EXHIBIT A
PLANET POLYMER TECHNOLOGIES, INC.
STOCK PURCHASE AGREEMENT
DATED AS OF NOVEMBER 12, 1998
SUBSCRIPTION INSTRUCTIONS - PLEASE READ CAREFULLY
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE NOT BEEN
QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. THE SECURITIES
CANNOT BE SOLD OR TRANSFERRED WITHOUT SUCH REGISTRATION OR
QUALIFICATION UNLESS AN EXEMPTION FROM SUCH REGISTRATION OR
QUALIFICATION IS THEN AVAILABLE
PLANET POLYMER TECHNOLOGIES, INC.
STOCK PURCHASE AGREEMENT
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STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of November 12,
1998 by and among Planet Polymer Technologies, Inc., a California corporation
with headquarters located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company") and Agway Holdings Inc., a Delaware corporation
("Buyer").
WHEREAS:
A. The Company and Buyer are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Rule 506 of
Regulation D ("Regulation D") as promulgated by the United States Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 Act");
B. Buyer wishes to purchase, upon the terms and conditions stated in
this Agreement, 1,000,000 newly issued shares (the "Shares") of the Company's
common stock (the "Common Stock"), no par value;
C. Buyer shall receive upon issuance of the Shares a warrant (the
"Warrant") to acquire up to 2,000,000 shares of Common Stock (the "Warrant
Shares" and, together with the Shares and the Warrant, the "Securities") at the
Per Share Price (defined below) during the one-and two-year periods immediately
following the closing date of the initial sale of Shares (the "Initial Closing
Date"), on the terms described below and as set forth more fully in the form of
Warrant attached hereto as Exhibit A; and
D. The Company will, in connection with the issuance of the Shares and
the Warrant Shares and pursuant to the terms of the Registration Rights
Agreement substantially in the form
of Exhibit B attached hereto (the "Registration Rights Agreement"), grant to
Buyer certain rights to register for resale by Buyer the Shares and the Warrant
Shares under the 1933 Act and the rules and regulations promulgated thereunder,
and applicable state securities laws; and
E. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering an agreement relating to the
funding by Buyer of an evaluation of the feasibility of the Company's polymer
coating technology (the "Feasibility Agreement") and a license agreement (the
"License Agreement" and, together with the Feasibility Agreement and the
Registration Rights Agreement, the "Ancillary Agreements") pursuant to which
Buyer will obtain an exclusive worldwide license to distribute all current and
future products that utilize the Company's polymer coating technology for
agricultural and food- related purposes;
NOW THEREFORE, the Company and Buyer hereby agree as follows:
1. PURCHASE AND SALE OF SHARES.
a. PURCHASE OF SHARES. At the Initial Closing (defined below),
the Company shall issue and sell to Buyer, and Buyer shall purchase
from the Company, the Shares. The per share purchase price (the "Per
Share Price") of the Shares shall be $1.00. The total purchase price
(the "Purchase Price") for Buyer's Shares shall be $1,000,000 (i.e.,
the number of Shares to be purchased by Buyer multiplied by the Per
Share Price). The Shares shall be sold at the Initial Closing as
hereinafter provided.
b. CLOSING. The initial closing (the "Initial Closing") of the
issuance and sale of the Shares shall occur on a date that is within
three (3) business days of the satisfaction (or waiver) of all
conditions to closing set forth in Sections 8 and 9 hereof (but in no
event shall the Initial Closing occur later than January 31, 1999). The
date of the occurrence of the Initial Closing shall be referred to
herein as the "Initial Closing Date."
c. FORM OF PAYMENT. Buyer shall pay the Purchase Price by wire
transfer of immediately available United States Dollars on the Initial
Closing Date to:
Bank: Citibank New York
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
ABA: ▇▇▇▇▇▇▇▇▇
FBO: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Beneficiary Account: ▇▇▇▇▇▇▇▇
For Further CR to: ▇▇▇-▇▇▇▇▇▇-▇▇▇
Account Name: Planet Polymer Technologies, Inc.
TIN: ▇▇-▇▇▇▇▇▇▇
Account Broker: ▇▇ ▇▇▇▇▇▇▇ #001
Branch Address: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
(ABA# ▇▇▇▇▇▇▇▇▇, Attention . At the Initial Closing, the
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Company shall deliver one or more stock certificates, duly executed on behalf of
the Company, representing the Shares (the "Stock Certificates"), together with
the Warrants described below.
d. WARRANT ISSUANCES. At the Initial Closing, the Company will
issue to Buyer a Warrant duly executed on behalf of the Company,
substantially in the form of Exhibit A attached hereto, to acquire the
Warrant Shares at an exercise price per Warrant Share equal to the per
share price for the Shares (subject to adjustment in the manner set
forth in the Warrant), which Warrant may be exercised as follows: (i)
during the twelve (12) month period commencing on the Initial Closing
Date and ending on the date which is twelve (12) months after the
Initial Closing Date (the "First Warrant Period"), Buyer shall be
entitled to purchase up to the full amount of the Warrant Shares (i.e.,
2,000,000 shares) at the Per Share Price; and (ii) during the period
commencing twelve (12) months after the Initial Closing Date and ending
twenty-four (24) months after the Initial Closing Date (the "Second
Warrant Period"), and provided that Buyer acquired at least 1,000,000
of the Warrant Shares during the First Warrant Period, Buyer shall be
entitled to purchase all Warrant Shares not purchased during the First
Warrant Period.
2. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
Buyer represents and warrants to the Company as of the date hereof and
as of the date of the Initial Closing that:
a. INVESTMENT PURPOSE. Buyer is purchasing the Shares and the
Warrants and will acquire the Warrant Shares for its own account for
investment only and not with a view towards, or for resale in
connection with, the distribution thereof except pursuant to sales
registered under the 1933 Act or exempt from the registration
requirements thereof. Buyer is not purchasing the Shares, the Warrants
or the Warrant Shares for the purpose of covering short sale positions
in the Common Stock established on or prior to the date of the Initial
Closing.
b. ACCREDITED INVESTOR STATUS. Buyer hereby represents and
warrants to the Company as follows:
(i) Buyer is an "Accredited Investor," as such term
is defined in Regulation D under the 1933 Act in that the
undersigned is a corporation having total assets in excess of
$5,000,000 not formed for the specific purpose of acquiring
the Securities (as defined below) .
(ii) Buyer is in a financial position to hold the
Securities for an indefinite period of time, is able to bear
the economic risk of an investment in the Securities and can
withstand a complete loss of the Buyer's investment in the
Securities.
(iii) Buyer either alone or together with the
assistance of its own professional advisor or advisors, has
the knowledge and experience in business and financial matters
to read and interpret financial statements of and concerning
the Company and to evaluate the merits and risks of an
investment in the Securities.
c. RELIANCE ON EXEMPTIONS. Buyer understands that the
Securities are being offered and sold to it in reliance on specific
exemptions from the registration requirements of United States federal
and state securities laws and that the Company is relying upon the
truth and accuracy of, and Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and
understandings of Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of Buyer to acquire
the Securities.
d. INFORMATION. Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale
of the Securities which have been requested by Buyer. Buyer and its
advisors, if any, have been afforded the opportunity to ask questions
of the Company and have received answers to such inquiries. Buyer
understands that its investment in Securities involves a high degree of
risk. Buyer nevertheless believes that an investment in the Securities
is suitable for Buyer based upon Buyer's investment objectives and
financial needs. Buyer has adequate means for providing for its current
financial needs and contingencies and has no need for liquidity of its
investment in the Securities. Buyer has sought such accounting, legal
and tax advice as it has considered necessary to make an informed
investment decision with respect to its acquisition of the Securities.
e. NO GOVERNMENTAL REVIEW. Buyer understands that no United
States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the
Securities or the fairness or suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits
of the offering of the Securities.
f. TRANSFER OR RESALE. Buyer understands that (i) except as
contemplated in the Registration Rights Agreement, the Securities have
not been and are not being registered under the 1933 Act or any state
securities laws, and may not be offered for sale, sold, assigned or
transferred unless (a) subsequently registered thereunder, (b) Buyer
shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company, to the effect
that the securities to be sold, assigned or transferred may be sold,
assigned or transferred pursuant to an exemption from such
registration, or (c) Buyer shall provide the Company with reasonable
assurances that the Securities can be sold pursuant to Rule 144 under
the 1933 Act (or a successor rule thereto); (ii) any sale of such
securities made in reliance on Rule 144 promulgated under the 1933 Act
may be made only in accordance with the terms of said
Rule and further, if said Rule is not applicable, any resale of such
securities under circumstances in which the seller (or the person
through whom the sale is made) may be deemed to be an underwriter (as
that term is defined in the ▇▇▇▇ ▇▇▇) may require compliance with some
other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other person is
under any obligation to register such securities (other than pursuant
to the Registration Rights Agreement) under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any
exemption thereunder.
g. LEGENDS. Buyer understands that subject to the removal
provisions set forth below, the certificates representing the
Securities shall bear a restrictive legend in substantially the
following form (and, subject to Section 6 hereof and only so long as
the Securities have the legend set forth below in accordance with this
paragraph, a stop-transfer order may be placed against transfer of such
Securities certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS,
OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE
REASONABLY ACCEPTABLE TO THE ISSUER THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR
UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. ANY SUCH
OFFER, SALE, ASSIGNMENT OR TRANSFER MUST ALSO COMPLY WITH
APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THE SECURITIES
MAY ALSO BE SUBJECT TO RESTRICTIONS UNDER A STOCK PURCHASE
AGREEMENT BETWEEN THE ISSUER AND AGWAY HOLDINGS INC., DATED AS
OF NOVEMBER 12, 1998.
The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of any Securities upon
which such legend is stamped, unless otherwise required by state
securities laws (1)(a) in the case of any Shares or Warrant Shares,
upon the sale of such Shares or Warrant Shares pursuant to an effective
registration statement under the 1933 Act in connection with the
Registration Rights Agreement, (b) in connection with any other sale,
assignment or transfer transaction, such holder provides the Company
with an opinion of counsel, in form, substance, scope and as, to the
counsel delivering such opinion, reasonably acceptable to the Company,
to the effect that the sale, assignment or other transfer of the
Securities may be made
without registration under the 1933 Act, or (c) such holder provides
the Company with reasonable assurances that the Securities can be sold
pursuant to Rule 144 under the 1933 Act (or a successor rule thereto);
and (2) if the limits imposed by this Agreement do not apply to the
Securities being sold. Such Buyer agrees to sell the Securities,
including those represented by certificate(s) from which the legend has
been removed, only in compliance with all applicable securities laws.
h. AUTHORIZATION; ENFORCEMENT. This Agreement has been duly
and validly authorized, executed and delivered by Buyer and (assuming
due execution and delivery by the Company) is a valid and binding
agreement of Buyer enforceable against Buyer in accordance with its
terms, subject as to enforceability to general principles of equity and
to bankruptcy, insolvency, moratorium, and other similar laws affecting
the enforcement of creditors' rights generally.
i. RESIDENCY. Buyer is a resident of that country and state
specified in its address set forth below.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth on a Schedule of Exceptions provided to Buyer five
(5) days prior to the execution of this Agreement, the Company represents and
warrants to Buyer as of the date hereof and as of the Initial Closing that:
a. ORGANIZATION AND QUALIFICATION. The Company and its
subsidiaries are corporations duly organized and validly existing in
good standing under the laws of the jurisdiction in which they are
incorporated, and have the requisite corporate power to own their
properties and to carry on their business as now being conducted and
presently proposed to be conducted. Each of the Company and its
subsidiaries is duly qualified as a foreign corporation to do business
and is in good standing in every jurisdiction in which the nature of
the business conducted by it makes such qualification necessary except
where the failure to be so qualified would not have a Material Adverse
Effect. "Material Adverse Effect" means any material adverse effect on
the business, operations, properties, prospects, condition (financial
or otherwise) or results of operation of the Company and its
subsidiaries taken as a whole.
b. AUTHORIZATION; ENFORCEMENT; COMPLIANCE WITH OTHER
INSTRUMENTS. (i) The Company has the requisite corporate power and
authority to enter into and perform this Agreement and the Ancillary
Agreements, and to issue the Securities in accordance with the terms
hereof and thereof; (ii) the execution and delivery of this Agreement
and the Ancillary Agreements by the Company and the consummation by it
of the transactions contemplated hereby and thereby, including the
issuance of the Securities, have been duly authorized by the Company's
Board of Directors and, except as required by the rules of the NASDAQ
SmallCap Market System, no further consent or corporate authorization
is required therefor; (iii) this Agreement and the Ancillary Agreements
have been duly
executed and delivered by the Company; and (iv) this Agreement and the
Ancillary Agreements (assuming due execution and delivery by the other
parties thereto) constitute the valid and binding obligations of the
Company enforceable against the Company in accordance with their
respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies or by other equitable
principles of general application or by the public policy provisions of
federal securities laws.
c. CAPITALIZATION. As of the date hereof, the authorized
capital stock of the Company consists of (i) twenty million
(20,000,000) shares of Common Stock of which, as of November 10, 1998,
five million three hundred thirty-two thousand four hundred ninety one
(5,332,491) shares were issued and outstanding, and (ii) seven hundred
fifty thousand (750,000) shares of Series A Convertible Preferred
Stock, no par value, of which, as of November 10, 1998, five hundred
thousand(500,000) shares were issued and outstanding and since that
date, there have been no material changes to such number. All of such
outstanding shares have been validly issued and are fully paid and
nonassessable. No shares of Common Stock or preferred stock are subject
to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company. Except as disclosed
in the Schedule of Exceptions, (i) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible
into or exchangeable for, any shares of capital stock of the Company or
any of its subsidiaries, or arrangements by which the Company or any of
its subsidiaries is or may become bound to issue additional shares of
capital stock of the Company or any of its subsidiaries, and (ii) there
are no outstanding debt securities of the Company. The Company has
furnished the Buyer with true and correct copies of the Company's
Articles of Incorporation, as amended, as in effect on the date hereof
("Articles of Incorporation"), and the Company's By-laws, as in effect
on the date hereof (the "Bylaws").
d. ISSUANCE OF SECURITIES. The Securities have been duly
authorized and, upon issuance in accordance with the terms hereof and
thereof, shall be validly issued, fully paid and non-assessable, and
free from all taxes, liens and charges with respect to the issue
thereof.
e. NO CONFLICTS. The execution, delivery and performance of
this Agreement and the Ancillary Agreements by the Company and the
consummation by the Company of the transactions contemplated hereby and
thereby will not (i) result in a violation of the Certificate of
Incorporation or Bylaws or (ii) conflict with, or constitute a default
(or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument
to which the Company or any of its subsidiaries is a party, or result
in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations)
applicable to the Company or
any of its subsidiaries or by which any property or asset of the
Company or any of its subsidiaries is bound or affected (except for
such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect). Neither the Company nor its
subsidiaries is in violation of any term of or in default under its
Articles of Incorporation or Bylaws or, in any material respect, any
contract, agreement, mortgage, indebtedness, indenture, instrument,
judgment, decree or order or any statute, rule or regulation applicable
to the Company or its subsidiaries. The business of the Company and its
subsidiaries is not being conducted in violation of any law, ordinance,
regulation or rule of any governmental entity, except for possible
violations which either singly or in the aggregate do not and will not
have a Material Adverse Effect. Except as required under the 1933 Act,
any applicable state securities laws, or the rules of the NASDAQ
SmallCap Market System the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration
with any court or governmental agency or third party in order for it to
execute, deliver or perform any of its obligations under or
contemplated by this Agreement and the Ancillary Agreements in
accordance with the terms hereof.
f. SEC DOCUMENTS, FINANCIAL STATEMENTS. Since August 2, 1995,
the Company has timely filed all reports, schedules, forms, statements
and other documents required to be filed by it with the SEC pursuant to
Section 13, 14 and 15(d) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), including all exhibits included therein and
financial statements and schedules thereto and documents incorporated
by reference therein (other than exhibits to incorporated documents).
The Buyer has been provided with true and complete copies of all
reports on Forms 10-KSB, 10-QSB and 8-K and proxy statements (or their
equivalents under the rules of the SEC applicable to small business
issuers) filed by the Company with the SEC since December 31, 1997
(such reports, including the financial statements and related schedules
being referred to hereinafter as the "SEC Documents"). As of their
respective dates, the SEC Documents complied in all material respects
with the requirements of the 1934 Act and the rules and regulations of
the SEC promulgated thereunder applicable to the SEC Documents, and
none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading. As of their respective dates, the
financial statements of the Company included in the SEC Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in
accordance with generally accepted accounting principles, consistently
applied during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto, or (ii) in
the case of unaudited interim statements, to the extent they may
exclude footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the Company
as of the dates thereof and the results of its operations and cash
flows for the periods then ended (subject, in the case of unaudited
statements, to normal
year-end audit adjustments). None of the information provided by the
Company or its representatives to Buyer contained any untrue statement
of a material fact or omitted to state any material fact necessary in
order to make the statements therein, in the light of the circumstance
under which they were made, not misleading. Prior to the date hereof,
the Company has corrected all statements in the SEC Documents which
have required correction and has filed all necessary amendments to the
SEC Documents, in each case as required by applicable law.
g. ABSENCE OF CERTAIN CHANGES. Since December 31, 1997, except
as disclosed in the SEC Documents, there has been no material adverse
change and no material adverse development in the business, properties,
operations, prospects, condition (financial or otherwise), or results
of operations of the Company. Since December 31, 1997, except as
disclosed in the SEC Documents, neither the Company nor any of its
subsidiaries has (i) incurred or become subject to any material
liabilities (absolute or continent) except liabilities incurred in the
ordinary course of business consistent with past practices; (ii)
discharged or satisfied any material obligation or liability (absolute
or contingent), other than current liabilities paid in the ordinary
course of business consistent with past practices; (iii) declared or
made any payment or distribution of cash or other property to
stockholders with respect to its capital stock, or purchased or
redeemed, or made agreements to purchase or redeem, any shares of its
capital stock; (iv) sold, assigned or transferred any other tangible
assets, or canceled any debts or claims, except in the ordinary course
of business consistent with past practices; (v) suffered any
substantial losses or waived any rights of material value, whether or
not in the ordinary course of business, or suffered the loss of any
material amount of existing business; (vi) made any changes in employee
compensation except in the ordinary course of business consisted with
past practices; or (vii) experienced any material problems with labor
or management in connection with the terms and conditions of their
employment. The Company has not taken any steps, and does not currently
expect to take any steps, to seek protection pursuant to any bankruptcy
law nor does the Company have any knowledge that its creditors intend
to initiate involuntary bankruptcy proceedings against the Company.
h. ABSENCE OF LITIGATION. Except as expressly set forth in its
SEC Documents, there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board or body pending or,
to the knowledge of the Company, overtly threatened against or
affecting the Company, wherein an unfavorable decision, ruling or
finding would have a Material Adverse Effect or which would adversely
affect the validity or enforceability of, or the authority or ability
of the Company to perform its obligations under, this Agreement, the
Ancillary Agreements or any of the other agreements contemplated
herein. There are no material outstanding orders, judgments,
injunctions, awards or decrees of any court, public board or body
against the Company or any of its subsidiaries.
i. PURPOSE OF INVESTMENT. The Company recognizes that Buyer's
investment in the Company is being made, and shall use the proceeds
therefrom, in order to provide financing for the Company's ongoing
operations and especially for the funding of research and development,
feasibility funding projects and for project and licensing
arrangements; costs of patent prosecution; and working capital and
general corporate purposes, including the possible acquisitions of
rights in new technologies in the Company's ordinary course of
business.
j. ACKNOWLEDGMENT REGARDING BUYER'S PURCHASE OF THE SHARES.
The Company acknowledges and agrees that Buyer is acting solely in the
capacity of an arm's length purchaser with respect to this Agreement
and the Ancillary Agreements and the transactions contemplated hereby
and thereby. The Company further acknowledges that Buyer is not acting
as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the Ancillary Agreements
and the transactions contemplated hereby and thereby and any advice
given by Buyer or any of its representatives or agents in connection
with this Agreement, the Ancillary Agreements and the transactions
contemplated hereby and thereby is merely incidental to Buyer's
purchase of the Securities. The Company further represents to Buyer
that the Company's decision to enter into this Agreement and the
Ancillary Agreements has been based solely on the independent
evaluation by the Company and its representatives.
k. NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. No material event
or circumstances has occurred or exists with respect to the Company or
its subsidiaries or their respective business, properties, prospects,
operations or financial condition which has not been publicly announced
or disclosed.
l. NO GENERAL SOLICITATION. Neither the Company, any of its
affiliates, nor, to its knowledge, any person acting on its or their
behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the 1933 Act), in
connection with the offer or sale of the Securities.
m. NO REGISTRATION REQUIRED. Except as provided herein,
neither the Company, nor to its knowledge, any of its affiliates, nor
any person acting on its or their behalf has, directly or indirectly,
made any offers or sales of any securities or solicited any offers to
buy any security, under circumstances that would require registration
of the Securities under the 1933 Act.
n. EMPLOYEE RELATIONS. Neither the Company nor any of its
subsidiaries is involved in any union labor dispute nor, to the
knowledge of the Company, is any such dispute threatened. None of the
Company's or its subsidiaries' employees is a member of a union and the
Company believes that its relations with its employees for the most
part are good.
o. INTELLECTUAL PROPERTY RIGHTS. The Company and its
subsidiaries own, have obtained or possess rights to use the
trademarks, trade names, service marks, service ▇▇▇▇ registrations,
patents, copyrights, licenses, approvals, governmental authorizations,
trade secrets and other rights necessary to conduct their respective
businesses as now conducted, the Company does not have any knowledge of
any material infringement by the Company or its subsidiaries of any
trademark, trade name rights, patent rights, copyrights, licenses,
service marks, service ▇▇▇▇ registrations, trade secrets or other
similar rights of others and there is no claim being made against the
Company or its subsidiaries regarding trademark, trade name, patent,
copyright, license, service marks, service ▇▇▇▇ registrations, trade
secret or other infringement which could have a Material Adverse
Effect. The Company and its subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of
their intellectual properties, whether currently owned or acquired in
the future, and the Company has entered into agreements with all
current officers and employees, and will enter into agreements with all
future officers and employees, which provide or will provide that all
legal rights concerning newly developed technologies by such officers
or employees shall be the sole property of the Company.
p. DILUTIVE EFFECT. The Company understands and acknowledges
the potentially dilutive effect to the Common Stock of the issuance of
the Securities.
4. COVENANTS.
a. BEST EFFORTS. Each party shall use its best efforts to
take, or cause to be taken, all action and to do, or cause to be done,
all things necessary to consummate the transactions contemplated
hereby, including without limitation, timely satisfaction of the
conditions set forth in Sections 8 and 9 of this Agreement.
b. FORM D. The Company agrees to file a Form D with respect to
the Shares and Warrants as required under Regulation D and to provide a
copy thereof to Buyer promptly after such filing.
c. REPORTING STATUS. Until the date on which Buyer has sold
all the Shares and Warrant Shares held by it, the Company shall use its
best efforts to file all reports required to be filed with the SEC
pursuant to the 1934 Act, and the Company shall not voluntarily
terminate its status as an issuer required to file reports under the
1934 Act even if the 1934 Act or the rules and regulations thereunder
would permit such termination.
d. USE OF PROCEEDS. The Company will use the proceeds from the
sale of the Securities to provide financing for the Company's ongoing
operations and principally for the funding of research and development,
feasibility funding projects and for project and licensing
arrangements; costs of patent prosecution; and working capital and
general
corporate purposes, including the possible acquisitions of rights in
new technologies in the Company's ordinary course of business.
e. FINANCIAL INFORMATION.
(i) The Company will deliver to Buyer as soon as
practicable after the end of each fiscal quarter or fiscal
year of the Company, as appropriate, and in no event later
than twenty (20) days following the end of the relevant
period, one copy of an unaudited consolidated balance sheet of
the Company and its subsidiaries as at the end of such
quarter, and unaudited consolidated statements of income,
retained earnings and changes in financial position of the
Company and its subsidiaries for such quarter; setting forth
in each case in comparative form the figures for the
corresponding periods in the previous fiscal year; all
prepared in accordance with GAAP except that the financial
statements referred to in this Section 4(e)(i) do not contain
footnotes and are subject to normal year-end audit
adjustments, which will not, individually or in the aggregate,
be material in magnitude.
(ii) In addition, the Company will deliver to Buyer
(x) no later than forty (40) days after the end of the
relevant period, any and all information necessary for the
Buyer to fulfill its reporting obligations with the SEC; (y)
within five (5) days after the filing thereof with the SEC, a
copy of each filing made by the Company with the SEC; and (z)
within two (2) days after release thereof, copies of all press
releases issued by the Company or any of its subsidiaries.
(iii) With respect to annual information, the Company
will deliver to Buyer, no later than sixty (60) days after
year end, one copy of an audited consolidated balance sheet of
the Company and its subsidiaries as at the end of such year,
and audited consolidated statements of income, retained
earnings and changes in financial position of the Company and
its subsidiaries for such year; setting forth in each case in
comparative form the figures for the corresponding periods in
the previous fiscal year; all prepared in accordance with
GAAP, and which audited financial statements shall be
accompanied by (A) an opinion thereon of the independent
certified public accountants regularly retained by the
Company, or any other form of independent certified public
accountants of recognized national standing selected by the
Company and (B) a report of such independent certified public
accountants confirming any calculation or adjustment made
pursuant to Section 5 herein, Section 6 of the Form of Warrant
attached hereto as Exhibit A, and any other adjustments
relating to securities authorized by the Company during such
year.
f. RESERVATION OF SHARES. The Company shall at all times have
authorized and reserved for the purpose of issuance, a sufficient
number of shares of Common Stock to provide for the issuance of the
Warrant Shares and any other shares of Common Stock issuable upon the
conversion, exercise or exchange of the Company's outstanding
securities.
g. LISTING. The Company shall use its best efforts to promptly
secure the listing of the Shares and the Warrant Shares upon each
national securities exchange or automated quotation system, if any,
upon which shares of Common Stock are now or may in the future be
listed or quoted, including without limitation the NASDAQ SmallCap
Market System (collectively, the "Exchange") (subject to official
notice of issuance) and shall use its best efforts to maintain, so long
as any other shares of Common Stock shall be so listed, such listing of
all Warrant Shares from time to time issuable under the terms of this
Agreement and the Warrant. During the Registration Period, the Company
shall use its best efforts to maintain the Common Stock's authorization
for listing on the Exchange. The Company shall promptly provide to
Buyer copies of any notices it receives from the Exchange regarding the
continued eligibility of the Common Stock for listing on the relevant
Exchange.
5. RIGHTS OF FIRST REFUSAL
a. SUBSEQUENT OFFERINGS. Buyer shall have a right of first
refusal to purchase its pro rata share of all Equity Securities, as
defined below, that the Company may, from time to time, propose to sell
and issue after the date of this Agreement, other than the Equity
Securities excluded by Section 5(e) hereof. Buyer's pro rata share is
equal to the ratio of (a) the number of shares of the Company's Common
Stock (including all shares of Common Stock issued or issuable upon
conversion of the Shares) which Buyer is deemed to be a holder
immediately prior to the issuance of such Equity Securities to (b) the
total number of shares of the Company's outstanding Common Stock
(including all shares of Common Stock issued or issuable upon
conversion of the Warrant Shares or upon the exercise of any
outstanding warrants or options) immediately prior to the issuance of
the Equity Securities. The term "Equity Securities" shall mean (i) any
Common Stock, Preferred Stock or other security of the Company, (ii)
any security convertible, with or without consideration, into any
Common Stock, Preferred Stock or other security (including any option
to purchase such a convertible security), (iii) any security carrying
any warrant or right to subscribe to or purchase any Common Stock,
Preferred Stock or other security or (iv) any such warrant or right.
b. EXERCISE OF RIGHTS. If the company proposes to issue any
Equity Securities, it shall give Buyer written notice of its intention,
describing the Equity Securities, the price and the terms and
conditions upon which the Company proposes to issue the same. Buyer
shall have twenty (20) days from the giving of such notice to agree to
purchase its pro rata share of the Equity Securities for the price and
upon the terms and conditions specified in the notice by giving written
notice to the Company and stating therein the quantity of Equity
Securities to be purchased.
c. ISSUANCE OF EQUITY SECURITIES TO OTHER PERSONS. If Buyer
fails to exercise in full the rights of first refusal, the Company
shall have ninety (90) days thereafter to sell the Equity Securities in
respect of which the Buyer's rights were not exercised, at a price and
upon general terms and conditions materially no more favorable to the
purchasers thereof than specified in the Company's notice to the Buyer
pursuant to Section 5(b) hereof. If the company has not sold such
Equity Securities within ninety (90) days of the notice provided
pursuant to Section 5(b), the Company shall not thereafter issue or
sell any Equity Securities, without first offering such securities to
the Buyer in the manner provided above.
d. WAIVER OF RIGHTS OF FIRST REFUSAL. The rights of first
refusal established by this Section 5 may be amended, or any provision
waived with the written consent of Buyer.
e. EXCLUDED SECURITIES. The rights of first refusal
established by this Section 5 shall have no application to any of the
following Equity Securities:
(i) up to an aggregate amount of 500,000 shares of
Common Stock issued pursuant to stock options under the
Company's 1995 Stock Option Plan;
(ii) shares of Common Stock issued upon the exercise
or conversion, as the case may be, or the dividend or
antidilution provisions thereof, if any, of options, warrants,
preferred stock, convertible securities or other rights to
purchase Common Stock which options, warrants, preferred
stock, convertible securities or other rights are issued and
outstanding on the date hereof;
(iii) shares of Common Stock issued pursuant to any
rights or agreements granted after the date of this Agreement;
provided that the rights of first refusal established by this
Section 5 did apply with respect to the initial sale or grant
by the Company of such rights or agreements;
(iv) any Equity Securities issued for consideration
other than cash pursuant to a merger, consolidation,
acquisition or similar business combination;
(v) shares of Common Stock issued in connection with
any Common Stock split or Common Stock dividend by the
Company.
6. TRANSFER AGENT INSTRUCTIONS.
The Company shall instruct its transfer agent to issue certificates,
registered in the name of the Buyer or its nominee, for the Shares and Warrant
Shares in such amounts as specified from time to time by the Buyer to the
Company. All such certificates shall bear the restrictive legend specified in
Section 2(g) of this Agreement but only to the extent provided in such Section.
The Company shall provide instructions and opinions of counsel to its transfer
agent in
accordance with the Registration Rights Agreement. The Company warrants and
covenants that no instruction other than such instructions referred to in this
Section 6, and stop transfer instructions to give effect to Section 2(f) hereof,
in the case of the Shares or Warrants, will be given by the Company to its
transfer agent and that the Securities shall otherwise be freely transferable on
the books and records of the Company as and to the extent provided in this
Agreement and the Warrants. Nothing in this Section 6 shall affect in any way
Buyer's obligations and agreement to comply with all applicable securities laws
upon the sale, assignment or other transfer of the Securities. If Buyer provides
the Company with an opinion of counsel, reasonably satisfactory in form, scope,
substance and as to the counsel delivering such opinion to the Company, that
registration of the sale, assignment or other transfer by Buyer of any of the
Securities is not required under the 1933 Act, the Company shall permit the
transfer, and promptly instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by Buyer.
7. STANDSTILL AND NO-SALE.
From the period beginning on the Initial Closing until the earlier of
(i) thirty (30) months after the Initial Closing, or (ii) the cessation of all
business activity between the Company and the Buyer (the "Standstill Period"):
a. STANDSTILL PROVISION. Buyer will not, nor will it permit
any of its affiliates (including parents, subsidiaries or other related
entities) to, in any manner, singly or as part of a partnership,
limited partnership, syndicate or other "Group" (within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Securities Exchange Act")), directly or indirectly, acquire, or
offer or agree to acquire, record ownership or beneficial ownership of
any shares of capital stock of the Company, any securities convertible
into or exchangeable for capital stock of the Company or any other
right to acquire capital stock of the Company, without the prior
written consent of the Company to the extent such acquisition, offer or
agreement would result in the Buyer owning more than forty-five percent
(45%) of the Common Stock outstanding at the time of such acquisition,
offer or agreement; provided, however, that this clause shall not apply
to (i) increases in percentage ownership due to the buy-back of Common
Stock by the Company; (ii) Common Stock purchases precipitated by an
unaffiliated third party attempt to acquire control of the Company; or
(iii) other Company securities purchased with the consent of the
Company.
b. AGREEMENT NOT TO SELL. During the twelve (12) month period
following the execution of this Agreement, Buyer will not, nor will it
permit any of its corporate affiliates (including parents, subsidiaries
or other related entities) to, directly or indirectly sell, contract to
sell (including, without limitation, any short sale), grant any option
to purchase or otherwise transfer or dispose of any of the Shares or
Warrant Shares or other securities of the Company. In any twelve (12)
month period, beginning with the anniversary of this Agreement and each
anniversary thereafter, Buyer will not, nor will it permit any of its
corporate affiliates (including parents, subsidiaries or other related
entities) to, directly or indirectly sell, contract to sell (including,
without limitation, any short sale), grant any option to purchase or
otherwise transfer or dispose of any of the Shares or Warrant Shares or
other securities of the Company in excess of one-third of such Shares,
Warrant Shares or other securities held by the Buyer on the first day
of the relevant twelve (12) month period without the prior written
consent of the Company. Notwithstanding the foregoing in the event the
business activity between the Company and the Buyer is terminated other
than pursuant to a breach by or the insolvency of the Company then,
following such termination, Buyer may sell the Shares or the Warrant
Shares in accordance with the volume and other limitations under
applicable securities laws. Buyer will notify the Company prior to any
such sale and work with the Company to effect such sales in an orderly
manner. In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the securities held
by Buyer and its affiliates that are subject to the foregoing
restriction until the end of such period.
8. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
The obligation of the Company hereunder to sell the Shares and the
Warrants is subject to the satisfaction, at or before the date of the Initial
Closing, of each of the following conditions, provided that these conditions are
for the Company's sole benefit and may be waived by the Company at any time in
its sole discretion.
a. The parties shall have executed this Agreement and the
Ancillary Agreements, and delivered the same to each other.
b. The shareholders of the Company shall have approved the
issuance of Shares contemplated hereunder in accordance with applicable
rules of the NASDAQ SmallCap Market System;
c. Pursuant to Section 1(d) of this Agreement, Buyer shall
have delivered to Company the Purchase Price for all Shares being
purchased by Buyer by certified check or wire transfer of immediately
available funds.
d. The representations and warranties of Buyer contained
herein shall be true and correct in all material respects as of the
date when made and as of the date of the Initial Closing as though made
at that time (except for representations and warranties that speak as
of a specific date), and Buyer shall have performed, satisfied and
complied in all material respects with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or
complied with by Buyer at or prior to the date of the Initial Closing.
9. CONDITIONS TO BUYER'S OBLIGATION TO PURCHASE
The obligation of Buyer to purchase the Shares and the Warrants at the
Initial Closing is subject to the satisfaction, at or before the Initial Closing
Date of each of the following conditions, provided that these conditions are for
Buyer's sole benefit and may be waived by Buyer at any time in its sole
discretion.
a. The parties shall have executed this Agreement and the
Ancillary Agreements, and delivered the same to the other parties.
b. From the date hereof, until the date of the Initial
Closing, the Common Stock shall be authorized for quotation on the
Exchange and trading in the Common Stock on the Exchange shall not have
been suspended by the SEC or the Exchange and trading in securities
generally on the Exchange shall have not been suspended or limited nor
shall minimum prices have been established for securities traded on the
Exchange nor shall a banking moratorium have been declared nor shall
there be any material adverse change in any financial market that in
the reasonable judgment of the Buyer makes it impracticable or
inadvisable to purchase the Shares and the Warrants.
c. The shareholders of the Company shall have approved the
issuance of the Shares, the Warrant, and the Warrant Shares
contemplated hereunder, and such approval shall have been obtained in
accordance with applicable rules of the NASDAQ SmallCap Market System
as if such rules required approval of such issuance(s), regardless of
whether approval thereunder is, in fact, required, and such shareholder
approval shall have occurred following the filing of the form 10-QSB
for the period ended September 30, 1998.
d. The Company shall have entered into an employment agreement
(the "Employment Agreement") with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ in the form attached
as Exhibit 9(d).
e. The Company shall have provided to the Buyer any changes to
the Schedule of Exceptions delivered in accordance with Section 3
within five (5) days prior to the Initial Closing Date.
f. The representations and warranties of the Company contained
herein and not qualified by a materiality standard shall be true and
correct in all respects as of the date when made, and shall be true and
correct in all material respects as of the date of the Initial Closing,
as though made at that time (except for representations and warranties
that speak as of a specific date); the representations and warranties
of the Company contained herein and qualified by a materiality standard
shall be true and correct in all respects as of the date when made and
as of the date of the Initial Closing, as though made at that time
(except for representations and warranties that speak as of a specific
date); and the Company shall have performed, satisfied and complied in
all respects with the covenants, agreements and conditions required by
this Agreement to be performed,
satisfied or complied with by the Company at or prior to the date of
the Initial Closing, as applicable. Buyer shall have received a
certificate, executed by the Chief Executive Officer of the Company,
dated as of the date of the Initial Closing to the foregoing effect.
Changes to the Schedule of Exceptions to be delivered in accordance
with Section 9(e) will not qualify the representations and warranties
made upon execution of this Agreement or at the date of the Initial
Closing; provided, however, that in the event that Buyer determines to
proceed with the Initial Closing following the receipt of an updated
Schedule of Exceptions, then these representations and warranties will
be so qualified.
g. Buyer shall have received the opinion of the Company's
counsel dated as of the date of the Initial Closing in substantially
the form attached hereto as Exhibit 9(e).
h. The Company shall have executed and delivered to Buyer the
Stock Certificate(s) for the Shares being purchased by Buyer and the
Certificates representing the Warrants.
i. No action, suit, investigation or proceeding before or by
any governmental authority shall have been commenced or threatened
against the Company or any of the officers, directors or affiliates of
the Company, which seeks to restrain, prevent or change the
transactions contemplated by this Agreement or the Registration Rights
Agreement or which seeks damages in connection with such transactions.
10. GOVERNING LAW; MISCELLANEOUS.
a. GOVERNING LAW. This Agreement shall be governed by
and interpreted in accordance with, the laws of the State of New York
without regard to the principles of conflict of laws.
b. COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, including, without limitation, by facsimile
transmission (with copies sent by United States mail to the other
parties), all of which counterparts shall be considered one and the
same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party. In the event any
signature page is delivered by facsimile transmission, the party using
such means of delivery shall cause four (4) additional original
executed signature pages to be physically delivered to the other party
within five (5) days of the execution and delivery hereof.
c. HEADINGS. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretations of, this Agreement.
d. SEVERABILITY. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement.
e. ENTIRE AGREEMENT; AMENDMENTS. This Agreement (together with
the Schedules and Exhibits hereto), the Ancillary Agreements, the
Warrant and the other agreements and instruments referenced herein
contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set
forth herein or therein, neither the Company nor Buyer makes any
representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other
than by an instrument in writing signed by the party to be charged with
enforcement.
f. NOTICES. Any notices required or permitted to be given
under the terms of this Agreement shall be sent by mail or delivered
personally, by courier or by facsimile (with a copy by U.S. mail) and
shall be effective five days after being placed in the mail, if mailed,
certified or registered, return receipt requested, or upon receipt, if
delivered personally or by courier or by facsimile (with a copy by U.S.
mail), in each case properly addressed to the party to receive the
same. The addresses for such communications shall be:
If to the Company:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Ph.D.
With Copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ Godward, LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
If to the Buyer:
Agway Holdings Inc.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇, V.P.
With a copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., General Counsel
Each party hereto shall provide notice to the other party of
any change in address.
g. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties. The Company shall not
assign this Agreement or any rights or obligations hereunder without
the prior written consent the Buyer. Buyer may assign its rights
hereunder without the consent of the Company, provided, however, that
any assignment of Buyer's obligations under the Ancillary Agreements
may be made only in accordance with the terms thereof.
h. NO THIRD PARTY BENEFICIARIES. This Agreement is intended
for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
i. SURVIVAL. All representations and warranties made by the
Company and the Buyer in this Agreement (including the Schedules and
Exhibits hereto), the Ancillary Agreements, the Warrant or otherwise
pursuant hereto shall survive the issuance of the Shares and the
Warrants to the Buyer for a period of two (2) years following such
issuance. Buyer shall be responsible only for its own representations,
warranties, agreements and covenants hereunder.
j. PUBLICITY. The Company and Buyer shall have the right to
approve before issuance any press releases or any other public
statements with respect to the transactions contemplated hereby that
identifies the Buyer; provided, however, that the Company shall be
entitled without the prior approval of Buyer, to make any press release
or other public disclosure with respect to such transactions as is
required by applicable law and regulations (although the Buyer shall be
consulted by the Company in connection with any such press release or
other public disclosure prior to its release and shall be provided with
a copy thereof).
k. FURTHER ASSURANCES. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and
shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in
order to carry out the intent and accomplish the purpose of this
Agreement and the consummation of the transactions contemplated hereby.
l. TERMINATION. In the event that (i) approval by the
Company's shareholders of the acquisition by Agway of the Shares, the
Warrant, and the Warrant Shares, and the other transactions
contemplated hereby (including without limitation the transactions
contemplated by the Ancillary Agreements) is not obtained at a special
meeting of the Company's shareholders called for that purpose, or (ii)
the Initial Closing shall not have occurred on or before January 31,
1999 (or such other date as the parties shall mutually agree), this
Agreement and, at the option of Buyer in its sole discretion, the
Ancillary Agreements, shall terminate at the close of business on such
date without liability of any party to any other party; provided,
however, that Agway shall be entitled to a return of all
amounts paid by it or its subsidiaries to the Company under the
Ancillary Agreements if so terminated; and provided further, that in
the event the Initial Closing has not occurred due to a material breach
of a representation or warranty by a party, the other party shall be
entitled to receive from such breaching party the out-of-pocket
expenses (including legal fees) incurred by the non-breaching party in
connection with this Agreement. Subject to the assignment or transfer
of rights set forth herein with respect to the Agreement and the
Securities, and subject to the Company's obligations to comply with the
Agreement prior to any sale, the obligations of the Company and the
Buyer (or any permitted assignees of Buyer) under this Agreement shall
otherwise terminate upon the sale or other transfer by Buyer (or any
permitted assignees of Buyer) of all Shares and Warrants acquired by
Buyer hereunder and all and Warrant Shares acquired by Buyer (or any
permitted assignees of Buyer) upon exercise of the Warrants.
m. INDEMNIFICATION. The Company agrees to indemnify, defend
and hold harmless the Buyer and its affiliates and their respective
directors, officers, employees and agents from and against any and all
losses, claims, damages, fees, fines and expenses (including without
limitation reasonable attorneys' fees) due to or arising out of a
breach of any representation or warranty or covenant of the Company
contained in this Agreement (including the Schedules and Exhibits
hereto) and in the other agreements and instruments referenced herein.
n. NO WAIVER. Notwithstanding any of the representations,
warranties, acknowledgments or agreements made herein by the
undersigned, the Buyer does not thereby or in any manner waive any
rights granted to him or it under U.S. Federal or state securities
laws.
Dated: November 12, 1998:
AGWAY HOLDINGS INC.
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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its: VP
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PLANET POLYMER TECHNOLOGIES, INC.
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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