on many factors, including:
- the cost of manufacturing scale-up;
- the timing of market acceptance of our products;
- competing technological and market developments; and
- the costs involved in filing, prosecuting and enforcing patent claims.
We anticipate that our existing resources will enable us to maintain our
current and planned operations through at least the next twelve months. We
cannot guarantee that changes in our plans or other events affecting our
operating expenses will not result in the expenditure of such resources before
such time.
We intend to seek additional funding through partnership arrangements or
the extension of existing arrangements or through public or private equity or
debt financing. We cannot guarantee that additional financing will be available
on acceptable terms, or at all. Insufficient funds may require us to delay,
scale back or eliminate some or all of our activities or to obtain funds through
arrangements with third parties that may require us to relinquish rights to
certain of our technologies, product candidates or products that we would
otherwise seek to develop or commercialize ourselves.
OUR FAILURE TO BE LISTED ON THE NASDAQ SMALLCAP MARKET MAY AFFECT OUR ABILITY TO
RAISE CAPITAL.
Our common stock is quoted on the Nasdaq SmallCap Market. Our ability to
raise capital may depend on our stock continuing to be quoted on the Nasdaq
SmallCap Market. We cannot guarantee that we will be able to satisfy the
criteria for continued quotation on the Nasdaq SmallCap Market. For example, one
of the criteria for continued quotation is that we will maintain net tangible
assets of $2 million. As of January 31, 1998, our net tangible assets were
approximately $2.2 million. Failure to meet the maintenance criteria in the
future may result in our common stock not being eligible for quotation. If our
common stock is delisted from the Nasdaq SmallCap Market, trading, if any, in
our common stock would thereafter have to be conducted in the over-the-counter
market in the so-called "pink sheets" or, if available, the Nasdaq OTC Bulletin
Board. As a result, an investor would find it more difficult to dispose of, and
to obtain accurate quotations as to the value of, our common stock, and our
ability to raise additional funding may be impeded.
OUR STOCK MAY BECOME SUBJECT TO PENNY STOCK REGULATIONS.
If our common stock is delisted from the Nasdaq SmallCap Market and the
trading price of our common stock is less than $5.00 per share, trading in our
common stock
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would also be subject to the requirements of Rule 15g-9 promulgated under the
Securities Exchange Act of 1934. These requirements could severely limit the
market liquidity of our common stock and the ability purchasers of our common
stock to sell such shares in the secondary market. We cannot guarantee that our
common stock will not be delisted from the Nasdaq SmallCap Market or treated as
a penny stock.
WE DEPEND ON THE AVAILABILITY OF RAW MATERIALS FOR USE IN OUR PRODUCTS.
Although certain raw materials used in our products are available from
several sources, should supply problems arise, our inability to develop
alternative sources of supply quickly and on a cost-effective basis could
materially impair our ability to manufacture and deliver our products. For
example, Deltco's recycled polypropylene generally replaces higher priced virgin
polypropylene in its customer's end products to reduce costs. Deltco's business
depends substantially upon the availability and price of this virgin
polypropylene as well as the price of oil. If the virgin polypropylene supply
becomes imbalanced due to excess polypropylene capacity, the price of the virgin
material will decrease creating a lessened demand for Deltco's recycled
material. Price downturns in the virgin polypropylene market have had and will
continue to have a material adverse effect on our business, financial condition
and results of operations.
A SIGNIFICANT PORTION OF OUR RAW MATERIALS ARE DERIVED FROM ONE SUPPLIER.
Deltco purchases the majority of its scrap resins from 3M. A formal supply
agreement has been executed with 3M. The agreement has an indefinite term and
may be terminated by either party upon thirty-days prior written notice. Should
demand for our products substantially exceed current expectations, or if supply
problems should arise with 3M, we cannot guarantee that we would be able to
obtain sufficient quantities of raw materials from our current sources, or that
alternate sources could be found without disrupting the manufacturing process.
If we were unable to obtain these raw materials to produce our products, our
business, financial condition and results of operations could be adversely
affected.
OUR GROWTH IS DEPENDENT ON THE MARKET'S ACCEPTANCE OF OUR PRODUCTS.
Our success is dependent on the commercial acceptance of our technologies
by the various industries targeted by our products. Although our products have
undergone numerous product trials with customers, to date no customer has made a
significant commitment to purchase any of our products. Broad market acceptance
of our products will depend upon our ability to demonstrate to potential
customers that our products can compete favorably with alternative solutions. We
cannot guarantee that any of our targeted markets will result in a significant
commercial opportunity, that unforeseen problems will not develop with respect
to our technology or products or that we will be successful in completing the
commercial implementation of our technology. A significant risk remains as to
the timing of commercial implementation and the prospects of commercial success
for our technology and products. In addition, we will need to achieve further
product cost reductions to compete successfully in the future. Although we
intend to achieve such reductions through a combination of engineering and
process improvements and economies of scale, we cannot guarantee that we will
achieve our cost objectives.
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WE HAVE LIMITED MANUFACTURING EXPERIENCE AND CAPABILITY.
Our facility in San Diego, California is a pilot production facility with
limited manufacturing capability. Deltco's facility is in Ashland, Wisconsin. In
the event that production at either facility were interrupted by fire,
earthquakes, floods or other acts of God, regulatory actions or other causes, we
would be unable to continue to develop and manufacture our products. Such an
interruption would materially and adversely affect our business and results of
operations. To date we have manufactured and sold only small quantities of our
products for commercial use. Our San Diego facility has limited capacity to
handle higher commercial volume manufacturing. To increase production
capability, we will need to either expand the production capabilities of the San
Diego facility and or Deltco facility or seek additional facilities, either of
which would require significant expenditures and additional personnel. Although
we plan to establish manufacturing relationships with contract manufacturers, no
manufacturer has produced significant volumes of our products to date. To be
successful, our products must be manufactured in commercial quantities at
competitive costs. If we are unable to develop or contract for manufacturing
capabilities on acceptable terms, our competitive position and our ability to
achieve profitability could be materially impaired.
OUR SUCCESS IS DEPENDENT ON OUR STRATEGIC RELATIONSHIPS WITH OUR CUSTOMERS.
Our technologies are designed to serve multiple industries. An important
part of our strategy is to promote acceptance of our products through technology
and product alliances with our customers. Our dependence on these customers
raises certain risks with respect to the future success of our business. We have
focused our product development efforts by working in close collaboration with
our customers. Certain of our customers are concurrently engaged in similar
development and testing programs with other companies involving competing
products and technologies. Our success is dependent on the successful completion
and commercial deployment of our products and on the future commitment of our
customers to our products and technology. We cannot guarantee that our
collaboration with our customers will result in products that are accepted by
our customers or widely accepted in the marketplace. In addition, our reliance
on collaborations with third parties may require us to relinquish rights to
certain of our technologies, product candidates or products that we would
otherwise seek to develop or commercialize ourselves. For example, pursuant to
our license agreement with Agway, Agway has certain rights to our technologies.
In addition, the Agway agreement places certain limitations on us with respect
to the use of our technologies in certain areas of business. We cannot guarantee
that we will not enter into similar collaborations in the future.
OUR FAILURE TO MANAGE GROWTH OF OPERATIONS MAY ADVERSELY AFFECT US.
Future company growth may challenge our management, operational and
financial resources. We may experience problems associated with the design,
engineering and manufacturing scale-up of our products. Our ability to manage
growth effectively will require us to continue to implement and improve our
management, operational and financial systems and to expand, train and manage
our employees.
Management of growth is especially challenging for a company with a short
operating history and limited financial resources, and the failure to
effectively manage growth could have a material adverse effect on our results of
operations. In addition, Planet has no experience in the operation of a
large-scale production facility and we may encounter
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unforeseen difficulties in the operation of a production facility that would
adversely affect our results of operations in future periods. Failure to upgrade
operating and financial control systems or difficulties encountered during such
upgrades could adversely affect our business and results of operations. Although
we believe that our systems and controls are adequate to address our current
needs, we cannot guarantee that such systems and controls will be adequate to
address future changes in our business.
WE MUST KEEP PACE WITH TECHNOLOGICAL CHANGE TO REMAIN COMPETITIVE.
We consider our competition for our AQUAMIM product to be from competing
technologies rather than from direct competitors. The competing technologies
include: solvent debinding technologies based on a wax binder by Advanced
Forming Technology, catalytic debinding based on a polyacetal binder by BASF
Corporation, air dry debinding based on a water-based binder by AlliedSignal
Inc. and thermal debinding based on an acrylic binder by Rohm & Haas Company. In
the manufacture and marketing of controlled-release urea, we compete indirectly
with Pursell Inc. and The Scotts Company in the United States and Haifa Chemical
Company in Israel. Many of our competitors have significantly greater financial,
technical and human resources than we do.
The primary source of competition for our EnviroPlastic and Aquadro
products currently comes from suppliers of conventional non-degradable plastic
products. The use of non-degradable products is well-established and accepted by
both consumers and the industry, many of whom may be indifferent to the benefits
offered by our products. Many of our competitors who provide these
non-degradable products have significantly greater financial, technical and
human resources than we do. Changes in political and consumer emphasis on
environmental factors in waste disposal could significantly harm our competitive
position relative to these established solutions with respect to certain of our
products whose principal advantage is degradability. Such changes may be
imminent in light of the current political climate, the unlikelihood of
increased environmental regulation and the possibility of a reduction in
environmental regulation. In addition, we are subject to competition from other
specialty chemical companies offering alternative solutions.
We cannot guarantee that our competitors will not succeed in developing
products or technologies that are more effective than any which have been or are
being developed by us or which would render our technology and products obsolete
and noncompetitive. Accordingly, our competitors may succeed in obtaining market
acceptance for products more rapidly than we do. Furthermore, if we obtain
market acceptance of our products, we will also be competing with respect to
volume manufacturing efficiency and marketing capabilities, areas in which we
have limited or no experience.
WE DEPEND ON OUR KEY PERSONNEL.
Our success depends to a significant extent upon the continued service of
Robert J. Petcavich, our Chairman, Chief Executive Officer and President, and
the loss of such key executive could have a material adverse effect on our
business or results of operations. We are also dependent on other key personnel,
and on our ability to continue to attract, retain and motivate highly skilled
personnel. The competition for such employees is intense, and we cannot
guarantee that we will be successful in attracting, retaining or motivating key
personnel. We maintain "key-person" life insurance policies with respect to such
persons to compensate us in the event of their deaths.
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OUR FAILURE TO ADEQUATELY PROTECT OUR PROPRIETARY RIGHTS MAY ADVERSELY AFFECT
US.
We rely on a combination of patent and trade secret protection,
non-disclosure agreements and licensing arrangements to establish and protect
our proprietary rights. We have filed and intend to file applications as
appropriate for patents covering our products. We cannot guarantee that patents
will issue from any of the pending applications or, if patents do issue, that
claims allowed will be sufficiently broad to protect our technology. In
addition, we cannot guarantee that any issued patents will not be challenged,
invalidated or circumvented, or that the rights granted thereunder will provide
proprietary protection to us. Since U.S. patent applications are maintained in
secrecy until patents issue, and since publication of inventions in the
technical or patent literature tend to lag behind such inventions by several
months, we cannot be certain that we were the first creator of inventions
covered by our issued patents or pending patent applications or that we were the
first to file patent applications for such inventions. Despite our efforts to
safeguard and maintain our proprietary rights, we cannot guarantee that we will
be successful in doing so or that our competitors will not independently develop
or patent technologies that are substantially equivalent or superior to our
technologies.
THERE ARE SUBSTANTIAL SHARES ELIGIBLE FOR SALE; THE SALE OF THESE SHARES MAY
DEPRESS OUR STOCK PRICE.
Sales of substantial amounts of our common stock in the public market or
the prospect of such sales by existing shareholders and warrant holders could
materially adversely affect the market price of our common stock. As of March
23, 1999 we had outstanding 6,938,974 shares of common stock (assuming the
conversion of all outstanding shares of Preferred Stock into shares of common
stock). Virtually all of our outstanding shares of common stock will be either
registered and therefore freely tradable or may be transferred pursuant to Rule
144(k) under the Securities Act, unless held by our "affiliates" as that term is
defined in Rule 144 under the Securities Act. We have also filed a Registration
Statement on Form S-8 under the Securities Act covering 500,000 shares of common
stock reserved for issuance under our 1995 Stock Plan. Upon issuance, shares
registered under such Registration Statement will be, subject to Rule 144 volume
limitations applicable to our affiliates, available for sale in the open market.
OUR SUCCESS DEPENDS ON OUR ABILITY TO OBTAIN REGULATORY APPROVAL OF OUR
PRODUCTS.
Certain end products into which our products are expected to be
incorporated are subject to extensive government regulation in the United States
by federal, state and local agencies including the EPA and FDA. Similar
regulatory agencies exist worldwide. Our customers who incorporate our products
into consumer products will bear primary responsibility for obtaining any
required regulatory approvals. The process of obtaining and maintaining FDA and
any other required regulatory approvals for products is lengthy, expensive and
uncertain, and regulatory authorities may delay or prevent product introductions
or require additional tests prior to introduction. We cannot guarantee that
changes in existing regulations or the adoption of new regulations will not
occur, which could prevent us or our customers from obtaining approval or delay
the approval of various products or could adversely affect market demand for our
products.
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A PRODUCT LIABILITY CLAIM MAY ADVERSELY AFFECT OUR BUSINESS.
Product liability claims may be asserted against us in the event that the
use of our products or products which incorporate our products are alleged to
have caused injury or other adverse effects, and such claims may involve large
amounts of alleged damages and significant defense costs. We do not maintain
product liability insurance. If we obtain product liability insurance in the
future, we cannot guarantee that the liability limits or the scope of our
insurance policy would be adequate to protect against such potential claims.
Additionally, we may not be able to obtain product liability insurance. Whether
or not we obtain such insurance, a successful claim against us could have a
material adverse effect on us. In addition, our business reputation could be
adversely affected by product liability claims, regardless of their merit or
eventual outcome.
YEAR 2000 RISKS MAY RESULT IN MATERIAL ADVERSE EFFECTS ON OUR BUSINESS.
Planet recognizes the need to ensure that its operations will not be
impacted by the year 2000 issue that results from computer applications being
written along two digits rather than four to define the application year. As a
result of the year 2000 issue, computer applications may recognize a date using
"00" as the year 1900 rather than the year 2000, resulting in system failures or
miscalculations causing disruption of operations.
Planet has reviewed its material computer applications for year 2000
compliance and is working with vendors and suppliers to make its computer
applications year 2000 compliant. Thus, Planet has developed a plan to modify
its information technology in recognition of the year 2000 issue. The plan calls
for updating existing software and hardware to newer versions that incorporate
corrections to eliminate the problem. Planet has estimated that the total cost
of updating the Company's accounting system in order to be year 2000 compliant
will be approximately $30,000 and the cost of improving Planet's computers and
network will be approximately $10,000.
Planet does not expect the year 2000 issue and the plan to resolve it to
have a significant impact on its operations. However, if such plans cannot be
completed on a timely basis, the year 2000 issue could have a material adverse
impact on Planet's business, financial condition and results of operations.
Because of the many uncertainties associated with year 2000 compliance issues,
and because Planet's assessment is necessarily based on information from third
party vendors and suppliers, we cannot guarantee that our assessment is correct
or as to the materiality or effect if our assessment is not correct. For
example, to the extent that customers would be unable to order products or pay
invoices or suppliers would be unable to manufacture or deliver product,
Planet's operations would be affected.
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SELLING SHAREHOLDERS
The following table sets forth the names of the selling shareholders, and
the number of shares of common stock owned beneficially by them as of March 23,
1999 which may be offered pursuant to this prospectus. This information is based
upon information provided by each selling stockholder. Because the selling
shareholders may offer all, some or none of their respective shares of common
stock, no definitive estimate as to the number of shares thereof that will be
held by the selling shareholders after such offering can be provided. The term
"selling stockholder" includes the shareholders listed below and their
transferees, pledgees, donees or other successors.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED NUMBER OF OWNED
BEFORE OFFERING SHARES AFTER OFFERING(3)
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SELLING STOCKHOLDER(1) NUMBER PERCENT(2) BEING OFFERED NUMBER PERCENT(2)
---------------------- --------- ---------- ------------- ------- ----------
<S> <C> <C> <C> <C> <C>
Agway Holdings, Inc.(4)................ 3,000,000 33.56% 3,000,000 0 0
Special Situations Private Equity Fund,
L.P.(5).............................. 1,108,611 14.98% 226,274 882,337 12.06%
AM-RE Services, Inc.(6)................ 48,286 * 12,570 35,716 *
L.B.C. Capital Resources, Inc.(6)...... 114,635 1.64% 114,635 0 0
</TABLE>
- -------------------------
* Less than 1%
(1) To our knowledge, the selling shareholders have sole voting and investment
power with respect to all common stock shown as beneficially owned by them,
subject to community property laws where applicable and the information
contained in the footnotes to this table.
(2) Percentage ownership is based on: (i) 6,938,974 shares of common stock
outstanding as of March 23, 1999, assuming conversion of all outstanding
shares of our preferred stock. The percentages shown for each of the selling
shareholders includes shares of common stock that each selling shareholder
has the right to acquire upon the exercise of outstanding warrants.
(3) Assumes the sale of all shares offered in this prospectus, should each
respective selling stockholder elect to do so.
(4) Agway Holdings, Inc. is a wholly-owned subsidiary of Agway Inc. Represents
(i) 1,000,000 shares of common stock and (ii) a warrant to purchase up to
2,000,000 shares of common stock.
(5) Represents (i) 588,235 shares of common stock issuable upon conversion of
shares of our Series A Preferred Stock, (ii) 462,444 shares of common stock
issuable upon exercise of a warrant to purchase common stock and (iii)
57,932 shares of common stock issued as dividends.
(6) Represents shares of common stock issuable upon exercise of certain warrants
to purchase common stock.
11
<PAGE> 13
PLAN OF DISTRIBUTION
The shares of common stock may be sold from time to time by the selling
shareholders in one or more transactions at fixed prices, at market prices at
the time of sale, at varying prices determined at the time of sale or at
negotiated prices. The selling shareholders may offer their shares of common
stock in one or more of the following transactions:
- on any national securities exchange or quotation service at which the
common stock may be listed or quoted at the time of sale, including the
Nasdaq SmallCap Market,
- in the over-the-counter market,
- in private transactions,
- through options,
- by pledge to secure debts and other obligations, or a combination of any
of the above transactions.
If required, we will distribute a supplement to this prospectus to describe
material changes in the terms of the offering.
The shares of common stock described in this prospectus may be sold from
time to time directly by the selling shareholders. Alternatively, the selling
shareholders may from time to time offer shares of common stock to or through
underwriters, broker/dealers or agents. The selling shareholders and any
underwriters, broker/dealers or agents that participate in the distribution of
the shares of common stock may be deemed to be "underwriters" within the meaning
of the Securities Act of 1933. Any profits on the resale of shares of common
stock and any compensation received by any underwriter, broker/dealer or agent
may be deemed to be underwriting discounts and commissions under the Securities
Act of 1933.
Any shares covered by this prospectus which qualify for sale pursuant to
Rule 144 under the Securities Act of 1933 may be sold under rule 144 rather than
pursuant to this prospectus. The selling shareholders may not sell all of the
shares. The selling shareholders may transfer, devise or gift such shares by
other means not described in this prospectus.
To comply with the securities laws of certain jurisdictions, the common
stock must be offered or sold only through registered or licensed brokers or
dealers. In addition, in certain jurisdictions, the common stock may not be
offered or sold unless they have been registered or qualified for sale or an
exemption is available and complied with.
Under the Securities Exchange Act of 1934, any person engaged in a
distribution of the common stock may not simultaneously engage in market-making
activities with respect to the common stock for nine business days prior to the
start of the distribution. In addition, each selling stockholder and any other
person participating in a distribution will be subject to the Securities
Exchange Act of 1934 which may limit the timing of purchases and sales of common
stock by the selling shareholders or any such other person. These factors may
affect the marketability of the common stock and the ability of brokers or
dealers to engage in market-making activities.
We will pay all expenses of this registration. These expenses include the
SEC's filing fees and fees under state securities or "blue sky" laws. We
estimate that our expenses in
12
<PAGE> 14
connection with this offering will be approximately $9,864. All expenses for the
issuance of a supplement to this prospectus, when requested by selling
stockholder(s), will be paid by the requesting stockholder(s).
LEGAL MATTERS
Cooley Godward LLP will give its opinion that the shares offered in this
prospectus have been validly issued and are fully paid and non-assessable, and
that the shares which will be issued upon the exercise of certain warrants will
be validly issued, fully paid and nonassessable.
EXPERTS
The financial statements of the registrant as of December 31, 1998 and for
each of the two years in the period ended December 31, 1998 and December 31,
1997 have been audited by PricewaterhouseCoopers LLP, as set forth in its report
thereon included in Planet Polymer Technologies, Inc.'s Annual Report on Form
10-KSB for the year ended December 31, 1998 and incorporated herein by
reference. Such financial statements are incorporated herein by reference in
reliance upon such reports given upon the authority of said firm as experts in
accounting and auditing.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Our Bylaws provide that we will indemnify our directors and executive
officers, and may indemnify our other officers, employees and other agents, to
the fullest extent not prohibited by California law. We are also empowered under
our Articles of Incorporation (the "Articles") and Bylaws to enter into
indemnification agreements with our directors, officers, employees and other
agents and to purchase insurance on behalf of any person whom we are required or
permitted to indemnify. Pursuant to this provision, we have entered into
indemnity agreements with each of our directors and executive officers.
In addition, our Articles provide that, to the fullest extent permitted by
California law, our directors will not be liable for monetary damages for breach
of the director's fiduciary duty of care to us and our shareholders. This
provision in the Articles does not eliminate the duty of care, and in
appropriate circumstances, equitable remedies such as an injunction or other
forms of non-monetary relief would remain available under California law. Each
director will continue to be subject to liability for breach of the director's
duty of loyalty to us, for acts or omissions not in good faith or involving
intentional misconduct or knowing or culpable violations of law that the
director believes to be contrary to the best of our interests or our
shareholders, for acts or omissions involving a reckless disregard for the
director's duty to us or our shareholders, or an unexcused pattern of
inattention that amounts to an abdication of the director's duty to us or our
shareholders, for improper transactions between the director and us or for
improper distributions to shareholders and loans to directors and officers, or
for acts or omissions by the director as an officer. This provision also does
not affect a director's responsibilities under any other laws, such as federal
securities laws or state or federal environmental laws.
13
<PAGE> 15
Insofar as indemnification by us for liabilities arising under the
Securities Act may be permitted to our directors, officers and controlling
persons of pursuant to the provisions referenced above or otherwise, we have
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act, and is, therefore
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by us of expenses incurred or paid by one of
our directors, officers or controlling persons in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered hereunder, we will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
14
<PAGE> 16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR
ANY PROSPECTUS SUPPLEMENT. YOU MUST NOT RELY ON ANY UNAUTHORIZED INFORMATION.
THIS PROSPECTUS IS NOT AN OFFER OF THESE SECURITIES IN ANY STATE WHERE AN OFFER
IS NOT PERMITTED. THE INFORMATION IN THIS PROSPECTUS IS CURRENT AS OF MARCH 30,
1999. YOU SHOULD NOT ASSUME THAT THIS PROSPECTUS IS ACCURATE AS OF ANY OTHER
DATE.
3,353,479 Shares
PLANET POLYMER TECHNOLOGIES, INC.
Common Stock
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Where You Can Get More Information.......................... 2
The Company................................................. 3
Use of Proceeds............................................. 3
Risk Factors................................................ 4
Selling Shareholders........................................ 11
Plan of Distribution........................................ 12
Legal Matters............................................... 13
Experts..................................................... 13
Disclosure of Commission Position on Indemnification for
Securities Act Liabilities................................ 13
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the
securities being registered are set forth in the following table (all amounts
except the registration fee are estimated):
<TABLE>
<S> <C>
SEC Registration Fee................................... $1,864
Legal fees and expenses................................ $5,000
Accounting fees and expenses........................... $2,500
Printing and engraving................................. $ 500
------
Total................................................ $9,864
======
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Our Bylaws provide that we will indemnify our directors and executive
officers, and may indemnify our other officers, employees and other agents, to
the fullest extent not prohibited by California law. We are also empowered under
our Articles of Incorporation (the "Articles") and Bylaws to enter into
indemnification agreements with our directors, officers, employees and other
agents and to purchase insurance on behalf of any person whom we are required or
permitted to indemnify. Pursuant to this provision, we have entered into
indemnity agreements with each of our directors and executive officers.
In addition, our Articles provide that, to the fullest extent permitted by
California law, our directors will not be liable for monetary damages for breach
of the director's fiduciary duty of care to us and our shareholders. This
provision in the Articles does not eliminate the duty of care, and in
appropriate circumstances, equitable remedies such as an injunction or other
forms of non-monetary relief would remain available under California law. Each
director will continue to be subject to liability for breach of the director's
duty of loyalty to us, for acts or omissions not in good faith or involving
intentional misconduct or knowing or culpable violations of law that the
director believes to be contrary to the best of our interests or our
shareholders, for acts or omissions involving a reckless disregard for the
director's duty to us or our shareholders, or an unexcused pattern of
inattention that amounts to an abdication of the director's duty to us or our
shareholders, for improper transactions between the director and us or for
improper distributions to shareholders and loans to directors and officers, or
for acts or omissions by the director as an officer. This provision also does
not affect a director's responsibilities under any other laws, such as federal
securities laws or state or federal environmental laws.
II-1
<PAGE> 18
ITEM 16. EXHIBITS.
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit
5.1.
24.1 Power of Attorney. Reference is made to page II-3.
99.1 Warrant to Purchase Common Stock, dated March 30, 1999,
issued by the Company to LBC Capital.
</TABLE>
ITEM 17. UNDERTAKINGS.
Insofar as indemnification by us for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of Planet Polymer Technologies, Inc. pursuant to the provisions referenced above
or otherwise, we have been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act of
1933, as amended, and is, therefore unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by us of
expenses incurred or paid by a director, officer or controlling person of Planet
Polymer Technologies, Inc. in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered hereunder, we will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933, as amended, and will be governed by the final adjudication of such
issue.
We hereby undertake:
(1) To file, during any period in which offers or sales are being made
pursuant to this registration statement, a post-effective amendment to this
registration statement to include any material information with respect to
the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
We hereby undertake that, for purposes of determining any liability under
the Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-2
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Diego, State of California, on March 30, 1999.
PLANET POLYMER TECHNOLOGIES
By: /s/ ROBERT J. PETCAVICH
-----------------------------------
Robert J. Petcavich
Chairman, Chief Executive Officer
and Secretary
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Robert J. Petcavich and H.M. Busby and
each of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, or any of
them, or his substitutes or substitute, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ROBERT J. PETCAVICH Chairman, Chief Executive March 30, 1999
- --------------------------------------------- Officer and Secretary
Robert J. Petcavich (Principal Executive
Officer) (Principal
Financial and Accounting
Officer)
/s/ MICHAEL M. COLEMAN Director March 30, 1999
- ---------------------------------------------
Michael M. Coleman
/s/ THOMAS M. CONNELLY Director March 30, 1999
- ---------------------------------------------
Thomas M. Connelly
/s/ H.M. BUSBY Director March 30, 1999
- ---------------------------------------------
H.M. Busby
/s/ THOMAS A. LANDSHOF Director March 30, 1999
- ---------------------------------------------
Thomas A. Landshof
</TABLE>
II-3
<PAGE> 20
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit
5.1.
24.1 Power of Attorney. Reference is made to Page II-3.
99.1 Warrant to Purchase Common Stock, dated March 30, 1999,
issued by the Company to LBC Capital.
</TABLE>
<PAGE> 1
EXHIBIT 5.1
[COOLEY GODWARD LLP LETTERHEAD]
March 30, 1999
Planet Polymer Technologies, Inc.
9985 Businesspark Avenue, Suite A
San Diego, CA 92131
RE: FORM S-3 REGISTRATION STATEMENT
Dear Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Planet Polymer Technologies, Inc. (the "Company") of a
Registration Statement on Form S-3 (the "Registration Statement"), including a
related prospectus filed with the Registration Statement (the "Prospectus"),
with the Securities and Exchange Commission covering the registration of an
aggregate of 3,353,479 shares of the Company's Common Stock by certain selling
shareholders, including 1,138,830 shares of the Company's Common Stock, (the
"Shares"), and 2,214,649 shares of the Company's Common Stock (the "Warrant
Shares") issuable upon exercise of certain warrants (the "Warrants").
In connection with this opinion, we have examined the Registration Statement and
related Prospectus, the Company's Articles of Incorporation and Restated Bylaws
and the Warrants and such other records, documents, certificates, opinions,
memoranda and other instruments as in our judgment are necessary or appropriate
to enable us to render the opinion expressed below. We have assumed: the
genuineness and authenticity of all signatures on original documents; the
authenticity of all documents submitted to us as originals; the conformity to
originals of all documents submitted to us as copies; the accuracy, completeness
and authenticity of certificates of public officials; and the due authorization,
execution and delivery of all documents where authorization, execution and
delivery are prerequisites to the effectiveness of such documents.
On the basis of the foregoing, in reliance thereon and with the foregoing
qualifications, we are of the opinion (i) the Shares are validly issued, fully
paid and nonassessable, and (ii) the Warrant Shares, when issued and sold in
accordance with the terms of the Warrants, will be validly issued, fully paid
and nonassessable.
<PAGE> 2
Planet Polymer Technologies, Inc.
March 30, 1999
Page 2
We consent to the reference to our firm under the caption "Legal Matters" in the
Prospectus included in the Registration Statement and to the filing of this
opinion as an exhibit to the Registration Statement.
Sincerely,
Cooley Godward LLP
/s/ LANCE W. BRIDGES
- -------------------------------
Lance W. Bridges
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectus constituting part of this Registration Statement on Form S-3 of our
report dated March 2, 1999, relating to the consolidated financial statements of
Planet Polymer Technologies, Inc. (the "Company"), which appears on page F-2 of
the Appendix to the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1998. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
San Diego, California
March 29, 1999
<PAGE> 1
EXHIBIT 99.1
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
50,000 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"), LBC CAPITAL (the "Holder"), is hereby
granted the right to purchase, at any time from the date hereof until 5:00 P.M.,
Pacific Standard Time, on March 30, 2004 (the "Expiration Date") up to all or
any part of fifty thousand (50,000) fully paid and non-assessable shares of the
Company's common stock, without par value ("Common Stock").
1. EXERCISE OF WARRANT. This Warrant is exercisable at a price of $4.1250
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 Exhibit 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
Businesspark Avenue, Suite A, San Diego, California, 92131, or at such other
office as the Company may designate by notice in writing, the Holder shall be
entitled to receive, as promptly as practicable after surrender of the Warrant,
a certificate or certificates for the shares of Common Stock so purchased. Upon
exercise of this Warrant as set forth in the preceding sentence, the Holder
shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise.
The purchase rights represented by this Warrant are exercisable at the option of
the Holder hereof, in whole or in part (but not as to fractional shares of the
Common Stock), during any period in which this Warrant may be exercised as set
forth above. In the case of the purchase of less than all the shares of Common
Stock purchasable under this Warrant, the Company shall cancel this Warrant upon
the surrender hereof and shall execute and deliver a new Warrant of like kind
for the balance of the shares of Common Stock purchasable hereunder.
2. ISSUANCE OF STOCK CERTIFICATES. The issuance of certificates for shares
of Common Stock upon the exercise of this Warrant shall be made without charge
to the Holder hereof 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
1.
<PAGE> 2
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 5.9, 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 Exhibit 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 5.9,
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 5.9, 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 5.9, 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 5, 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 $4.1250 per
share of Common Stock.
5. REGISTRATION AND REGISTRATION RIGHTS.
5.1 RESTRICTED SECURITIES. The shares of Common Stock issuable upon
exercise of this Warrant (the "Warrant Stock") have not been registered under
the Securities Act of 1933, as amended ("the Securities Act").
Except as otherwise provided in this Section 5, upon exercise, in part
or in whole, of this Warrant, the Warrant Stock shall bear the following legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The
shares have been acquired
2.
<PAGE> 3
for investment and may not be sold, transferred, pledged or
hypothecated in the absence of an effective registration
statement for the shares under the Securities Act of 1933 or an
opinion of counsel of the Company that registration is not
required under said Act."
5.2 DEFINITIONS. For purposes of Section 5:
(a) The term "Commission" means the Securities and Exchange
Commission;
(b) The term "Exchange Act" means the Securities Exchange Act of
1934, as amended;
(c) The terms "register," "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act and the declaration or ordering of
effectiveness of such registration statement;
(d) The term "Registrable Securities" means Common Stock issuable
or issued upon exercise of Warrants to purchase Common Stock of the Company
outstanding as of the filing of any registration statement subject to the
provisions of Section 5.3;
(e) The term "Holder" means any investor holding Registrable
Securities and any other person holding Registrable Securities to whom these
registration rights have been transferred pursuant to Sections 3 and 5; and
(f) The term "Securities Act" means the Securities Act of 1933,
as amended.
5.3 COMPANY REGISTRATION.
(a) If the Company at any time proposes to file on its behalf
and/or on behalf of any of its security holders (the "demanding security
holders") a registration statement under the Securities Act on any form (other
than a Registration Statement on Form S-4 or S-8 or any successor form for
securities to be offered in a transaction of the type referred to in Rule 145
under the Securities Act or to employees of the Company pursuant to any employee
benefit plan, respectively) for the general registration of securities to be
sold for cash with respect to its Common Stock or any other class of equity
security (as defined in Section 3(a)(11) of the Exchange Act) of the Company, it
will give written notice to all holders of Warrants or Warrant Stock at least
ten (10) days before the initial filing with the Commission of such registration
statement, which notice shall set forth the intended method of disposition of
the securities proposed to be registered by the Company. The notice shall offer
to include in such filing the aggregate number of shares of Warrant Stock, and
the number of shares of Common Stock for which this Warrant is exercisable, as
such holders may request.
(b) Each holder of any such Warrants or any such Warrant Stock
desiring to have Warrant Stock registered under this Section 5.3 shall advise
the Company in writing within ten (10) days after the date of receipt of such
offer from the Company, setting forth the amount of such Warrant Stock for which
registration is requested. The Company shall thereupon include in such filing
the number of shares of Warrant Stock for which registration is so requested,
3.
<PAGE> 4
subject to the paragraph 5.3(c) below, and shall use its best efforts to effect
registration under the Securities Act of such shares.
(c) If the registration of which the Company gives notice is for
a registered public offering involving an underwriting, the Company shall so
indicate in the notice given pursuant to Section 5.3(a). In such event the right
of any Holder to registration pursuant to this Section 5.3 shall be conditioned
upon such Holder's agreeing to participate in such underwriting and in the
inclusion of the securities of the Holder to be so registered in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company and
the other holders distributing their securities through such underwriting) enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company. Notwithstanding any
other provision of this Section 5.3, if the underwriter determines that
marketing factors require a limitation of the number of shares to be
underwritten, the underwriter may exclude some or all of the securities of the
Holders from such registration and underwriting (hereinafter an "Underwriter
Cutback"). In the event of an Underwriter Cutback, the Company shall so advise
the Holders distributing their securities through such underwriting, and the
number of Registrable Securities that may be included in the registration and
underwriting shall be allocated among the Holders in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by such
Holders at the time of filing the registration statement; provided that in no
event shall the Company be required to include in the registration less than one
thousand (1,000) shares held by any Holder. If any Holder disapproves of the
terms of any such underwriting, such Holder may elect to withdraw therefrom by
written notice to the Company and the underwriter. Any securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
Except as otherwise provided in Section 5.5, all expenses of such registration
shall be borne by the Company.
5.4 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Section 5 that the
Holders shall furnish to the Company such information regarding them, the
Registrable Securities held by them, and the intended method of disposition of
such securities as the Company shall reasonably request and as shall be required
in connection with the action to be taken by the Company.
5.5 COMPANY REGISTRATION EXPENSES. All expenses incurred in complying
with Section 5, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company, the
reasonable fees and expenses of one counsel for the selling security holders
(selected by those holding a majority of the shares being registered), expenses
of any special audits incident to or required by any such registration and
expenses of complying with the securities or blue sky laws of any jurisdictions
pursuant to Section 5, shall be paid by the Company, except that the Company
shall not be liable for any fees, discounts or commissions to any underwriter or
any fees or disbursements of counsel for any underwriter in respect of the
securities sold by such Holder of Warrant Stock.
5.6 DELAY OF REGISTRATION. No Holder shall have any right to take any
action to restrain, enjoin, or otherwise delay any registration as the result of
any controversy that might arise with respect to the interpretation or
implementation of this Section 5.
4.
<PAGE> 5
5.7 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under Section 5:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, each of such Holder's directors and officers and
each other person who is requesting or joining in a registration, any
underwriter (as defined in the Securities Act) for it, and each other person, if
any, who controls such Holder or underwriter within the meaning of the
Securities Act, against any losses, claims, damages, or liabilities, joint or
several, to which they may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based on any untrue or alleged untrue statement of
any material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading or arise out of any
violation by the Company of any rule or regulation promulgated under the
Securities Act applicable to the Company and relating to action or inaction
required of the Company in connection with any such registration; and will
reimburse each such Holder, director, officer, participating person,
underwriter, or controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this Section 5.7(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company nor shall the Company
be liable in any such case for any such loss, claim, damage, liability, or
action to the extent that it arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in connection
with such registration statement, preliminary prospectus, final prospectus, or
amendments or supplements thereto, in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by any such Holder, director, officer, other participating person,
underwriter, or controlling person. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of such Holder
or such director, officer, participating person, underwriter or controlling
person, and shall survive the transfer of such Securities by such Holder.
(b) To the extent permitted by law, each Holder requesting or
joining in a registration will indemnify and hold harmless the Company, each of
its directors, each of its officers who has signed the registration statement,
each person, if any, who controls the Company within the meaning of the
Securities Act, and each agent and any underwriter for the Company (within the
meaning of the Securities Act) against any losses, claims, damages, or
liabilities to which the Company or any such director, officer, controlling
person, agent, or underwriter may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereto) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in such
5.
<PAGE> 6
registration statement, preliminary or final prospectus, or amendments or
supplements thereto, in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration;
and each such Holder will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, controlling person,
agent, or underwriter in connection with investigating or defending any such
loss, claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this Section 5.7(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of such Holder (which consent shall
not be unreasonably withheld).
(c) Promptly after receipt by an indemnified party under this
section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying party
under this section, notify the indemnifying party in writing of the commencement
thereof and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties. The failure to notify an indemnifying
party promptly of the commencement of any such action, if prejudicial to his
ability to defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this section, but the omission so to
notify the indemnifying party will not relieve him of any liability that he may
have to any indemnified party otherwise than under this section.
5.8 REPORTS UNDER THE EXCHANGE ACT. With a view to making available to
the Holders the benefits of Rule 144 promulgated under the Securities Act and
any other rule or regulation of the Commission that may at any time permit a
Holder to sell securities of the Company to the public without registration, the
Company agrees to use its best efforts to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144, at all times subsequent to the date
hereof;
(b) file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act; and
(c) furnish to any Holder so long as such Holder owns any of the
Registrable Securities forthwith upon request a written statement of the Company
that it has complied with the reporting requirements of Rule 144, and of the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements), a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents so filed by the
Company as may be reasonably requested in availing any Holder of any rule or
regulation of the Commission permitting the selling of any such securities
without registration.
5.9 LOCKUP AGREEMENT. In consideration for the Company agreeing to its
obligations under this Section 5, each Holder agrees in connection with any
registration of the Company's securities that, upon the request of the Company
or the underwriters managing any underwritten offering of the Company's
securities, not to sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any Warrants or Warrant Stock (other than
those included in the registration) without the prior written consent of the
Company or such
6.
<PAGE> 7
underwriters, as the case may be, for such period of time (not to exceed one
hundred eighty (180) days) from the effective date of such registration as the
Company or the underwriters may specify.
6. ADJUSTMENTS OF PURCHASE PRICE AND NUMBER OF SHARES.
6.1 SUBDIVISION AND COMBINATION. In case the Company shall at any time
subdivide or combine the outstanding shares of Common Stock, the Exercise Price
shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
6.2 ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of the Exercise
Price pursuant to the provisions of this Section 6 (including Sections 6.4
through 6.7 below), the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted to the nearest full share by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of shares of Common Stock issuable upon exercise of the Warrant
immediately prior to such adjustment and dividing the product so obtained by the
adjusted Exercise Price.
6.3 ANTI-DILUTION PROVISIONS. The Exercise Price in effect at any time
and the number and kind of securities purchasable upon the exercise of this
Warrant shall also be subject to adjustment from time to time upon the happening
of any of the events set forth in Sections 6.4 through 6.7.
6.4 In the event the Company shall issue or sell any shares of Common
Stock (except as provided in Section 6.7) for a consideration per share less
than the Exercise Price in effect immediately prior to such issue or sale, then
the Exercise Price in effect immediately prior to such issue or sale shall be
reduced to such lesser price (calculated to the nearest cent) as shall be
determined by multiplying the Exercise Price in effect immediately prior thereto
by a fraction, the numerator of which shall be the sum of (i) the number of
shares of Common Stock outstanding immediately prior to the issuance or sale of
such additional shares and (ii) the number of shares of Common Stock which the
aggregate consideration received for the issuance or sale of such additional
shares would purchase at the Exercise Price then in effect, and the denominator
of which shall be the number of shares of Common Stock outstanding immediately
after the issuance or sale of such additional shares. For purposes of this
Section 6.4, all shares of Common Stock issuable upon exercise of outstanding
options and warrants, and all shares of Common Stock issuable upon exercise of
this Warrant, shall be deemed to be outstanding.
6.5 For the purposes of Section 6.4 above, the following subparagraphs
(a) to (d), 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
7.
<PAGE> 8
amount, if any, received or receivable by the Company as consideration for the
granting of such rights or options, plus the minimum aggregate amount of
additional consideration payable to the Company upon the exercise of such rights
or options, plus, in the case of any such rights or options which shall relate
to Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the issue or sale of such Convertible
Securities and upon the conversion or exchange thereof, by (2) the total number
of shares of Common Stock issuable upon the exercise of such rights or options
or upon the conversion or exchange of all such Convertible Securities issuable
upon the exercise of such rights or options) shall be less than the Exercise
Price in effect immediately prior to the time of the issue or sale of such
rights or options, then the total number of shares of Common Stock issuable upon
the exercise of such rights or options or upon conversion or exchange of the
total amount of such Convertible Securities issuable upon the exercise of such
rights or options shall (as of the date of granting of such rights or options)
be deemed to be outstanding and to have been issued for such price per share,
and except as provided in Section 6.6, no further adjustments of the Exercise
Price shall be made upon the actual issue of such Common Stock or of such
Convertible Securities, upon the exercise of such rights or options or upon the
actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities.
(b) If at any time the Company shall issue or sell any
Convertible Securities, whether or not the rights to exchange or convert
thereunder shall be immediately exercisable, and the price per share for which
Common Stock shall be issuable upon such conversion or exchange (determined by
dividing (1) the total amount received or receivable by the Company as
consideration for the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the conversion or exchange thereof, by (2) the total number of
shares of Common Stock issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the Exercise Price in effect
immediately prior to the time of such issue or sale, then the total number of
shares of Common Stock issuable upon conversion or exchange of all such
Convertible Securities shall (as of the date of the issue or sale of such
Convertible Securities) be deemed to be outstanding and to have been issued for
such price per share, and, except as provided in Section 6.6 no further
adjustments of the Exercise Price shall be made upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible Securities. In
addition, if any issue or sale of such Convertible Securities shall be made upon
exercise of any rights to subscribe for or to purchase or any option to purchase
any such Convertible Securities for which adjustments of the Exercise Price
shall have been or shall be made pursuant to other provisions of this Section
6.5, no further adjustment of the Exercise Price shall be made by reason of such
issue or sale.
(c) If at any time any shares of Common Stock or Convertible
Securities or any rights or options to purchase any such Common Stock or
Convertible Securities shall be issued or sold for cash, the consideration
received therefor shall be deemed to be the amount received by the Company
therefor, without deduction therefrom of any expenses incurred or any
underwriting commissions or concessions or discounts paid or allowed by the
Company in connection therewith. In case any shares of Common Stock or
Convertible Securities or any rights or options to purchase any such Common
Stock or Convertible Securities shall be issued or sold for a consideration
other than cash, the amount of the consideration other than cash received by the
Company shall be deemed to be the fair value of such consideration as determined
by the Board of Directors, without deduction therefrom of any expenses incurred
or any underwriting commissions or concessions or
8.
<PAGE> 9
discounts paid or allowed by the Company in connection therewith. In case any
shares of Common Stock or Convertible Securities or any rights or options to
purchase any such Common Stock or Convertible Securities shall be issued in
connection with any merger of another corporation into the Company, the amount
of consideration therefor shall be deemed to be the fair value of the net assets
of such merged corporation as determined by the Board of Directors after
deducting therefrom all cash and other consideration (if any) paid by the
Company in connection with such merger.
(d) The number of shares of Common Stock outstanding at any given
time shall not include shares owned or held by or for the account of the
Company, provided that such shares are neither issued, sold or otherwise
distributed by the Company.
6.6 If the purchase or exercise price provided for in any right or
option referred to in Section 6.5, or the rate at which any Convertible
Securities referred to in Section 6.5 (a) or (b) shall be convertible into or
exchangeable for Common Stock, shall change or a different purchase or exercise
price or rate shall become effective at any time or from time to time (including
any change resulting from termination of such right, option or convertible
security), then, upon such change becoming effective, the Exercise Price then in
effect hereunder shall forthwith be increased or decreased to such Exercise
Price as would have been obtained had the adjustments made upon the granting or
issuance of such rights or options or Convertible Securities been made upon the
basis of (a) the issuance of the number of shares of Common Stock theretofore
actually delivered upon the exercise of such options or rights or upon the
conversion or exchange of such Convertible Securities for the consideration
received therefor and (b) the granting or issuance at the time of such change of
any such options, rights or Convertible Securities then still outstanding for
the consideration, if any, received by the Company therefor and to be received
on the basis of such changed price.
6.7 The Company shall not be required to make any adjustment to the
Exercise Price in the case of:
(a) the granting, after the date hereof, by the Company of stock
options under the Company's 1995 Stock Option Plan, so long as the shares of
Common Stock underlying such options are covered by the 500,000 shares currently
reserved for issuance under such Plan as of the date hereof;
(b) the issuance of shares of Common Stock, pursuant to the
exercise of the options referred to in Section 6.7(a) above or the exercise of
any other options or warrants outstanding as of the date hereof;
(c) the issuance of shares of Common Stock upon the conversion of
any shares of the Company's Series A Convertible Preferred Stock or upon the
exercise of any of the Warrants originally issued to Special Situations Private
Equity Fund, L.P. on September 24, 1997; and
(d) the issuance of shares of Common Stock upon the exercise of
any options or warrants outstanding as of the date hereof.
9.
<PAGE> 10
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 ANNUAL INFORMATION. The Company will deliver to each Holder as soon
as practicable after the end of each fiscal year of the Company, and in any
event within 90 days thereafter, one copy of:
(a) an audited consolidated balance sheet of the Company and its
subsidiaries as at the end of such year, and
(b) 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. REPRESENTATIONS OF HOLDER.
8.1 ACQUISITION OF WARRANT FOR PERSONAL ACCOUNT. The Holder represents
and warrants that it is acquiring the Warrant solely for its account for
investment and not with a view to or for sale or distribution of said Warrant or
any part thereof. The Holder also represents that the entire legal and
beneficial interests of the Warrant and Warrant Stock is being acquired for, and
will be held for, its account only.
10.
<PAGE> 11
8.2 SECURITIES ARE NOT REGISTERED.
(a) The Holder recognizes that this Warrant and Warrant Stock
being acquired by it must be held indefinitely unless they are subsequently
registered under the Act or an exemption from such registration is available.
The Holder recognizes that, except as set forth in Section 5 hereof, the Company
does not have any obligation to register this Warrant or the Warrant Stock or to
comply with any exemption from such registration.
(b) The Holder is aware that neither this Warrant nor the Warrant
Stock may be sold pursuant to Rule 144 adopted under the Act unless certain
conditions are met and until the Holder has held the Warrant Stock for at least
one year. Among the conditions for use of Rule 144 is the availability of
current information to the public about the Company. The Holder understands that
the Company has not made such information available and has no present plans to
do so.
(c) The Holder represents and warrants that it is an "accredited
investor" as such term is defined in Rule 501(a) under the Act. Specifically,
the Holder represents and warrants that it is either a corporation or
partnership, not formed for the specific purpose of acquiring securities of the
Company, with total assets in excess of $5,000,000.
8.3 DISPOSITION OF WARRANT AND WARRANT STOCK.
(a) The Holder further agrees not to make any disposition of all
or any part of this Warrant or the Warrant Stock in any event unless and until:
(i) 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 disposition;
or
(ii) 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
(iii) The Holder shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, the Holder
shall have furnished the Company with an opinion of counsel for the Holder to
the effect that such disposition will not require registration of such Warrant
or shares under the Act, and such opinion of counsel for the Holder shall have
been concurred in by the Company's counsel and the Company shall advise the
Holder of such concurrence.
(iv) Notwithstanding the provisions of paragraphs (i),
(ii) and (iii) 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 shareholder
or affiliate of such corporation, (B) a retired partner or shareholder, or (iii)
for the transfer by gift, will or intestate succession by
11.
<PAGE> 12
any Holder to his or her spouse or lineal descendants or ancestors or any trust
for any of the foregoing.
9. EXCHANGE AND REPLACEMENT OF WARRANT. This Warrant is exchangeable
without expense, upon the surrender hereof by the registered Holder at the
principal executive office of the Company, for a new Warrant of like kind and
date representing in the aggregate the right to purchase the same number of
shares as are purchasable hereunder in such denominations and in the name(s) of
such assignee(s) as shall be designated by the registered Holder hereof at the
time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft or destruction of this Warrant, of indemnity or security
reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will make and deliver a new Warrant of
like kind, in lieu of this Warrant.
10. FRACTIONAL SHARES. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant. With respect to any
fraction of a share called for upon any exercise hereof, the Company shall pay
to the Holder an amount in cash equal to such fraction multiplied by the current
market value of a share of Common Stock, as determined in good faith by the
Board of Directors of the Company.
11. RESERVATION AND LISTING OF SHARES. The Company shall at all times
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issuance upon the exercise of this Warrant, such number of
shares of Common Stock as shall be issuable upon the exercise hereof. The
Company covenants and agrees that, upon exercise of this Warrant and payment of
the Exercise Price therefor, all shares of Common Stock issuable upon such
exercise shall be duly and validly issued, fully paid and non-assessable,
provided that the Exercise Price per share shall equal or exceed the par value
of the Common Stock. As long as the Warrant shall be outstanding, the Company
shall use its best efforts to cause all shares of Common Stock issuable upon the
exercise of the Warrant to be listed (subject to official notice of issuance) on
all securities exchanges on which the Common Stock may then be listed.
12. CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each adjustment or
readjustment of the Exercise Price, the Company, at its expense, shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
prepare and furnish to the Holder a certificate of the chief financial officer
of the Company setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. The
Company shall, upon the written request at any time of the Holder, furnish to
the Holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Exercise 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.
12.
<PAGE> 13
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 Stock, in addition
to being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under Section 5
of this Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of Section 5 of this Warrant and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
16. AMENDMENT. This Warrant and all other Warrants may be modified or
amended or the provisions hereof waived with the written consent of the Company
and the Holder or Holders, provided that no such Warrant may be modified or
amended to reduce the number of shares of Common Stock for which such Warrant is
exercisable or to increase the price at which such shares may be purchased upon
exercise of such Warrant (before giving effect to any adjustment as provided
therein) without the prior written consent of the Holder thereof.
17. SEVERABILITY. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.
18. SUCCESSORS. All the covenants, agreements, representations and
warranties contained in this Warrant shall bind the parties hereto and their
respective heirs, executors, administrators, distributes, successors and
assigns.
19. HEADINGS. The Section headings in this Warrant are inserted for
purposes of convenience only and shall have no substantive effect.
20. LAW GOVERNING. This Warrant shall be construed and enforced in
accordance with, and governed by, the laws of the State of California.
WITNESS the seal of the Company and the signature of its duly authorized
officer.
Dated: March 29, 1999
PLANET POLYMER TECHNOLOGIES, INC.
By:
-------------------------------
Robert J. Petcavich,
Chief Executive Officer
<PAGE> 14
EXHIBIT A
SUBSCRIPTION FORM
(To be Executed by the Registered Holder
in Order to Exercise the Warrant)
The undersigned hereby irrevocably elects to exercise the right to
purchase _____ shares of Common Stock of Planet Polymer Technologies, Inc.
covered by the Warrant to which this Exhibit A is attached, according to the
conditions of such Warrant, and herewith makes payment of the Exercise Price of
such shares in full.
INSTRUCTIONS FOR REGISTRATION OF STOCK
NAME
-------------------------------
ADDRESS
----------------------------
-------------------------------
Signature
Dated:
-------------------------------
<PAGE> 15
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of the Warrant to
which this Exhibit B is attached hereby sells, assigns and transfers unto the
Assignee named below all of the rights of the undersigned under such Warrant,
with respect to the number of shares of Common stock set forth below:
NAME AND ADDRESS OF ASSIGNEE NO. OF SHARES OF COMMON STOCK
- ---------------------------- -----------------------------
and does hereby irrevocably constitute and appoint _________ attorney-in-fact to
register such transfer on the books of Planet Polymer Technologies, Inc.
maintained for the purpose, with full power of substitution in the premises.
Dated:
------------------------------- -------------------------------
Signature
