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                                                                   EXHIBIT 10.20

                                LICENSE 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 333 Butternut Drive, Dewitt, New York 13214
(hereinafter  "Agway"),  and Planet  Polymer  Technologies,  Inc.,  a California
corporation  with  offices  at 9985  Businesspark  Avenue,  Suite A, San  Diego,
California 92131 (hereinafter "Planet").

                  WHEREAS,  Planet  ha  develope  technology  relating  to time-
release coatings and protective coatings; and

                  WHEREAS,  Agway  wishes to  receive  an  exclusive,  worldwide
license from Planet 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").


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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.


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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 the Product Feasibility  Agreement entered
         into  between  the  parties  hereto as of the  effective  date  hereof,
         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

LICENSES; NON-COMPETITION; DUE DILIGENCE:

2.1      Subject to the terms and  conditions of this  Agreement,  Planet hereby
         grants  to Agway an  exclusive,  worldwide  license  under  the  Planet
         Technology to use and sell  Products in Agway's Field of Business.  The
         license  granted to Agway under this  paragraph  2.1 shall  include the
         right to grant  sublicenses to third parties covering Planet Technology
         to the extent necessary to use or sell Products  incorporating  the New
         Technology in Agway's Field of Business.

2.2      Subject to the terms and  conditions of this  Agreement,  Planet hereby
         grants  to  Agway  an  exclusive,   worldwide  license  under  the  New
         Technology to use and sell  Products in Agway's Field of Business.  The
         license  granted to Agway under this  paragraph  2.2 shall  include the
         right  to  grant   sublicenses  to  third  parties,   in  Agway's  sole
         discretion. Agway shall notify any sublicensees hereunder of all rights
         and  obligations of Agway under this Agreement which are sublicensed to
         such sublicensee and shall notify Planet within 30 days of the grant of
         any sublicense hereunder.

2.3      Subject to the terms and conditions of this Agreement,  with respect to
         Products which revert to Planet pursuant to Section 2.4, or pursuant to
         the terms of any sub-agreement  contemplated by ARTICLE 4 hereof, Agway
         hereby  grants  to  Planet  a  non-exclusive,   worldwide,  fully-paid,
         royalty-free  license under the Agway Know-How to make,  have made, use
         and sell such Products in Agway's Field of Business.

2.4      Agway shall not market,  sell or distribute  any polymer coated product
         (either  directly or  indirectly) in Agway's Field of Business which is
         directly  competitive  with any  Product.  In the event Agway  markets,
         sells or  distributes  any  polymer  coated  product  


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         which  is  directly  competitive  with a Product, all rights granted to
         Agway  under  this Agreement with respect to such Product and any other
         license  of any Planet Technology  or  New Technology  related  thereto
         shall  revert to Planet and Agway shall have no further right  to  use,
         market, sell or distribute such Product. Planet agrees that no products
         sold by Agway either currently or  within the immediately  preceding 12
         months shall  be  considered to be "competitive" within the meaning  of
         this Section 2.4. Planet shall  not  market,  sell  or  distribute  any
         polymer coated product (either directly or indirectly) in Agway's Field
         of Business which is directly competitive with any Product.

2.5      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.


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2.6      Planet  shall  provide  written  notice  to Agway in the  event  Planet
         develops,  totally independently of Agway, a product which demonstrates
         efficacy for use in Agway's Field of Business. Agway shall have 90 days
         following  receipt of such notice from Planet to advise Planet  whether
         Agway considers the product to be Commercially  Feasible, and to submit
         a commercialization  plan to Planet with respect to such product. Agway
         shall have 60 days following Planet's receipt of such commercialization
         plan to negotiate  commercially  reasonable license terms acceptable to
         Planet with  respect to such  product.  If the parties  cannot agree to
         license terms within the  following  60-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  during  such  arbitration  proceeding.  In the event (a) Agway
         fails to provide a commercialization  plan to Planet within such 90-day
         period, and (b) the product is considered to be Commercially  Feasible,
         then  (i)  Agway  shall  have no  rights  to such  product  under  this
         Agreement  and (ii) Planet  shall have no further  obligation  to Agway
         under this  Agreement  with  respect to such product and 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
         product in Agway's  Field of  Business.  Any such third  party  license
         shall be  limited  to such  product  and shall not  otherwise  diminish
         Agway's  rights  with  respect  to the  Planet  Technology  and the New
         Technology under this Agreement. Planet agrees that it will not, during
         the term of this  Agreement,  commercialize  such a product  in Agway's
         Field of Business if it is not considered to be Commercially  Feasible.
         Notwithstanding  the foregoing,  the notice set forth in this provision
         shall not be required  with  respect to any product  developed  under a
         product  feasibility  study, if Planet has complied with the procedures
         set forth in Section 2.5.

2.7      If  Planet is  unwilling  or  unable  to  supply  Agway's  commercially
         reasonable requirements of a Product which Agway has decided to market,
         the licenses  granted  Agway under  Sections 2.1 and 2.2 above shall be
         extended to include a non-exclusive, worldwide license to make and have
         made such Product,  automatically without further action on the part of
         either  party  to the  extent  necessary  to  compensate  for  Planet's
         unwillingness   or  inability  to  supply   Agway's   requirements   on
         commercially reasonable terms including, without limitation,  economies
         of scale. If Planet subsequently becomes willing and able to supply all
         or a portion of Agway's  commercially  reasonable  requirements of such
         Product,  the  parties  agree that the  transfer  to Planet as supplier
         shall take into account any contractual obligations of Agway to others.

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                                    ARTICLE 3

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 1, 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 4

ROYALTY:

         The parties  agree that a reasonable  royalty for the licenses  granted
         Agway under this Agreement will depend upon various factors,  including
         the nature of the particular  Product being marketed and the particular
         market area.  Accordingly,  when Agway decides, in its sole discretion,
         to market a  particular  Product  developed  as a result of the Product
         Feasibility Agreement entered into between the parties hereto as of the
         effective date hereof,  or otherwise  involving  Agway, in a particular
         area,  the parties  shall enter into a  sub-agreement  on  commercially
         reasonable  terms  mutually  acceptable  to the parties  covering  such
         Product and market area, in the form of the  sub-agreement set forth in
         Exhibit 2 attached  hereto and  hereby  incorporated  herein and made a
         part  hereof.  Agway  agrees  that:  (a) once such a  Product  has been
         developed  which  the  parties  agree  can be  reasonably  expected  to
         generate a minimum of  $1,000,000.00  in net profits  annually,  shared
         between Planet and Agway;  it will, (b) upon written request by Planet,
         present to Planet a Schedule for the marketing thereof,  in the form of
         Exhibit 2, within one year from the date of receiving such request. All
         of the terms of this Agreement shall apply to each such  sub-agreement,
         to the extent they are not inconsistent therewith.  Any dispute between
         the parties  with  respect to the terms of any  sub-agreement  shall be
         resolved by arbitration pursuant to ARTICLE 18.



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                                    ARTICLE 5

TERM:

5.1      Except as otherwise  provided herein,  this Agreement shall commence as
         of the date of its execution and shall continue until the expiration of
         the last to expire of any patents covering the Planet Technology and/or
         the New Technology.

5.2      This  Agreement  may be extended  by mutual  written  agreement  of the
         parties.


                                    ARTICLE 6

TERMINATION:

6.1      This Agreement may be terminated:

         a)       Upon mutual written agreement of the parties; or

         b)       By either party for material breach of any of the 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,  it being  understood  and  agreed  that the
                  failure  by  Agway  to  meet  performance   standards  in  any
                  individual subagreement of Exhibit 2 shall not be considered a
                  material breach; or

         c)       By Agway on six months' prior written  notice to Planet if, in
                  Agway's sole  opinion,  the  continued  marketing  and sale of
                  Products 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
                  until the  expiration of 3 years from the Effective Date first
                  above written; 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


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         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.

6.2      Any termination  pursuant to ARTICLE 6.1 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 6.1 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.

6.3      The Mutual Non-Disclosure  Agreement attached as Exhibit 1 shall remain
         in effect  following the termination of this  Agreement,  in accordance
         with its terms.

6.4      In the event of  termination  of this  Agreement for any reason,  Agway
         shall have three months following the date of termination  within which
         to dispose of inventory  incorporating the Planet Technology and/or the
         New  Technology and to fulfill  orders  received  therefor prior to the
         termination  date,  subject to the payment of  royalties as provided in
         ARTICLE 5 above.

6.5      The  provisions  of ARTICLES 1, 3, 6, 8.3, 8.4, 11, 12, 13, 14, 15, 16,
         17, 18, 19, and 20 shall  survive  expiration  or  termination  of this
         Agreement.

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                                    ARTICLE 7

PATENT MARKING; INTELLECTUAL PROPERTY RIGHTS:

7.1      Agway and its Affiliates will use  commercially  reasonable  efforts to
         affix  and/or  to  require  its  or  their  distributors  to  affix  to
         packaging,  or in the  case of bulk  distribution  to the  accompanying
         documents,  for the  Products a notice  complying  with all  applicable
         patent  marking  laws in the country or countries in which the Products
         are  made and the  country  or  countries  in which  the  Products  are
         distributed  and sold.  Planet  shall from time to time inform Agway of
         the appropriate  patent marking in respect of Planet Technology and New
         Technology.

7.2      With respect to any patent applications and patents covering the Planet
         Technology and 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 Planet  Technology and
         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
         Planet  Technology or 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.

7.3      Each party agrees to cooperate fully in the  preparation,  filing,  and
         prosecution  of any  patent  applications  under this  Agreement.  Such
         cooperation includes, but is not limited


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         to:  (a)  executing  all  papers  and  instruments,  or  requiring  its
         employees or agents,  to execute such papers and instruments,  so as to
         effectuate the ownership of such patent  applications  (and  inventions
         covered by such patent  applications)  and to enable the other party to
         apply for and to prosecute patent applications in any country,  and (b)
         promptly  informing  the  other  party of any  matters  coming  to such
         party's   attention  that  may  affect  the  preparation,   filing,  or
         prosecution of any such patent applications.

7.4      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
         under  this  Agreement  infringes  or  may  infringe  the  intellectual
         property  rights of such third  party.  Planet  shall have the right to
         control the defense of any claims with respect to the Planet Technology
         or the New Technology by counsel of its own choice.  If Planet fails to
         proceed in a timely  fashion  with  regard to the defense of any claims
         with  respect to the Planet  Technology  or the New  Technology,  Agway
         shall  have the right to  control  any such  defense  of such  claim by
         counsel  of its own  choice,  and  Planet  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 patent infringement litigation
         under  this  Section  7.4 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.

7.5      Planet  and Agway  shall  promptly  notify  the other in writing of any
         alleged or threatened infringement of any patent included in the Planet
         Technology  or the New  Technology  of which they  become  aware.  Both
         parties shall use their best efforts in cooperating  with each other to
         terminate such infringement  without litigation.  Planet shall have the
         right to bring and control  any action or  proceeding  with  respect to
         infringement of any patent included in the Planet Technology or the New
         Technology by counsel of its own choice.  With respect to  infringement
         of any patent included in the Planet  Technology or the New Technology,
         if Planet  fails to bring an action or  proceeding  within  (a) 90 days
         following the notice of alleged  infringement or (b) 10 days before the
         time limit, if any, set forth in the  appropriate  laws and regulations
         for the filing of such actions, whichever comes first, Agway shall have
         the right to bring and  control  any such  action by counsel of its own
         choice,  and Planet 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  7.5  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 Planet and Agway, shall belong to the party who
         brought the action.



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                                    ARTICLE 8

REPRESENTATIONS AND WARRANTIES:

8.1      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.

8.2      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.

8.3      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.

8.4      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 9

NOTICES:


<PAGE>   12
                                      -12-






         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.
                  P.O. Box 4933
                  Syracuse, New York 13221-4933
                  FAX: (315) 449-6253

                  Attention: Dennis LaHood


         PLANET:

                  Planet Polymer Technologies, Inc.
                  9985 Businesspark Avenue, Suite A
                  San Diego, California U.S. 92131
                  FAX: (619) 549-5133

                  Attention: Robert J. Petcavich

         or to such other address or individual as either party may specify from
         time to time in writing.


                                   ARTICLE 10

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.


<PAGE>   13
                                      -13-



                                   ARTICLE 11

NO REFUND OR PAYMENTS:

         Royalties  and all  other  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.



<PAGE>   14
                                      -14-

                                   ARTICLE 12

LITIGATION:

12.1     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.

12.2     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 13

PRODUCT LIABILITY:

13.1     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.

13.2     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.

13.3     In the event either party seeks  indemnification under this ARTICLE 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.


<PAGE>   15
                                      -15-



                                   ARTICLE 14

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 15

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 16

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 17

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.


<PAGE>   16
                                      -16-






                                   ARTICLE 18

DISPUTE RESOLUTION AND CHOICE OF LAW:

18.1     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.

18.2     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 19

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.


<PAGE>   17
                                      -17-





                                   ARTICLE 20

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:
                                                   --------------------------
                                               Title:


 
                                               PLANET POLYMER TECHNOLOGIES, INC.


                                               By: 
                                                   ----------------------------
                                               Title: