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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 1)
______________________
MYCOGEN CORPORATION
(Name of Subject Company)
MYCOGEN CORPORATION
(Name of Person Filing Statement)
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)
CARLTON J. EIBL
PRESIDENT
MYCOGEN CORPORATION
5501 OBERLIN DRIVE
SAN DIEGO, CA 92121-1718
(619) 453-8030
(Name, address and telephone number of person authorized to receive
notice and communications on behalf of the person filing statement)
_____________________
COPIES TO:
NORMAN M. GOLD, ESQ.
PETER H. LIEBERMAN, ESQ.
Altheimer & Gray
10 South Wacker Drive
Suite 4000
Chicago, Illinois 60606
(312) 715-4000
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This Amendment No. 1 amends and supplements the Solicitation/Recommendation
Statement on Schedule 14D-9 dated September 4, 1998 (the "Schedule 14D-9") of
Mycogen Corporation, a California corporation (the "Company") with respect to a
tender offer made by AgroSciences Acquisition Inc., a Delaware corporation (the
"Purchaser"), which is a majority-owned subsidiary of Dow AgroSciences LLC, a
Delaware limited liability company ("Parent"), and an indirect wholly-owned
subsidiary of The Dow Chemical Company, a Delaware corporation ("TDCC"), to
purchase all of the outstanding shares of common stock, par value $0.001 per
share, of the Company (the "Common Stock" or "Shares") at a price of $28.00 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in Purchaser's Offer to Purchase dated September 4, 1998. Capitalized
terms used herein and not defined here shall have the meaning ascribed to them
in the Schedule 14D-9 and the schedules attached thereto.
A. ITEM 3. IDENTITY AND BACKGROUND
1. The first paragraph of Item 3(b)(1) of Schedule 14D-9 is hereby
restated as follows:
"All information contained in this Statement or incorporated
herein by reference concerning Purchaser, Parent or TDCC, or actions
or events with respect to any of them, was provided by the Purchaser,
Parent or TDCC, respectively. The Company believes that all such
information included in the Schedule 14D-9, or incorporated herein,
relating to Parent, Purchaser and TDCC is correct. Information
contained in this Statement with respect to the Company and its
advisors has been provided by the Company."
B. ITEM 4. THE SOLICITATION OR RECOMMENDATION
1. The twenty-third paragraph of Item 4(b)(i) of Schedule 14D-9, which
currently reads:
"During the succeeding ten days, the parties exchanged correspondence
regarding the presentations and conclusions of the financial advisors.
During this period, Parent questioned the wide discrepancy between the
projections presented by the Company's management to the Board in
December 1997 and the projections included in the WP&Co. materials.
Also during this period, the Special Committee received a report from
Mr. Eibl regarding the view of the Company's management with respect
to the financial advisors' reports, assumptions and conclusions. This
report was provided by the Special Committee to Parent."
is hereby amended by adding thereto the following:
"This report (the "Management Report") supported the projections
included in the WP&Co. 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
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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."
2. The paragraph headed paragraph (ix) under Item 4(b)(2) of Schedule
14D-9 is hereby amended and restated as follows:
"(ix) the written opinion of WP&Co. delivered to the Special
Committee on August 31, 1998 (the "WP&Co. Opinion") to the effect
that, subject to the various assumptions and limitations set forth in
the WP&Co. 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
WP&Co. In considering the WP&Co. Opinion, the Special Committee noted
that the $28.00 cash price was below the range of valuations derived
by WP&Co. for comparable transactions. In this regard, the Special
Committee noted WP&Co.'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. WP&Co. advised the Special
Committee that comparable transactions were only one of the means of
determining value and in this case not a particularly useful means to
do so in light of the foregoing factors. The full text of the WP&Co.
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 WP&Co. 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 WP&CO. OPINION AND THE "OPINION OF WP&CO."
SECTION SET FORTH BELOW IN THEIR ENTIRETY;"
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3. The second paragraph under the heading "Opinion of WP&Co." in Item
4(b)(2) of Schedule 14D-9 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 ANNEX A HERETO 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 ANNEX A."
4. The following paragraphs are hereby added as a seventh paragraph
and an eighth paragraph under the heading "Opinion of WP&Co." in Item 4(b)(2)
of Schedule 14D-9:
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 Item 4(b)(i) 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.
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5. The following paragraph is hereby added as a fourth paragraph under
the subheading "Comparable Transaction Analysis." under the heading "Opinion of
WP&Co." of Item 4(b)(2) of Schedule 14D-9:
"WP&Co. 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."
6. The paragraph under the subheading "Composite Range." under the
heading "Opinion of WP&Co." in Item 4(b)(2) of Schedule 14D-9 is hereby amended
and restated as follows:
"COMPOSITE RANGE. At the August 31, 1998 meeting of the Special
Committee, WP & Co. provided the Special Committee with a composite
range of per share values of $25.00 to $35.00. In deriving this
composite range, WP & Co. 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 projection provided to WP & Co. 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."
C. ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 29. Fairness Opinion of Wasserstein Perella & Co., Inc. dated
Autgust 31, 1998.
Exhibit 38. Memorandum of Understanding dated September 3, 1998
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SIGNATURE
After reasonable inquiry and to the best on my knowledge and belief, I
hereby certify that the information set forth in this statement is true,
complete and correct.
MYCOGEN CORPORATION
By: /s/ Carlton J. Eibl
-------------------------------------
Name: Carlton J. Eibl
Title: PRESIDENT
Dated: September 25, 1998
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[LOGO]
August 31, 1998
Special Committee of the Board of Directors
Mycogen Corporation
5501 Oberlin Drive
San Diego, CA 92121
Members of the Special Committee of the Board:
You have asked us to advise you with respect to the fairness, from a
financial point of view, to the holders (other than The Dow Chemical Company and
its affiliates (collectively, the "Dow Group")) of shares of common stock, par
value $.001 per share (the "Shares"), of Mycogen Corporation, a California
corporation (the "Company"), of the consideration to be received by such holders
in the Transactions (as defined below) pursuant to the Agreement and Plan of
Merger, dated as of August 31, 1998, by and among the Company, Dow AgroSciences
LLC ("Parent") and AgroSciences Acquisition Inc. ("Acquisition") (the "Merger
Agreement"). The Merger Agreement provides for, among other things, a cash
tender offer (the "Tender Offer") by Acquisition to acquire all of the
outstanding Shares, other than Shares held by members of the Dow Group, at a
price of $28.00 per Share, net to the seller in cash (the "Cash Price"), and for
a subsequent merger of Acquisition with and into the Company pursuant to which
each outstanding Share (other than as provided in the Merger Agreement) will be
converted into the right to receive the Cash Price (the "Merger" and, together
with the Tender Offer, the "Transactions"). The terms and conditions of the
Transactions are set forth in more detail in the Merger Agreement.
In connection with rendering our opinion, we have reviewed the financial
terms and provisions of a draft of the Merger Agreement, and for purposes
hereof, we have assumed that the financial terms and provisions of the final
form of the Merger Agreement will not differ in any material respect from the
draft provided to us. We also reviewed the Exchange and Purchase Agreement,
dated January 15, 1996, among the Company, Agrigenetics, Inc., DowElanco and
United Agriseeds, Inc. (the "Exchange Agreement"), including the Dow Group's
rights and obligations thereunder both if the Transactions are completed and not
completed. We further reviewed and analyzed certain publicly available business
and financial information relating to the Company for recent years and interim
periods to date, as well as certain internal financial and operating
information, financial forecasts, projections and analyses prepared by or on
behalf of the Company and provided to us for purposes of our analysis. We have
met with certain representatives of the Company and the Dow Group to review and
discuss such information and, among other matters, the Company's business,
financial condition, results of operations and prospects.
[LOGO]
III-1
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Special Committee of the Board of Directors
August 31, 1998
Page 2
We have reviewed and considered certain financial and stock market data
relating to the Company, and we have compared that data with similar data for
certain other companies, the securities of which are publicly traded, that we
believe may be relevant or comparable in certain respects to the Company or one
or more of its businesses or assets, and we have reviewed and considered the
financial terms of certain recent acquisitions and business combination
transactions in the seed and agrobiotech industries specifically, and in other
industries generally, which we believe to be reasonably comparable to the
Transactions or otherwise relevant to our inquiry. We have also performed such
other studies, analyses and investigations and reviewed such other information
as we considered appropriate for purposes of this opinion.
In our review and analysis and in formulating our opinion, we have assumed
and relied upon the accuracy and completeness of all the financial and other
information provided to or discussed with us or publicly available, including
the financial projections, forecasts, analyses and other information provided to
us, and we have not assumed any responsibility for independent verification of,
and express no opinion as to, any of such information. We also have relied upon
the reasonableness and accuracy of the unadjusted projections, forecasts,
analyses and other information furnished to us, and have assumed, with the
Special Committee's consent, that such projections, forecasts and analyses and
other information were reasonably prepared in good faith and on bases reflecting
the best currently available judgments and estimates of the Company's management
as of the date hereof and that management of the Company is unaware of any facts
that would make the projections, forecasts and other information provided to us
incomplete or misleading. We express no opinion with respect to such
projections, forecasts and analyses or the assumptions on which they are based.
We have not reviewed any of the books and records of the Company or Parent, and
although we have visited selected facilities, we were not retained to conduct,
nor have we assumed any responsibility for conducting, a physical inspection of
the properties or facilities of the Company or Parent, or for making or
obtaining an independent valuation or appraisal of the assets or liabilities of
the Company or Parent, and no such independent valuation or appraisal was
provided to us. Our opinion is necessarily based on economic and market
conditions and other circumstances as they exist and can be evaluated by us as
of the date hereof. It should be understood that, although subsequent
developments may affect this opinion, we do not have any obligation to update,
revise or reaffirm this opinion. Finally, we have assumed that the transactions
described in the Merger Agreement will be consummated on the terms set forth
therein, without material waiver or modification.
In the context of our engagement, we have not been authorized to and have
not solicited alternative offers for the Company or its assets, or investigated
any other alternative transactions which may be available to the Company. We
express no opinion with respect to the Third Party Sale Value of the Company as
such term is defined in the Exchange Agreement.
We are acting as financial advisor to the Special Committee of the Board of
Directors of the Company (the "Special Committee") in connection with the
proposed Transactions and will receive a fee for our services, including this
opinion, a significant portion of which is contingent upon the completion of the
proposed Transactions and the amount of consideration received by holders of the
Shares (other than the Dow Group) in the Transactions. In the ordinary course of
our business, we may actively trade the securities of the Company or members of
the Dow Group for our own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
[LOGO]
III-2
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Special Committee of the Board of Directors
August 31, 1998
Page 3
Our opinion addresses only the fairness from a financial point of view to
the holders of the Shares (other than the members of the Dow Group) of the
consideration to be paid to them pursuant to the Merger Agreement and does not
address the Special Committee's underlying business decision to recommend the
Transactions.
This letter is for the benefit and use of the Special Committee in its
consideration of the Transactions, and may not be used for any other purpose or
reproduced, disseminated, quoted or referred to at any time, in any manner or
for any purpose without our prior written consent (except as otherwise provided
in the engagement letter, dated as of June 11, 1998, between the Company and
us). We have been engaged and are acting solely as an advisor to the Special
Committee and not as an advisor to or agent of any other person. This opinion
does not constitute a recommendation to any stockholder with respect to whether
such holder should tender Shares pursuant to the Tender Offer or as to how such
holder should vote or otherwise act with respect to the Merger, and should not
be relied upon by any stockholder as such a recommendation.
Based upon and subject to the foregoing, including the various assumptions
and limitations set forth herein it is our opinion that, as of the date hereof,
the Cash Price to be received by the holders of Shares (other than members of
the Dow Group) in the Transactions pursuant to the Merger Agreement is fair to
such holders from a financial point of view.
Very truly yours,
[LOGO]
III-3
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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,
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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
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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,
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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
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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.
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(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
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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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