<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
(Amendment No. 1)
-----------------------
`MYCOGEN CORPORATION
(Name of Subject Company)
THE DOW CHEMICAL COMPANY
ROFAN SERVICES INC.
CENTEN AG INC.
DOW AGROSCIENCES LLC
and
AGROSCIENCES ACQUISITION INC.
(Bidder)
COMMON STOCK
PAR VALUE $0.001 PER SHARE
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
(Title of Class of Securities)
628452 10 4
(CUSIP Number of Class of Securities)
John Scriven Jane M. Gootee Brian G. Taylorson
Vice President, General Vice President President
Counsel and Secretary Rofan Services Inc. Centen Ag Inc.
The Dow Chemical Company 2030 Dow Center 2030 Dow Center
2030 Dow Center Midland, Michigan 48674 Midland, Michigan 48674
Midland, Michigan 48674 (517) 636-1000 (517) 636-1000
(517) 636-1000
Louis W. Pribila Brian G. Taylorson
Vice President, Secretary President
and General Counsel AgroSciences Acquisition Inc.
Dow AgroSciences LLC 2030 Dow Center
9330 Zionsville Road Midland, Michigan 48674
Indianapolis, Indiana 46268 (517) 636-1000
(317) 337-3000
with a copy to:
Scott J. Davis
James T. Lidbury
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
(312) 782-0600
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)
<TABLE>
<CAPTION>
CALCULATION OF FILING FEE
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Transaction Valuation* Amount of Filing Fee
<S> <C>
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$374,232,918 $74,847
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</TABLE>
* For purposes of calculating the filing fee only. This amount assumes the
purchase of 11,532,381 shares of common stock (the "Shares") of the subject
company at $28.00 in cash per Share as well as the purchase of 3,568,635
Shares subject to outstanding options at $28.00 per Share less the average
exercise price per Share subject to such options of $13.6174.
/X/ Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: $74,847
Form or Registration Number: Schedule 14D-1
Filing Party: The Dow Chemical Company, Rofan Services Inc.,
Centen Ag Inc., Dow AgroSciences LLC and
AgroSciences Acquisition Inc.
Date Filed: September 4, 1998
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Page 1 of 8 Pages
Exhibit Index is located on Page 8
<PAGE>
CUSIP No.: 628452 10 4 14D-1
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1. Name of Reporting Person: The Dow Chemical Company
S.S. or I.R.S. Identification Nos. of Above Person: 38-1285128
Name of Reporting Person: Rofan Services Inc.
S.S. or I.R.S. Identification Nos. of Above Person: 38-2853855
Name of Reporting Person: Centen Ag Inc.
S.S. or I.R.S. Identification Nos. of Above Person: 38-3355904
Name of Reporting Person: Dow AgroSciences LLC
S.S. or I.R.S. Identification Nos. of Above Person: 35-1781118
Name of Reporting Person: AgroSciences Acquisition Inc.
S.S. or I.R.S. Identification Nos. of Above Person: 38-3409607
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2. Check the Appropriate Box if a Member of a Group: (a) / /
(b) / /
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3. SEC Use Only:
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4. Sources of Funds: WC
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5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e)
or 2(f): / /
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6. Citizenship or Place of Organization: Delaware (The Dow Chemical Company)
Delaware (Rofan Services Inc.)
Delaware (Centen Ag Inc.)
Delaware (Dow AgroSciences LLC)
Delaware (AgroSciences Acquisition
Inc.)
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7. Aggregate Amount Beneficially Owned by Each Reporting Person: 24,766,157
Shares (except Centen Ag Inc. and AgroSciences Acquisition
Inc., which beneficially own no shares)
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8. Check if the Aggregate in Row (7) Excludes Certain Shares: / /
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9. Percent of Class Represented by Amount in Row (7): 68.3%
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10. Type of Reporting Person: CO (The Dow Chemical Company)
CO (Rofan Services Inc.)
CO (Centen Ag Inc.)
OO (Dow AgroSciences LLC)
CO (AgroSciences Acquisition Inc.)
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Page 2 of 8
<PAGE>
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
The sixth full paragraph on page 19 of the Offer to Purchase is hereby
amended by adding the following to the end thereof:
This report (the "Management Report") supported the projections included in
the Wasserstein Perella materials, which were more favorable to the Company
than the estimates presented to the Board in December 1997. In this
regard, the Management Report stated that the Company's North American seed
business is poised to significantly expand distribution channels and
increase market share reach. The Management Report also stated that the
Company believes that its internal breeding programs are proving to be
competitive. The Management Report noted the Company's recent successes in
accessing South American markets (primarily Brazil) and in attracting
interest from potential partners in Europe and South Africa. It was also
noted that the Company was exploring possible alliances covering alfalfa,
turf and vegetables. The Management Report further noted the Company's
validation of plant disease resistance technology which has been
in-licensed by the Company. The Company's recent successes in developing
and acquiring access to potentially valuable new technologies were briefly
summarized as were the Company's recent patent litigation successes. The
Management Report also indicated that substantial additional investment was
necessary in research and development to develop the Company's technology
platforms. In light of these developments, the Management Report concluded
that the Company's management supported more favorable projected results
over a ten-year time frame for the business than those reflected in the
projections which had been presented to the Board in December 1997.
Paragraph (ix) on page 22 of the Offer to Purchase is hereby amended and
restated as follows:
(ix) the written opinion of Wasserstein Perella delivered to the
Special Committee on August 31, 1998 (the "Wasserstein Perella Opinion") to
the effect that, subject to the various assumptions and limitations set
forth in the Wasserstein Perella Opinion, the $28.00 cash price to be
received by the holders of shares of Common Stock (other than TDCC or its
affiliates) pursuant to the Merger Agreement is fair to such holders from a
financial point of view, and the report and analysis presented by
Wasserstein Perella. In considering the Wasserstein Perella Opinion, the
Special Committee noted that the $28.00 cash price was below the range of
valuations derived by Wasserstein Perella for comparable transactions. In
this regard, the Special Committee noted Wasserstein Perella's explanation
that there were only four comparable transactions and that the
comparability of those transactions was limited because all of the other
parties whose securities were acquired were significantly larger companies
in terms of sales, had greater market shares with respect to their
principal products and were profitable companies. Wasserstein Perella
advised the Special Committee that comparable transactions were only one of
the means of determining value and in this case not a
Page 3 of 8
<PAGE>
particularly useful means to do so in light of the foregoing factors.
The full text of the Wasserstein Perella Opinion, which sets forth among
other things, assumptions made, matters considered and limitations on
the review undertaken, is attached hereto as Annex A and is incorporated
herein by reference. The Wasserstein Perella Opinion is directed to the
Special Committee, addresses only the fairness of the consideration to
be received by the Minority Stockholders from a financial point of view
and does not constitute a recommendation to any such stockholder as to
whether such stockholder should accept the Offer and tender its Shares.
STOCKHOLDERS ARE URGED TO CAREFULLY READ THE WASSERSTEIN PERELLA OPINION
AND THE "OPINION OF WASSERSTEIN PERELLA" SECTION SET FORTH BELOW IN
THEIR ENTIRETY;
The final paragraph on page 29 and extending to the top of page 30 of the
Offer to Purchase is hereby amended and restated as follows:
THE FULL TEXT OF THE WRITTEN OPINION OF WASSERSTEIN PERELLA, DATED
AUGUST 31, 1998, WHICH SETS FORTH AMONG OTHER THINGS THE OPINIONS
EXPRESSED, THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED
AND LIMITATIONS OF THE REVIEW UNDERTAKEN IN CONNECTION WITH THE OPINION, IS
ATTACHED AS SCHEDULE III AND HOLDERS OF THE SHARES ARE URGED TO READ IT IN
ITS ENTIRETY. WASSERSTEIN PERELLA'S OPINION DOES NOT CONSTITUTE A
RECOMMENDATION TO ANY HOLDER OF SHARES AS TO WHETHER OR NOT SUCH HOLDER
SHOULD TENDER SHARES PURSUANT TO THE OFFER OR HOW SUCH HOLDER SHOULD VOTE
OR OTHERWISE ACT IN RESPECT OF THE OFFER, THE MERGER AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED THEREBY AND SHOULD NOT BE RELIED UPON BY ANY
HOLDER AS SUCH A RECOMMENDATION. THE SUMMARY OF THE OPINION OF
WASSERSTEIN PERELLA SET FORTH HEREIN IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE FULL TEXT OF THE OPINION ATTACHED AS SCHEDULE III.
The following paragraphs are hereby added immediately before the first full
paragraph on page 30 of the Offer to Purchase.
Preliminary drafts dated June 25, 1998, July 20, 1998, July 27,
1998 and August 3, 1998 of the final valuation report dated August 31,
1998 were presented to and discussed with the Special Committee on or
about such dates. See "Background of the Offer" above. Between June
25, 1998 and August 31, 1998, Wasserstein Perella conducted due
diligence with respect to the Company to refine its valuation analysis.
Based upon its ongoing due diligence, Wasserstein Perella refined the
discount rate, perpetuity growth rate and EBIT exit multiple assumptions
used in the discounted cash flow analyses for the Company's various
business segments, which had the effect of reducing the per share value
of the Company in some instances and had the effect of increasing the
per share value of the Company in other instances. The discounted cash
flow analyses in the preliminary presentations did not include certain
cost savings, synergies, research and development costs, litigation
expenses and other miscellaneous items that were taken into account in
the August 31, 1998 report, which had the effect of reducing the per
share value of the Company in some instances and had the effect of
increasing the per share value of the Company in other instances. The
draft reports dated June 25, 1998, July 20, 1998 and July 27, 1998 were
preliminary in nature and subject to revision and completion and, as a
result, were not material to the Special Committee's negotiations of the
terms of the contemplated transactions or its determination that the
Merger Agreement, the Offer, the Merger and the other transactions
contemplated by the Merger Agreement are advisable and fair to, and in
the best interests of, the Company and the Minority Stockholders.
On the other hand, the Special Committee did consider the August 3,
1998 preliminary report to be material to its negotiations of the
contemplated transactions and its determination that the Merger
Agreement, the Offer, the Merger and the other transactions contemplated
by the Merger Agreement are advisable and fair to, and in the best
interests of, the Company and the Minority Stockholders. However, the
August 3, 1998 preliminary report did not include the impact of the
recent erosion of the Company's market share which was reflected in
Wasserstein Perella's final valuation report. As stated in Wasserstein
Perella's August 31, 1998 report, compilation of the Company's fiscal
year 1998 financial results revealed that North American and Argentine
seed sales and market share would be significantly below projected
levels. The discounted cash flow analysis in Wasserstein Perella's
August 31, 1998 report took this new information into account and
reduced the projected market share growth assumptions, which had the
effect of reducing the per share value of the Company derived from the
discounted cash flow analysis by approximately $1.00 per Share.
Page 4 of 8
<PAGE>
The following paragraph is hereby added immediately following the first
full paragraph on page 34 of the Offer to Purchase:
Wasserstein Perella advised the Special Committee that the
comparability of these transactions to the Offer and the Merger was limited
by the fact that each of the four companies whose securities were acquired
was substantially larger than the Company in terms of sales, had a greater
market share than the Company with respect to its principal products and
was profitable.
The paragraph appearing under the heading "Composite Range" on page 35 of
the Offer to Purchase is hereby amended and restated as follows:
Composite Range. At the August 31, 1998 meeting of the Special
Committee, Wasserstein Perella provided the Special Committee with a
composite range of per share values of $25.00 to $35.00. In deriving this
composite range, Wasserstein Perella applied its professional judgment to
the foregoing analyses taking into account, among other things, that (i)
the Company historically has failed to achieve its operating projections
and the projections provided to Wasserstein Perella by management of the
Company were significantly higher than those included in the Company's 1997
business plan, (ii) the Company is projecting net operating losses for the
next several years, (iii) due to the fact that the Company is projecting
net losses for the next several years, the inherent uncertainty associated
with the success and timing of scientific research activities and the
historical uncertainty associated with the Company's cash flows, selection
of appropriate discount rates for purposes of the DCF analyses set forth
above involved a greater than usual degree of subjective judgment, and (iv)
the Company's competitors generally are significantly larger, better
established companies with much greater resources, larger market
capitalization, greater market share and a history of profits.
Page 5 of 8
<PAGE>
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a) and (c) A list of exhibits filed with this Schedule 14D-1 is set forth
on the Exhibit Index immediately following the signature page of
this Schedule 14D-1 and is incorporated herein by reference.
(b) and (d) None.
(e)-(f) Not Applicable.
Page 6 of 8
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated: September 25, 1998. THE DOW CHEMICAL COMPANY
By: /s/ G. MICHAEL LYNCH
--------------------------------------
Name: G. Michael Lynch
Title: Vice President and Controller
ROFAN SERVICES INC.
By: /s/ J. PEDRO REINHARD
--------------------------------------
Name: J. Pedro Reinhard
Title: President
CENTEN AG INC.
By: /s/ BRIAN G. TAYLORSON
--------------------------------------
Name: Brian G. Taylorson
Title: President
DOW AGROSCIENCES LLC
By: /s/ LOUIS W. PRIBILA
--------------------------------------
Name: Louis W. Pribila
Title: Vice President, Secretary and General
Counsel
AGROSCIENCES ACQUISITION INC.
By: /s/ BRIAN G. TAYLORSON
--------------------------------------
Name: Brian G. Taylorson
Title: President
Page 7 of 8
<PAGE>
EXHIBIT INDEX
Sequentially Numbered
<TABLE>
<CAPTION>
Exhibit Description Page
- ------- ----------- ----
<S> <C> <C>
99(a)(1) Offer to Purchase dated September 4, 1998*. . . . . . . . . . . . . . . .
99(a)(2) Form of Letter of Transmittal*. . . . . . . . . . . . . . . . . . . . . .
99(a)(3) Form of Notice of Guaranteed Delivery*. . . . . . . . . . . . . . . . . .
99(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees, dated September 4, 1998*. . . . . . . . .
99(a)(5) Form of Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and other Nominees* . . . . . . . . .
99(a)(6) Form of Option Election*. . . . . . . . . . . . . . . . . . . . . . . . .
99(a)(7) Form of Stock Purchase Election*. . . . . . . . . . . . . . . . . . . . .
99(a)(8) Form of Restricted Stock Election*. . . . . . . . . . . . . . . . . . . .
99(a)(9) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9*. . . . . . . . . . . . . . . . . . . . . . . . . .
99(a)(10) Form of Summary Advertisement*. . . . . . . . . . . . . . . . . . . . . .
99(c)(1) Agreement and Plan of Merger among Mycogen Corporation,
Dow AgroSciences LLC and AgroSciences Acquisition Inc. dated as of
August 31, 1998. (Incorporated herein by reference from Exhibit 99.1
to Amendment No. 15 to Schedule 13D filed September 1, 1998)* . . . . .
99(c)(2) Confidentiality Agreement among Mycogen Corporation,
The Dow Chemical Company and Dow AgroSciences LLC
dated July 16, 1998*. . . . . . . . . . . . . . . . . . . . . . . . . .
99(c)(3) Exchange and Purchase Agreement among Mycogen Corporation,
Agrigenetics, Inc., DowElanco and United AgriSeeds, Inc. dated as of
January 15, 1996 (Incorporated herein by reference from Exhibit
99(a)(1) to Schedule 13D filed January 25, 1996)* . . . . . . . . . . .
99(c)(4) Amendment to Exchange and Purchase Agreement between Mycogen
Corporation and Dow AgroSciences LLC dated as of July 2, 1998.
(Incorporated herein by reference from Exhibit 99(1) to Amendment
No. 14 to Schedule 13D filed July 23, 1998)*. . . . . . . . . . . . . .
99(c)(5) Technology Agreement among Mycogen Corporation, Agrigenetics, Inc.
and DowElanco dated as of February 19, 1996 (Incorporated herein by
reference from Exhibit B to Exhibit 99(a)(1) to Schedule 13D filed
January 25, 1996)*. . . . . . . . . . . . . . . . . . . . . . . . . . .
99(c)(6) Brassica License and Research Agreement between DowElanco Canada
and Mycogen Corporation dated October 30, 1997*.. . . . . . . . . . . .
99(c)(7) Restated Loan Agreement between Dow AgroSciences, LLC and
Mycoyen S.A. dated May 15, 1998*. . . . . . . . . . . . . . . . . . . .
99(c)(8) Loan Agreement between DowElanco and Mycogen Corporation dated as
of April 1, 1997 (the "Dow Loan Agreement")*. . . . . . . . . . . . . .
99(c)(9) Amendment No. 1 to Dow Loan Agreement dated as of September 29,
1997*.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
99(c)(10) Amendment No. 2 to Dow Loan Agreement dated as of November 14, 1997*. . .
99(c)(11) Amendment No. 3 to Dow Loan Agreement dated as of November 18, 1997*. . .
99(c)(12) Amendment No. 4 to Dow Loan Agreement dated as of April 6, 1998*. . . . .
99(c)(13) Amendment No. 5 to Dow Loan Agreement dated as of October 1, 1997*. . . .
99(c)(14) Loan Agreement between Mycogen Corporation and DowElanco dated as
of April 1, 1997 (the "Mycogen Loan Agreement)*.. . . . . . . . . . . .
99(c)(15) Amendment No. 1 to Mycogen Loan Agreement dated as of April 6, 1998*. . .
99(c)(16) Amendment No. 2 to Mycogen Loan Agreement dated as of October 1, 1998*. .
99(c)(17) Memorandum of Understanding dated September 3, 1998** . . . . . . . . . .
* Previously filed with the original Schedule 14D-1 on September 4, 1998.
** Filed herewith.
</TABLE>
Page 8 of 8
<PAGE>
MEMORANDUM OF UNDERSTANDING
WHEREAS, there are now pending several consolidated putative class
action lawsuits in the Superior Court for the State of California, for the
County of San Diego (the "Court"), consolidated under the lead case of LESLIE
SUSSER V. MYCOGEN CORPORATION, ET AL., Case No. 720255 (the "Litigation"),
brought on behalf of the public, minority shareholders of Mycogen Corporation
("Mycogen" or the "Company");
WHEREAS, the Complaint in the Litigation challenges certain actions
allegedly taken or not taken by defendant Dow Agrosciences LLC ("DAS") the
majority shareholder of Mycogen, The Dow Chemical Company ("TDCC"), DAS's
parent, and certain members of Mycogen's Board of Directors, some of whom
are also affiliated with DAS and TDCC, in connection with DAS's April 30,
1998, request to the board of directors of Mycogen to execute a contractual
amendment to permit Mycogen to enter discussions with DAS regarding the
possible acquisition by DAS of all of the outstanding shares of Mycogen common
stock held by persons and entities other than DAS at a price of $20.50 per
share (the "Proposed Transaction");
WHEREAS, following announcement of the Proposed Transaction, the board
of directors of Mycogen formed a Special Committee of disinterested directors
to negotiate with TDCC and DAS regarding the Proposed Transaction, which
Special Committee retained legal and financial advisors to assist in
evaluations and negotiations regarding the Proposed Transaction;
WHEREAS, following the commencement of the Litigation and the filing of
the complaints, plaintiffs' attorneys continued their investigative efforts,
communicated at various times with counsel for the defendants, and, together
with their independent financial advisor, were provided by defendants'
counsel with, INTER ALIA, confidential financial evaluations,
<PAGE>
analyses and projections prepared by DAS's financial advisor, Salomon Smith
Barney, and the Special Committee's financial advisor, Wasserstein Perella
and Company, pertaining to Mycogen and the Proposed Transaction, so that
plaintiffs, through their counsel, could convey their position as to a fair
price for Mycogen shares. Plaintiffs attorneys and their independent
financial advisor reviewed these materials and other publicly available
materials filed with the Securities and Exchange Commission with respect to
Mycogen in connection with their communications with defendants' counsel and
their financial advisors;
WHEREAS, the documents provided by defendants' counsel to plaintiffs'
counsel included a draft letter written in August 1997 by Dr. Jerry Caulder,
who had resigned in May 1997 as Chairman of the Board and Chief Executive
Officer of Mycogen, and Thomas J. Cable, a director of the Company, alleging
that TDCC and DAS had not acted in the best interest of the Company with
regard to certain transactions, and various other documents relating to the
matters discussed in the draft letter (collectively, the "Caulder
documents");
WHEREAS, after review of the materials provided by the defendants to
plaintiffs' counsel and their independent financial advisor, and plaintiffs'
counsel's independent review of other pertinent materials, plaintiffs'
counsel and their independent financial advisor, at the request of attorneys
for the defendants, met in person with attorneys and financial advisors for
TDCC, DAS and the Special Committee to discuss the Proposed Transaction and
the ongoing negotiations between TDCC and DAS and the Special Committee and
to present their views;
WHEREAS, the pendency of the Litigation and the communications between
counsel for plaintiffs and defendants and their respective financial advisors
with respect to the above matters, were among the material causal factors
that TDCC, DAS and the Special
2
<PAGE>
Committee took into account in the course of the negotiations regarding
enhancement of the terms of the Proposed Transaction;
WHEREAS, on August 31, 1998, Mycogen and DAS jointly announced the
execution of a definitive merger agreement (the "Merger Agreement") whereby
DAS, through an acquisition subsidiary, will make a tender offer to acquire
all of the shares of Mycogen common stock that DAS does not already own for a
price of $28.00 per share (the "Tender Offer") and, following the Tender
Offer, if DAS and the acquisition subsidiary obtain at least 90% of the total
shares of Mycogen (on a fully diluted basis), the acquisition subsidiary will
be merged into Mycogen and each remaining shareholder will receive $28.00 per
share for each remaining share of Mycogen common stock;
WHEREAS, plaintiffs' counsel, after consultation with their independent
financial advisor, and after a candid exchange of views with defendants and
their financial advisors, have agreed in principle, subject to the review of
final transaction documents and confirmatory discovery as further set forth
herein, that the enhanced terms of the transaction set forth in the Merger
Agreement result in a transaction that is fair to and in the best interests
of the plaintiffs and the minority shareholders of Mycogen, taking into
account all factors affecting or potentially affected the value and business
prospects of Mycogen;
WHEREAS, defendants deny that they have committed any wrongdoing but
nevertheless believe that is in their best interests to resolve the
Litigation on the basis set forth herein,
WHEREAS, counsel for the parties have reached an agreement in principle,
subject to confirmatory discovery by plaintiffs in the Litigation and the
other terms hereof,
3
<PAGE>
providing for the settlement of the Litigation (the "Settlement") between and
among plaintiffs, on behalf of themselves and the putative class of persons
on behalf of whom plaintiffs have brought the Litigation, and all defendants,
on the terms and subject to the conditions set forth below;
NOW THEREFORE, as a result of the foregoing and the negotiations among
counsel to the parties, the parties to the Litigation hereby agree as follows:
1. INCORPORATION OF RECITALS: The foregoing recitals are incorporated
into and expressly made a part of this Memorandum of Understanding.
2. STIPULATION AND OTHER SETTLEMENT DOCUMENTS: The parties to the
Litigation will attempt in good faith to agree upon and to execute as soon as
practicable an appropriate stipulation of settlement (the "Stipulation") and
such other documentation as may be required in order to obtain any and all
necessary or appropriate court approvals of the Stipulation and the
Settlement, upon and consistent with the terms set forth in this Memorandum
of Understanding. The Stipulation will expressly provide, INTER ALIA:
(1) CLASS CERTIFICATION: for class certification, conditional on
final Court approval (as defined herein) of the Settlement, pursuant to
Section 382 of the California Code of Civil Procedure of a class consisting
of all persons (other than defendants and their affiliates) who owned common
stock of Mycogen on April 30, 1998, and their successors in interest and
transferees, immediate and remote through and including the closing of the
Merger (the "Class");
(2) NO ADMISSION OF WRONGDOING: that all defendants have denied,
and continue to deny, that they have committed any violations of law and that
they are entering into
4
<PAGE>
the Stipulation because the proposed Settlement would eliminate the burden
and expense of further litigation;
(3) RELEASE OF ALL CLAIMS: for the release of all claims that
were asserted or could have been asserted in the Litigation by members of the
Class, or any or all of them, and any and all other or additional such claims
by or on behalf of Mycogen itself or the stockholders of Mycogen, against
TDCC, DAS, Mycogen, the Special Committee, each of the members thereof, each
of the current directors of Mycogen and any and all other defendants, as well
as each of their present or former officers, directors, employees, agents,
attorneys, accountants, financial advisors, commercial bank lenders,
investment bankers, representatives, affiliates, associates, parents,
subsidiaries, general and limited partners and partnerships, heirs,
executors, administrators, successors and assigns, whether known or unknown,
under state or federal law, and whether directly, derivatively,
representatively or in any other capacity, arising out of, relating to, or in
connection with, in whole or in part, the Proposed Transaction, the Tender
Offer, the Merger, the Merger Agreement, the Caulder documents or any of the
matters alleged in them, any disclosures made in connection with any of
these, or any other matter affecting or alleged to affect the sufficiency or
fairness of the consideration offered or paid in the Tender Offer or the
Merger on any basis whatsoever, except for statutory appraisal rights (the
"Settled Claims"). In addition, Mycogen shall release TDCC, DAS and each of
their present or former officers, directors, employees, agents,
representatives, affiliates, parents, subsidiaries, successors and assigns,
from any and all claims arising out of, relating to, or in connection with,
in whole or in part, their fiduciary duties as majority or controlling
shareholders or directors of Mycogen, including without limitation any of the
matters alleged in the Caulder documents.
5
<PAGE>
(4) DISMISSAL: for the dismissal of the Litigation and all Settled
Claims with prejudice and without costs to any party (except as set forth
below);
(5) OPT OUTS: that the defendants shall in their sole discretion
have the option to terminate the Settlement if potential class members
holding in excess of a certain number of shares of Mycogen (to be agreed upon
in advance by the parties and set forth in the Stipulation) request exclusion
from the class.
3. SUBMISSION TO THE COURT. The parties to the Litigation, through
their counsel, will present the Stipulation and Settlement to the Court for
hearing and approval as soon as practicable following appropriate notice to
the members of the Class and will use their best efforts to final Court
approval of the Stipulation and Settlement, including dismissal of the
Litigation with prejudice and the release of all claims as set forth above.
It is expressly acknowledged that the Tender Offer and the Merger may be
closed prior to final Court approval of the Settlement. As used in this
Memorandum of Understanding, "final COURT approval" of the Settlement means
that the Court has entered an Order approving the Settlement in accordance
with the Stipulation and that Order is finally affirmed on appeal or is no
longer subject to appeal.
4. SUSPENSION OF PROCEEDINGS. Pending the preparation of the
Stipulation and other documents and their presentation to the Court for its
approval, the plaintiffs agree that they shall not move for preliminary
injunction in the Litigation and all parties agree that all proceedings in the
Litigation shall be suspended, except for the confirmatory discovery provided
herein and any other matters as to which the parties may expressly agree.
5. CONFIRMATORY DISCOVERY. The parties shall conduct as expeditiously
as possible such reasonable additional discovery as the parties agree or the
Court orders is
6
<PAGE>
necessary and appropriate to confirm the fairness and reasonableness of the
terms of the Settlement. Plaintiffs presently anticipate that up to four
depositions will be required in addition to relevant document production in
response to the Request for Production of Documents previously served by
plaintiff's counsel. Plaintiffs reserve the right to withdraw from the terms
of this Memorandum of Understanding and the proposed Settlement in the event
that such discovery reveals that the Settlement is not fair and reasonable.
6. ATTORNEYS' FEES. Conditional upon a Stipulation of Settlement
being executed, Court approval of the Settlement (including the class
certification and release) being granted, and the Court dismissing the
Litigation with prejudice, all in accordance with the Stipulation of
Settlement, plaintiffs' counsel of record in the Litigation will jointly
apply at the settlement hearing to the Court for an award of attorneys' fees
and expenses (including, but not limited to, fees and expenses of plaintiffs'
counsels' independent financial advisor). The parties shall attempt in good
faith to agree on a maximum dollar amount of plaintiffs' counsel's fees
application and, in the event they so agree the fee application shall not
exceed that maximum dollar amount and the defendants will not oppose the
application. In the event the parties are unable to agree on a maximum
dollar amount, plaintiffs' counsel may make a fee petition in any amount,
without limitation, but the defendants shall reserve the rights to make any
and all objections to the petition, or any part thereof, on any relevant
grounds, plaintiffs shall reserve the right to oppose any and all such
objections and pursue any additional relevant discovery pertaining thereto,
and defendants shall reserve the right to oppose such discovery on any
applicable ground. Subject to the conditions set forth in this Memorandum of
Understanding and any order of the Court, any and all attorneys' fees and
expenses awarded by the Court to
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plaintiffs' counsel may be paid by any combination of TDCC, DAS, Mycogen
and/or their successors in interest on behalf of all defendants to the order
of Milberg Weiss Bershad Hynes & Lerach LLP, as receiving agent for
plaintiffs' counsel, within ten days after final Court approval of the
Settlement (as defined in paragraph 3 hereof) and dismissal, with prejudice
and without costs or fees (except as otherwise set forth in this paragraph),
of the Litigation. TDCC, DAS and/or Mycogen or their successors in interest
shall also cause the dissemination of notice of the Settlement to the Class
in such manner as the Court determines to be appropriate, and shall pay all
costs and expenses incurred in providing such notice to the members of the
Class.
7. CONDITIONS TO SETTLEMENT. The consummation of the Settlement is
subject to (a) the completion by plaintiffs' counsel of confirmatory
discovery as provided above; (b) confirmation by plaintiffs' counsel
following such confirmatory discovery that the Settlement is fair and
reasonable, (c) drafting and execution of the Stipulation and such other
documentation as may be required to obtain final Court approval of the
Settlement in a form satisfactory to the parties; (d) consummation of the
Tender Offer, and (e) final Court approval of the Settlement and the
Stipulation, including class certification, release, and dismissal with
prejudice as set forth above. The consummation of the Merger shall not be a
condition of this Memorandum of Understanding or of the Settlement. In the
event that the Settlement is not consummated for any reason, neither this
Memorandum of Understanding, anything contained herein, nor anything done or
disclosed by any person or party in connection herewith shall be deemed to
prejudice in any way the positions of any party with respect to the
Litigation. In such event, neither the existence of this Memorandum of
Understanding nor its contents shall be admissible in evidence or shall be
referred to for any purpose in the Litigation or in any other litigation or
proceeding.
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8. COUNTERPARTS. This Memorandum of Understanding may be executed in
counterpart by any of the signatories hereto, including by telecopier, and as
so executed shall constitute one agreement.
9. GOVERNING LAW. This Memorandum of Understanding and the Settlement
contemplated by it shall be governed by, and construed in accordance with,
the laws of the State of California, without regard to California's conflict
of law rules.
10. MODIFICATION. This Memorandum of Understanding may be modified or
amended only by a writing signed by the signatories hereto.
11. BINDING EFFECT. This Memorandum of Understanding shall be binding
upon and inure to the benefit of the parties and their respective agents,
executors, heirs, successors and assigns.
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12. CONFIDENTIALITY OF INFORMATION. All agreements by, between
or among the parties, their counsel and their other advisors as to the
confidentiality of information exchanged between or among them shall remain
in full force and effect, and shall survive the execution of this Memorandum
of Understanding and the consummation of the Settlement, if consummated,
without regard to any of the conditions of the Settlement.
Dated: September 3, 1998 MILBERG WEISS BERSHAD HYNES &
LERACH LLP
By: /s/ Steven G. Schulman
----------------------------------------
STEVEN G. SCHULMAN
SETH OTTENSOSER
One Pennsylvania Plaza, 49th Floor
New York, New York 10119
(212) 594-5300
MILBERG WEISS BERSHAD HYNES &
LERACH LLP
WILLIAM S. LERACH
STEVEN W. PEPICH
RANDALL J. BARON
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058
ABBEY, GARDY & SQUITIERI, LLP
DATED: September 3, 1998 By: /s/ Mark C. Gardy
----------------------------------------
ARTHUR ABBEY
MARK C. GARDY
JAMES S. NOTIS
212 East 39th Street
New York, NY 10016
Telephone: 212/889-3700
CO-LEAD COUNSEL FOR PLAINTIFFS
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MAYER, BROWN & PLATT
DATED: September 3, 1998 By: /s/ Bennett W. Lasko
_______________________________________
HERBERT L. ZAROV
BENNETT W. LASKO
190 South La Salle Street
Chicago, IL 60603-3411
Telephone: 312/782-0600
MAYER, BROWN & PLATT
FREDERICK S. LEVIN
350 South Grand Avenue
25th Floor
Los Angeles, CA 90071
Telephone: 213/229-9500
ATTORNEYS FOR DEFENDANTS
DOW AGROSCIENCES, THE DOW CHEMICAL CO.
CARLTON J. EIBL, JOHN L. HAGAMAN,
NICKOLAS D. HEIN, LOUIS W. PRIBILA, G.
WILLIAM TOLBERT, J. PEDRO REINHARD,
ROY M. BARBEE, WILLIAM C. SCHMIDT AND
PERRY J. GEHRING
ALTHEIMER & GRAY
DATED: September 3, 1998 By: /s/ Theodore J. Low
----------------------------------------
THEODORE J. LOW
10 South Wacker Drive
Suite 4000
Chicago, IL 60606
Telephone: 312/715-4000
GRAY, CARY, WARE & FREIDENRICH
ROBERT W. BROWNLIE
401 B Street, Suite 1700
San Diego, CA 92101-4297
Telephone: 619/699-2700
ATTORNEYS FOR DEFENDANTS
MYCOGEN CORP., JOSEPH P. SULLIVAN, AND
GEORGE KHACHATOURIANS
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