EXHIBIT E
PRODUCT FEASIBILITY AGREEMENT
This Agreement is made effective the 12th day of November,
1998 (the "Effective Date"), by and between Agway Consumer Products, Inc., a
Delaware corporation with offices at 000 Xxxxxxxxx Xxxxx, Xxxxxx, Xxx Xxxx 00000
(hereinafter "Agway"), and Planet Polymer Technologies, Inc., a California
corporation with offices at 0000 Xxxxxxxxxxxx Xxxxxx, Xxxxx X, Xxx Xxxxx,
Xxxxxxxxxx 00000 (hereinafter "Planet").
WHEREAS, Planet has developed technology relating to time-
release coatings and protective coatings; and
WHEREAS, Agway wishes to have Planet conduct product
feasibility work in connection with time-release coatings for a variety of
Agricultural Products (as hereafter defined) and in connection with protective
coatings for a variety of Food Products (as hereafter defined).
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS:
1.1 "Agricultural Products" shall mean products for use in Agriculture,
including, but not be limited to, animal feeds and other products
intended for animal consumption, but shall exclude Fertilizer Products,
as defined in 1.4 below, and Biological Products as defined in the
agreement between Planet and Agrium, Inc. dated January 30, 1995.
Agriculture shall mean the production of crops, livestock, dairy
products, poultry products, meats, and other products produced for
and/or produced from a farm operation.
1.2 "Food Products" shall mean products intended for human dietary
consumption, including, but not be limited to, dairy products, poultry
products, meat products, fruits and vegetables.
1.3 "Other Products" shall mean coated urea for melting ice at airports,
and packaging for Agricultural Products and Food Products.
1.4 "Fertilizer Products" shall mean plant nutrients and other products
intended for use in fertilizers, including the specific urea fertilizer
coating ("Enviroplastic CRT) developed by Planet for Agrium, Inc., as
covered by U.S. patent no. 5,803,946.
1.5 "Agway's Field of Business" shall mean the production, distribution
and/or marketing of Agricultural Products, Food Products, Other
Products and any other products as
may be mutually agreed upon in writing by Agway and Planet
(individually a "Product" and collectively the "Products").
1.6 "Affiliate" shall mean any company which, directly or indirectly is
controlled by, or controls, a party to this Agreement, or is under
common control with a party to this Agreement. Ownership of 50% or more
of the voting stock of, or membership interest in a company shall be
regarded as control.
1.7 "Control" shall mean possession of the ability to grant a license or
sublicense as provided for herein without violating the terms of any
agreement or other arrangement with any third party.
1.8 "Know-How" shall mean all know-how, trade secrets, inventions, data,
processes, techniques, procedures, compositions, devices, methods,
formulas, protocols and information, whether or not patentable, which
are not generally publicly known, including, without limitation, all
chemical, biochemical, toxicological, and scientific research
information.
1.9 "Commercially Feasible" shall mean a product that will generate a
minimum of $500,000.00 in net profits annually to be shared between
Planet and Agway, beginning no later than the second year following
product introduction.
1.10 "Patent Rights" shall mean all rights under patents and patent
applications, and any and all patents issuing therefrom (including
utility, model and design patents and certificates of invention),
together with any and all substitutions, extensions (including
supplemental protection certificates), registrations, confirmations,
reissues, divisionals, continuations, continuations-in-part,
re-examinations, renewals and foreign counterparts of the foregoing.
1.11 "Agway Know-How" shall mean all Know-How necessary or appropriate to
develop and commercialize Products for use in Agway's Field of
Business, and which is under the Control of Agway.
1.12 "Products" shall mean Agricultural Products, Food Products, Other
Products and any other products as may be mutually agreed upon in
writing by Agway and Planet.
1.13 "Planet Know-How" shall mean all Know-How related to Planet's
proprietary coating technology, which is not covered by the Planet
Patent Rights, but is necessary or appropriate to develop and
commercialize Products for use in Agway's Field of Business, and which
is under the Control of Planet as of the Effective Date.
1.14 "Planet Patent Rights" shall mean all Patent Rights that claim Planet's
proprietary coating technology, which are necessary or appropriate to
develop and commercialize Products for use in Agway's Field of
Business, and which are under the Control of Planet as of the Effective
Date.
1.15 "Planet Technology" shall mean the Planet Patent Rights and the Planet
Know-How.
1.16 "New Technology" shall mean Patent Rights and Know-How including, but
not limited to, new compositions of matter, new chemical complexes,
improved chemical complexes, association compounds, blends, mixtures or
compositions of coating materials, polymer materials and new products
or processes relating thereto, developed as a result of the Work
conducted under ARTICLE 2 of this Agreement, whether developed by
Planet alone or jointly with Agway, or by Agway alone as a result of
disclosures made to it by Planet in connection with such work.
ARTICLE 2
WORK TO BE PERFORMED:
2.1 The product feasibility work to be conducted by Planet under this
Agreement (hereafter the Work) is set forth in Exhibit 1 attached
hereto and hereby made a part hereof. Exhibit 1 sets forth the Work
initially contemplated, and may be amended from time to time by mutual
written agreement of the parties to recite additional Work to be
conducted by Planet. The conduct of the Work shall include regular
meetings between representatives of Planet and representatives of
Agway, during which Agway will offer comments on samples made from
blends of materials to be supplied to Agway by Planet.
2.2 If the performance characteristics set forth in Exhibit 1 are not met
by Planet, or reasonable progress is not made by Planet toward
achieving such performance characteristics, or the work being conducted
by Planet is not performed to Agway's reasonable satisfaction, then
Agway, in its sole judgment, shall have the right to terminate the Work
pursuant to Section 9.1b) and shall have no further obligation to
Planet with respect to any fees for Work remaining to be performed, as
outlined in Exhibit 1, provided, however, that Agway shall reimburse
Planet for all reasonable costs incurred or committed to in connection
with the Work prior to receipt of such notice of termination.
ARTICLE 3
WORK SCHEDULE:
The Work to be performed shall be conducted in accordance with the time
schedule set forth in Exhibit 1, attached hereto and hereby made a part
hereof. Planet will use reasonable commercial efforts to conduct the
Work set forth in Exhibit 1, and to complete the Work in accordance
with the time schedule set forth therein.
ARTICLE 4
PAYMENTS:
4.1 Agway agrees to pay the fees as set forth in Exhibit 1, for performance
of the Work.
4.2 Agway also agrees to reimburse Planet for its reasonable costs for
travel and lodging in connection with the meetings contemplated under
ARTICLE 2.1, when incurred at the written request of Agway, and for the
reasonable cost of the coating materials and coated Products supplied
by Planet to Agway for alpha and beta testing in accordance with
Exhibit 1, including reasonable shipping and processing costs, and for
the cost of such independent laboratory tests as may be mutually agreed
upon by the parties in writing.
ARTICLE 5
OWNERSHIP:
5.1 The New Technology, including all inventions, whether patentable or
not, arising from the Work performed and to be performed under this
Agreement, shall be owned by Planet, or by such of its Affiliates as it
may designate from time to time.
5.2 Planet agrees (a) to promptly execute and file, or to cause to be
executed and filed any and all patent applications covering any of the
New Technology and relating to any matter determined by Agway and
Planet to be feasible, and (b) to require the inventors of such New
Technology who are employees or representatives of Planet to assign
such patent applications and the inventions disclosed therein to
Planet, or as Planet may direct, and to execute all such other
documents as may be reasonably necessary to confirm the ownership
rights of Planet in the subject matter of this ARTICLE 5.Agway agrees
(a) to require the inventors of any New Technology who are employees or
representatives of Agway to assign their rights to such New Technology to Agway,
and (b) to assign such New Technology to Planet.
5.3 With respect to any patent applications and patents covering the New
Technology, Planet shall be responsible for all costs and expenses
related to preparing, filing and prosecuting such patent applications
and paying all maintenance fees related to any such issued patents.
After any patents covering the New Technology have issued, Planet and
Agway shall share equally all costs and expenses related to the further
prosecution and any defense and enforcement of such patents (including,
if applicable, opposition proceedings related to any European patents,
re-examination of issued patents, interference proceedings and
declaratory judgements regarding invalidity of any such issued
patents). In the event that Planet desires to abandon any patent
application or patent covering the New Technology, or if Planet later
declines responsibility for any such patent application or patent,
Planet shall provide reasonable prior written notice to Agway of such
intention to abandon or decline responsibility, and Agway shall have
the right, at its own expense, to file, prosecute and maintain such
patent application or patent. In addition, Agway shall have the right,
at its own expense, to file, prosecute and maintain such patent
application or patent upon or after the bankruptcy, dissolution or
winding up of Planet. Agway may offset its costs and expenses in
connection with any such patent application or patent against any
royalties due Planet thereunder, in an amount not to exceed 5% of such
royalties, until the total of such costs and expenses, plus accrued
interest (at the rate of 1.5% per month, up to the maximum legal annual
interest rate) on the balance of such costs and expenses remaining
after each such royalty payment to Planet, has been recouped by Agway
in this manner.
5.4 If Agway and Planet mutually decide to protect some or all of the New
Technology under laws relating to trade secrets, the parties shall
cooperate with one another in achieving such trade secret protection.
ARTICLE 6
CONFIDENTIALITY:
The terms of the Mutual Non-Disclosure Agreement between Agway and
Planet, made as of August 6, 1998 (the "NDA"), a copy of which is
attached hereto as Exhibit 2, is hereby incorporated herein and made a
part hereof. Neither party shall terminate the NDA during the term of
the Agreement. Each party may use Confidential Information (as defined
in NDA) of the other party only to the extent necessary to accomplish
the purposes of this Agreement.
ARTICLE 7
RIGHT OF FIRST NEGOTIATION:
Planet shall provide written notice to Agway in the event Planet
desires to develop a product with a third party, or is approached by a
third party to develop a product, for use in Agway's Field of Business.
Such notice shall include an outline of anticipated funding needs, the
anticipated length of the product feasibility study and Planet's
desired result from such study. Agway shall have 30 days following
receipt of such notice to advise Planet whether Agway considers the
product to be Commercially Feasible, and whether Agway is interested in
such a product. Agway shall have another 30 days thereafter to
negotiate a product feasibility study on terms and conditions
acceptable to Planet, including financial terms under which Agway will
fund such product feasibility study. If the parties cannot agree to
such terms and conditions within such 30 day period, or if the parties
cannot agree whether the product is or is not Commercially Feasible,
the parties agree to submit the matter to arbitration under ARTICLE 18
and Planet agrees to take no further action with respect to such
product and feasibility study during the arbitration proceeding. If the
product is considered to be Commercially Feasible, and if Agway does
not express interest in such a product within the initial 30 day
period, (i) Planet may proceed with such a third party product
feasibility study and Agway shall have no rights in connection with
such product feasibility study or with respect to any product developed
thereunder (hereinafter a "Developed Product"), and (ii) Planet shall
have the right to grant an exclusive license to a third party under the
Planet Technology and the New Technology to make, have made, use or
sell such Developed Product in Agway's Field of Business. Any such
third party license shall be limited to such Developed Product and
shall not otherwise diminish Agway's rights with respect to the Planet
Technology and to the New Technology under this Agreement. Planet
agrees that it will not, during the term of this Agreement, proceed
with such a third party feasibility study if the product is not
considered to be Commercially Feasible.
ARTICLE 8
TERM:
8.1 Except as otherwise provided herein, this Agreement shall commence as
of the date of its execution and shall continue for 5 years following
such date.
8.2 This Agreement may be extended by mutual written agreement of the
parties.
ARTICLE 9
TERMINATION:
9.1 This Agreement may be terminated:
a) Upon mutual written agreement of the parties; or
b) By either party for breach of any of the material terms hereof
by the other party, if the breach is not corrected within
sixty (60) days after giving written notice of such breach to
the other party; or
c) By Agway on six months' prior written notice to Planet if, in
Agway's sole opinion, the continued conduct of the Work under
this Agreement is unprofitable or otherwise not viable for
Agway: provided, however, that Agway shall not have the right
to terminate the Agreement under this subparagraph c) until
the expiration of 3 years from the Effective Date; or
d) By Agway, forthwith, upon written notice to Planet if Planet
shall become insolvent or shall make an assignment for the
benefit of creditors, or shall be placed in receivership,
reorganization, liquidation or bankruptcy (voluntary or
involuntary); or
e) By Planet, forthwith, upon written notice to Agway if Agway
shall become insolvent or shall make an assignment for the
benefit of creditors, or shall be placed in receivership,
reorganization, liquidation or bankruptcy (voluntary or
involuntary); or
f) By Planet, if the business of Agway, subject to the terms of
this Agreement, by law, decree, ordinance or other
governmental action, is vested in, or is made subject to, the
control or direction of any governmental agent, officer or
appointee, or of any other person or firm not a party or an
Affiliate of a party to this agreement; or
g) By Agway, if the business of Planet, subject to the terms of
this Agreement, by law, decree, ordinance or other
governmental action, is vested in, or is made subject to, the
control or direction of any governmental agent, officer or
appointee, or of any other person or firm not a party or an
Affiliate of a party to this Agreement; or
h) By Agway, in Agway's sole discretion forthwith upon written
notice to Planet if the shareholders of Planet do not approve
at a special meeting of its
shareholders called for such purpose (A) the purchase by Agway
Holdings, Inc. ("AHI") of 1,000,000 shares of Planet's common
stock pursuant to a Stock Purchase Agreement between AHI and
Planet dated on or about the date of this Agreement (the
"Stock Agreement"), (B) the Warrant and the Warrant Shares (as
such terms are defined in the Stock Agreement) and (C) the
other transactions provided for in the Stock Agreement, or if
the Initial Closing (as defined in the Stock Agreement) shall
not have occurred on or before January 31, 1999 or such later
date as the parties may agree upon in writing ("Termination
Date"). If this Agreement is terminated as hereinabove
provided, then Planet shall repay to Agway all amounts paid by
Agway or any Affiliate of Agway under this Agreement on the
Termination Date.
9.2 Any termination pursuant to ARTICLE 9 shall not relieve either party of
any obligation or liability accrued under this Agreement prior to such
termination, or rescind or give rise to any right to rescind anything
done or, except as provided for in Section 9.1 h), to recover any
payments made or other consideration given under this Agreement prior
to the time such termination becomes effective, and such termination
shall not affect in any manner any rights arising under this Agreement
prior to such termination.
9.3 The Mutual Non-Disclosure Agreement attached as Exhibit 2 shall remain
in effect following the termination of this Agreement, in accordance
with its terms.
9.4 The provisions of ARTICLES 1, 5, 6, 9, 10.3, 10.4, 13, 14, 18, 20, 21
and 22 shall survive termination of this Agreement.
ARTICLE 10
REPRESENTATIONS AND WARRANTIES:
10.1 Planet represents and warrants that:
a) It has authority to enter into this Agreement, and doing so
will not violate any agreements to which it is a party.
b) It has all necessary government licenses and approvals
required to conduct its business.
c) It has no knowledge of any impediment to its performance of
this Agreement.
10.2 Agway represents and warrants that:
a) It has authority to enter into this Agreement, and doing so
will not violate any agreements to which it is a party.
b) It has all necessary government licenses and approvals
required to conduct its business.
c) It has no knowledge of any impediment to its performance of
this Agreement.
10.3 EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES
ANY REPRESENTATION OR WARRANTY TO THE OTHER PARTY OF ANY KIND, EXPRESS
OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
10.4 NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY
SPECIAL, INDIRECT, INCIDENTAL, EXEMPLARY, CONSEQUENTIAL, OR PUNITIVE
DAMAGES IN CONNECTION WITH THIS AGREEMENT OR ANY WORK PERFORMED
HEREUNDER.
ARTICLE 11
NOTICES:
All notices or other communications required or permitted to be given
under this Agreement shall be in writing and shall be deemed to have
been sufficiently given when delivered in person, or when deposited
with the United States Postal Service or Canada Post, first-class,
registered or certified mail, postage prepaid, or by fax (upon
confirmation of receipt) addressed as follows:
AGWAY:
Agway Consumer Products, Inc.
X.X. Xxx 0000
Xxxxxxxx, Xxx Xxxx 00000-0000
FAX: (000) 000-0000
Attention: Xxxxxx XxXxxx
PLANET:
Planet Polymer Technologies, Inc.
0000 Xxxxxxxxxxxx Xxxxxx, Xxxxx X
Xxx Xxxxx, Xxxxxxxxxx X.X. 00000
FAX: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx
or to such other address or individual as either party may
specify from time to time in writing.
ARTICLE 12
ASSIGNMENT:
This Agreement shall be binding on and inure to the benefit of the
parties to this Agreement and their successors and permitted assigns,
provided no assignment shall relieve the assigning party of its
obligations under this Agreement. The rights, duties, privileges and
obligations of each party under this Agreement shall not be assigned or
delegated without the prior written consent of the other party (which
consent shall not be unreasonably withheld); provided, however, that
either party may assign this Agreement and its rights and obligations
hereunder without the other party's consent (a) in connection with the
transfer or sale of all or substantially all of the business of such
party to which this Agreement relates to another party, whether by
merger, sale of stock, sale of assets or otherwise, or (b) to any
Affiliate. Any assignment not in accordance with this Agreement shall
be void.
ARTICLE 13
NO REFUND OR PAYMENTS:
All sums paid by Agway to Planet under this Agreement shall not be
refundable for any purpose, except for excess payment made due to
computational errors.
ARTICLE 14
LITIGATION:
14.1 Planet shall have no obligation to enforce rights under its patents
and/or trade secrets for the benefit of Agway or otherwise; nor shall
Planet have any obligation to defend or indemnify Agway or its
Affiliates in respect of any activities of Agway and/or its Affiliates
under this Agreement.
14.2 Agway shall have no obligation to enforce rights under its patents
and/or trade secrets for the benefit of Planet or otherwise; nor shall
Agway have any obligation to defend or indemnify Planet or its
Affiliates in respect of any activities of Planet and/or its Affiliates
under this Agreement.
ARTICLE 15
PRODUCT LIABILITY:
15.1 Agway shall hold Planet and its Affiliates harmless, and shall defend
and indemnify Planet and its Affiliates against any product liability
claim made against Planet or its Affiliates arising out of the
activities of Agway and/or its Affiliates under this Agreement.
15.2 Planet shall hold Agway and its Affiliates harmless, and shall defend
and indemnify Agway and its Affiliates against any product liability
claim made against Agway or its Affiliates arising out of the
activities of Planet and/or its Affiliates under this Agreement.
15.3 In the event either party seeks indemnification under this ARTICLE 15,
it shall inform the other party of a claim as soon as reasonably
practicable after it receives notice of the claim, shall permit the
other party to assume direction and control of the defense of the claim
(including the right to settle the claim solely for monetary
consideration), and shall cooperate as requested (at the expense of the
other party) in the defense of the claim.
ARTICLE 16
NON-WAIVER:
The failure by any party to this Agreement, at any time, to enforce or
to require strict compliance of performance by any other party of any
of the provisions of this Agreement shall not constitute a waiver of
such provisions and shall not affect or impair in any way its rights at
any time to enforce such provisions or to avail itself of such remedies
as it may have for any breach thereof.
ARTICLE 17
SEVERABILITY:
If any provision hereof is held invalid or unenforceable by a court of
competent jurisdiction, it shall be considered severed from this
Agreement and shall not serve to invalidate or render unenforceable the
remaining provisions hereof.
ARTICLE 18
ENTIRE AGREEMENT; AMENDMENT:
This Agreement constitutes the entire understanding between the parties
with respect to the subject matter hereof. No waiver, modification or
amendment of any terms of this Agreement shall be valid unless made in
writing specifying such waiver, modification, or amendment and signed
by the parties hereto.
ARTICLE 19
FORCE MAJEURE:
Neither party shall be held liable or responsible to the other party
nor be deemed to have defaulted under or breached this Agreement for
failure or delay in fulfilling or performing any term of this Agreement
(other than non-payment) when such failure or delay is caused by or
results from causes beyond the reasonable control of the affected
party, including, but not limited to, fire, floods, embargoes, war,
acts of war (whether war be declared or not), insurrections, riots,
civil commotions, strikes, lockouts or other labor disturbances, acts
of God or acts, omissions or delays in acting by any governmental
authority or the other party.
ARTICLE 20
DISPUTE RESOLUTION AND CHOICE OF LAW:
20.1 This Agreement will be governed by and interpreted in accordance with
the laws of the State of New York, U.S.A., without regard to its choice
of law provisions.
20.2 If any dispute arises between the parties relating to the
interpretation, breach or performance of this Agreement or the grounds
for the termination thereof, and the parties cannot resolve the dispute
within 30 days of a written request by either party to the other party,
the parties agree to hold a meeting, attended by a Vice President or
President of each party, to attempt in good faith to negotiate a
resolution of the dispute prior to pursuing other available remedies.
If, within 60 days after such written request, the parties have not
succeeded in negotiating a resolution of the dispute, such dispute
shall be submitted to final and binding arbitration under the then
current commercial rules and regulations of the American Arbitration
Association ("AAA") relating to voluntary arbitrations. The arbitration
proceedings shall be held in Buffalo, New York. The arbitration shall
be conducted by one arbitrator, who is knowledgeable in the subject
matter at issue in the dispute and who shall be selected by mutual
agreement of the parties or, failing such agreement, shall be selected
in accordance with the AAA rules. Each party shall initially bear its
own costs and legal fees associated with such arbitration. The
prevailing party in any such arbitration shall be entitled to recover
from the other party the reasonable attorneys' fees, costs, and
expenses incurred by such prevailing party in connection with such
arbitration. The decision of the arbitrator shall be final and binding
on the parties. The arbitrator shall prepare and deliver the parties a
written, reasoned opinion conferring its decision. Judgment on the
award so rendered may be entered in any court having competent
jurisdiction thereof.
ARTICLE 21
NO AGENCY:
It is expressly agreed that Planet and Agway shall be independent
contractors and that the relationship between the two parties shall not
constitute a partnership or agency of any kind. Neither Planet nor
Agway shall have the authority to make any statements, representations,
or commitments of any kind, or to take any action, which shall be
binding on the other party, without the prior written consent of the
other party.
ARTICLE 22
COUNTERPARTS:
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the day and year
first set forth above.
AGWAY CONSUMER PRODUCTS, INC.
By: /s/ Xxxxxx X. XxXxxx
-------------------------
Title: VP
PLANET POLYMER TECHNOLOGIES INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------
Title: Chairman & CEO
