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Exhibit 10.39

                          SALE AND LICENSING AGREEMENT
               (FOR CERTAIN TECHNOLOGY FOR USE IN CONNECTION WITH
             FRUIT, VEGETABLE, FLORAL, NURSERY AND RELATED PRODUCTS)

This Sale and Licensing Agreement (the "Agreement") is made effective as of
March __, 2003 (the "Effective Date") by and between AGWAY, INC., a Delaware
corporation with offices at 333 Butternut Drive, De Witt, New York 13214
("Agway"), and PLANET POLYMER TECHNOLOGIES, INC., a California corporation with
offices at 9985 Businesspark Avenue, Suite A, San Diego, California 92131
("Planet").

         1.       BACKGROUND OF THE TRANSACTION.

                  a.       Agway originally licensed from Planet, pursuant to
the November 12, 1998 License Agreement between Planet and Agway Consumer
Products, Inc. (the "License Agreement"), certain technology owned by Planet
(the "Planet Technology"), including the Patent Rights and the Licensed
Technology (defined below). Agway Consumer Products, Inc. subsequently assigned
the License Agreement, including all of its rights, duties, privileges and
obligations under the License Agreement, to Agway as of March 16, 1999.

                  b.       Agway and Planet subsequently entered into a March 1,
2000 agreement entitled "Sub-Agreement to License Agreement (Fruits, Vegetables,
etc.)" (referred to in this Agreement as the "Fruit and Vegetable Technology
Sub-Agreement") that defines a Sales Royalty as consideration for the grant of
certain licenses, a Minimum Annual Royalty as consideration for the exclusivity
of such licenses, and related terms and conditions in connection with Agway's
license under the License Agreement to use certain of the Planet Technology to
create and sell Products.

                  c        Planet, Agway, Inc. and Agway Holdings, Inc.
subsequently entered into a letter agreement dated November 14, 2000 (the
"Letter Agreement") for, inter alia, (i) the sale, assignment and transfer by
Planet to Agway of certain patents and patent applications referred to in
Exhibit A to the Letter Agreement (collectively the patents and patent
applications to be sold, assigned and transferred by Planet to Agway pursuant to
the Letter Agreement are referred to as the "Patent Rights" and are listed in
Exhibit A attached to this Agreement), including the fruit, vegetable, floral
and nursery related Patent Rights referred to in Exhibit B attached to this
Agreement (the "FVFN Patent Rights"), for a price of $250,000 cash at closing
and continuation of royalty payments equal to the payments that Planet would
otherwise be entitled to receive pursuant to the License Agreement; and (ii) the
grant to Planet of an irrevocable, exclusive, worldwide, royalty free license to
use and commercially exploit all rights related to the Patent Rights for all
uses other than food and agricultural initiatives, in consideration of the
payment of $150,000 by Planet to Agway.

                  d.       The Letter Agreement required that the sale and
assignment be consummated by Planet's delivery to Agway by November 17, 2000 (or
as soon thereafter as reasonably practicable) of (i) patent assignments in usual
and customary form, together with (ii) such other documents and instruments of
conveyance as Agway deemed reasonably necessary and appropriate, including sale
agreements evidencing the transaction contemplated by the Letter

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Agreement that would include such representations, warranties and covenants
(including indemnification of Agway by Planet) as are usual and customary of
transactions of the type contemplated by the Letter Agreement.

                  e.       On or about November 19, 2000, Agway paid $250,000 to
Planet for the Patent Rights and Planet paid $150,000 to Agway for the Planet
License (referred to above and further defined below).

         2.       PURPOSE. This Agreement is one of the "sale agreements"
contemplated by the Letter Agreement for the sale, assignment and transfer of
certain of the Patent Rights by Planet to Agway. Specifically, this Agreement
addresses the sale, assignment and transfer of the Patent Rights listed in
Exhibit B; licenses to Agway certain "know-how" of Planet related to the use of
certain of the Patent Rights in connection with fruit, vegetable, floral and
nursery products and related products in Agway's "Field of Business" (as defined
below); defines the royalty rights in favor of Planet; confirms the
"license-back" to Planet by Agway of the right to use certain of the Patent
Rights in connection with products outside of Agway's Field of Business; and
includes related terms and conditions. This Agreement contains certain terms and
conditions that the parties have negotiated since executing the Letter Agreement
that are different than certain of the terms and conditions of, or contemplated
by, the Letter Agreement.

         3.       DEFINITIONS. In addition to the terms defined throughout this
Agreement, the following terms as used in this Agreement are defined as follows:

                  a.       "Agway's Field of Business" shall mean the
development, production, distribution and/or marketing of (i) unprocessed fruit
and vegetable products intended for human dietary consumption; (ii) floral and
nursery plant products; and (iii) any other products as may be mutually agreed
upon in writing by Agway and Planet.

                  b.       "Products" shall mean any coating products developed,
produced, distributed or marketed in or for Agway's Field of Business that are
made from, incorporate, or utilize in any way the FVFN Patent Rights and/or the
Licensed Technology.

                  c.       "Licensed Technology" shall mean all technology
developed or acquired by Planet before or after the Effective Date that (i) is
necessary or appropriate to develop and/or commercialize coating products
utilizing the FVFN Patent Rights or is functionally equivalent to or competitive
with coating products utilizing the FVFN Patent Rights; and (ii) has not been
assigned to Agway or agreed to be assigned to Agway pursuant to this Agreement.
By way of example and not by way of limitation, "technology" as used in the
preceding sentence shall include, but not be limited to, all know-how; trade
secrets; inventions; data; processes; techniques; procedures; compositions;
devices; methods; formulas; protocols; information, including, without
limitation, all chemical, biochemical, toxicological, and scientific research
information; compositions of matter; chemical complexes, including improved
chemical complexes; association compounds; blends, mixtures or compositions of
coating materials; polymer materials; and new products or processes relating
thereto; whether or not patentable and whether developed by Planet alone or with
Agway or a third party.

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                  d.       "Net Sales and Revenues" shall mean Agway's gross
sales and revenues from (i) Products, less adjustments for returns, allowances
and discounts, as recognized under generally accepted accounting principles and
under methods historically used and consistently applied by Agway for its CPG
Technologies business or any of its successors; and (ii) sublicenses of, or
other rights granted with respect to, the FVFN Patent Rights and/or the Licensed
Technology to third parties. Proceeds and/or revenues received from the
assignment, sale or other transfer of this Agreement shall not be included in
Net Sales and Revenues so long as the transferee in Agway's transfer of the
Agreement, expressly assumes all of Agway's obligations under this Agreement.

                  e.       "Full Fiscal Year" shall mean the accounting and
reporting cycle of Agway, which begins on the first day of July and ends on the
last day of June.

                  f.       "Affiliate" shall mean any company that, 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.

                  g.       "Net Proceeds" shall mean the cash proceeds of the
FreshSeal Sale (defined below) by Agway (including any cash payments received by
way of deferred payment of principal pursuant to a note or installment
receivable, but only as and when received) net of outside attorneys' fees,
outside accountants' fees, investment banking fees, survey costs, title
insurance premiums, related search and recording charges, transfer taxes, deed
or mortgage recording taxes, any current liabilities retained by Agway relating
to the FreshSeal business, other customary expenses, and brokerage, consultant
and other customary fees actually incurred in connection with the FreshSeal
Sale.

         4.       ASSIGNMENT OF PATENT RIGHTS.

                  a.       Planet has executed and delivered to Agway an
assignment of certain of the Patent Rights, including certain of the FVFN Patent
Rights, (the "Assignment") a copy of which Assignment is attached as Exhibit C;
and Agway confirms that the Assignment has been recorded in the United States
Patent and Trademark Office.

                  b.       Planet confirms the assignment of the patents listed
in the Assignment. Planet shall execute and deliver to Agway, simultaneously
with the execution of this Agreement, further assignments, in substantially the
same form as the Assignment, of the following patent applications: (I)
PRESERVING FRESH PRODUCE (CHITOSAN); AND (II) PRESERVING FRESH PRODUCE (PVDC).
Planet shall execute and deliver to Agway further assignments, in substantially
the same form as the Assignment, of (i) any subsequent patent applications
derived from current research initiatives related to the Products; and (ii) any
international patent applications related to the FVFN Patent Rights

                  c.       Planet will execute all such further assignments and
related documents, prepared by or for Agway, as may be reasonably necessary to
secure to Agway its ownership of the FVFN Patent Rights throughout the world.

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                  d.       The parties acknowledge and agree that the assignment
of the FVFN Patent Rights by Planet to Agway is final, and that no breach,
termination or expiration of this Agreement and/or the License, or failure to
make any payment due pursuant to this Agreement, including any Sales Royalties,
shall invalidate the Assignment or cause or give rise to any claim for any
reversion of the Patent Rights to Planet, provided, however, that Planet may
reacquire the FVFN Patent Rights pursuant to Section 10a of this Agreement.

                  e.       Planet hereby fully and forever releases and waives
any agreement by Agway to grant to Planet an option to repurchase the Patent
Rights. Nothing contained in the previous sentence shall be interpreted or
construed as indicating that the parties ever entered into an agreement granting
Planet an option to repurchase the Patent Rights.

         5.       LICENSE OF THE LICENSED TECHNOLOGY.

                  a.       Subject to the terms and conditions of this
Agreement, including the payment of royalties to Planet as provided in this
Agreement, Planet hereby grants to Agway an exclusive, perpetual, irrevocable,
worldwide license (the "License") to use any and all of the Licensed Technology
to develop, have developed, make, have made, use, offer to sell and sell
Products in Agway's Field of Business. The License includes the right to grant
sublicenses to third parties to use the Licensed Technology to make, use or sell
Products in Agway's Field of Business. Agway shall notify any sub-licensees
under this paragraph of all rights and obligations of Agway under this Agreement
that are sublicensed to such sub-licensee, and Agway shall notify Planet within
30 days of the grant of any sublicense under this paragraph.

                  b.       All improvements to the Licensed Technology by Agway,
its employees or agents shall be the sole and exclusive property of Agway, and
Agway shall have the right to file and prosecute applications for letters patent
on any such improvements.

         6.       CONSIDERATION.

                  a.       Agway will pay Planet as follows:

                           (i)      Up-Front Payment. The parties acknowledge
         that Agway paid to Planet the amount of $100,000 as of October 31, 2001
         pursuant to the Fruit and Vegetable Technology Sub-Agreement.

                           (ii)     Additional Payments. In order to continue to
         limit Planet's use of the FVFN Patent Rights to outside of Agway's
         Field of Business pursuant to the Planet License, Agway will pay to
         Planet additional amounts as follows:

                                    (1)      A payment of $100,000.00 by wire
                  transfer upon the execution of this Agreement.

                                    (2)      In the event that Agway, in its
                  sole discretion, enters into an agreement within 12 months
                  from the Effective Date for the sale of all or substantially
                  all of the assets of the Technologies business, including an
                  assignment of this Agreement (the "FreshSeal Sale"), Agway
                  will pay Planet an

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                  additional amount upon receipt by Agway of Net Proceeds from
                  the FreshSeal Sale as follows:

                                             (a)      The Net Proceeds actually
                           received by Agway will be split by Agway and Planet,
                           sixty five percent to Agway and thirty five percent
                           to Planet, until Planet receives payment from such
                           Net Proceeds of no more than $200,000.00 plus accrued
                           interest from January 1, 2003 at two percentage
                           points over the prime lending rate. Once the 65/35
                           split of Net Proceeds provides the $200,000.00 plus
                           accrued interest amount to Planet, the 65/35 split
                           shall end and Planet shall not receive any further
                           part of the Net Proceeds except as provided in
                           Section 6a(ii)2(b) below. By way of further
                           clarification, pursuant to this paragraph Planet
                           shall be entitled to receive 35% of Net Proceeds from
                           the FreshSeal Sale up to a maximum amount of
                           $200,000.00 plus accrued interest. If the 65/35 split
                           of Net Proceeds results in Planet receiving less than
                           $200,000.00 plus accrued interest, Planet shall not
                           be entitled to, and Agway shall not be liable for,
                           any additional amount.

                                             (b)      Agway shall pay Planet two
                           percent of remaining Net Proceeds, if any, after
                           Agway and Planet receive the sixty five
                           percent/thirty five percent distribution of the
                           amount of Net Proceeds required pursuant to (a) above
                           to provide Planet with the payment amount
                           contemplated by (a) above.

                                             (c)      In the event that Agway
                           does not complete the FreshSeal Sale pursuant to an
                           agreement entered into for the sale of all or
                           substantially all of the assets of the Technologies
                           business within 12 months after the Effective Date,
                           Agway shall have the option of paying Planet
                           $200,000.00 plus accrued interest from January 1,
                           2003 at two (2) percentage points over the prime
                           lending rate in order to continue to limit Planet's
                           use of the FVFN Patent Rights to outside of Agway's
                           Field of Business pursuant to the Planet License.
                           Such amount to be paid within 30 days after the 12
                           month anniversary date of the Effective Date.

                                             (d)      In the event that Agway
                           does not complete the FreshSeal Sale pursuant to an
                           agreement entered into for the sale of all or
                           substantially all of the assets of the Technologies
                           business within 12 months after the Effective Date,
                           Agway may choose to not pay the amount provided for
                           in (c) above, and then Planet's only recourse and
                           remedy will be to obtain an exclusive license as set
                           forth in Section 15a, below, and this Agreement shall
                           continue in full force and effect.

                           (iii)    Sales Royalty. Agway will pay Planet an
         on-going Sales Royalty on Net Sales and Revenues from sales of Products
         (the "Sales Royalty") as follows:

                                    (1)      Sales Royalty amounts calculated
                  and determined to be due to Planet pursuant to this Section
                  6a(iii) shall be payable for the term of 15 years

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                  immediately following the later of (a) the Effective Date; or
                  (b) the date the patent relating to the Product is issued
                  ("Royalty Termination Date"). No Sales Royalty shall be
                  calculated or become due on Net Sales and Revenues received by
                  Agway after the Royalty Termination Date.

                                    (2)      Sales Royalty amounts shall be
                  calculated based on annual Net Sales and Revenues by applying
                  the following percentage to Net Sales and Revenues for each of
                  Agway's Full Fiscal Years commencing July 1, 2003, and ending
                  on the Royalty Termination Date:

                           3.33% of Net Sales and Revenues.

                                    (3)      Any quarterly Sales Royalty payment
                  to Planet, as calculated under Section 6a(iii)(2) shall be
                  reduced by any amount or amounts required to be paid to third
                  parties by Agway for that quarter for any licenses of
                  additional technology incorporated in the Products pursuant to
                  a settlement as provided in Section 10d of this Agreement.

                           (iv)     The Sales Royalty payment as calculated
         above becomes earned at the end of each fiscal quarter and becomes due
         and payable 45 days thereafter. With each such payment, Agway or any of
         its successors shall furnish Planet a report in sufficient detail to
         permit confirmation of the accuracy of the Sales Royalty payment made,
         including without limitation, the sales of Products during the fiscal
         quarter being reported, the Sales Royalty payment in United States
         dollars, the method used to calculate the Sales Royalty payment and the
         exchange rate used.

                           (v)      At the end of each Full Fiscal Year, an
         annual Sales Royalty true-up will be calculated. The Sales Royalty
         annual true-up will apply the Sales Royalty calculation under Section
         6a(iii)(2) and modified as specified under Section 6a(iii)(3) above to
         the Net Sales and Revenues for the Full Fiscal Year to determine the
         actual amount due Planet for the Full Fiscal Year. This amount will be
         compared to the amounts calculated as due Planet under the four
         quarterly calculations for that corresponding Full Fiscal Year. If the
         annual calculation indicates a higher amount due Planet, that payment
         is due 90 days after the end of the Full Fiscal Year. If the annual
         calculation indicates a lower amount is due Planet, the difference will
         be deducted from the next succeeding payment(s) due Planet. Agway, or
         any of its successors, shall furnish Planet a report in sufficient
         detail to permit confirmation of the accuracy of the Sales Royalty
         true-up, including without limitation, the sales of Products during the
         fiscal year being reported, the Sales Royalty payment in United States
         dollars, the method used to calculate the Sales Royalty payment and the
         exchange rate used.

                  b.       In the event that any Sales Royalty payments due
hereunder are not made when due, the payments shall accrue interest from the due
date at two (2) percentage points over the prime lending rate as of said date as
published in The Wall Street Journal; provided, however, that in no event shall
such rate exceed the maximum legal annual interest rate. The payment of such
interest shall not limit Planet from exercising any other rights it may have as
a consequence of the lateness of any Sales Royalty payment.

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                  c.       All payments owed to Planet under this Agreement
shall be made by wire transfer to a bank account designated by Planet, unless
otherwise specified in writing by Planet. All payments due Planet under this
Agreement shall be paid in United States dollars, free of taxes payable in any
foreign country, except for such taxes as result in, and to the extent that the
same do result in a foreign tax credit applicable to the United States taxes
payable by Planet. With respect to each quarter, for countries other than the
United States, whenever conversion of payments from any foreign currency shall
be required, such conversion shall be made at the rate of exchange required of
Agway, or any of its successors, under generally accepted accounting principles
for the applicable accounting period.

                  d.       Agway and its affiliates shall keep accurate books
and records as reasonably needed for determination of Sales Royalty payments due
under this Section. Such books and records shall be maintained for a period of
at least three years from the expiration of the relevant Sales Royalty payment
period.

                  e.       Not more than once in each fiscal year, upon not less
than 30 days' prior written notice, Planet may have the books and records of
Agway's CPG Technologies business, or any of its successors, examined, by an
independent certified public accounting firm (CPA Firm) reasonably acceptable to
Agway at a time and place reasonably acceptable to Agway, to the extent
necessary to verify the correctness of any Sales Royalty payment report
furnished under this Agreement. If such independent CPA Firm should determine
that an underpayment of Sales Royalty may have occurred, Agway may have Agway's
independent accountants review the applicable records and the report and
calculations of the CPA Firm to determine Agway's independent accountants'
assessment of the amount due under this Agreement. If the CPA Firm and Agway's
independent accountants do not agree, and the parties cannot agree to a mutually
satisfactory resolution, then, a third mutually agreeable nationally recognized
independent certified public accounting firm shall be hired by the parties to
finally resolve the correct amount due. The determination by the third
independent certified public accounting firm shall be final. The CPA Firm and
any third firm shall keep all information received in connection with any audit
confidential, and they shall report to Planet and Agway only the accuracy of
and/or any deficiencies in any such Sales Royalty payment report. The fee for
such CPA Firm and any third firm shall be paid by Planet, unless the audit
finally results in an upward adjustment of Sales Royalty payments due Planet by
more than 5% of the amount due under this Agreement. In such case, Agway shall
pay the full cost of such audits. In any event, Agway shall pay any finally
determined underpayment with interest in accordance with paragraph 6c above.

         7.       LICENSE-BACK TO PLANET. Pursuant to the Letter Agreement,
Agway and Planet entered into a license agreement that granted Planet an
exclusive, irrevocable, worldwide, royalty-free limited license to use the
Patent Rights, including the right to use the FVFN Patent Rights, only for all
uses other than and outside of the Products and Agway's Field of Business (the
"Planet License"). The parties hereby confirm the Planet License, a copy of
which is attached as Exhibit D.

         8.       COMPETING PRODUCTS MARKETED BY AGWAY.

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                  a.       Agway shall not market, sell or distribute (directly
or indirectly) any product in Agway's Field of Business that is directly
competitive with a Product, unless Agway, at its option, (i) agrees to pay
Planet the same Sales Royalty on sales of such directly competitive product that
Agway pays Planet on sales of Products pursuant to this Agreement, such Sales
Royalty to be based on the same percentage of annual Net Sales and Revenues of
such directly competitive product, and to be calculated and paid, as set forth
in Section 6 of this Agreement, or (ii) shall end the exclusive nature of the
License with respect to that existing Product, and Planet shall have a
non-exclusive license pursuant to paragraph b of Section 10, below. In the event
that Agway chooses option (i), Agway would retain the exclusive nature of the
License for that (and all other) Products.

                  b.       Planet agrees that no products (1) sold by Agway as
of the Effective Date or within the immediately preceding 12 months, or (2) sold
by a successor to Agway or assignee (other than an Affiliate of Agway) of this
Agreement prior to the effective date of such succession or assignment, shall be
considered to be "directly competitive" with a Product within the meaning of
this Section 8.

         9.       NEW PRODUCTS AND/OR TECHNOLOGY IN AGWAY'S FIELD OF BUSINESS
                  DEVELOPED BY PLANET.

                  a.       In the event Planet (i) independently of Agway
(regardless of whether a third party is involved directly or indirectly)
develops a new technology (not based on, derived from, or that otherwise
utilizes any claim or claims of the FVFN Patent Rights or any part of the
Licensed Technology and that is not competitive with the Products) that Planet
has determined to have potential application as or for a new product in Agway's
Field of Business; Planet shall provide prompt written notice of such new
technology to Agway in sufficient detail for Agway to reasonably understand the
nature of the new technology, including, but not limited to, the potential new
product(s) for Agway's Field of Business that Planet envisions resulting from
such technology. Such notice shall include sufficient detail for Agway to
reasonably understand the nature of the new technology and proposed product(s),
an outline of anticipated funding needs, the anticipated length of any product
feasibility study being considered by Planet, Planet's desired result from such
study, and target market for the new technology and/or proposed product.

                  b.       If Agway reasonably determines that the technology
and/or potential product to be developed does not compete with an existing
Product, then Agway shall have 150 days to determine by written notice to Planet
whether it wants to proceed with commercialization of the proposed new
technology. If Agway decides to proceed with commercialization, then the parties
shall use commercially reasonable efforts to negotiate in good faith
commercially reasonable terms acceptable to the parties for Agway to acquire the
new technology, or an exclusive license, with reasonable and customary sales
royalty to be paid to Planet, to use the new technology to develop, have
developed, make, have made, use, offer to sell and sell products in Agway's
Field of Business. If Agway decides not to proceed with commercialization,
Planet shall have no further obligation to Agway under this Agreement with
respect to the new technology, and shall have the right to grant an exclusive
license to and/or sell, and transfer or assign, the new technology to a third
party and/or to make, have made, use or sell the proposed product both outside
and in Agway's Field of Business. The failure of Agway to respond to

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Planet in writing on or before 150 days after the date of any notice of a
proposed product or new technology given by Planet to Agway shall be
conclusively presumed to be an election by Agway not to proceed with
commercialization of the proposed product or new technology.

                  c.       If the parties cannot agree to such agreements as are
contemplated by this Section within 60 days after written notice by Agway to
Planet of its election to proceed with commercialization of the proposed product
or new technology, either party may submit the matter to arbitration pursuant to
Section 15 of this Agreement, and neither party shall take any further action
with respect to any commercialization of the proposed product or any new
technology or any product utilizing or based on the new technology once the
matter has been submitted to arbitration, until a decision of the arbitrator has
been rendered.

                  d.       Any new technology and/or new product developed by
Planet that competes with one or more of the Products shall become a Product and
subject to all terms and provisions of this Agreement.

         10.      ADDITIONAL PROVISIONS REGARDING FVFN PATENT RIGHTS AND
                  LICENSED TECHNOLOGY.

                  a.       With respect to any patent applications and patents
covering any of the FVFN Patent Rights or new technology to be owned by Agway
pursuant to Sections 4b and 9 of this Agreement, Agway shall be responsible for
all costs and expenses related to preparing, filing and prosecuting such patent
applications, paying all maintenance fees related to any such issued patents,
and otherwise maintaining and defending such patents (including, if applicable,
opposition proceedings related to any European patents, re-examination of issued
patents, interference proceedings and declaratory judgments regarding invalidity
of any such issued patents). In the event Agway decides to intentionally abandon
(or fails to reasonably maintain or defend) any of the patent applications
and/or patents covering any of the FVFN Patent Rights or new technology acquired
by Agway from Planet pursuant to Sections 4b and 9 of this Agreement, Agway
shall provide reasonable prior written notice to Planet of such intention to
abandon (or its failure to reasonably maintain or defend), and shall, upon
receipt of prompt written notice from Planet, transfer and assign such abandoned
patent application and/or patent to Planet.

                  b.       In the event, subject to the terms of this Agreement,
Agway's License for the Licensed Technology becomes no longer exclusive as to
any one or more Products, Agway grants to Planet a non-exclusive, irrevocable,
worldwide, royalty-free license to use the FVFN Patent Rights and any new
technology acquired by Agway from Planet pursuant to Sections 4b and 9 of this
Agreement, only for such Products as to which Agway's License to use the
Licensed Technology is no longer exclusive, as set forth in the First Amendment
to the Planet License, a copy of which is attached hereto as Exhibit D-1.

                  c.       With respect to any patent applications and patents
covering any of the Licensed Technology or new technology to be owned by Planet,
Planet shall be responsible for all costs and expenses related to preparing,
filing and prosecuting such patent applications, paying all maintenance fees
related to any such issued patents, and otherwise maintaining and defending such
patents (including, if applicable, opposition proceedings related to any
European

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patents, re-examination of issued patents, interference proceedings and
declaratory judgments regarding invalidity of any such issued patents). In the
event Planet decides to intentionally abandon (or fails to reasonably maintain
or defend) any patent application or patent for the Licensed Technology or new
technology to which Agway acquires exclusive rights pursuant to Section 9 of
this Agreement , Planet shall provide reasonable prior written notice to Agway
of such intention to abandon (or its failure to reasonably maintain or defend),
and shall, upon receipt of prompt written notice from Agway, transfer and assign
such patent application and/or patent to Agway.

                  d.       Planet and Agway agree to cooperate fully in the
preparation, filing, and prosecution of any patent applications under this
Agreement. Such cooperation includes, but is not limited to:

                           (i)      executing all papers and instruments, or
         requiring its employees or agents to execute such papers and
         instruments, so as to effectuate the ownership by the appropriate party
         of such patent applications (and inventions covered by such patent
         applications) and to enable the appropriate party to apply for and to
         prosecute such patent applications in any country, and

                           (ii)     promptly informing the other party of any
         matters coming to its attention that may affect the preparation,
         filing, or prosecution of any such patent applications.

                  e.       Planet and Agway shall promptly notify the other in
writing of any allegation by a third party that the activity of either of the
parties relating to the FVFN Patent Rights or the Licensed Technology infringe
or may infringe the intellectual property rights of such third party. Agway
shall have the right to control the defense of any such claims by counsel of its
own choice. If Agway fails to proceed in a timely fashion with regard to the
defense of any such claims, Planet shall have the right to control the defense
of any such claim by counsel of its own choice, and Agway shall have the right
to be represented in any such action by counsel of its own choice. Neither party
shall have the right to settle any infringement claim or litigation under this
Section 10 in a manner that diminishes the rights or interests of the other
party or obligates the other party to make any payment or take any action
without the consent of such other party, which consent shall not be unreasonably
withheld.

                  f.       Planet and Agway shall promptly notify the other in
writing of any actual, alleged or threatened infringement of any of the FVFN
Patent Rights of which it becomes aware, even if such infringing activity may be
by such party or any of its Affiliates, or any employee, representative or
contractor of any of them. Both parties shall use reasonable efforts in
cooperating with each other to terminate and resolve such infringement without
litigation. Agway shall have the right to bring and control any action or
proceeding with respect to infringement of any FVFN Patent Rights or the
Licensed Technology by counsel of its own choice.

                  g.       With respect to infringement of any of the FVFN
Patent Rights, if Agway fails to bring an action or proceeding within (i) 90
days following receipt by Agway of written notice of alleged infringement or
(ii) 10 days before the time limit, if any, set forth in the

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appropriate laws and regulations for the filing of or recovery of damages in
such actions, whichever comes first, then Planet shall have the right to bring
and control, at its own expense, any such action by counsel of its own choice,
and Agway shall have the right to be represented in any such action by counsel
of its own choice. In the event a party brings an infringement action, the other
party shall cooperate fully, including if required to bring such action, the
furnishing of a power of attorney. Neither party shall have the right to settle
any patent infringement litigation under this Section in a manner that
diminishes the rights or interests of the other party without the prior written
consent of such other party. Except as otherwise agreed to by the parties as
part of a cost sharing arrangement, any recovery realized as a result of such
litigation, after reimbursement of any litigation expenses of Agway and Planet,
shall belong to the party who brought the action and if recovered by Agway shall
be treated as Net Sales and Revenues for purposes of calculating the Sales
Royalty.

                  h.       Neither party shall have any obligation to enforce
rights under the FVFN Patent Rights for the benefit of the other party.

                  i.       In the event Agway is permanently enjoined from
exercising its license rights granted under the License pursuant to an
infringement action brought by a third party, or if both Agway and Planet elect
not to undertake the defense or settlement of such a claim of alleged
infringement involving the Licensed Technology for a period three months from
notice of such claim or suit, then Agway shall have the right to terminate the
License with respect to the infringing Licensed Technology by written notice to
Planet.

         11.      REPRESENTATIONS, WARRANTIES, AND COVENANTS.

                  a.       Planet represents and warrants that:

                           (i)      It has authority to enter into this
         Agreement, all corporate action on behalf of Planet necessary to
         consummate the transactions contemplated by this Agreement have been
         taken by Planet, and entering into this Agreement will not violate any
         agreements to which it is a party.

                           (ii)     It has all necessary government licenses and
         approvals required to conduct its business, and no consent or approval
         of any third party (including without limitation stockholders,
         government entities, self-regulatory bodies and licensees of any of
         Planet's intellectual property) is necessary to consummate the
         transactions contemplated by this Agreement.

                           (iii)    It has no knowledge of any impediment to its
         performance of this Agreement.

                           (iv)     It is the sole and exclusive owner of the
         Licensed Technology.

                           (v)      The FVFN Patent Rights are genuine and
         valid.

                           (vi)     To the best of its knowledge, the Licensed
         Technology does not infringe upon the proprietary rights of any
         individual or entity.

                                       11
<PAGE>

                           (vii)    It has not granted a license to any other
         individual or entity to develop, market, exploit or commercialize the
         Licensed Technology with respect to the Products in Agway's Field of
         Business.

                           (viii)   It does not have or expect to have in the
         foreseeable future any source of income or revenue other than from
         Agway, consulting fees and the nominal amounts related to the Ryer
         Industries, LLC royalty payments previously disclosed to Agway.

                           (ix)     It is not, directly or indirectly, engaged
         in any discussions regarding, or contemplating, any sale or change of
         ownership or control of Planet.

                           (x)      As of the date of the Assignment,

                                    (1)      Planet was the sole and exclusive
                  owner of the FVFN Patent Rights;

                                    (2)      Planet owned and conveyed to Agway
                  the FVFN Patent Rights free and clear of all liens and
                  encumbrances;

                                    (3)      no license or other rights relating
                  to the FVFN Patent Rights had been conveyed by Planet to any
                  party other than Agway;

                                    (4)      all corporate action on behalf of
                  Planet necessary to consummate the Assignment had been taken
                  by Planet; and

                                    (5)      no consent or approval of any third
                  party (including without limitation stockholders, government
                  entities, self-regulatory bodies and licensees of any of
                  Planet's intellectual property) was necessary to consummate
                  the Assignment.

                  b.       Agway represents and warrants that:

                           (i).     Agway has authority to enter into this
         Agreement, all corporate action on behalf of Agway necessary to
         consummate the transactions contemplated by this Agreement have been
         taken by Agway, and entering into this Agreement will not violate any
         agreements to which it is a party.

                           (ii)     No consent or approval of any third party
         (including without limitation stockholders, government entities,
         self-regulatory bodies and licensees of any of Agway's intellectual
         property) is necessary to consummate the transactions contemplated by
         this Agreement and Agway has no knowledge of any impediment to its
         performance of this Agreement.

                           (iii)    To the best of its knowledge, it is the sole
         and exclusive owner of the FVFN Patent Rights.

                                       12
<PAGE>

                  c.       Subject to Agway's right to sell the Technologies
business, and/or assign this Agreement and/or its rights under this Agreement,
and subject further to Agway's right to sublicense the Licensed Technology and
to license the FVFN Patent Rights in Agway's Field of Business, Agway agrees and
covenants that it will use its reasonable and good faith efforts to market and
sell the Products throughout the term of this Agreement.

         12.      WARRANTY DISCLAIMER AND LIMITATION OF LIABILITY.

                  a.       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
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

                  b.       EXCEPT IN REGARD TO THEIR RESPECTIVE INDEMNIFICATION
OBLIGATIONS, 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.

         13.      INDEMNIFICATION.

                  a.       Agway shall indemnify, defend and hold harmless
Planet and its directors, officers, employees, representatives, agents, and
contractors from and against any product liability claim by a third party to the
extent arising solely out of the activities of Agway or its directors, officers
or employees.

                  b.       Planet shall indemnify, defend and hold harmless
Agway and its directors, officers, employees, representatives, agents, and
contractors from and against any product liability claim by a third party to the
extent arising solely out of the activities of Planet or its directors, officers
or employees.

                  c.       Planet shall indemnify, defend and hold harmless
Agway and its directors, officers, employees, representatives, agents, and
contractors from and against any and all claims, causes of action, demands,
judgments, losses, damages, liabilities, costs and expenses (including
attorneys' fees and court costs) caused by or arising out of any claim that the
Licensed Technology or any part of the Licensed Technology infringes any patent,
copyright, trademark, trade secret or other proprietary right of any third
party.

                  d.       In the event either party seeks indemnification under
this Section 13, 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.

                                       13
<PAGE>

         14.      DISPUTE RESOLUTION.

                  a.       Except as otherwise provided in this Agreement, 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.

                  b.       1f within 60 days after such written request, the
parties have not succeeded in negotiating a resolution of the dispute, or as
otherwise provided in this Agreement 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 Syracuse, New York if
instituted by Planet, and in San Diego, California if instituted by Agway. 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.

                  c.       The decision of the arbitrator shall be final and
binding on the parties. The arbitrator shall prepare and deliver to the parties
a written, reasoned opinion conferring his/her decision. Judgment on the award
so rendered may be entered in any court having competent jurisdiction thereof.

                  d.       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.

         15.      TERMINATION OF LICENSE.

                  a.       Planet may terminate the License upon written notice
to Agway in the event Agway fails to make any payment that is due and payable
pursuant to this Agreement (including, without limitation, the payment set forth
in Section 6a.(ii)(2)(c) of this Agreement) and/or upon Agway's material breach
of any of the provisions of this Agreement, which failure or breach is not cured
within 60 days after Agway receives written notice from Planet of such failure
or breach.

                           (i)      In the event Planet terminates the License
         pursuant to Section 15a, above, Planet shall have an exclusive,
         irrevocable, world-wide, royalty free license to use the FVFN Patent
         Rights and any new technology acquired by Agway from Planet pursuant to
         Sections 4b and 9 of this Agreement to sell, market and otherwise
         distribute products, including, but not limited to, Products.

                           (ii)     Nothing contained in this Section 15a shall
         give Planet any rights to or in any assets of Agway (other than the
         license to use Agway's FVFN Patent Rights and any new technology
         acquired by Agway from Planet pursuant to Sections 4b and 9 of

                                       14
<PAGE>

         this Agreement as set forth in Section 15b(i) above), including, but
         not limited to Agway's plant facilities and equipment, trademarks,
         know-how, or related business information.

                  b.       Agway may terminate the License (i) upon 60 days'
advance written notice to Planet upon Planet's material breach of any of the
provisions of this Agreement, which breach is not cured (if capable of being
cured) within the notice period, or (ii) if any of the representations and
warranties made by Planet in this Agreement prove to be inaccurate or false in
any material respect, or (iii) if Agway determines that the market or the cost
of entry into the market for Products is not, or is no longer, viable, or (iv)
any regulatory body makes a determination or finding that Agway reasonably
believes will severely reduce or eliminate the market for one or more Products,
or will present an untenable technical or financial barrier to entry into the
market for such Product or Products.

                           (i)      In the event Agway terminates the License
         pursuant to Section 15b, above, Planet shall have an exclusive,
         irrevocable, world-wide, royalty free license to use the FVFN Patent
         Rights and any new technology acquired by Agway from Planet pursuant to
         Sections 4b and 9 of this Agreement to sell, market and otherwise
         distribute products, including, but not limited to, Products.

                           (ii)     Nothing contained in this Section 15b shall
         give Planet any rights to or in any assets of Agway (other than the
         license to use Agway's FVFN Patent Rights and any new technology
         acquired by Agway from Planet pursuant to Sections 4b and 9 of this
         Agreement as set forth in Section 15b(i) above), including, but not
         limited to, Agway's plant facilities and equipment, trademarks,
         know-how, or related business information.

                  c.       Upon termination of the License and except as
otherwise expressly provided in this Agreement, Agway shall have the right for
one year thereafter to dispose of all Products then in its inventory, and shall
pay Sales Royalties thereon as though the License had not terminated.

                  d.       Termination of the License and/or Agreement shall not
affect any rights or obligations accrued prior to the effective date of such
termination. Agway's obligation to pay all Sales Royalties, if any, on Agway's
Net Sales and Revenues occurring prior to or after the termination of the
License and/or this Agreement shall survive any such termination and continue
for the full term set forth in Section 6a(iii) of this Agreement.

                  e.       Except as provided in Section 4d, the rights provided
in this Section shall be in addition and without prejudice to any other rights
which the parties may have with respect to any breach or violations of the
provisions of this Agreement.

         16.      MISCELLANEOUS.

                  a.       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

                                       15
<PAGE>

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.

                  b.       The provisions of this Agreement shall be deemed
separable. If any part of this Agreement is rendered void, invalid, or
unenforceable, it shall be considered severed from this Agreement, and shall not
affect the validity or enforceability of the remainder of this Agreement.

                  c.       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.

                  d.       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 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.

                  e.       The obligations of Agway under this Agreement are
contingent upon the approval of the United States Bankruptcy Court, Northern
District of New York.

                  f.       This Agreement will be governed by, and interpreted
and enforced in accordance with, the laws of the State of New York, U.S.A.,
without regard to its choice of law provisions; except where the federal laws of
the United States are applicable and have precedence.

                  g.       Any notice required by this Agreement shall be sent
by Registered or Certified U.S. mail, or by telecopy, telex or cable and shall
be deemed delivered if sent to the following addresses of the respective parties
or such other address as is furnished by proper notice to the other party:

<TABLE>
<S>                                <C>
To Agway:                          To Planet:

Agway, Inc.                        Planet Polymer Technologies, Inc.
Attn: Michelle Burnet              Attn: President
333 Butternut Drive                9985 Business Park Avenue, Suite C
De Witt, New York 13214 9985       San Diego, California 92131

With copy to:                      With copy to:

Bond, Schoeneck & King, PLLC       Blanchard, Krasner & French
Attn:  Robert P. Lane, Jr.         Attn:  Robert W. Blanchard
One Lincoln Center                 800 Silverado Street, Second Floor
Syracuse, New York 13202           La Jolla, California 92037
</TABLE>

                                       16
<PAGE>

                  h.       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 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 ("Sale of
Business") provided such party gives the other party at least 60 days written
notice of any contemplated Sale of Business and the opportunity to make an offer
to purchase such business. Any assignment not in accordance with this Agreement
shall be void.

                  i.       Each of the parties will perform all other acts and
execute and deliver all other documents as may be necessary or appropriate to
carry out the intent and purposes of this Agreement.

                  j.       This Agreement, including the attached Exhibits A, B,
C, D, and D-1, which Exhibits are hereby incorporated in the Agreement by
reference, is the entire agreement of the parties regarding the subject matter,
except for the Assignment and the Planet License, and any and all other
agreements, including, but not limited to, the Letter Agreement, licenses,
representations and understandings, whether oral or in writing, are hereby
merged into and superseded by this Agreement.

         The assent of the parties to this Agreement as of the Effective Date is
established by the following signatures of their authorized representatives.

AGWAY, INC.                                PLANET POLYMER TECHNOLOGIES, INC.

By:___________________________             By: _________________________________

Title: _______________________             Title: ______________________________

Date: ________________________             Date: _______________________________

                                       17
<PAGE>

                                    EXHIBIT A

                                  PATENT RIGHTS

1. Controlled Release Urea Based Products - Allowed

2. Preserving Fresh Produce (PVOH) - Allowed

3. Preserving Fresh Produce (CMC) - Allowed

4. Preserving Fresh Produce (Chitosan) - Pending

5. Preserving Fresh Produce (PVDC) - Pending

6. Any subsequent patent applications derived from current research initiatives.

7. Any international patent applications related to the above patents and patent
   applications.

                                       18
<PAGE>

                                    EXHIBIT B

                               FVFN PATENT RIGHTS

1. Preserving Fresh Produce (PVOH) - Allowed

2. Preserving Fresh Produce (CMC) - Allowed

3. Preserving Fresh Produce (Chitosan) - Pending

4. Preserving Fresh Produce (PVDC) - Pending

5. Any subsequent patent applications derived from research initiatives as of
   November 14, 2000.

6. Any international patent applications related to the above patents and patent
   applications.

                                       19
<PAGE>

                                    EXHIBIT C

                                   ASSIGNMENT

[Attach copy of Assignment of Patent Rights by Planet to Agway]

                                       20
<PAGE>

                                    EXHIBIT D

                                 PLANET LICENSE

[Attach copy of November 14, 2000 License Agreement licensing patent rights back
to Planet outside Agway's Field of Business]

                                       21
<PAGE>

                                   EXHIBIT D-1

                            PLANET LICENSE AMENDMENT

[Attach copy of draft amendment to November 14, 2000 License Agreement]

                                       22