and management teams and created pro forma financial models. Stephens provided its informal oral recommendation to our board regarding Company B because Stephens believed that Company B presented an opportunity for us to acquire a company with growth prospects based on an existing customer base at an acceptable purchase price (as a multiple of cash flow) which had the potential to enable us to generate profit in the future sufficient to utilize our net operating loss carryforwards within a reasonable time period. Further, Stephens believed that an acquisition of Company B had the potential to generate favorable returns on invested capital with minimal ongoing capital requirements. Stephens provided an informal oral recommendation to certain 5% or greater shareholders of the Company regarding Company C because Stephens believed that Company C presented an opportunity for us to acquire a company with favorable growth prospects based on an existing customer base and good market position that would enable us to potentially utilize a portion of our net operating loss carryforwards. However, as both of the proposed transactions failed to proceed due primarily to the unavailability of adequate financing, there was never a definitive transaction for Stephens to present to our board and provide a formal recommendation, report, opinion or appraisal. Stephens did not provide any verbal recommendations, reports, opinions or appraisals to our board regarding any of the proposed acquisitions brought forth by VFA, either before Stephens’ engagement in August 2007 or thereafter, or with respect to the Plan of Dissolution.

At a board meeting on November 6, 2007, representatives of Stephens updated our board of directors on the activities undertaken by Stephens to identify and contact potential acquisition candidates, including Company B, and potential providers of debt and equity financing for any such acquisition. Stephens provided additional updates to our directors at board meetings held on January 15, 2008, February 12, 2008, March 19, 2008, May 6, 2008, July 31, 2008 and September 17, 2008. At each meeting, Stephens briefed our board on the activities undertaken by Stephens to identify and contact potential acquisition candidates and the challenges of obtaining financing for mergers and acquisitions, including the worsening conditions in the high-yield debt market, which we believed, on the advice of Stephens, to be the most likely source of financing to fund an acquisition. Over the course of these meetings, representatives of Stephens reviewed feedback received from potential acquisition targets, including the hesitancy of some to becoming public companies. Stephens also explored the possibility of obtaining capital investment from existing holders owning 5% or more of our outstanding common stock as a potential means to facilitate the completion of a transaction and avoid a change of ownership that would limit our net operating loss carryforwards under Section 382 of the Code. At each meeting, our board of directors discussed the information provided by Stephens. Our board ultimately concluded not to pursue a transaction with any of the potential acquisition targets identified by Stephens, other than Company C as discussed below, due to the lack of adequate financing sources to consummate the transactions and the likely inability of the potential targets to generate sufficient revenue and taxable income to maximize the utilization of our net operating loss carryforwards within a reasonable period of time. At these meetings, Mr. Powell also provided our board of directors with updates on our Home and Garden Business, which was generally experiencing continued declines in revenues resulting in continued operating losses.

On February 20, 2008, our board of directors unanimously approved a one-for-three reverse stock split in order to regain compliance with the minimum bid price requirement for continued listing on The Nasdaq Capital Market. The reverse stock split became effective on February 22, 2008.

At a meeting on March 19, 2008, Perkins Coie generally discussed fiduciary duties of directors under Washington law and, at our board’s request, specifically addressed issues arising with respect to our board’s determination of whether to continue to pursue the NOL Strategy. At that meeting and at each meeting thereafter through the September 17, 2008 meeting, our board evaluated whether the continuation of the NOL Strategy was, in light of the information presented by Stephens, management and other board advisors, in the best interests of the Company and its shareholders and determined that it was advisable to continue the NOL Strategy and its exclusive arrangement with Stephens.

After discussions with Mr. Powell and certain board members, in September 2008, Stephens, on behalf of the Company, submitted to Company C a written indication of our interest in acquiring the assets of Company C, an online credit reporting agency. The Company initially intended to fund the proposed acquisition through cash on hand and a combination of equity and debt financing, including an equity investment by the holders of 5% or more of the Company’s outstanding common stock. The indication of interest was subject to a number of conditions, including completion of due diligence, negotiation of final terms, execution of definitive agreements, completion of debt and equity financings to pay the acquisition price and approvals of our board and shareholders. We conducted preliminary diligence on, and held telephonic meetings with management of, Company C.

At a board meeting on September 17, 2008, as part of its regular board update, Stephens led a discussion of two specific acquisition candidates, including Company C, and the increasing difficulties in obtaining financing for mergers and acquisitions. Stephens noted that the high-yield debt market essentially had shut down, and the issuance of high-yield bonds in June, July and August 2008 were at their lowest levels in 14 years. Stephens had previously indicated to the board that due to the inactive debt markets, we would need to seek out more equity financing for any transaction, including a transaction with Company C. After discussion, our board of directors agreed that it should continue to investigate an opportunity with Company C. However, our board of directors determined that if we were unable to make significant progress toward financing and completing this or another acquisition within a short period of time, it would begin to explore other alternatives to the NOL Strategy, including winding up the Company’s operations and distributing any remaining assets to its shareholders. Our board of directors instructed Stephens to obtain additional information regarding the availability of financing.

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On September 8, 2008, Mr. Powell announced his resignation from the Company, effective September 30, 2008, in order to pursue another career opportunity. On September 17, 2008, our board appointed Nathaniel T. Brown as our chief executive officer, chief financial officer and secretary.

At a board meeting on November 6, 2008, representatives of Stephens updated our board of directors on the discussions with Company C and provided an overview of possible third party financing sources. Stephens and management met with representatives of Company C telephonically, but were unable to arrange a face-to-face meeting due to the fact that our bid price did not satisfy Company C’s requirements. Stephens also reported on its discussions to determine whether the holders of 5% or more of the Company’s common stock were possible sources of equity financing for the acquisition of Company C’s assets. Stephens noted that none of the shareholders was interested in investing in the transaction. Our board discussed with Stephens the advantages and disadvantages of pursuing the proposed acquisition on the pricing terms presented to our board. Ultimately, our board concluded that a transaction with Company C was not in the best interests of the Company and its shareholders based primarily on the unavailability of adequate financing for the transaction. Because of the unavailability of adequate financing, our board never reviewed definitive transaction terms. Without such a review, our board did not make a determination as to whether a transaction with Company C would be in the best interests of the Company and its shareholders. At that meeting, our board also discussed a proposed sale of the public corporate shell or a voluntary dissolution of the Company as strategic alternatives to the NOL Strategy, and reviewed legal information provided by Perkins Coie. Our board instructed Mr. Brown to work with Perkins Coie to explore further each of these alternatives. Mr. Brown noted that sales in our Home and Garden Business were very slow, due in part to the seasonality of the business and minimal product marketing and advertising efforts.

At a board meeting on November 20, 2008, representatives of Perkins Coie provided an overview of legal considerations relating to the strategic alternatives available to our board of directors with respect to our future operations. The alternatives addressed were (i) continuation of the NOL Strategy, (ii) a sale of the public corporate shell in connection with a reverse merger, and (iii) a statutory dissolution of the Company and distribution of its assets under Washington law. Representatives of Perkins Coie discussed, and answered questions from our board of directors related to, the legal benefits and risks and the potential timing and costs associated with each alternative. Our board was advised that, on November 10, 2008, a family member of one of the directors had made a very general inquiry regarding a possible purchase of the public corporate shell, and of the potential conflicts of interest associated with such a transaction. After discussion of the legal issues related to the sale of the public corporate shell, our board concluded that this general strategy, whether with a third party or a potential related party, was not advisable and in the best interests of the Company and its shareholders due to the legal risks, lack of perceived value to the Company and its shareholders and costs associated with such a transaction. After discussing the other strategic alternatives, our board concluded that a statutory dissolution was the preferred strategy among the alternatives discussed at the meeting and instructed Perkins Coie to prepare a formal plan of dissolution to be discussed and considered for adoption at a subsequent board meeting.

At its meeting on December 4, 2008, our board, with legal input from Perkins Coie, continued its earlier discussion of the voluntary dissolution of the Company. Perkins Coie provided an overview of the voluntary dissolution process under Washington law and reviewed with our board a draft Plan of Dissolution delivered to each board member for review in advance of the meeting. Throughout this discussion, Perkins Coie responded to director questions on legal matters. After discussion of the legal benefits and risks and the potential timing and costs of each of the strategic options available to the Company and, upon consideration of the Company’s financial situation, business prospects, and continued inability to effectuate the NOL Strategy and the continued distress in the capital markets, our board determined that the voluntary dissolution and liquidation and winding up of the Company under Washington law is advisable and in the best interests of the Company and its shareholders, approved the Plan of Dissolution and recommended the Plan of Dissolution for approval of the shareholders.

On December 5, 2008, we issued a press release announcing that our board of directors had approved the Plan of Dissolution. On December 5, 2008, a representative of VFA separately contacted Mr. Brown and Stephens requesting that the Company not abandon the NOL Strategy. Mr. Brown requested that VFA provide its specific written proposal for consideration and review by Stephens and the Company’s legal advisors.

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On December 9, 2008, a representative of VFA submitted a brief outline setting out the general structure of a proposed alternative to liquidation that he asserted would enable the Company to continue the NOL Strategy, but did not provide any details regarding potential acquisition candidates, the terms of any such acquisition, analysis of legal and tax issues or precedent transactions. On December 10, 2008, VFA submitted a slightly more detailed outline of the general structure, which included our board issuing a dividend to our shareholders consisting of most of our existing cash, the appointment of a new board of directors led by individuals acceptable to VFA and to our existing board, the creation of a new class of preferred stock paying a 20% premium in cash or in additional shares, an acquisition acceptable to the new board and VFA, the sale of the preferred stock to VFA in order to fund the acquisition, the payment of dividends on our preferred and common stock and the Company ceasing to be a public reporting company. This outline similarly did not provide significant additional information regarding potential acquisition candidates, the terms of any such acquisition, analysis of legal and tax issues, precedent transactions and other critical business, financial and legal matters.

By telephone conference on December 12, 2008, Mr. Brown, a representative of Stephens, and attorneys from Pepper Hamilton and Perkins Coie discussed and reviewed the materials presented by VFA to determine whether the structure outlined would enable the Company to successfully implement the NOL Strategy. The general conclusion was that the proposed structure created legal risk that the IRS would ultimately determine that the proposed structure does not comply with Section 382 of the Code and, from a tax standpoint, based on all surrounding circumstances, likely would not enable the Company to successfully implement the NOL Strategy. On December 18, 2008, Mr. Brown, an attorney from Pepper Hamilton and a representative of VFA discussed the structure outlined by VFA. The attorney at Pepper Hamilton concluded that the structure proposed by VFA, along with variations of such structure raised by the representative of VFA, created legal risk that the IRS would find that the proposed structure does not comply with Section 382 of the Code and would not support successful implementation of the NOL Strategy.

At a board meeting on December 19, 2008, our board reviewed and discussed VFA’s proposed structure with representatives of Stephens and attorneys from Pepper Hamilton and Perkins Coie present. During the discussion, the outside advisors responded to questions from the directors. The attorney from Pepper Hamilton reviewed the structure with our board and noted her opinion that the proposed structure would jeopardize the Company’s ability to utilize its net operating loss carryforwards and create legal risk for the Company that the IRS would ultimately determine that the proposed structure does not comply with Section 382 of the Code. In addition to not providing any details on potential acquisition candidates or the proposed structure, VFA did not provide any tax or legal analyses to our board showing that the proposed structure would be acceptable to the IRS. Accordingly, our board was faced with the risk of committing additional time and potentially exhausting all of our resources to pursue a strategy that our advisors believed may violate Section 382 of the Code and result in the denial or limitation of our net operating loss carryforwards and that may potentially leave our shareholders with nothing or proceeding with the previously announced Plan of Dissolution, pursuant to which we expect to provide liquidating distributions to shareholders over time. Our board, based on the advice of legal counsel and input from Stephens, reaffirmed its earlier determination that voluntary dissolution of the Company is advisable and in the best interests of the Company and its shareholders. Our board, however, noted that it would continue to consider, with the advice of its experts, any detailed proposals accompanied by well-reasoned tax and legal analyses, setting out a specific plan that would successfully maximize the use of the Company’s net operating loss carryforwards in the best interests of the Company and its shareholders.

Reasons for the Plan of Dissolution

Our board of directors is recommending approval of the Plan of Dissolution because it believes that the voluntary dissolution and liquidation of the Company is advisable and in the best interests of the Company and its shareholders. Our board of directors has considered at length, with the assistance of legal and financial advisors, the NOL Strategy. In its role as our exclusive financial advisor, Stephens contacted by telephone 34 potential acquisition targets and eight financial sponsors. Ten of these potential acquisition targets were presented to Stephens and/or the Company by VFA or its affiliates. Of these 34 potential acquisition targets and eight financial sponsors, Stephens (i) conducted detailed financial analyses on 18 potential acquisition targets and one financial sponsor, (ii) met with representatives of eleven potential acquisition targets and three financial sponsors, (iii) entered into four confidentiality agreements and (iv) submitted two indications of interest on our behalf.

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In determining the potential acquisition candidates to approach, Stephens sought companies with strong management teams operating in attractive markets that presented growth opportunities without the infusion of significant capital. Stephens also focused on companies that generated sufficient amounts of pre-tax income such that the acquisition would enable us to utilize all or a portion of our net operating loss carryforwards in a relatively short period of time and thereby fully realize their value. A major consideration for identifying potential candidates was whether Stephens thought we could finance the acquisition based on our existing cash position and the availability of third-party financing sources. Stephens also vetted potential acquisition candidates presented to us by VFA and its affiliates, none of which satisfied our criteria. Once identified, detailed conversations regarding the potential acquisition candidate were held internally at Stephens and between representatives of Stephens and our chief executive officer. Stephens conducted detailed financial analyses on candidates for which financial information was available and presented these analyses to our chief executive officer who would then determine whether to pursue such acquisition candidates. Stephens would contact identified candidates or their representatives and, if there was mutual interest, further discussions were held, including in some instances face-to-face meetings among our chief executive officer, Stephens and representatives of the candidate. In the majority of cases, either the acquisition candidate did not satisfy our criteria or we did not satisfy the acquisition candidate’s criteria. If both parties were interested in a possible transaction, a confidentiality agreement was entered into and, with respect to Company B and Company C, indications of interest were executed and presented to our board of directors for consideration.

Stephens also contacted financial sponsors to discuss facilitating a transaction with one of their portfolio companies. These financial sponsors included private equity and investment groups, including VFA. In contacting financial sponsors, Stephens generally sought out private equity firms and other entities that had experience evaluating net operating loss carryforwards and/or had consummated transactions utilizing net operating loss carryforwards in the past. While certain of the financial sponsors had general interest, after further discussions, these financial sponsors determined not to pursue a transaction with us for various reasons, including that our net operating loss carryforward was not large enough, concern regarding our charter protections, perceived issues as to the validity of our net operating loss carryforward and that they did not want to give up a large portion of the equity upside, which was a key requirement for any transaction. We did not receive any offers from potential acquisition candidates or financial sponsors, including VFA, in which we were interested or that otherwise satisfied our criteria.

Despite its efforts, our board did not identify any potential business combinations that it deemed to be advisable and in the best interests of the Company and its shareholders. During the course of the process for effectuating the NOL Strategy, our board, with the input of Stephens, concluded that we needed to acquire a highly profitable business, or one that would become highly profitable over a relatively short period of time, in order to fully realize the value of our net operating loss carryforwards. A strategy focused on acquiring a series of small businesses that generated minimal or moderate amounts of profit, or that expected to generate profits over a longer time frame, likely would not increase our revenues and generate new income sufficient in future years to enable us to utilize our net operating loss carryforwards before they expire or in a manner that maximized their value. In addition, due to limitations on change of ownership set forth in Section 382 of the Code, we are limited in how we can finance any potential business combination, including restrictions on the amount of equity that we can issue in connection with any transaction. In light of recent and current economic conditions, including the lack of financing opportunities in the high-yield debt market, finding a profitable business and obtaining sufficient financing to enable us to acquire a highly profitable business on terms that did not otherwise jeopardize our net operating loss carryforwards became extremely difficult. In fact, the credit markets were deteriorating faster than the prices being sought for acquisition candidates, thereby widening the gap between the financial resources available to us and the asking prices for acquisition candidates. During this same time, we continued to incur operating losses from our Home and Garden Business.

After discussion of the benefits and risks and the potential timing and costs of its strategic options and upon consideration of the Company’s financial situation, business prospects, and continued inability to effectuate the NOL Strategy and the continued distress in the capital markets, our board determined that voluntary dissolution and liquidation and winding up of the Company under Washington law is advisable and in the best interests of the Company and its shareholders, approved the Plan of Dissolution and recommended the Plan of Dissolution for approval of the shareholders. No member of our board dissented during the

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deliberative process with respect to any of our decisions regarding strategic alternatives to the Plan of Dissolution. In arriving at its determination that the Plan of Dissolution is the preferred strategic option that best serves the interests of the Company and its shareholders, our board of directors carefully considered the terms of the Plan of Dissolution, as well as the alternatives, including the possibility of the sale of the public corporate shell and the continuation of the NOL Strategy. As part of this process, our board considered the risks and timing of each alternative, as well as management’s financial projections, information provided by Stephens and the advice of our legal advisors. In approving the Plan of Dissolution, our board considered the factors set out above, as well as the following factors:

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even if we were able to complete a business combination transaction in furtherance of the NOL Strategy, the risk that we may be unable to realize the benefit of our net operating loss carryforwards, including the risk that the IRS or some other taxing authority may disagree with our position regarding ownership changes under Section 382 of the Code thereby severely limiting the availability of our net operating loss carryforwards;

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the limitations placed on the amount of equity we may issue to provide capital for our business, or to secure financing necessary to acquire a profitable business, due to the ownership changes rules set forth in Section 382 of the Code;

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the uncertainty as to whether we would be able to generate sufficient taxable income to utilize our net operating loss carryforwards;

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that we had vigorously explored strategic alternatives, including undertaking extensive efforts to find a business combination that would enable us to utilize our net operating loss carryforwards, as described above, and none was successful;

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the volatility in the credit markets and the effect of such volatility on our ability to obtain financing on acceptable terms for the continued operation of our business and to acquire a profitable business in connection with our NOL Strategy;

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the low probability that we would be presented with or otherwise identify, within a reasonable period of time under current circumstances, any viable opportunities to engage in an attractive alternative transaction;

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our ability to survive as an independent entity given our history of operating losses and our expectations of continued operating losses;

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the substantial accounting, legal and other expenses associated with being a small publicly-traded company in light of our existing and expected revenues;

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the uncertain prospects of our Home and Garden Business, its continued net losses and its ability to generate sufficient revenues to enable us to continue pursuing the NOL Strategy or other strategic alternatives;

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our board’s belief that liquidation and distribution of our net assets to our shareholders could produce more value than if our shareholders continued to hold their shares, given that, on and prior to the date of our board’s approval of the Plan of Dissolution, the estimated per share value of our assets in excess of estimated liabilities, claims and expenses of liquidation exceeded the market price of our outstanding common stock;

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the terms and conditions of the Plan of Dissolution, including the provisions that permit our board to revoke the plan prior to, or at any time until 120 days after, the Effective Date if our board determines that, in light of new proposals presented or changes in circumstances, dissolution and liquidation are no longer advisable and in the best interests of the Company and its shareholders;

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the fact that Washington corporate law requires that the Plan of Dissolution be approved by the affirmative vote of holders of two-thirds of the shares of our common stock entitled to vote, which ensures that our board will not be taking actions of which a significant portion of our shareholders disapprove;

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the fact that approval of the Plan of Dissolution by the requisite vote of our shareholders authorizes our board of directors and officers to implement the Plan of Dissolution without further shareholder approval;

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the fact that shareholders are not entitled to assert dissenter’s rights with respect to the Plan of Dissolution under Chapter 23B.13 of the WBCA;

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the uncertainty of the timing, nature and amount of any liquidating distributions to shareholders;

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the risks associated with the sale of our remaining non-cash assets, consisting primarily of our Home and Garden Business, as part of the Plan of Dissolution, including that we might have received more for such assets if we sold them other than in liquidation;

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that shareholders would lose the opportunity to capitalize on the potential business opportunities and possible future growth of the Company had we elected to continue to pursue the acquisition of a profitable business as part of the NOL Strategy;

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the risk that, under Washington law, our shareholders may be required to return to creditors some or all of the liquidating distributions;

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the fact that, if the Plan of Dissolution is approved, shareholders would generally not be permitted to transfer shares of our common stock after the Effective Date; and

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the risk that our common stock might in the near future be delisted from The Nasdaq Capital Market for failure to satisfy continued listing standards, including the minimum bid price requirement, thereby significantly limiting our shareholders ability to sell their stock.

Our board of directors also considered the factors described in the section entitled “Risk Factors” in this proxy statement in deciding to approve, and unanimously recommending that our shareholders approve, the Plan of Dissolution.

In view of the variety of factors considered in connection with its evaluation of the Plan of Dissolution, our board of directors did not find it practical to, and did not quantify or otherwise attempt to assign relative weight to the specific factors considered in reaching its conclusions. In addition, our board did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to its ultimate determination, but rather conducted an overall analysis of the factors described above. In considering the factors described above, individual members of our board may have given different weight to different factors.

We cannot offer any assurance that the liquidation value per share of our common stock will equal or exceed the price or prices at which such shares recently have traded or could trade in the future. However, our board of directors believes that it is in the best interests of the Company and its shareholders to distribute to the shareholders our net assets pursuant to the Plan of Dissolution. If the Plan of Dissolution is not approved by our shareholders, our board of directors will explore what, if any, alternatives are available for the future of the Company, particularly in light of the fact that our Home and Garden Business continues to incur net losses and is expected to do so for the foreseeable future. Possible alternatives include continued exploration of the NOL Strategy, seeking to raise capital from the sale of securities, which could result in substantial dilution to our existing shareholders and the granting of superior rights to the new shareholders, selling all of our stock or assets, changing our business focus, expanding the scope of our business through relationships with third parties, seeking voluntary dissolution at a later time and with potentially diminished assets or seeking bankruptcy protection. At this time, our board does not know which alternatives might be considered, or what impact any alternative might have on shareholder value. If our shareholders do not approve the Plan of Dissolution and we continue to operate our Home and Garden Business, we expect that our cash resources will continue to diminish. Considering our recent financial performance and the volatility of the capital markets, it is unlikely that we would be able to obtain additional equity or debt financing. If we were unable to obtain sufficient capital, we would eventually deplete our available resources and could be required to discontinue operations, which could impair our ability to pursue the NOL Strategy or other alternatives to realize value for our shareholders. See “Risk Factors — Risks Related to the Plan of Dissolution.”

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Dissolution Under Washington Law

Washington law provides that a corporation may dissolve upon approval and recommendation by the board of directors of the corporation, followed by the approval of its shareholders. Following such approval, the dissolution is effected by filing articles of dissolution with the Secretary of State. The Effective Date is the date on which the articles of dissolution are filed with the Secretary of State or any later date specified in the articles of dissolution.

Section 23B.14.050 of the WBCA provides that once a corporation is dissolved, it continues its corporate existence but may not carry on any business except that appropriate to wind up and liquidate its business and affairs. The process of winding up includes:

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the publication of a notice of dissolution that requests persons with claims against the corporation to present them in accordance with the notice;

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the collection of assets and the disposal of properties that will be applied toward the satisfaction or making reasonable provision for the satisfaction of liabilities or will not otherwise be distributed in kind to the corporation’s shareholders;

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the satisfaction or making reasonable provision for satisfaction of liabilities;

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subject to statutory limitations, the distribution of any remaining assets to the shareholders of the corporation; and

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the taking of all other actions necessary to wind up and liquidate the corporation’s business and affairs.

Principal Provisions of the Plan of Dissolution

This section of the proxy statement describes material aspects of the proposed Plan of Dissolution. While we believe that the description covers the material terms of the Plan of Dissolution, this summary may not contain all of the information that is important to you. You should carefully read this entire proxy statement, including the Plan of Dissolution attached as Annex A to this proxy statement, and the document delivered with and incorporated by reference into this proxy statement for a more complete understanding of the Plan of Dissolution.

Approval of Plan of Dissolution

The Plan of Dissolution must be approved by the affirmative vote of at least two-thirds of the outstanding shares of our common stock. The approval of the Plan of Dissolution by the requisite vote of the holders of our common stock will constitute adoption of the Plan of Dissolution and a grant of full and complete authority for our board of directors and officers, without further shareholder action, to proceed with the dissolution and liquidation of the Company in accordance with any applicable provision of the WBCA, including the authority to dispose of our Home and Garden Business and all of the other remaining non-cash assets of the Company.

Dissolution and Liquidation

If the Plan of Dissolution is approved by the requisite vote of our shareholders, the steps set forth below will be completed at such times as our board of directors, in its discretion, deems necessary, appropriate or advisable in the best interests of the Company and its shareholders. Our board of directors may instruct the officers of the Company to delay the taking of any of the following steps until the Company has performed such actions as our board of directors or such officers determine to be in the best interests of the Company and its shareholders to maximize the value of the Company’s assets upon liquidation:

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the filing of articles of dissolution of the Company with the Secretary of State to establish the Effective Date of dissolution;

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the publication of notice of the Company’s dissolution in a newspaper of general circulation in King County, Washington, within 30 days after the Effective Date, which notice must be published once a week for three consecutive weeks;

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the mailing of written notice of the Company’s dissolution to the holders of known claims at any time after the publication of the notice set forth in the preceding bullet;

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the cessation of all of the Company’s business activities and the withdrawal of the Company from any jurisdiction in which it is qualified to do business, except as necessary for the sale or other disposition of its property and assets or for the proper winding up and liquidation of the Company’s business and affairs;

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the collection and disposal of the Company’s properties and assets that will be applied toward satisfaction or making reasonable provision for satisfaction of the Company’s liabilities, in all cases subject to applicable liens and security interests and applicable contractual restrictions;

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the negotiation and consummation of sales or other dispositions of our Home and Garden Business and other non-cash assets of the Company, including the assumption by the purchaser of liabilities of the Company, upon such terms as our board of directors may deem in the best interests of the Company and its shareholders;

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as determined by our board of directors, the prosecution, defense, settlement or other resolution of any and all claims or suits by or against the Company and the satisfaction of or the making of reasonable provision for the satisfaction of liabilities of the Company by means of insurance coverage, provision of security therefor, contractual assumptions thereof by a solvent person or any other means that our board of directors determines is reasonably calculated to provide for satisfaction of the reasonably estimated amount of such liabilities. Upon making such determination, our board of directors will, for purposes of determining whether a subsequent distribution to shareholders is prohibited under the WBCA, be entitled to treat such liabilities as fully satisfied by the assets used or committed in order to make such provision;

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if our board of directors deems it in the best interests of the Company and its shareholders, (i) petitioning to have the dissolution continued under court supervision in accordance with the WBCA or, to the extent permissible under the WBCA, dedicate the Company’s property and assets to the repayment of its creditors by making an assignment for the benefit of creditors or obtain the appointment of a general receiver or (ii) filing an application pursuant to the WBCA for a court determination of (a) the amount and form of reasonable provision to be made for satisfaction of any claims or liabilities that have arisen or that are reasonably likely to arise within the survival period specified in the WBCA or (b) whether the provision made or proposed to be made by our board of directors for the satisfaction of any one or more claims or liabilities is reasonable;

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subject to the limitations on distributions set forth in the WBCA, the distribution of the remaining funds of the Company and the distribution of the remaining unsold assets of the Company, if any, to its shareholders; and

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the taking of any and all other actions permitted or required by the WBCA and any other applicable laws and regulations, including federal tax and securities laws and regulations and the Nasdaq Marketplace Rules and regulations, in connection with the winding up and liquidation of the Company.

Authority of Officers and Directors

After the Effective Date, our board of directors and officers will continue in their positions for the purpose of winding up the business and affairs of the Company. Our board of directors may appoint officers, hire employees and retain independent contractors in connection with the winding up process, and is authorized to pay to the Company’s officers, directors, employees and independent contractors compensation above their regular compensation in recognition of the extraordinary efforts they may be required to undertake in connection with the successful implementation of the Plan of Dissolution. Any such compensation must be fair and reasonable with respect to the efforts expended. Approval of the Plan of Dissolution by the requisite vote of our shareholders will constitute the approval of the shareholders of our board’s authorization of the payment of any such compensation. Each director currently receives $250 for each board meeting attended and is reimbursed for his or her reasonable expenses incurred in attending meetings of the board and its committees. In addition, directors serving as chairs of our board committees receive $250 for each committee meeting attended. Our chief executive officer, chief financial officer and secretary currently receives a monthly

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salary of $12,500 for his services. Our board currently expects to maintain the current compensation levels of our directors and chief executive officer during the implementation of the Plan of Dissolution and has not yet determined the amount, if any, of compensation to be received by our officers and directors above his or her regular compensation with respect to the services related to the implementation of the Plan of Dissolution.

The approval of the Plan of Dissolution by our shareholders also will constitute full and complete authority for our board of directors and officers, without further shareholder action, to do and perform any and all acts and to make, execute and deliver any and all agreements, conveyances, assignments, transfers, certificates and other documents of any kind and character that our board of directors or such officers deem in the best interests of the Company and its shareholders: (i) to dissolve the Company in accordance with the WBCA and cause its withdrawal from all jurisdictions in which it and its subsidiaries are authorized to do business; (ii) to dispose of the remaining property and assets of the Company; (iii) to prosecute, defend, settle or otherwise resolve any claims or suits by or against the Company; (iv) to satisfy or make reasonable provision for the satisfaction of the Company’s obligations and liabilities in accordance with the WBCA; (v) subject to statutory limitations, to distribute all of the remaining funds of the Company and any unsold assets of the Company pari passu to the holders of our common stock; and (vi) to otherwise take any and all actions permitted or required by the WBCA and other applicable laws and regulations to wind up and liquidate the Company.

Professional Fees and Expenses

It is specifically contemplated that we will retain a law firm or law firms selected by our board of directors to provide legal advice and guidance in implementing the Plan of Dissolution, and we will pay all legal fees and expenses reasonably incurred by us in connection with or arising out of the implementation of the Plan of Dissolution, including the prosecution, defense, settlement or other resolution of any claims or suits by or against us, the discharge of our obligations and liabilities, and the advancement and reimbursement of any legal fees and expenses payable by us pursuant to the indemnification we provide in our articles of incorporation and bylaws, the WBCA or otherwise. In addition, in connection with and for the purpose of implementing and assuring completion of the Plan of Dissolution, we may, as our board of directors determines in the best interests of the Company and its shareholders, engage and pay any brokerage, agency, professional and other reasonable fees and expenses of persons rendering services to us in connection with the disposition of our property and assets, the implementation of the Plan of Dissolution and the winding up and liquidation of the Company.

Indemnification

After the Effective Date, we will continue to indemnify our officers, directors, employees and agents in accordance with our articles of incorporation and bylaws and the WBCA for actions taken in connection with the Plan of Dissolution and the winding up of our business and affairs. Our board of directors is authorized to obtain and maintain insurance as may be advisable in the best interests of the Company and its shareholders to cover any of our obligations under the Plan of Dissolution, including directors’ and officers’ liability coverage and insurance coverage reasonably calculated to provide for satisfaction of reasonably estimated liability claims under the WBCA.

Liquidating Distributions

Provided that, in the opinion of our board of directors, reasonable provision has been made for the payment, satisfaction and discharge of all known, conditional, unmatured or contingent debts, obligations and liabilities of the Company (including liabilities and expenses incurred and anticipated to be incurred in connection with the prosecution, defense, settlement or other resolution of any claims or suits by or against the Company, the sale of property and assets and the complete liquidation of the Company), after the Effective Date, liquidating distributions are expected to be made from time to time to the holders of record of outstanding shares of our common stock at the close of business on the Effective Date pro rata in accordance with the respective number of shares then held of record. All determinations as to the time for and the amount and kind of liquidating distributions will be made in the exercise of the discretion of our board of directors and in accordance with any applicable provision of the WBCA.

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If any liquidating distribution payable to a shareholder pursuant to the Plan of Dissolution cannot be made, whether because the shareholder cannot be located, has not surrendered its certificates evidencing the common stock as may be required pursuant to the Plan of Dissolution, is not competent to receive the distribution, or for any other reason, then the distribution to which such shareholder is entitled will be transferred, at such time as the final liquidating distribution is made, to the Washington State Treasurer or the official of such state or other jurisdiction authorized or permitted by applicable law to receive the proceeds of such distribution. The proceeds of such distribution will thereafter be held solely for the benefit of and for ultimate distribution to such shareholder as the sole equitable owner thereof and will be treated as abandoned property and escheat to the applicable state or other jurisdiction in accordance with applicable law. In no event will the proceeds of any such distribution revert to or become the property of the Company.

Amendment, Modification or Abandonment of Plan

If for any reason our board of directors determines that such action would be in the best interests of the Company and its shareholders, our board may, in its sole discretion and without requiring further shareholder approval, revoke the Plan of Dissolution and all actions contemplated thereunder, to the extent and in the manner permitted by the WBCA, (i) at any time prior to the Effective Date or (ii) at any time within 120 days after the Effective Date. Our board of directors may not amend or modify the Plan of Dissolution under circumstances that would require additional shareholder approval under the WBCA and/or the federal securities laws or Nasdaq requirements without complying with such requirements. The Plan of Dissolution would be void upon the effective date of any such revocation. By approving the Plan of Dissolution, shareholders will be granting our board of directors the authority to abandon the Plan of Dissolution without further shareholder action, if our board of directors determines that dissolution and liquidation are not in the best interests of the Company and its shareholders.

Cancellation of Stock and Stock Certificates

From and after the Effective Date, and subject to applicable law, our common stock will be deemed cancelled and each holder of common stock will cease to have any rights in respect thereof, except the right to receive distributions pursuant to and in accordance with the Plan of Dissolution. As a condition to delivery of any distribution to our shareholders, our board of directors may require our shareholders to (i) surrender their certificates evidencing their shares of common stock to the Company or (ii) furnish the Company with evidence satisfactory to our board of directors of the loss, theft or destruction of such certificates, together with such surety bond or other security or indemnity as may be required by and satisfactory to our board of directors. We will close our stock transfer books and discontinue recording transfers of shares of stock of the Company at the close of business on the Effective Date, and thereafter certificates representing shares of common stock will not be assignable or transferable on the books of the Company except by will, intestate succession or operation of law.

Liquidation Under Code Sections 331 and 336

It is intended that the Plan of Dissolution constitutes a plan of complete liquidation of the Company within the meaning of Sections 331 and 336 of the Code. The Plan of Dissolution will be deemed to authorize the taking of such action as, in the opinion of counsel for the Company, may be necessary to conform with the provisions of Sections 331 and 336 of the Code and the Treasury regulations promulgated thereunder, including the making of an election under Section 336(e) of the Code, if applicable.

Filing of Tax Returns, Forms and Other Reports and Statements

The Plan of Dissolution authorizes and directs the appropriate officers of the Company to prepare (or cause to be prepared), execute and file (or cause to be filed) in accordance with all applicable laws such returns, forms, reports and information statements, and any schedules or attachments to any of the foregoing, as may be necessary or appropriate or required under applicable law in connection with our dissolution and liquidation and the carrying out thereof.

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Estimated Liquidating Distributions

MANY OF THE FACTORS INFLUENCING THE AMOUNT OF CASH DISTRIBUTED TO OUR SHAREHOLDERS AS A LIQUIDATING DISTRIBUTION CANNOT BE CURRENTLY QUANTIFIED WITH CERTAINTY AND ARE SUBJECT TO CHANGE. ACCORDINGLY, AT THE TIME YOU VOTE ON THE PROPOSAL TO APPROVE THE PLAN OF DISSOLUTION, YOU WILL NOT KNOW THE EXACT AMOUNT OF ANY LIQUIDATING DISTRIBUTIONS THAT YOU MAY RECEIVE. YOU MAY RECEIVE SUBSTANTIALLY LESS THAN THE AMOUNT WE CURRENTLY ESTIMATE, OR YOU MAY NOT RECEIVE ANY LIQUIDATING DISTRIBUTIONS.

As of December 31, 2008, we had approximately $4.9 million in net cash. In addition to satisfying the liabilities reflected on our balance sheet, we anticipate using cash between December 31, 2008 and throughout the liquidation process for the following:

•

ongoing operating, overhead and administrative expenses;

•

purchasing a director and officer liability insurance policy as well as a “tail” insurance policy for periods subsequent to the Effective Date;

•

expenses incurred in connection with the dissolution and our liquidation; and

•

professional, legal, tax, accounting, and consulting fees.

This projected liquidating distribution analysis assumes that the Plan of Dissolution will be approved by our shareholders. If the Plan of Dissolution is not approved by our shareholders, no liquidating distributions will be made. We intend to sell our remaining non-cash assets, consisting primarily of our Home and Garden Business, for the best price available as soon as reasonably practicable after the Effective Date. As of December 31, 2008, our non-cash assets represented less than 3% of our total assets and less than 4% of our net cash. The non-cash assets that made up our Home and Garden Business as of December 31, 2008 consisted of approximately $70,000 in inventory, the license and supply agreement with Plant Health Care and approximately $19,000 of prepaid EPA and state product registrations. The amount of inventory is based on historical cost while the registrations are based on the registration fees actually paid. We have not historically assigned any value to the license and supply agreement because management believed there was no material value. As of December 31, 2008, our other non-cash assets consisted of approximately $69,000 of prepaid insurance expenses.

We do not expect the net proceeds from the sale of our Home and Garden Business to represent a material portion of the total amount available for distribution to our shareholders. We cannot currently estimate the value of our Home and Garden Business because we cannot predict the value that potential acquirers may place on the license and supply agreement, the product registrations and our remaining inventory, whether and to what extent we may receive competing bids for these assets and the extent to which the sale of these assets in dissolution may adversely affect the purchase price of such assets. Accordingly, such amounts are not included in the calculation of liquidating distributions to our shareholders. Any amounts we receive upon the sale of the non-cash assets comprising our Home and Garden Business would increase the estimated liquidating distributions payable to our shareholders based on the assumptions set forth below. The amount of any contingency reserve established by our board of directors will be deducted before the determination of amounts available for distribution to shareholders. Based on the foregoing, we currently estimate that the amount ultimately distributed to our shareholders will be between approximately $1.27 and $1.42 per share of common stock, computed as described below. The following estimates are not guarantees and they do not reflect the total range of possible outcomes. You may receive substantially less than the amount of liquidating distributions we currently estimate, or you may not receive any liquidating distributions.

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Estimated Liquidating Distributions to Shareholders

				Low Range of Net Proceeds				High Range of Net Proceeds
Net Cash as of December 31, 2008 (a)				$	4,930,000			$	4,930,000
Total Estimated Cash Assets (b)					4,930,000				4,930,000
Operating Expenses (c)					879,000				645,000
Professional Fees (attorneys, accountants, tax and agent) (d)					431,000				339,000
Insurance (e)					116,000				79,000
Interest Income (f)					(35,000	)			(47,000	)
Total Operating Expenses, net					1,391,000				1,016,000
Reserve for Claimants (g)					100,000				50,000
Total Estimated Net Liabilities					1,491,000				1,066,000
Estimated Cash to Distribute to Shareholders (b)				$	3,439,000			$	3,864,000
Shares outstanding as of December 31, 2008					2,716,486				2,716,486
Estimated per share distribution (b)				$	1.27			$	1.42

 

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Notes

(a)

Represents cash and cash equivalents of approximately $5.1 million as of December 31, 2008, less outstanding liabilities as of December 31, 2008 of approximately $169,000, including accounts payable and accrued expenses. The amount of outstanding liabilities at December 31, 2008 excludes $25,000 for a deductible that is discussed in footnote (g) below.

(b)

Does not include estimated value of non-cash assets for the reasons set forth in the paragraph immediately preceding this table.

(c)

Operating expenses consist primarily of (i) estimated salaries and related benefits for our three part-time employees for 13 and ten months from December 31, 2008 in the low and high range of net proceeds, respectively, including $24,000 in total severance pay to our two non-executive part-time employees, (ii) estimated directors’ compensation and reimbursement requests through the period ending three years after the Effective Date, assuming that we maintain eight board members and current director compensation levels, (iii) estimated monthly operating expenses consisting of office lease payments, telecommunications and Internet usage fees, common area maintenance expenses and business taxes of approximately $45,000 per month for 13 months from December 31, 2008 and $42,000 per month for ten months from December 31, 2008 in the low and high range of net proceeds, respectively, (iv) estimated monthly operating expenses of approximately $4,000 and $2,500 per month for the remaining 28 and 31 months of our corporate existence under Washington law in the low and high range of net proceeds, respectively, and (v) a $27,500 payment representing our annual fee owed to The Nasdaq Capital Market, which was paid in January 2009. The operating expenses are based on the assumption that the Effective Date occurs by the beginning of June 2009, or approximately five months after December 31, 2008. On the low range of net proceeds, we currently estimate that we will continue to incur normal operating expenses for approximately eight months from the Effective Date. On the high range of net proceeds, we currently estimate that we will continue to incur normal operating expenses for approximately five months from the Effective Date. Thereafter, we expect to incur lower operating expenses as noted in subclause (iv) above for the duration of our corporate existence under Washington law. Our office lease expires in May 2009 and the estimated operating expenses assume that we will continue to lease such offices on a month-to-month basis for 13 and ten months from its expiration in the low and high range of net proceeds, respectively.

(d)

Estimated professional fees for both the low and high range of net proceeds include the attorney, accountant, tax and transfer, soliciting and paying agent fees and expenses to complete (i) the special meeting and the dissolution, (ii) the 2008 year-end audit, (iii) our annual report on 10-K for the year ended December 31, 2008 and (iv) our quarterly report on Form 10-Q for the quarter ended March 31, 2009.

(e)

We will purchase a director and officer liability insurance policy, as well as a “tail” insurance policy for six years subsequent to the Effective Date. The estimated premium for our director and officer liability insurance policy is net of estimated refunds under such policy.

(f)

We have estimated interest income on our cash and cash equivalents at an annual rate of 0.75%.

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(g)

Amount estimated to cover any potential claims made against us during the three-year period following the Effective Date. We are not currently aware of any potential claims, other than the pending litigation for which we have already reserved $25,000 to cover the deductible amount on the insurance covering such litigation. The amount of any contingency reserve ultimately established by our board of directors will be deducted before the determination of amounts available for distribution to shareholders. See “— Contingency Reserve.”

The estimated range of approximately $1.27 to $1.42 per share is our best current estimate of the amount of cash that will be available for distribution to shareholders following the prosecution, defense, settlement or other resolution of claims and suits and satisfaction of liabilities, including payment of final closeout and dissolution expenses and the establishment of adequate reserves and other means reasonably calculated to provide for satisfaction of current, contingent or conditional liabilities. We will continue to defend suits and incur claims, liabilities and expenses (such as salaries and benefits, directors’ and officers’ insurance, payroll and local taxes, facilities expenses, legal, accounting and consulting fees and miscellaneous office expenses) following approval of the Plan of Dissolution and during the three years following the Effective Date. Satisfaction of these liabilities and expenses will reduce the amount of assets available for ultimate distribution to shareholders. While we cannot predict the actual amount of our liabilities and expenses, we believe that available cash and any amounts received from the sale of our remaining non-cash assets will be adequate to provide for satisfaction of our liabilities and expenses and that we will make one or more cash distributions to shareholders.

We presently expect to make an initial distribution to shareholders of up to $1.00 per share within 45 days after the Effective Date. We do not intend to make any further distributions until after we sell our non-cash assets, consisting primarily of our Home and Garden Business, settle claims with our known creditors and establish reserves or otherwise make reasonable provision for the prosecution, defense, settlement or other resolution of claims and suits and the satisfaction of liabilities, which activities we do not expect to complete until at least six months after the Effective Date. However, we are not able to predict the precise nature, amount or timing of any liquidating distributions, due primarily to our inability to predict the amount of our remaining liabilities, the amount that we will expend during the course of the liquidation, the timing of any sales of our non-cash assets, the net proceeds from such sales, and the net value of our remaining non-cash assets. To the extent that the amount of our liabilities or the amounts that we expend during the liquidation are greater than we anticipate, our shareholders may receive substantially less than we presently anticipate, or may not receive any distributions. Our board has not established a firm timetable for final distributions to our shareholders. Subject to contingencies inherent in winding up our business and affairs, our board of directors intends to authorize any distributions as promptly as reasonably practicable in the best interests of the Company and its shareholders. Our board of directors, in its discretion, will determine the nature, amount and timing of all distributions. See “Risk Factors — Risks Related to the Plan of Dissolution.”

Conduct of the Company Following Dissolution

If the Plan of Dissolution is approved by the requisite vote of our shareholders, we intend to file articles of dissolution with the Secretary of State as soon as reasonably practicable after receipt of the required revenue clearance certificate from the Department of Revenue. We intend to make a public announcement in advance of the anticipated Effective Date. After the Effective Date, our corporate existence will continue but we may not carry on any business except that appropriate to wind up and liquidate our business and affairs, including collecting and disposing of our assets, satisfying or making reasonable provision for the satisfaction of our liabilities and, subject to legal requirements, distributing our remaining property among our shareholders.

Sale of Remaining Assets

The Plan of Dissolution gives our board of directors the authority to dispose of all of our remaining property and assets. Shareholder approval of the Plan of Dissolution will constitute approval of any and all such future asset dispositions on such terms as our board of directors, in its discretion in the best interests of the Company and its shareholders and without further shareholder approval, may determine. We intend to sell our remaining non-cash assets, consisting primarily of our Home and Garden Business, on such terms as are approved by our board of directors in the best interests of the Company and its shareholders. We may conduct

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sales by any means, including by competitive bidding or private negotiations, to one or more purchasers in one or more transactions over a period of time. We currently expect to seek competitive bids on the assets as soon as reasonably practicable after the Effective Date. The goal of the competitive bidding process will be to enable our board of directors to obtain the best price possible for the assets and thereby maximize shareholder value. We do not expect to solicit any further shareholder votes with respect to the approval of the specific terms of any particular sale of assets approved by our board of directors. See “— Interests of Management in the Dissolution of the Company” for information regarding the interest expressed by one of our directors in the potential acquisition of our Home and Garden Business.

The prices at which we will be able to sell our remaining non-cash assets will depend largely on factors beyond our control, including the supply and demand for such assets, changes in interest rates, the condition of financial markets, the availability of financing to prospective purchasers of the assets and regulatory approvals. The net price that we receive for our remaining non-cash assets will be reduced to the extent that we employ brokers to assist in the sale of such assets. In addition, we may not obtain as high a price for a particular asset as we might secure if we were not in liquidation. Upon the sale of any of our assets in connection with our liquidation, we will generally recognize gain or loss in an amount equal to the difference between (i) the fair market value of the consideration received for each asset sold and (ii) our adjusted tax basis in the asset sold. See “— Certain Material U.S. Federal Income Tax Consequences” below.

Contingency Reserve

Under the WBCA, we generally are required, in connection with our dissolution, to pay or make reasonable provision for the prosecution, defense, settlement or other resolution of claims and suits and the satisfaction of liabilities. Following the Effective Date, we will pay all expenses and other known liabilities and establish a contingency reserve, consisting of cash or other assets that are adequate for the satisfaction of all current, contingent or conditional liabilities. As of December 31, 2008, our known current, contingent and conditional liabilities consisted of approximately $42,000 of accounts payable and approximately $151,000 of accrued liabilities related to legal fees and warranty claims, including a $25,000 deductible amount on insurance covering pending litigation, which amount is currently reserved to cover the potential exposure. We also may seek to acquire insurance coverage and take other steps our board determines are reasonably calculated to provide for the satisfaction of the reasonably estimated amount of such liabilities. We are currently unable to provide a precise estimate of the amount of the contingency reserve or the cost of insurance or other steps we may undertake to make provision for the satisfaction of liabilities, but any such amount will be deducted before the determination of amounts available for distribution to shareholders.

The actual amount of the contingency reserve will be based upon estimates and opinions of our board of directors, derived from consultations with management and outside experts, if our board of directors determines that it is advisable to retain such experts, and a review of our estimated contingent liabilities and our estimated ongoing expenses, including anticipated salary and benefits payments, estimated investment banking, legal and accounting fees, rent, payroll and other taxes, miscellaneous office expenses, facilities costs and expenses accrued in our financial statements. We anticipate that expenses for professional fees and other expenses of liquidation may be significant. Our established contingency reserve may not be sufficient to satisfy all of our obligations, expenses and liabilities, in which case a creditor could bring a claim against one or more of our shareholders for the total amount distributed by us to that shareholder or shareholders pursuant to the Plan of Dissolution. From time to time, we may distribute to our shareholders on a pro rata basis any portions of the contingency reserve that our board of directors deems no longer to be required.

Potential Liability of Shareholders

Under the WBCA, if the amount of the contingency reserve and other measures reasonably calculated to provide for satisfaction of liabilities are insufficient to satisfy the aggregate amount ultimately found payable in respect of our liabilities, each shareholder could be held liable for amounts due creditors up to the amounts distributed to such shareholder under the Plan of Dissolution.

The potential for shareholder liability regarding a distribution continues for three years after the Effective Date. Under the WBCA, our dissolution does not remove or impair any remedy available against the Company, its directors, officers or shareholders for any right or claim existing, or any liability incurred, prior

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to such dissolution or arising thereafter, unless the action or other proceeding thereon is not commenced within three years after the Effective Date.

If we were held by a court to have failed to make adequate provision for our expenses and liabilities or if the amount ultimately required to be paid in respect of such liabilities exceeded the amount available from the contingency reserve, a creditor could seek an injunction against us to prevent us from making distributions to shareholders under the Plan of Dissolution. Any such action could delay and substantially diminish liquidating distributions to our shareholders.

Reporting Requirements

Whether or not the Plan of Dissolution is approved, we have an obligation to continue to comply with the applicable reporting requirements of the Exchange Act, even though compliance with such reporting requirements is economically burdensome. If the Plan of Dissolution is approved by our shareholders, in order to curtail expenses, we intend, after the Effective Date, to seek relief from the SEC from the reporting requirements under the Exchange Act. We anticipate, however, that even if such relief is granted, we would continue to file current reports on Form 8-K to disclose material events relating to our liquidation and dissolution along with any other reports that the SEC might require. However, the SEC may not grant any such relief.

Closing of Transfer Books

We intend to close our stock transfer books and discontinue recording transfers of shares of our common stock at the close of business on the Effective Date, and thereafter certificates representing shares of our common stock will not be assignable or transferable on our books except by will, intestate succession or operation of law. After the Effective Date, we will not issue any new stock certificates, other than replacement certificates. It is anticipated that no further trading of our shares will occur after the Effective Date. The Effective Date will be determined following the receipt of a revenue clearance certificate from the Department of Revenue and will be announced as soon as reasonably practicable after that time. See “— Cessation of Trading of Common Stock” below.

Any liquidating distributions made by us after the Effective Date will be made to shareholders according to their holdings of common stock as of the close of business on the Effective Date. Subsequent to the Effective Date, we may at our election require shareholders to surrender certificates representing their shares of our common stock in order to receive subsequent distributions. If surrender of stock certificates should be required following the dissolution, we will send you written instructions regarding such surrender. Shareholders should not forward their stock certificates before receiving instructions to do so. Any distributions otherwise payable by us to shareholders who have not surrendered their stock certificates, if requested to do so, may be held in trust for such shareholders, without interest, pending the surrender of such certificates (subject to escheat pursuant to the laws relating to unclaimed property). If a shareholder’s certificate(s) evidencing his, her or its common stock has been lost, stolen, or destroyed, the shareholder may be required to furnish us with satisfactory evidence of the loss, theft, or destruction, together with a surety bond or other security or indemnity, as a condition to the receipt of any distribution.

Cessation of Trading of Common Stock

We anticipate that we will request that our common stock be delisted from The Nasdaq Capital Market at the close of business on the Effective Date. As noted above, we also currently intend to close our stock transfer books at the close of business on the Effective Date and to cease recording transfers and issuing stock certificates (other than replacement certificates) at such time. Accordingly, it is expected that trading in the shares of our common stock will cease after the Effective Date.

Absence of Dissenters’ Rights

Holders of our shares of common stock are not entitled to assert dissenters’ rights with respect to the transactions contemplated by the Plan of Dissolution under Chapter 23B.13 of the WBCA.

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Regulatory Approvals

We are not aware of any United States federal or state regulatory requirements or governmental approvals or actions that may be required to consummate the Plan of Dissolution, except for compliance with the applicable regulations of the SEC in connection with this proxy statement and compliance with the WBCA. Additionally, our dissolution requires that we obtain a revenue clearance certificate from the Department of Revenue certifying that every license fee, tax increase or penalty of the Company has been paid or provided for. In order to obtain the revenue clearance certificate, we must file an application with the Department of Revenue. If shareholders approve the Plan of Dissolution, we intend to file such application as soon as reasonably practicable after the special meeting. Once we receive the revenue clearance certificate, we must file articles of dissolution with the Secretary of State. We intend to file our articles of dissolution with the Secretary of State as soon as reasonably practicable after our receipt of the revenue clearance certificate from the Department of Revenue. The dissolution will be effective on the date on which we file the articles of dissolution or a later date specified in the articles of dissolution.

Interests of Management in the Dissolution of the Company

Our directors currently hold options to purchase an aggregate of 93,328 shares of our common stock. Pursuant to the terms of the plans under which the options were granted, the options will automatically terminate immediately prior to the Effective Date. However, the directors may exercise any vested options prior to their termination, and options granted under our 1995 Combined Incentive and Nonqualified Stock Option Plan may be exercised whether or not all vesting requirements have been satisfied. Because the exercise prices of the options held by our directors are greater than the estimated per share liquidating distribution payable under the Plan of Dissolution, we do not expect any options held by our directors will be exercised prior to their termination. See “Security Ownership of Certain Beneficial Owners and Management” for information on the number of shares and options held by our directors. Nathaniel T. Brown, our sole executive officer, does not own any shares of our common stock or options.

Following dissolution, we will continue to indemnify our officers, directors, employees and agents in accordance with our articles of incorporation and bylaws for actions taken in connection with the Plan of Dissolution and the winding up of our business and affairs, and we will continue to compensate our officers, directors and employees in connection with their services provided in connection with the implementation of the Plan of Dissolution. See “— Principal Provisions of the Plan of Dissolution — Authority of Officers and Directors” for information on the compensation payable to our officers and directors in connection with their services provided in connection with the implementation of the Plan of Dissolution. As part of our dissolution process, we will purchase a director and officer liability insurance policy as well as a “tail” insurance policy for periods subsequent to the Effective Date. See “— Principal Provisions of the Plan of Dissolution” above.

Dr. Rhett Atkins, one of our directors and our former chief executive officer and president, has expressed interest in the potential acquisition of our Home and Garden Business after the Effective Date, although he has not submitted an offer regarding the potential acquisition. Our board of directors will review any offer for our Home and Garden Business made by Dr. Atkins and compare it against all other third-party offers. Any transaction between the Company and Dr. Atkins would be negotiated on an arms-length basis and would be subject to the approval of the requisite vote of our disinterested directors.

Certain Material U.S. Federal Income Tax Consequences

The following discussion is a general summary of the material U.S. federal income tax consequences of the dissolution and liquidation of the Company pursuant to the Plan of Dissolution to the Company and its shareholders. The discussion does not address all of the U.S. federal income tax considerations that may be relevant to particular shareholders in light of their particular circumstances, or to shareholders that are subject to special treatment under U.S. federal income tax laws, including, without limitation, financial institutions, persons that are partnerships or other pass-through entities, non-U.S. individuals and entities, or persons who acquired their shares of our common stock through stock options or other compensatory arrangements. This discussion does not address the U.S. federal income tax considerations applicable to holders of options to purchase our common stock. Furthermore, this discussion does not address any U.S. federal estate and gift or

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alternative minimum tax consequences or any state, local or foreign tax consequences of our dissolution and liquidation pursuant to the Plan of Dissolution.

The following discussion is based on the Code, applicable Treasury Regulations, and administrative and judicial interpretations thereof, each as in effect as of the date hereof, all of which may change, possibly with retroactive effect. The discussion assumes that shares of our common stock are held as capital assets within the meaning of Section 1221 of the Code (generally, property held for investment).

The following discussion has no binding effect on the IRS or the courts. Liquidating distributions pursuant to the Plan of Dissolution may occur at various times and in more than one tax year. We can give no assurance that the U.S. federal income tax treatment described herein will remain unchanged at the time of our liquidating distributions. No ruling has been requested from the IRS with respect to any tax consequences of the Plan of Dissolution, and we will not seek any such ruling or an opinion of counsel with respect to any such tax consequences.

THE FOLLOWING DISCUSSION DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OF THE POTENTIAL TAX CONSEQUENCES RELATING TO THE PLAN OF DISSOLUTION AND IS NOT TAX ADVICE. SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM IN CONNECTION WITH OUR DISSOLUTION AND LIQUIDATION PURSUANT TO THE PLAN OF DISSOLUTION, INCLUDING TAX RETURN REPORTING REQUIREMENTS AND THE EFFECT OF FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.

Material U.S. Federal Income Tax Consequences to the Company

After the approval of the Plan of Dissolution and until our liquidation is completed, we will continue to be subject to U.S. federal income tax on our taxable income, if any, such as interest income, gain from the sale of any remaining assets or income from operations. Upon the sale of any of our assets in connection with our liquidation, we will recognize gain or loss in an amount equal to the difference between (i) the fair market value of the consideration received for each asset sold and (ii) our adjusted tax basis in the asset sold. We should not recognize any gain or loss upon the distribution of cash to our shareholders in liquidation of their shares of our common stock. We currently do not anticipate making distributions of property other than cash to shareholders in our liquidation. In the event we were to make a liquidating distribution of property other than cash to our shareholders, we may recognize gain upon the distribution of such property as if we sold the distributed property for its fair market value on the date of the distribution. We currently do not anticipate that our dissolution and liquidation pursuant to the Plan of Dissolution will produce a material corporate tax liability for U.S. federal income tax purposes.

Material U.S. Federal Income Tax Consequences to Shareholders

In general, for U.S. federal income tax purposes, we intend that amounts received by our shareholders pursuant to the Plan of Dissolution will be treated as full payment in exchange for their shares of our common stock. As a result of our dissolution and liquidation, shareholders generally will recognize gain or loss equal to the difference between (i) the sum of the amount of cash and the fair market value (at the time of distribution) of property, if any, distributed to them and (ii) their tax basis for their shares of our common stock. In general, a shareholder’s gain or loss will be computed on a “per share” basis. If we make more than one liquidating distribution, which is expected, each liquidating distribution will be allocated proportionately to each share of stock owned by a shareholder, and the value of each liquidating distribution will be applied against and reduce a shareholder’s tax basis in his or her shares of stock. In general, gain will be recognized as a result of a liquidating distribution to the extent that the aggregate value of all liquidating distributions received by a shareholder with respect to a share exceeds his or her tax basis for that share. Any loss generally will be recognized by a shareholder only when the shareholder receives our final liquidating distribution to shareholders, and then only if the aggregate value of all liquidating distributions with respect to a share is less than the shareholder’s tax basis for that share. Gain or loss recognized by a shareholder generally will be capital gain or loss and will be long term capital gain or loss if the stock has been held for more than one year. The deductibility of capital losses is subject to limitations.

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In the unlikely event we make a liquidating distribution of property other than cash to our shareholders, a shareholder’s tax basis in such property immediately after the distribution generally will be the fair market value of the property received by the shareholder at the time of distribution. Gain or loss realized upon the shareholder’s future sale of that property generally would be measured by the difference between the proceeds received by the shareholder in the sale and the tax basis of the property sold.

In the event that our liabilities are not fully covered by the assets in our contingency reserve or otherwise satisfied through insurance or other reasonable means (See “— Contingency Reserve” above), payments made by a shareholder in satisfaction of those liabilities generally would produce a capital loss for such shareholder in the year the liabilities are paid. The deductibility of any such capital loss would generally be subject to certain limitations under the Code.

Reporting of Liquidating Distributions and Back-Up Withholding

After the close of each taxable year, we will provide shareholders and the IRS with a statement of the amount of cash distributed to our shareholders in our liquidation and our best estimate as to the value of any property distributed to them during the relevant taxable year. In the unlikely event we make a liquidating distribution of property other than cash to our shareholders, no assurance can be given that the IRS will not challenge our valuation of the distributed property. Any shareholder owning at least five percent (by vote or value) of our total outstanding stock may be subject to special rules regarding information to be provided with the shareholder’s U.S. federal income tax returns. Shareholders should consult their own tax advisors as to the specific tax consequences to them in connection with our dissolution and liquidation pursuant to the Plan of Dissolution, including tax return reporting requirements. Liquidating distributions made to our shareholders pursuant to the Plan of Dissolution may be subject to back-up withholding (currently at a rate of 28%) requirements. Back-up withholding generally will not apply to payments made to exempt recipients, including corporations or financial institutions, or individuals who furnish their correct taxpayer identification number or a certificate of foreign status and other required information. Back-up withholding is not an additional tax. Rather, amounts withheld generally may be used as a credit against a shareholder’s U.S. federal income tax liability or the shareholder may claim a refund of any excess amounts withheld by timely and duly filing a claim for refund with the IRS.

Accounting Treatment

If our shareholders approve the Plan of Dissolution, we will change our basis of accounting from the going-concern basis, which contemplates realization of assets and satisfaction of liabilities in the normal course of business, to the liquidation basis. Under the liquidation basis of accounting, assets are stated at their estimated net realizable values and liabilities are stated at their estimated settlement amounts. Recorded liabilities will include the estimated expenses associated with carrying out the Plan of Dissolution. For periodic reporting, a statement of net assets in liquidation will summarize the liquidation value per outstanding share of common stock. Valuations presented in the statement will represent management’s estimates, based on present facts and circumstances, of the net realizable values of assets, estimated settlement amounts of liabilities, and expenses associated with carrying out the Plan of Dissolution based upon management assumptions.

The valuation of assets and liabilities will necessarily require many estimates and assumptions, and there will be substantial uncertainties in carrying out the provisions of the Plan of Dissolution. Ultimate values of assets and settlement amounts for liabilities are expected to differ from estimates recorded in interim statements.

Required Vote

All holders of our common stock as of the record date are entitled to vote on Proposal 1. The affirmative vote of at least two-thirds of the outstanding shares of our common stock is required for approval of the proposed Plan of Dissolution. Abstentions from voting and broker non-votes will have the same effect as votes against Proposal 1. It is intended that shares represented by the enclosed form of proxy will be voted in favor of Proposal 1 unless otherwise specified in such proxy.

Members of our board of directors who beneficially owned as of March 23, 2009 an aggregate of approximately 10% of the outstanding shares of our common stock have indicated that they will vote in favor

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of Proposal 1. Affiliates of Stephens beneficially owned approximately 19.8% of the outstanding shares of our common stock as of March 23, 2009. SF Holding Corp. and Stephens — EBC, LLC collectively beneficially own approximately 16.6% of our outstanding common stock, which shares are the subject of a voting trust under which the trustee is required to vote the shares for or against proposals submitted to our shareholders in the same proportion as the votes cast for or against such proposals by all other shareholders, except abstentions. The chief executive officer and president of Stephens is the co-chairman of SF Holding Corp., the sole managing member of Stephens EBC, LLC. The other affiliates of Stephens, who beneficially own approximately 3.2% of our outstanding common stock, have not indicated to us whether they intend to vote their shares in favor of the Plan of Dissolution. Stephens does not have voting or investment power over any of the shares held by its affiliates. See “Proposal 1: Approval of Plan of Dissolution — Background and Reasons for the Proposed Dissolution and Liquidation — Background.”

Recommendation of our Board of Directors

Our board of directors has determined that the voluntary dissolution and liquidation of the Company pursuant to the Plan of Dissolution is advisable and in the best interests of the Company and its shareholders. Our board of directors has approved the Plan of Dissolution and unanimously recommends that shareholders vote “FOR” the Plan of Dissolution.

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SELECTED FINANCIAL DATA

Set forth below is selected financial data for the Company for the periods indicated. The statements of operations data for the years ended December 31, 2008 and 2007 and the balance sheet data as of December 31, 2008 and 2007 have been derived from our audited financial statements included in our annual report on Form 10-K for the year ended December 31, 2008, which is being delivered with and incorporated by reference into this proxy statement. The statements of operations data for the years ended December 31, 2006, 2005 and 2004 and the balance sheet data as of December 31, 2006, 2005 and 2004 has been derived from our audited annual financial statements, which are not being delivered with or incorporated by reference into this proxy statement. When you read this selected financial data, it is important that you also read our historical consolidated financial statements and related notes included in our annual report on Form 10-K for the year ended December 31, 2008, as well as the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in that report. Historical results are not necessarily indicative of future results. Unless otherwise indicated, we have retroactively adjusted all common stock-related amounts in this report to reflect our one-for-three reverse stock splits effective on each of February 22, 2008 and April 18, 2006.

On December 4, 2008, our board of directors voted to adopt the Plan of Dissolution, subject to shareholder approval. If our shareholders approve the Plan of Dissolution, we will change our basis of accounting from a going-concern basis, which contemplates realization of assets and satisfaction of liabilities in the normal course of business, to a liquidation basis. Under a liquidation basis of accounting, assets are stated at their estimated net realizable values and liabilities are stated at their estimated settlement amounts. Recorded liabilities will include the estimated expenses associated with carrying out the Plan of Dissolution. The financial information presented below and delivered with and incorporated by reference into this proxy statement does not include any adjustments necessary to reflect the possible future effects on recoverability of the assets or settlement of liabilities that may result from adoption of the Plan of Dissolution or our potential to complete such a plan in an orderly manner.

On February 28, 2007, we completed the sale of our proprietary harpin protein technology and substantially all of the assets related to our worldwide agricultural and horticultural markets to Plant Health Care pursuant to an asset purchase agreement dated as of December 1, 2006. Under the terms of the sale, Plant Health Care purchased substantially all of our assets and other rights relating to the creation of plant health technology incorporating harpin proteins and the manufacture of biopesticide, plant health and nutrient products utilizing harpin protein technology. We retained our cash, accounts receivable and assets relating to our Home and Garden Business, consisting primarily of our inventory of harpin protein-based products designated for the Home and Garden Market. Accordingly, our results of operations for 2008 and 2007 are not comparable to prior periods.

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				Year Ended December 31,
				2008				2007				2006				2005				2004
				(in thousands, except per share data)
Statements of Operations Data:
Revenues:
Product sales, net of sales allowances				$	172			$	351			$	3,790			$	3,764			$	1,040
Operating expenses:
Cost of goods sold					54				178				2,195				2,480				2,023
Research and development					—				137				1,318				3,221				3,505
Selling, general and administrative					857				1,468				4,763				5,391				4,418
Loss on impairment of equipment and leasehold improvements					—				—				4,902				1,650				—
Loss on write-down of inventory					—				—				452				—				—
Lease termination loss					—				—				—				2,261				—
Gain on sale of property and equipment					—				—				(44	)			(86	)			—
Loss on facility subleases					—				—				—				—				202
Total operating expenses					911				1,783				13,586				14,917				10,148
Loss from operations					(739	)			(1,432	)			(9,796	)			(11,153	)			(9,108	)
Other income (expense):
Gain on sale of investment					—				—				100				—				—
Gain on sale of Harpin Protein Technology					—				114				—				—				—
Interest income					160				317				251				295				224
Interest expense					—				—				—				—				(2	)
Total other income					160				431				351				295				222
Net loss				$	(579	)		$	(1,001	)		$	(9,445	)		$	(10,858	)		$	(8,886	)
Basic and diluted net loss per share				$	(0.21	)		$	(0.37	)		$	(3.48	)		$	(4.01	)		$	(3.28	)
Weighted average shares outstanding used in computation of basic and diluted net loss per share					2,716				2,717				2,715				2,710				2,708

 

				December 31,
				2008				2007				2006				2005				2004
				(in thousands)
Balance Sheet Data:
Cash and cash equivalents				$	5,099			$	5,668			$	4,185			$	6,826			$	11,860
Working capital					4,982				5,516				6,138				7,842				13,970
Total assets					5,256				5,898				7,973				17,497				31,336
Accumulated deficit					(127,833	)			(127,254	)			(126,253	)			(116,808	)			(105,950	)
Total shareholders’ equity					5,063				5,635				6,709				15,757				26,609

 

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PROPOSAL 2: APPROVAL OF ADJOURNMENT OF SPECIAL MEETING TO SOLICIT ADDITIONAL PROXIES

General

We are soliciting proxies to grant authority to the proxy holders to adjourn the special meeting to another date, time or place if necessary in their judgment, for the purpose of soliciting additional proxies to vote in favor of Proposal 1. Any adjournment of the special meeting may be made without notice, other than by the announcement made at the special meeting, if the votes cast in favor of the adjournment proposal by the holders of shares of our common stock entitled to vote on the proposal exceed the votes cast against the proposal at the special meeting. If the meeting is adjourned to another time, date or place, notice is not required to be provided to the shareholders of the adjourned meeting and a new record date is not required if the date, time and place of the new meeting are announced at the meeting at which the adjournment is taken and the adjournment is for no more than 120 days after the date of the original meeting. If we adjourn the special meeting to a later date, we will conduct the same business at the later meeting and, unless the law requires us to set a new record date, only the shareholders who were eligible to vote at the original meeting will be permitted to vote at the adjourned meeting.

Recommendation of our Board of Directors

Our board of directors unanimously recommends that shareholders vote “FOR” approval of Proposal 2.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Except as otherwise noted, the following table sets forth, as of March 23, 2009, certain information with respect to the beneficial ownership of our common stock by (i) each shareholder known by us to be the beneficial owner of more than 5% of our common stock, (ii) each director of the Company, (iii) our current chief executive officer and other executive officers that were included in the summary compensation table found in our annual report on Form 10-K for the year ended December 31, 2008, and (iv) all directors and executive officers of the Company as a group. The following table reflects the one-for-three reverse stock split effective on February 22, 2008.

Beneficial ownership is determined in accordance with SEC rules and includes shares over which the indicated beneficial owner exercises sole or shared voting or investment power. Shares of our common stock subject to options currently exercisable or exercisable within 60 days after March 23, 2009 are deemed outstanding for computing the percentage ownership of the person holding the options, but are not deemed outstanding for computing the percentage ownership of any other person. Except as otherwise indicated, we believe the beneficial owners of our common stock listed below, based on information furnished by them, have sole voting and investment power with respect to the shares listed opposite their names.

Name and Address Of Beneficial Owner (1)				Shares Beneficially Owned				Percent of Class (2)
Directors and Executive Officers:
William T. Weyerhaeuser					143,129	(3)			5.3	%
Nathaniel T. Brown					—				—
Agatha L. Maza					73,050	(4)			2.7	%
Jon E. M. Jacoby					60,042	(5)			2.2	%
Albert A. James					67,965	(6)			2.5	%
Rhett R. Atkins					56,288	(7)			2.0	%
Richard N. Pahre					4,554	(8)			*
Gilberto H. Gonzalez					4,054	(9)			*
Roger Ivesdal					3,333	(10)			*
Bradley S. Powell					22	(11)			*
All directors and executive officers as a group (10 persons)					412,437	(12)			14.7	%
Other 5% Shareholders:
SF Holding Corp. (formerly Stephens Group, Inc.) 111 Center Street — Suite 2500 Little Rock, Arkansas 72201					451,037	(13)			16.6	%
Yorktown Avenue Capital, LLC 415 South Boston, 9th Floor Tulsa, Oklahoma 74103					352,967	(14)			13.0	%

 

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*

Less than one percent.

(1)

The business address of the directors and executive officers is c/o Eden Bioscience Corporation, 14522 NE North Woodinville Way, Suite 202B, Woodinville, WA 98072.

(2)

Based on 2,716,486 shares of common stock outstanding as of March 23, 2009.

(3)

Represents 28,833 shares owned directly by Dr. Weyerhaeuser; 106,519 shares held by the WBW Trust Number One, of which Dr. Weyerhaeuser is trustee; 1,111 shares owned by Dr. Weyerhaeuser’s wife; and 6,666 shares subject to options exercisable within 60 days after March 23, 2009. Dr. Weyerhaeuser disclaims beneficial ownership of shares held by his wife and two sons, except to the extent of his pecuniary interest in such shares.

(4)

Represents 34,466 shares owned directly by Ms. Maza; 16,799 shares held by Prudential Securities as custodian for the Agatha L. Maza IRA; 111 shares owned by Ms. Maza’s spouse; 15,008 shares held by the Maza Family LLC, of which Ms. Maza is a co-manager; and 6,666 shares subject to options that are

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exercisable within 60 days after March 23, 2009. Ms. Maza disclaims beneficial ownership of shares held by the Maza Family LLC, except to the extent of her pecuniary interest in such shares.

(5)

Includes 5,000 shares owned directly by Mr. Jacoby; 23,710 shares owned by Jacoby Enterprises, Inc., of which Mr. Jacoby is president; 20,889 shares held by Stephens — EBC, LLC for the benefit of Jacoby Enterprises, Inc. and that are subject to the voting trust described in footnote 13; 3,333 shares held by Stephens — EBC, LLC for the benefit of J & J Partners, of which Mr. Jacoby is a partner, and that are subject to the voting trust described in footnote 13; and 6,666 shares subject to options that are exercisable within 60 days after March 23, 2009. Also includes the following shares as to which Mr. Jacoby disclaims beneficial ownership: 222 shares owned by Grandchild’s Trust One and 222 shares owned by Grandchild’s Trust Three, as to which Mr. Jacoby, as co-trustee, has shared power of disposition and shared power to vote. Does not include shares beneficially owned by SF Holding Corp. (formerly Stephens Group, Inc.), of which Mr. Jacoby was an executive officer until his retirement on October 1, 2003 and of which he was a director until November 2006.

(6)

Represents 12,839 shares held by the Albert A. James Family Partnership, of which Mr. James is a co-general partner; 48,460 shares held by the Albert A. James Living Trust, of which Mr. James is trustee; and 6,666 shares subject to options that are exercisable within 60 days after March 23, 2009.

(7)

Represents 733 shares owned directly by Dr. Atkins and 55,555 shares subject to options exercisable within 60 days after March 23, 2009.

(8)

Represents 666 shares owned directly by Mr. Pahre and 3,888 shares subject to options exercisable within 60 days after March 23, 2009.

(9)

Represents 166 shares owned directly by Mr. Gonzalez and 3,888 shares subject to options exercisable within 60 days after March 23, 2009.

(10)

Represents 3,333 shares subject to options exercisable within 60 days after March 23, 2009.

(11)

Represents shares held in a trust for the benefit of Mr. Powell’s minor sons, of which Mr. Powell’s father serves as trustee. Mr. Powell disclaims beneficial ownership of all such shares held in trust, except to the extent of his pecuniary interest in such shares. Mr. Powell served as our president, chief financial officer and secretary until his resignation in September 2008.

(12)

Includes 93,328 shares subject to options that are exercisable within 60 days after March 23, 2009.

(13)

Represents 451,037 shares beneficially owned by Stephens — EBC, LLC, of which SF Holding Corp. (formerly Stephens Group, Inc.) is the sole managing member. Stephens Inc. does not have voting or investment power over any of the shares reported in this table. Jon E. M. Jacoby, a director of the Company, was an executive vice president of SF Holding Corp. until October 1, 2003 and a director of SF Holding Corp. until November 2006. Stephens — EBC, LLC has contributed all of its shares to a voting trust pursuant to which the trustee of the trust, Steve Patterson, 349 Colony Drive, Naples, Florida 34108, an individual not affiliated with SF Holding Corp., has sole voting power. The trustee is required to vote such shares “for” or “against” proposals submitted to our shareholders in the same proportion as the votes cast “for” or “against” such proposals by all other shareholders, excluding abstentions. The voting trust agreement also imposes limitations on the sale or other disposition of the shares subject to the voting trust. The voting trust agreement expires in 2010 or earlier upon the occurrence of certain events set forth in the voting trust agreement, including Stephens Inc. ceasing to be a market maker of our common stock.

(14)

Information provided is based solely on a Schedule 13D/A filed on August 14, 2007 (the “Schedule 13D/A”) by Yorktown Avenue Capital, LLC (“Yorktown”), Boston Avenue Capital, LLC (“Boston”), Value Fund Advisors, LLC (“Value Fund”) and Charles M. Gillman (“Gillman”). According to the Schedule 13D/A, (a) the amount shown above includes 262,090 held by Yorktown and 90,877 held by Boston, (b) Boston and Yorktown are Oklahoma limited liability companies whose principal business is business investment, (c) Value Fund is an Oklahoma limited liability company whose principal business is investment management, and (d) Gillman is a U.S. citizen in the business of managing various investment entities. Value Fund, as general manager of Boston and Yorktown, and Gillman, as manager of Value Fund, may also be deemed to beneficially own the 352,967 shares of our common stock held by Boston and Yorktown.

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Market for Common Stock

Our common stock trades on The Nasdaq Capital Market under the symbol “EDEN.” The following table sets forth, for the periods indicated, the high and low sales prices for our common stock as quoted on The Nasdaq Capital Market for each full quarterly period. The sales prices set forth below have been retroactively adjusted to reflect the one-for-three reverse stock split effective on February 22, 2008. The closing sales price of our common stock on The Nasdaq Capital Market was $0.79 on December 4, 2008, the day prior to the announcement that our board approved the Plan of Dissolution. The closing sales price of our common stock on The Nasdaq Capital Market was $1.29 on March 26, 2009.

Fiscal Year Ended December 31,

				2009								2008								2007
				High				Low				High				Low				High				Low
First Quarter (1)				$	1.50			$	1.02			$	2.00			$	0.50			$	3.45			$	1.50
Second Quarter					—				—				2.74				1.13				4.05				2.43
Third Quarter					—				—				2.00				0.60				3.90				2.25
Fourth Quarter (2)					—				—				1.77				0.40				4.35				1.65

 

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(1)

For the first quarter of 2009, reflects high and low sales prices through March 26, 2009.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements, and other information with the SEC. You may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. You may also find the materials we file with the SEC on the “About Us — Investor Information” section of our website at http://www.edenbio.com. Information on our website is not incorporated by reference into, or made a part of, this proxy statement.

HOUSEHOLDING

Beneficial owners, but not record holders, of our common stock who share a single address may receive only one copy of this proxy statement, unless their broker has received contrary instructions from any beneficial owner at that address. This practice, known as “householding,” is designed to reduce printing and mailing expenses. If any beneficial owner at such an address wishes to discontinue householding and receive a separate copy of the proxy statement, they should notify their broker. Beneficial owners sharing an address to which a single copy of the proxy statement was delivered can also request prompt delivery of a separate copy of the proxy statement by contacting us at Eden Bioscience Corporation, Attn: Secretary, 14522 NE North Woodinville Way, Suite 202B, Woodinville, WA 98072, (425) 806-7300.

WHO CAN HELP ANSWER YOUR QUESTIONS

If you have additional questions about the special meeting, you should contact:

BNY Mellon Shareowner Services
480 Washington Boulevard, 27th Floor
Jersey City, NJ 07310
Telephone: (888) 845-4020

or

Nathaniel T. Brown, Secretary
Eden Bioscience Corporation
14522 NE North Woodinville Way, Suite 202B
Woodinville, WA 98072
Telephone: (425) 806-7300

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SHAREHOLDER PROPOSALS FOR 2009 ANNUAL MEETING

Submission of Shareholder Proposals for Inclusion in the Proxy Statement for 2009 Annual Meeting

Under the SEC’s proxy rules, shareholder proposals that meet certain conditions may be included in our proxy statement and form of proxy for a particular annual meeting of shareholders. If we hold an annual meeting in 2009, shareholders that intend to present a proposal at our 2009 annual meeting of shareholders were required to give notice of the proposal to the Company no later than December 23, 2008 to be considered for inclusion in the proxy statement and form of proxy relating to the 2009 annual meeting of shareholders. However, if the date of the 2009 annual meeting is a date that is not within 30 days before or after May 22, 2009, notice by the shareholders of a proposal must be received a reasonable time before we begin to print and send our proxy materials.

Advance Notice Procedures for Director Nominations and Other Business

Shareholders who intend to nominate persons for election to our board of directors or to present a proposal at the 2009 annual meeting of shareholders, if held, without inclusion of the proposal in our proxy materials must provide advance written notice of such nomination or proposal in the manner required by our bylaws. Notice of nominations or other business proposed to be considered by shareholders, complying with Sections 2.6 or 3.3, as applicable, of our bylaws, were required to be delivered to the Corporate Secretary no earlier than February 21, 2009 and no later than March 23, 2009. However, if the date of the 2009 annual meeting is a date that is not within 30 days before or after May 22, 2009, notice by the shareholder must be delivered not later than the close of business on the later of (i) the 90th day prior to the annual meeting or (ii) the tenth day following the day on which the notice of the date of the annual meeting was mailed or such public disclosure was made. Notices should be sent to: Corporate Secretary, Eden Bioscience Corporation, 14522 NE North Woodinville Way, Suite 202B, Woodinville, Washington 98072.

For proposals that are not timely filed, we retain discretion to vote proxies we receive. For such proposals that are timely filed, we retain discretion to vote proxies we receive provided that (i) we include in our proxy statement advice on the nature of the proposal and how we intend to exercise our voting discretion and (ii) the proponent does not issue a proxy statement.

OTHER BUSINESS

We know of no other business to be presented at the special meeting, and no other matters properly may be presented for a vote at the special meeting. If any other business properly were to come before the special meeting, it is intended that the shares represented by proxies would be voted with respect thereto in accordance with the best judgment of the persons named in the accompanying form of proxy.

INCORPORATION BY REFERENCE

The SEC allows us to “incorporate by reference” information into this proxy statement, which means that we can disclose important information to you by referring you to other documents that we have filed separately with the SEC and delivered to you with this proxy statement. This proxy statement incorporates by reference our annual report on Form 10-K for the year ended December 31, 2008 (File No. 001-33510), as filed with the SEC on March 27, 2009.

Our annual report on Form 10-K contains important information about us and our financial condition that is not set forth in this proxy statement. A copy of our annual report on Form 10-K for the year ended December 31, 2008 is being delivered with this proxy statement. In addition, this report has been filed with the SEC and may be accessed from the SEC’s website at http://www.sec.gov.

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Any statement contained in a document incorporated by reference into this proxy statement will be deemed to be modified or superseded for purposes of this proxy statement to the extent that a statement contained in this proxy statement modifies or supersedes the statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this proxy statement.

BY ORDER OF THE BOARD OF DIRECTORS

 

Nathaniel T. Brown
Chief Executive Officer,
Chief Financial Officer and Secretary

March 27, 2009
Woodinville, WA

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Annex A

PLAN OF COMPLETE DISSOLUTION AND LIQUIDATION
OF
EDEN BIOSCIENCE CORPORATION

WHEREAS, the Board of Directors and the shareholders of Eden Bioscience Corporation, a Washington corporation (the “Company”), wish to accomplish the complete dissolution and liquidation of the Company in accordance with Chapter 23B.14 and other applicable provisions of the Washington Business Corporation Act (the “WBCA”) and Sections 331 and 336 of the Internal Revenue Code of 1986, as amended (the “Code”).

1.

Approval and Adoption of the Plan. This Plan of Complete Dissolution and Liquidation (the “Plan”) shall become effective when all of the following steps have been completed:

a)

Resolutions of the Company’s Board of Directors. The Company’s Board of Directors (the “Board”) shall have adopted a resolution or resolutions with respect to the following:

i)

Complete Dissolution and Liquidation. The Board shall determine that it is advisable and in the best interests of the Company and its shareholders for the Company to be dissolved and liquidated completely;

ii)

Adoption of the Plan. The Board shall approve the Plan as the appropriate means for carrying out the complete dissolution and liquidation of the Company;

iii)

Recommend the Plan to Shareholders. The Board shall recommend the Plan for approval by the shareholders of the Company; and

iv)

Disposition of Assets. The Board shall, as part of the Plan, approve the sale, exchange or other disposition of all of the Company’s remaining property and assets, on such terms and conditions and in such manner as it deems necessary, appropriate or advisable in the best interests of the Company and its shareholders in order to facilitate liquidation and distributions to the Company’s creditors and shareholders, as appropriate.

b)

Approval of the Plan by the Company’s Shareholders. The holders of at least two-thirds of the outstanding shares of the Company’s common stock, par value $0.0025 per share (the “Common Stock”), entitled to vote thereon shall have approved the Plan at a special meeting of the shareholders of the Company called for such purpose by the Board. The approval of the Plan by the requisite vote of the holders of the Common Stock shall constitute full and complete authority for the Board and the officers of the Company, without further shareholder action, to proceed with the dissolution and liquidation of the Company in accordance with any applicable provision of the WBCA, including without limitation, the authority to sell, exchange or otherwise dispose of in liquidation all of the property and assets of the Company following the Effective Date (as defined in Section 2(a) below), whether such sale, exchange or other disposition occurs in one transaction or a series of transactions.

2.

Dissolution and Liquidation Period. After approval and adoption of the Plan in accordance with Section 1, the steps set forth below shall be completed at such times as the Board, in its discretion, deems necessary, appropriate or advisable in the best interests of the Company and its shareholders. Without limiting the generality of the foregoing, the Board may instruct the officers of the Company to delay the taking of any of the following steps until the Company has performed such actions as the Board or such officers determine to be necessary, appropriate or advisable in the best interests of the Company and its shareholders to maximize the value of the Company’s assets upon liquidation; provided that such steps may not be delayed longer than is permitted by applicable law.

A-1

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a)

The filing of Articles of Dissolution of the Company (the “Articles of Dissolution”) pursuant to RCW 23B.14.030 (the date on which the Articles of Dissolution are filed are referred to herein as the “Effective Date”), and the completion of all actions that may be necessary, appropriate or advisable in the best interests of the Company and its shareholders to wind up and liquidate its business and affairs;

b)

The publication of notice, in accordance with the terms of RCW 23B.14.030, of the Company’s dissolution in a newspaper of general circulation in King County, Washington, within 30 days after the Effective Date, which notice must be published once a week for three consecutive weeks;

c)

The mailing of written notice, in accordance with the terms of RCW 23B.14.060, of the Company’s dissolution to the holders of known claims (as defined in RCW 23B.14.060(3)) at any time after the publication of notice as set forth in subparagraph (b) above;

d)

The cessation of all of the Company’s business activities and the withdrawal of the Company from any jurisdiction in which it is qualified to do business, except and insofar as appropriate for the sale or other disposition of its property and assets and for the proper winding up and liquidation of the Company in accordance with the Plan and pursuant to the WBCA;

e)

The collection and disposal of the Company’s properties and assets that will be applied toward satisfaction or making reasonable provision for satisfaction of the Company’s liabilities or will otherwise not be distributed in kind to its shareholders, in all cases subject to applicable liens and security interests and applicable contractual restrictions on dispositions, pursuant to RCW 23B.14.050;

f)

The negotiation and consummation of sales or other dispositions of all of the assets and properties of the Company, including the assumption by the purchaser or purchasers of any or all liabilities of the Company, insofar as the Board deems such sales or dispositions to be necessary, appropriate or advisable in the best interests of the Company and its shareholders;

g)

As determined by the Board, the prosecution, defense, settlement or other resolution of any and all claims or suits, whether civil, criminal or administrative, by or against the Company and the satisfaction of or the making of reasonable provision for the satisfaction of any and all liabilities of the Company, whether arising in tort or by contract, statute, or otherwise, and whether matured or unmatured, contingent, or conditional, by means of insurance coverage, provision of security therefor, contractual assumptions thereof by a solvent person or any other means that the Board determines is reasonably calculated to provide for satisfaction of the reasonably estimated amount of such liabilities. Upon making such determination, the Board shall, for purposes of determining whether a subsequent distribution to shareholders is prohibited under RCW 23B.06.400(2), be entitled to treat such liabilities as fully satisfied by the assets used or committed in order to make such provision. For purposes of determining whether a distribution to shareholders is prohibited, the Board also shall be entitled to disregard, and make no provision for the satisfaction of, any liabilities that are barred in accordance with RCW 23B.14.060(2), or that may exceed any provision for their satisfaction ordered by a court pursuant to RCW 23B.14.065, or that the Board does not consider, based on the facts known to it, reasonably likely to arise prior to expiration of the survival period specified in RCW 23B.14.340. Such liabilities shall be satisfied, or the Board shall make reasonable provision for satisfying such liabilities, in accordance with their priorities as established by law, and on a pro rata basis within each class of liabilities. Notwithstanding any provision in the Plan to the contrary, if the Board deems it necessary, appropriate or advisable in the best interests of the Company and its shareholders, the Board may (i) petition to have the dissolution continued under court supervision in accordance with RCW 23B.14.300 or, to the extent the conditions of RCW 23B.14.050(4) may be applicable, dedicate the Company’s property and assets to the repayment of its creditors by making an assignment for the benefit of creditors or obtain the appointment of a general receiver or (ii) file an application pursuant to RCW 23B.14.065 for a court determination of (a) the amount and form of reasonable provision to be made for satisfaction of any one or more claims or liabilities that have arisen or that are reasonably likely to arise within the survival period specified in RCW 23B.14.340 or (b) whether the provision made or proposed to be made by the Board for the satisfaction of any one or more claims or liabilities is reasonable;

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h)

Subject to the limitations of RCW 23B.06.400, the distribution of the remaining funds of the Company and the distribution of the remaining unsold assets of the Company, if any, to its shareholders pursuant to Sections 4 and 7 below; and

i)

The taking of any and all other actions permitted or required by the WBCA and any other applicable laws and regulations, including but not limited to, federal tax and securities laws and regulations and the NASDAQ Marketplace Rules and regulations, in connection with the winding up and liquidation of the Company.

3.

Authority of Officers and Directors. Prior to and after the Effective Date, the Board and the officers of the Company shall continue in their positions for the purpose of winding up the affairs of the Company as contemplated by the WBCA. The Board may appoint officers, hire employees and retain independent contractors in connection with the winding up process, and is authorized to pay to the Company’s officers, directors, employees and independent contractors, or any of them, compensation or additional compensation above their regular compensation, in money or other property, in recognition of the extraordinary efforts they, or any of them, will be required to undertake, or actually undertake, in connection with the successful implementation of the Plan, provided that any such compensation shall be fair and reasonable with respect to the efforts expended by any recipient of such compensation. Approval of the Plan by holders of at least two-thirds of the outstanding shares of Common Stock entitled to vote shall constitute the approval of the Company’s shareholders of the Board’s authorization of the payment of any such compensation.

The approval of the Plan by the holders of at least two-thirds of the outstanding shares of Common Stock entitled to vote shall constitute full and complete authority for the Board and the officers of the Company, without further shareholder action, to do and perform any and all acts and to make, execute and deliver any and all agreements, conveyances, assignments, transfers, certificates and other documents of any kind and character that the Board or such officers deem necessary, appropriate or advisable in the best interests of the Company and its shareholders: (i) to dissolve the Company in accordance with the WBCA and cause its withdrawal from all jurisdictions in which it and its subsidiaries are authorized to do business; (ii) to sell, dispose, convey, transfer and deliver the property and assets of the Company; (iii) to prosecute, defend, settle or otherwise resolve any claims or suits by or against the Company; (iv) to satisfy or make reasonable provision for the satisfaction of the Company’s obligations and liabilities in accordance with any applicable provision of the WBCA; (v) to distribute all of the remaining funds of the Company and any unsold assets of the Company pari passu to the holders of the Common Stock; and (vi) to otherwise take any and all actions permitted or required by the WBCA and other applicable laws and regulations to wind up and liquidate the Company.

4.

Conversion of Assets Into Cash or Other Distributable Form. Subject to approval by the Board, the officers, employees and agents of the Company shall, as promptly as feasible, proceed to collect all sums due or owing to the Company, to sell and convert into cash or other distributable form any and all property and assets of the Company and to (a) pay, satisfy and discharge, or make reasonable provision for the payment, satisfaction and discharge of, any and all liabilities of the Company pursuant to Section 2 above, including all expenses associated with the defense, prosecution, settlement or other resolution of any claims or suits by or against the Company, the sale or other disposition of the Company’s property and assets, and the dissolution and liquidation provided for by the Plan, and (b) make distributions to shareholders pursuant to Section 7 below.

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5.

Professional Fees and Expenses. It is specifically contemplated that the Company will retain a law firm or law firms selected by the Board to provide legal advice and guidance in implementing the Plan, and the Company shall pay all legal fees and expenses reasonably incurred by the Company in connection with or arising out of the implementation of the Plan, including, among other things, the prosecution, defense, settlement or other resolutions of any claims or suits by or against the Company, the discharge of obligations and liabilities of the Company, and the advancement and reimbursement of any legal fees and expenses payable by the Company pursuant to the indemnification provided by the Company in its Restated Articles of Incorporation, as amended, and Third Amended and Restated Bylaws, the WBCA, or otherwise.

In addition, in connection with and for the purpose of implementing and assuring completion of the Plan, the Company may, as the Board determine necessary, appropriate or advisable in the best interests of the Company and its shareholders, engage and pay any brokerage, agency, professional and other reasonable fees and expenses of persons rendering services to the Company in connection with the collection, sale, exchange or other disposition of the Company’s property and assets, the implementation of the Plan and the winding up and liquidation of the Company.

6.

Indemnification. The Company shall continue to indemnify its officers, directors, employees and agents in accordance with its Restated Articles of Incorporation, as amended, and Third Amended and Restated Bylaws, the WBCA, or otherwise, for actions taken in connection with the Plan and the winding up of the affairs of the Company. The Board is authorized to obtain and maintain insurance as it may be necessary, appropriate or advisable in the best interests of the Company and its shareholders to cover any of the Company’s obligations under the Plan, including without limitation, directors’ and officers’ liability coverage and insurance coverage reasonably calculated to provide for satisfaction of reasonably estimated liability claims under RCW 23B.14.050(3).

7.

Liquidating Distributions. Liquidating distributions, in cash or in kind, shall be made from time to time after the Effective Date to the holders of record of the shares of Common Stock of the Company outstanding at the close of business on the Effective Date, pro rata in accordance with the respective number of shares then held of record; provided that, prior to any such distribution, the Board has made a determination that reasonable provision has been made for the payment, satisfaction and discharge of all known, conditional, unmatured or contingent debts, obligations and liabilities of the Company (including costs and expenses incurred and anticipated to be incurred in connection with the prosecution, defense, settlement or other resolution of any claims or suits by or against the Company, the sale of property and assets, and the complete liquidation of the Company) by means reasonably calculated to provide for satisfaction of the reasonably estimated amount of such liabilities. All determinations as to the time for and the amount and kind of liquidating distributions shall be made in the exercise of the absolute discretion of the Board and in accordance with any applicable provision of the WBCA. As provided in Section 10 below, distributions made pursuant to the Plan are intended to be treated as distributions made in complete liquidation of the Company within the meaning of Sections 331 and 336 of the Code and the Treasury regulations promulgated thereunder.

If any liquidating distribution to shareholders of the Company cannot be made pursuant to the Plan, whether because the shareholder cannot be located, has not surrendered its certificates evidencing the Common Stock as may be required pursuant to Section 9 below, is not competent to receive the distribution, or for any other reason, then the distribution to which such shareholder is entitled shall be transferred, at such time as the final liquidating distribution is made by the Company, to the Washington State Treasurer or the official of such state or other jurisdiction authorized or permitted by applicable law to receive the proceeds of such distribution. The proceeds of such distribution shall thereafter be held solely for the benefit of and for ultimate distribution to such shareholder as the sole equitable owner thereof and shall be treated as abandoned property and escheat to the applicable state or other jurisdiction in accordance with applicable law. In no event shall the proceeds of any such distribution revert to or become the property of the Company.

8.

Amendment, Modification or Abandonment of the Plan. If for any reason the Board determines that such action would be in the best interests of the Company and its shareholders, the Board may, in its sole discretion and without further shareholder approval, revoke the Plan and all actions contemplated

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hereunder, to the extent and in the manner permitted by the WBCA, (i) at any time prior to the Effective Date, or (ii) at any time within 120 days after the Effective Date. The Board may not amend or modify the Plan under circumstances that would require additional shareholder approval under the WBCA and/or the federal securities laws or NASDAQ requirements without complying with the WBCA and/or the federal securities laws or NASDAQ requirements. Upon the effective date of revocation of dissolution, the Plan shall be void.

9.

Cancellation of Stock and Stock Certificates. The distributions to the Company’s shareholders pursuant to Section 7 hereof shall be in complete cancellation of all of the outstanding shares of the Common Stock. From and after the Effective Date, and subject to applicable law, the Common Stock will be treated as no longer being outstanding and each holder of Common Stock shall cease to have any rights in respect thereof, except the right to receive distributions pursuant to and in accordance with Section 7 hereof. As a condition to delivery of any distribution to the Company’s shareholders, the Board, in its absolute discretion, may require the Company’s shareholders to (i) surrender their certificates evidencing their shares of Common Stock to the Company, or (ii) furnish the Company with evidence satisfactory to the Board of the loss, theft or destruction of such certificates, together with such surety bond or other security or indemnity as may be required by and satisfactory to the Board. The Company will close its stock transfer books and discontinue recording transfers of shares of stock of the Company at the Effective Date, and thereafter certificates representing shares of Common Stock will not be assignable or transferable on the books of the Company except by will, intestate succession, or operation of law.

10.

Liquidation Under Code Sections 331 and 336. It is intended that the Plan constitutes a plan of complete liquidation of the Company within the meaning of Sections 331 and 336 of the Code. The Plan shall be deemed to authorize the taking of such action as, in the opinion of counsel for the Company, may be necessary to conform with the provisions of Code Sections 331 and 336 and the Treasury regulations promulgated thereunder, including, without limitation, the making of an election under Section 336(e) of the Code, if applicable.

11.

Filing of Tax Returns, Forms and Other Reports and Statements. The appropriate officers of the Company are authorized and directed to prepare (or cause to be prepared), execute and file (or cause to be filed) in accordance with all applicable laws such returns, forms, reports and information statements, and any schedules or attachments to any of the foregoing, as may be necessary or appropriate or required under applicable law in connection with the Plan and the carrying out thereof, including, without limitation, Internal Revenue Service Form 966 as provided under Section 6043 of the Code and the Treasury regulations promulgated thereunder.

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This proxy, when properly executed, will be voted in the manner directed herein by the undersigned shareholder(s). PROXY CARDS PROPERLY EXECUTED AND RETURNED WITHOUT DIRECTION WILL BE VOTED FOR PROPOSALS 1 AND 2.		Please mark your votes as indicated in this example	x

																FOR	AGAINST			ABSTAIN
1.	PROPOSAL TO APPROVE THE VOLUNTARY DISSOLUTION AND LIQUIDATION OF THE COMPANY PURSUANT TO THE PLAN OF COMPLETE DISSOLUTION AND LIQUIDATION.															0	0			0				Your vote is important. Prompt return of this proxy card will help save the expense of additional solicitation efforts.
																FOR	AGAINST			ABSTAIN
2.	PROPOSAL TO ADJOURN THE SPECIAL MEETING TO ANOTHER DATE, TIME OR PLACE, IF NECESSARY IN THE JUDGEMENT OF THE PROXY HOLDERS, FOR THE PURPOSE OF SOLICITING ADDITIONAL PROXIES TO VOTE IN FAVOR OF PROPOSAL 1.															0	0			0				In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the special meeting and any adjournments or postponements thereof. The undersigned acknowledges receipt of the Notice of Special Meeting of Shareholders and the Proxy Statement relating thereto.

 
 

Mark Here for Address   0 Change or Comments SEE REVERSE

 

Signature		Signature		Date
NOTE: Please sign above exactly as your name or names appear on your stock certificate. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership please sign in partnership name by an authorized person.
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WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING,
BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.

Internet and telephone voting is available through 11:59 PM Eastern Time
the day prior to the special meeting date.

 

EDEN BIOSCIENCE CORPORATION Proxies granted pursuant to Internet or telephone voting are valid under Washington law.

INTERNET http://www.proxyvoting.com/eden Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site. OR TELEPHONE 1-866-540-5760 Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call. If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card.   To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.   Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card.

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Eden Bioscience Corporation
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 2009
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

        The undersigned hereby appoints Nathaniel T. Brown and William T. Weyerhaeuser (collectively, the “Proxies”), and each of them, with full power of substitution, as proxies to represent and to vote, as designated on the reverse side, all the voting shares of Eden Bioscience Corporation common stock held of record by the undersigned on March 23, 2009, at the Special Meeting of Shareholders of Eden Bioscience Corporation to be held at the Country Inn & Suites By Carlson, 19333 North Creek Parkway, Bothell, WA 98011 on May 20, 2009 at 9 a.m. (Pacific Time), or any adjournments or postponements thereof. Such shares shall be voted as indicated with respect to the proposals listed on the reverse side hereof, or if no indication is made, shall be voted in favor of the proposals, and in the Proxies’ discretion on such other business as may properly come before the special meeting and any adjournments or postponements thereof.

BNY MELLON SHAREOWNER SERVICES P.O. BOX 3550 SOUTH HACKENSACK, NJ 07606-9250

Address Change/Comments (Mark the corresponding box on the reverse side)
	(Continued and to be marked, dated and signed, on the reverse side)

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